Global stocks drop sharply after Fed meeting minutes and before US employment data; Tax reform in the room and more highlights
7 min read
Thursday’s session (6) is one of the losses incurred by the major global stock exchanges, while investors await the release of data on the US labor market and assess the prospects for interest rates after publishing the last minutes of the Federal Reserve meeting.
The day before, the FOMC meeting minutes showed that the Fed agreed to maintain its base rate at its June meeting as a way to buy time and assess whether it is necessary to raise interest rates. After the minutes were released, investors expected the US central bank to raise the key interest rate at its next meeting later this month.
The CME Group’s instrument indicates an 88.7% chance that the Fed will raise the benchmark interest rate by 25 basis points this month, to the range between 5.25% and 5.50%. The level is similar to that observed before the report was issued.
A host of new economic indicators are due for release today, including the ADP Special Employment Data for June, the JOLTS report, and the weekly jobless claims. Readings from S&P Global Services PMI and ISM Services PMI are also available.
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In Brazil, with the indicator agenda emptied, discussions of economic agendas continue to focus in the National Congress. The mayor, Arthur Lyra (PP-AL), led the discussion in the first round of tax reform in the plenary session of the House of Representatives. Lyra plans to vote on the merits of the issue in the first round on Thursday (6).
1. Global Scholarships
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US futures indexes are running at their lowest levels on Thursday morning, with expectations focused on the release of important data on the US labor market.
For the JOLTS report, the Refinitiv consensus forecasts 9.9 million job vacancies in May, which is down from April’s figure (10.1 million). The ADP survey is expected to show that 228 thousand private sector jobs were created in June, according to the median market forecast. While unemployment insurance claims were expected to reach 245,000 last week. On Friday, data will be released from the US monthly jobs report.
Watch how the futures markets performed:
- Dow Jones Contracts (US), -0.44%
- S&P 500 (US) Futures, -0.43%
- Nasdaq Futures (US), -0.44%
Asia
Asian markets fell on Thursday after minutes from the Federal Reserve’s meeting revealed that the US central bank expects more interest rate hikes at a slower pace.
Hong Kong’s Hang Seng Index led the region’s losses, dropping 3% in the last hour of trading. In China, the Shanghai Composite Index fell 0.54%, closing at 3,205.57.
US Treasury Secretary Janet Yellen began her visit to Beijing this week, where she is expected to meet with senior Chinese officials. This comes after China on Wednesday unexpectedly canceled the visit of EU High Representative for Foreign Affairs Josep Borrell to China.
- Shanghai SE (China), -0.54%
- Nikkei (Japan), -1.70%
- Hang Seng (Hong Kong) -3.02%
- Kospi (South Korea), -0.88%
- ASX 200 (Australia), -1.24%
Europe
European markets fell on Thursday as investors digested slowing global economic growth. All major sectors and exchanges are in the red.
Activity in China’s service sector slowed sharply in June, according to the Caixin/S&P Global Purchasing Managers’ Index survey released on Wednesday, while eurozone PMI figures showed business output contracted last month.
Euro retail sales disappointed expectations for a 0.3% rise in May, stagnating in April and declining 2.9% y/y, while an unexpected rise in German factory orders in May provided some relief.
On the corporate front, Swedish gaming group Embracer is operating at a 14% loss after it raised SEK 2 billion ($182 million) in a discounted share issue.
The group, which owns the rights to Tomb Raider, said in June that it would need to cut investment and costs. Embracer issued 80,000 new shares at a subscription price of SEK 25 per share on Wednesday.
- FTSE 100 (UK), -1.08%
- DAX (Germany), -0.88%
- CAC 40 (France), -1.56%
- FTSE MIB (Italy), -1.10%
- Stokes 600, -1.11%
goods
Crude Oil prices rose in today’s trading session as the prospect of tighter supply with production cuts from Saudi Arabia and Russia and a larger-than-expected drop in US crude inventories eased concerns about a slow recovery in demand in China.
- WTI, +0.61%, at $72.23 a barrel
- Brent Oil, +0.46%, at $77.00 a barrel
- Iron ore traded on the Dalian Stock Exchange rose 0.97% to 829.50 yuan, equivalent to $114.51.
bitcoin
- Bitcoin, +3.12% to $31,450.38 (24 hours ago)
2. Schedule
Today’s agenda highlights data from the US labor market. For the JOLTS report, the Refinitiv consensus forecasts 9.9 million job vacancies in May, which is down from April’s figure (10.1 million). The ADP survey is expected to show that 228 thousand private sector jobs were created in June, according to the median market forecast.
Brazil
10:00 am: Finance Minister Fernando Haddad met with Guy Parmelin – Minister of the Swiss Federal Council.
2:30 pm: Haddad met with Tatiana Roseto – Secretary for International Affairs
4 p.m.: Haddad met with Daniel Xavier Lara – Acting President of UNACON Sindical
United States of America
9:15 a.m.: Special Recruitment (ADP) for the month of June. Refinitiv Consensus expects to create 228,000 jobs
9:30 a.m.: Weekly Unemployment Claims: Refinitiv consensus estimates 245,000 claims in the period
9:30 am: Trade Balance for May; The Refinitiv consensus forecasts a deficit of $69.0 billion
10:45 a.m.: June PMI Services
11 am: ISM June services
11 a.m.: Postings – JOLTs
3. Economic news
Lira agenda for discussion in the first round of tax reform in the Chamber’s plenary session
The Mayor, Arthur Lyra (PP-AL), last Wednesday evening (5) directed the debate in the first round of tax reform in the plenary session of the House of Representatives. Lyra intends to vote on the merits (content) of the matter in the first round on Thursday (6). Lyra also directed a request from the Nouveau party to remove the tax agenda from the agenda.
tax reform: 13 sectors of the Brazilian stock exchange should be affected; See how taxes are imposed and what could change
Haddad said the farm has reserved an offer of R$40 billion to finance the regional development fund
Finance Minister Fernando Haddad said the portfolio maintains the offer of R$40 billion to fund the Fund for Regional Development (FDR) set out in the tax reform proposal. The states claimed an even higher figure, R$75 billion. When asked last Wednesday evening, the fifth of this month, whether the portfolio refers to an amount greater than 40 billion Brazilian riyals, Haddad denied this and said that it is necessary to be “enthusiastic” about public accounts.
The Minister also said that the Treasury submitted to the Reform Rapporteur, Representative Aguinaldo Ribeiro (PP-PB), a proposal for governance rules in the Federal Council. According to Haddad, the proposed idea provides for meeting two criteria for deliberations in the commission: the size of the population and the number of states.
4. Political news
Haddad says the Karf project evolved after negotiations
Finance Minister Fernando Haddad said this evening that the project that restores the government’s decisive vote in the Administrative Council for Tax Appeals (CARF) has developed after negotiations. According to him, the text met more conditions to be passed in the room than at the beginning of the week.
Haddad did not detail the changes to the project. He said only that the changes were “collateral” and would not alter the agreement between the Ministry of Finance and the Brazilian Bar Association (OAB), signed in February.
According to the minister, the changes will have a positive financial impact, making the government collect more due to the new procedures for negotiating tax debts included in the text.
5. Corporate Radar
WEG (WEGE3)
For Rent (ALUP11) It entered into an agreement with two subsidiaries of WEG (WEGE3) to form a corporate partnership to generate power through Central Geradora Eólica AW Santa Régia owned by Eólica do Agreste Potiguar II SA, controlled by the company, for consumption by production units of WEG.
Alupar and WEG have signed this partnership to operate a wind energy complex located in the city of Jandaíra, in the state of Rio Grande do Norte, which will have an installed capacity of 37.8 megawatts (MW) and a physical guarantee of an average of 21.7 MW, of which about 15 MW will be delivered. Averaged annually to WEG under the system of self-production by matching.
In addition to the contract with Alupar, WEG has signed an agreement with 2W Ecobank SA for the joint self-production of energy at Anemus Wind Farms I, II and III, located in the municipality of Currais Novos, in the state of Rio Grande. do norte.
With power purchase contracts worth about R$970 million, they last 20 years and start in January 2024.
multiplane (MULT3)
Multiplan (MULT3) exercised its preemptive right to acquire a 4.1% stake in the gross leasable area (GLA) of RibeirãoShopping, Increasing the company’s stake in the mall to 86.5%.
This share represents 5.2% of the mall’s NOI (Net Operating Income) (last twelve months as of March 2023).
The purchase price of the share is R$76.0 million, to be paid in 4 inflation-indexed installments (IPCA), after the closing date, as follows: (i) R$22.8 million on the closing date, (ii) R$19.0 million in January 2024 , (3) R$15.2 million in July 2024 and (4) R$19.0 million in January 2025.
(with Estadão, Reuters and Agência Brasil)
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