Softer Growth, Higher Inflation Seen Stalling Equity Rebound

Stocks

Economic

Summary:

The chances of an acceleration in inflation numbers in the coming months are growing as President Donald Trump’s...

The chances of an acceleration in inflation numbers in the coming months are growing as President Donald Trump’s aggressive tariff regime begins to drive prices higher, according to analysts at JPMorgan Chase (NYSE:JPM).

In a note to clients on Monday, the analysts led by Mislav Matejka added that this trend, along with the risk of softening growth figures, could put the Federal Reserve in a "difficult position" as it assesses the future path of interest rates.

Should the dilemma facing the Fed worsen over the summer, U.S. equities and other international markets would likely be impacted, they said.

"JPM’s call is that recession will be avoided, but at 40% our economists believe the chances are not insignificant, and the current market pricing is probably underplaying this," the strategists wrote. "We believe the above combination of softer activity and at the same time higher inflation will drive a stalling in equity rebound that was in force over the past two months."

Against this backdrop, some of the brokerage’s top picks included European names like materials group Air Liquide (OTC:AIQUY), lenders Deutsche Bank and Societe Generale (OTC:SCGLY), carrier Ryanair, and consumer staples firm Unilever (LON:ULVR).

On the economic calendar this week, all eyes will be on the release of May’s reading of U.S. consumer price, which could provide a glimpse into the impact of Trump’s aggressive tariff policies on inflation.

The Labor Department’s consumer price index is tipped to speed up slightly to 2.5% from 2.3%, while the month-on-month gauge is expected to match April’s pace of 0.2%.

Cutting out more volatile items like food and fuel, the index is seen edging up to 2.9% year-over year and 0.3% on a monthly basis.

Following the release of the data on Wednesday, further data points are due out that track producer prices and consumer expectations for inflation in the months ahead.

Separate data last week showed that the U.S. added 139,000 jobs in May, falling from 147,000 in April but above economists’ estimates of 126,000, Labor Department data showed on Friday. April’s figure had originally stood at 177,000, while March’s total was also brought down by 65,000 to 120,000.

Federal employment declined by 22,000, reflecting an ongoing push by the White House to cut away at the size of the U.S. government workforce. Employment in the sector has slipped by 59,000 since January, when Trump returned to office for a second term in office.

Hiring in the health care, hospitality, and social assistance segments were trending up, the Labor Department’s Bureau of Labor Statistics said in a statement.

The unemployment rate was 4.2%, matching the previous month’s pace, while average hourly wage growth edged up to 0.4% month-on-month from 0.2%.

Source: Investing

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Warren Takunda

Central Bank

Economic

GBP/CAD was unable to break through the massive glass ceiling at 1.87 late May, in the process confirming a 'double top' technical pattern in the process (the March and May peaks).

From here, a continuation of the drift lower looks likely to us, and we think a test of the 50-day exponential moving average - now at 1.8470 - is in store soon.

Still, the broader multi-month trend remains to the upside, but a deeper consolidative period is underway, which could carry us through the Northern Hemisphere's summer months, denying UK-based CAD buyers the opportunity to transact at multi-year highs.

Canadian Dollar to Maintain Pressure on the Pound: The Week Ahead Forecast_1

Above: GBP/CAD at daily intervals.

To be sure, zooming out a bit on the charts shows these are still excellent levels for those buying CAD on an historical basis, but it might be some time before fresh highs are on tap again.

Weighing on GBP/CAD is last week's above-consensus Canadian employment figures that justify the Bank of Canada's decision made earlier in the week to keep interest rates unchanged.

In fact, it looks as though the Bank might cut just once more in the current cycle, which will prop up Canadian bond yields and relieve pressure on CAD.

Following Friday's employment report, Goldman Sachs economists removed a cut from their policy forecasts. They now expect the Bank to cut once this year to a terminal rate of 2.50%.

"While the labour market data was soft and the continued rise in the unemployment rate seems to confirm below trend growth, the weakness does not yet seem broad enough to prompt the BoC to cut imminently. Plus, the BoC still faces a difficult tradeoff between inflation and growth risks," says a weekly FX research note from Goldman Sachs.

"We think a more hawkish BoC, alongside better growth later this year, should support a stronger Canadian Dollar," it adds.

USD/CAD has ground lower since Goldman Sachs last revised its forecasts to show greater CAD appreciation in late-April. "We expect this pace of appreciation to continue and reiterate our optimistic view on the currency," says the Wall Street bank.

An additional headwind for GBP/CAD is receding trade tensions with China and the U.S. sending their trade negotiators to London this week to hash out a resolution on various sticking points required to unlock the trade accord recently agreed in Geneva.

"While Xi Jinping’s administration has shown determination not to bow down to Trump’s tariff intimidation, having already been forging deeper trading relationships with other nations, there are hopes that both sides will want to agree on a deal," says Susannah Streeter, head of money and markets at Hargreaves Lansdown.

The U.S. is seeking to restore flows of critical minerals, and China is seeking tariff reductions and an easing of export controls.

Progress here will settle nerves about the trade war and ultimately point to an overall tariff burden that is lower than a counterfactual where China and the U.S. fail to reach a resolution on outstanding issues.

This will help the U.S. Dollar and the Canadian Dollar, as the two North American currencies tend to benefit when trade tensions recede.

Source: Poundsterlinglive

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Adam

Economic

For US consumer giants, smaller is better.

Procter & Gamble, the maker of Tide laundry detergent and other household goods, announced a restructuring plan last week that includes cutting 7,000 people from its workforce and potentially exiting certain product categories over the next two years.

Anti-conglomerate

“We are evolving into the next phase of our organization design with a program that we have just announced today,” P&G executives said at a Deutsche Bank conference in Paris. “The strategy is inherently dynamic. It adapts to the changing needs of consumers, customers, society, and the geopolitical dynamics around us.”

Scale for scale’s sake appears to have become passé, with conglomerates jockeying for market share with a more focused brand identity than in the past:

Kimberly-Clark, the maker of Huggies diapers, said on Thursday it would sell a majority stake in its international tissue business to Brazilian paper company Suzano, which agreed to pay $1.73 billion in cash for 51% of the unit. The deal is expected to close next year. General Mills, the maker of Cheerios, completed the sale of its Canadian yogurt business to Sodiaal in January and received regulatory approval last week to offload its US yogurt unit to Lactalis. The companies plan to close the transaction later this month.

J.M. Smucker Co., the maker of Folgers, finalized its sale of Cloverhill, Big Texas, and private-label products to JTM Foods in March. Some 400 employees are part of the transaction. Those brands in the baked goods category were under Hostess Brands, which was acquired in 2023. Unilever, the maker of Dove soap and Hellmann’s mustard, is selling plant-based food brand The Vegetarian Butcher as part of its plans to slim its portfolio. It is in the process of spinning off its ice cream business, including Ben & Jerry’s and Talenti; the company announced last year that it would cut 7,500 jobs to simplify operations. Newly appointed CEO Fernando Fernandez said he was focused on “portfolio quality over portfolio scale” during his first earnings call as chief in April.

Breakups Pay Up: Shedding misaligned businesses can help boost growth, according to PwC. The Big 4 accounting firm’s analysis of US divestitures from 1998 to 2017 found that sellers tended to show higher growth in earnings before interest, taxes, depreciation, and amortization (Ebitda) in the years following a transaction. Record levels of US corporate cash and the dry powder sitting at private equity firms may also be inspiration enough for yard sales.

This post first appeared on The Daily Upside. To receive delivering razor sharp analysis and perspective on all things finance, economics, and markets, subscribe to our free The Daily Upside newsletter.

source : finance.yahoo

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Glendon

Commodity

Economic

Gold prices edged higher in early trading today, despite rising optimism that the US and China may soon bury the hatchet and reach a trade accord. That renewed optimism has been fuelling a robust rally in global equities of late, which in turn has dulled some of the appeal for safe-haven assets like gold and yen.

Indeed, we haven’t seen a new record high since gold hit $3,500 back in April, even though other precious metals like silver and platinum have rallied strongly.

Now, with high-level trade talks between Washington and Beijing scheduled to take place in London today—following what’s been described as a “very positive” call between Presidents Trump and Xi last week—there’s room for sentiment to improve further. Meanwhile, Friday’s better-than-expected US jobs report could encourage dollar dip buyers today, potentially putting pressure on gold prices.

In that context, a short-term correction wouldn’t be a shocker. But could we see a more significant move towards the psychologically significant $3,000 level in the coming weeks?

Could Gold Slip Further as Haven Appeal Fades?

Gold’s been struggling to reclaim the $3,400 mark, despite silver’s breakout last week to its highest level since 2012—around $36 per ounce. There’s also been some action in other precious metals, with platinum especially catching a bid thanks to tightening supply and a surge in jewellery demand as a cheaper alternative to gold.

Yet, despite being the first to make headlines with successive record highs in recent years, gold now appears to be lagging behind its shinier cousins. While the yellow metal has found some traction this morning as US wakes up, the overall lack of momentum and the improved appetite for risk suggest it might face more pressure.

Investors seem to be reallocating to riskier assets, leaving gold vulnerable to a potential deeper pullback – though, so far, we haven’t seen such a move.

A strengthening US dollar—particularly against currencies like the pound, euro, and yen—could exacerbate the weakness. These currencies outperformed during times of global trade anxiety in the last few months, so with tensions easing, the greenback may come back into favour. And a stronger dollar usually spells trouble for dollar-denominated assets like gold.

US CPI and Consumer Sentiment Could Drive the Next Move

After last week’s barrage of economic figures, this week’s calendar is looking a little more relaxed—especially with much of Europe enjoying a public holiday today. For gold traders, attention will shift to the US CPI figures on Wednesday and the University of Michigan’s consumer sentiment survey on Friday.

Last month’s CPI came in lighter than expected at 2.3%, versus a forecast of 2.4%, and several other indicators disappointed as well, raising hopes of a rate cut from the Fed. But it was really the uncertainty around tariffs that had the most pronounced impact on the dollar.

Now, with the US and China back at the negotiating table, that uncertainty is receding. A strong inflation print this week could breathe fresh life into the dollar, putting some downward pressure on gold.

Friday’s consumer sentiment report will be closely watched too. With equity markets roaring back in recent weeks, traders will want to see whether consumer confidence is also on the up. A strong showing here could reinforce bullish dollar bets and sap demand for safe-haven assets like gold.

Gold Technicals: Vulnerable but not broken

Gold’s modest bounce this morning follows a two-day slide late last week. While we haven’t seen any screaming sell signals just yet, the failure to notch fresh highs since April’s peak certainly raises the risk of further downside—particularly if risk sentiment continues to improve.

Gold: Save-Haven Premium Is Fading Fast As US-China Optimism Builds_1

At the moment, the $3,300 support level is just about holding. But if that gives way, things could get lively. The next real level of support doesn’t come into play until the trendline around $3,200. A decisive break could see gold drop $100 in fairly short order. Below that, the mid-May low of $3,120 will be key, and after that we’re looking at the big psychological level—$3,000.

That said, the broader trend remains bullish. So while there’s short-term downside risk, don’t write off gold just yet. Resistance to watch includes the $3,345 area—last week’s former support turned resistance. Beyond that, $3,400 is back in play, with $3,430 the next level up.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Economic

China–U.S. Trade War

Futures Flat as Markets Brace for Data and Diplomacy

U.S. equity futures are little changed early Monday as traders position ahead of a packed macro week. S&P 500 futures are up 0.01%, Nasdaq 100 futures down 0.11%, and Dow futures are flat. The S&P 500 closed above 6,000 last week for the first time since February, capping a second straight week of gains across all three majors.

Momentum has been supported by strength in cyclical sectors and easing investor concern around tariffs and domestic growth. Strategas’ Chris Verrone noted late Friday that “cyclicals making new highs versus defensives” signals broad market resilience despite recent soft data.

This week’s tone will be set by incoming inflation reports and Monday’s U.S.-China trade talks in London, which could shape tariff policy moving forward.

Today’s Data: Light Schedule Before Inflation Storm

10:00 GMT – Wholesale Inventories (April)

The only economic release today, wholesale inventories, is unlikely to move markets directly. However, it could add context to Wednesday’s CPI by showing back-end supply trends.

Focus now shifts to May CPI (Wednesday) and PPI (Friday), both of which will be dissected for evidence of tariff-related pricing pressure. These prints carry real policy weight ahead of the Fed’s June 17–18 meeting. Friday’s preliminary University of Michigan sentiment data will also include consumer inflation expectations, a variable closely tracked by FOMC voters.

Post-Bell Prints: Eyes on Consumer Resilience

Reports after the bell:

CVGW – Calavo Growers: est. EPS $0.53

CASY – Casey’s General Stores: est. EPS $1.97

No pre-market names on deck. While CVGW is niche, CASY will offer read-throughs on fuel margins and consumer behavior across middle-America convenience spending.

Index Futures at Critical Junctures

Daily E-mini S&P 500 Index

S&P 500 Futures: S&P 500 $6,000.36 +1.03% Price is consolidating just beneath 6025.00 resistance. The index reclaimed its 200-day SMA at 5900.76 last week. Support sits at 5756.50 and 5596.00. A clean breakout above 6025.00 sets the stage for a retest of all-time high at 6236.50.

The Day Ahead: Markets Calm Today Before CPI and U.S.-China Trade Headlines_2

Daily E-mini Nasdaq 100 Index Futures

Nasdaq 100 Futures: Hovering under 21935 with next upside target at 22,656.75. Pullback support seen at 20727 and the 200-day SMA at 20,843.04.

The Day Ahead: Markets Calm Today Before CPI and U.S.-China Trade Headlines_3

Daily E-mini Dow Jones Industrial Average

Dow Futures: Price remains capped at 42979, with 43148 as the next key ceiling and potential trigger point for an upside breakout. Downside levels to watch include 41236 and the 50-day SMA at 41,235.50.

Key Risks Ahead: CPI and Trade in Focus

Markets are consolidating at elevated levels, but catalysts are looming. Traders should expect volatility around Wednesday’s CPI and Friday’s PPI, with added headline risk from today’s U.S.-China talks. Directional bias will likely be defined by inflation tone and tariff guidance, as the Fed enters blackout mode ahead of next week’s rate decision.

Source: fxempire

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Warren Takunda

Stocks

London stocks had dipped into the red by midday on Monday as investors digested the latest Chinese trade and inflation data and awaited the outcome of US-China trade talks in London.

The FTSE 100 was down 0.1% at 8,825.80, trading in a narrow range.

Figures released earlier showed that Chinese consumer prices declined year-on-year in May for the fourth straight month on the back of weak domestic demand and falling prices, while export growth slowed as a result of the country's ongoing trade war with the US.

Commenting on the trade talks, Richard Hunter, head of markets at Interactive Investor, said: "Despite the President’s previous rhetoric, there seems to be some possibility that some of this aggression will be dialled back, not least of which since China has an upper hand especially with regard to its near monopoly on rare earth minerals which are so vital for components in the high-tech industry.

"China may also be keen on conciliation since there are further signs that its economy is struggling to fend off the tariff pressures so far. There are signs of deflation, caused in part by weak consumer sentiment, while the country’s exports growth fell sharply in May to 4.8% compared to 8% the previous month, with US shipments in particular decline."

Hunter said that taken together, these seem to give some grounds for optimism on the imminent talks.

In equity markets, M&G gained after an upgrade to ‘buy’ at UBS.

Alphawave rocketed after agreeing to be bought by US chipmaker Qualcomm in a $2.4bn deal.

Advertising agency WPP lost ground as it announced that chief executive officer Mark Read will retire on 31 December after more than 30 years with the company, including seven as CEO. It said Read "has decided that the time is right for him to hand over to a new leader" and that the search for a successor is underway.

Russ Mould, investment director at AJ Bell, said: "The fact WPP’s share price had more than halved over the past three years meant Mark Read’s days were always numbered as CEO. Shareholders can be patient, but there reaches a point where they can wait no longer and something has to change in order to revive the share price.

"The share price falling further on Read’s departure news is a sign that investors are all too aware of the problems at hand. This isn’t a simple situation where all that’s needed is fresh thinking from a leadership perspective. WPP needs a complete overhaul and that won’t come easily or quickly.

"The fact the company hasn’t got a replacement CEO lined up would suggest chaos behind closed doors. It could take another three to six months to find someone else, and by that point, WPP’s more tech-savvy rivals could be even further ahead."

Homeware retailer Dunelm slumped after a downgrade to ‘sector perform’ from ‘outperform’ by RBC Capital Markets.

"We view Dunelm as a high quality business. It's cash generative, has executed well in recent years and expansion potential has stepped up," RBC said. "But we think this is now more reflected in its valuation."

Trustpilot tumbled after Panmure Liberum initiated coverage of the stock with a ‘sell’ rating, citing high medium-term execution risk from a complex business transition.

Outside the FTSE 350, Revolution Beauty surged as it confirmed that Mike Ashley’s Frasers Group was one of a number of parties conducting due diligence as part of plans to sell the cosmetic retailer, adding that there was no certainty it would result in a firm offer.

Source: Sharecast

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Michelle

Economic

Political

Top U.S. and Chinese officials were due to meet in London on Monday for talks aimed at defusing the high-stakes trade dispute that has widened in recent weeks beyond tit-for-tat tariffs to export controls over goods critical to global supply chains.

Officials from the two superpowers were due to meet at the ornate Lancaster House to try to get back on track with a preliminary agreement struck last month in Geneva that had briefly lowered the temperature between Washington and Beijing.

The talks, which were due to start around 1130 GMT on Monday, come at a crucial time for both economies, with investors looking for some relief from U.S. President Donald Trump's cascade of tariff orders since his return to the White House in January.

"The next round of trade talks between the U.S. and China will be held in the UK on Monday," a UK government spokesperson said on Sunday. "We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks."

Gathering there will be a U.S. delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, and a Chinese contingent helmed by Vice Premier He Lifeng.

In Geneva the two sides agreed to reduce steep import taxes on each other's goods that had had the effect of erecting a trade embargo between the world's No. 1 and 2 economies, but U.S. officials in recent weeks accused China of slow-walking on its commitments, particularly around rare earths shipments.

The inclusion of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central rare earths has become. He did not attend the Geneva talks, at which the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other.

POSITIVE CONCLUSION

The second round of meetings comes four days after Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Trump's January 20 inauguration.

During the more than one-hour-long call, Xi told Trump to back down from trade measures that roiled the global economy and warned him against threatening steps on Taiwan, according to a Chinese government summary.

But Trump said on social media the talks focused primarily on trade led to "a very positive conclusion," setting the stage for Monday's meeting in London.

The next day, Trump said Xi had agreed to resume shipments to the U.S. of rare earths minerals and magnets. China's decision in April to suspend exports of a wide range of critical minerals and magnets upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.

"We want China and the United States to continue moving forward with the agreement that was struck in Geneva," White House spokeswoman Karoline Leavitt told the Fox News program "Sunday Morning Futures" on Sunday. "The administration has been monitoring China's compliance with the deal, and we hope that this will move forward to have more comprehensive trade talks."

The preliminary deal in Geneva sparked a global relief rally in stock markets, and U.S. indexes that had been in or near bear market levels have recouped the lion's share of their losses.

The S&P 500 Index, which at its lowest point in early April was down nearly 18% after Trump unveiled his sweeping "Liberation Day" tariffs on goods from across the globe, is now only about 2% below its record high from mid-February. The final third of that rally followed the U.S.-China truce struck in Geneva.

Still, that temporary deal did not address broader concerns that strain the bilateral relationship, from the illicit fentanyl trade to the status of democratically governed Taiwan and U.S. complaints about China's state-dominated, export-driven economic model.

While the UK government will provide a venue for Monday's discussions, it will not be party to them but will have separate talks later in the week with the Chinese delegation.

The dollar slipped against all major currencies on Monday as investors waited for news, while oil prices were little changed.