Five things you need to know before the market opens on Monday June 5.
1. -- Stock Futures Edge Higher As Jobs Report, Debt Deal Boost Global Markets
U.S. equity futures extended modest gains Monday, while the dollar added to its recent run on foreign exchange markets and oil prices surged, as investors looked to the impact of last week's jobs report on the domestic economy.
With the Atlanta Federal Reserve's GDPNow forecasting tool showing the economy growing at a 2% clip, Friday's better-than-expected jobs report, which showed 339,000 new hires set against moderating wage growth, looks to have bolstered the case for a so-called soft landing over the second half of the year.
It's also pared bets on a Fed rate hike when the central bank meets next week in Washington, with the CME Group's FedWatch suggesting a 77.6% chance that Chairman Jerome Powell and his colleagues will hold the benchmark Fed Funds rate steady at between 5% and 5.25%.
The weekend signing of the 'Fiscal Responsibility Act' by President Joe Biden, formalizing a deal that suspends the $31.4 trillion debt ceiling until early 2025, is also providing a tailwind to global stocks and boosting the value of the dollar.
The U.S. dollar index, which tracks the value of the greenback against a basket of six global currencies, was marked 0.24% higher in overnight trading at 104.260. Benchmark 2-year Treasury note yields eased were pegged 4 basis points higher at 4.543% while 10-year notes rose 5 basis points to 3.743%.
Oil prices were also on the move, taking WTI futures past the $73 per barrel mark, after Saudi Arabia agreed to voluntary production cuts of up to 1 million barrel per day as part of a broader OPEC effort to stabilize global crude markets.
On Wall Street, futures tied to the S&P 500, which is up 11.5% for the year, were indicating a 2 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 41 point move to the upside.
The tech-focused Nasdaq, which extended its longest weekly winning streak to six on Friday, its longest run in more than three years, is set to open around 43 points lower amid the jump in Treasury bond yields.
European stocks were muted in early Frankfurt trading, with the Stoxx 600 rising 0.09% following data showing economic activity around the region fell to a 3-month low in May. Britain's FTSE 100, meanwhile, gained 0.54% in early London dealing.
Overnight in Asia, the region-wide MSCI ex-Japan index rose 1.29% higher in a follow-on rally from Wall Street's strong Friday close, while the Nikkei 225 rode a wave of positive sentiment, and a weaker yen, to a 2.2% gain that lifted the benchmark past the 32,000 point mark for the first time since July of 1990.
2. -- Week Ahead: Inflation Data, Treasury Bond Sales In Focus
A light calendar of economic data and earnings this week likely means markets will focus on the Treasury's effort to rebuild its depleted coffers with a wave of new issuance following President Joe Biden's signing of the bi-partisan debt ceiling deal on Saturday.
Analysts expect the Treasury to rush through as much as $1 trillion worth of new paper, from bills to longer-dated bonds as it replenishes the account with the Federal Reserve it ran down after the debt ceiling was first breached in early January. The sales are likely to start as early as Monday.
In a week bereft of big earnings or data release, markets will also likely focus on the prices paid components of Monday's PMI data from S&P Global, as well as the ISM non-manufacturing survey figures expected at 10:00 eastern time.
Only three S&P 500 companies -- JM Smucker (SJM), Brown Forman (BF.A) and Campbell Soup (CPB) -- are slated to publish profit updates this week, as the first quarter earnings season winds to a close.
Collective S&P 500 profits are likely to have fallen 0.01% from last year, to a share-weighted $441 billion, with second quarter profits forecast to fall 5.4% from last year, but come in flat compared to the first three months of the year.
3. -- Saudi Arabia Agrees Steep Production Cuts As OPEC Seeks to 'Stabilize' Global Markets
Global oil prices surged higher in overnight trading Monday after members of the OPEC cartel, along with non-member allies such as Russia, agreed to extended their collective production cuts until at least the end of the year.
Saudi Arabia, the cartel's most influential member, will reduce its output by another 1 million barrels per day, starting in July, The Kingdom said following OPEC's weekend meeting in Vienna. Other OPEC members will keep their current cuts of 3.66 million barrels per day, equivalent to around 3.6% of global demand, in place until early 2024.
Saudi Energy Minister Prince Abdulaziz bin Salman, who warned oil speculators betting against lower prices earlier this year to "watch out", said the Kingdom would “will do whatever is necessary to bring stability to this market.”
WTI futures for July delivery, which are tightly linked to U.S. gasoline prices, were marked $1.70 in overnight trading and changing hands at $73.44 per barrel. Brent contracts for August, the global pricing benchmark, traded $1.73 higher at $77.85 per barrel..
4. -- Palo Alto Networks Leaps On S&P 500 Inclusion, DISH Networks Slumps
Palo Alto Networks (PANW) shares surged higher in pre-market trading after S&P Dow Jones Indices said the the cybersecurity group would replace DISH Network (DISH) in the S&P 500.
Palo Alto Networks, which met the base criterium for S&P 500 inclusion earlier this year when it posted its fourth consecutive profitable quarter, will replace DISH in the main U.S. stock benchmark prior to the start of trading on June 20.
Dish Network, meanwhile, will move to the S&P SmallCap 600, replacing aesthetics devices maker Cutera Inc (CUTR) on the same date.
Palo Alto Networks lifted its full-year profit forecasts last month, and now sees net income to between $4.25 and $4.29 per share, a 26 cent improvement from prior forecasts, with revenues rising to between $6.88 billion and $6.91 billion.
The overall macro trends of cautious spending, deal scrutiny, and cost and value consciousness persist," CEO Nikesh Arora told investors on a conference all on May 23. "Against this backdrop, we have been staying ahead, with rigorous execution. We've increased our own deal scrutiny, gotten ahead of the challenges, and continue to sharpen our business value focus while demonstrating superior security outcomes to our customers."
Palo Alto Networks shares were marked 5.2% higher in pre-market trading to indicate an opening bell price of $228.55 each. DISH Network shares slumped 5.75% to $6.88 each.
5. -- AstraZeneca Unveils 'Unprecedented' Data From Late-Stage Lung Cancer Trial
AstraZeneca (AZN) shares edged higher in pre-market trading after the U.K.-based drug maker published "unprecedented" results from a late-stage trial of its developing lung cancer treatment.
AstraZeneca said patients with early-stage non-small cell lung cancer who were treated with the adjuvant Tagrisso, also known as osimertinib, saw their risk of death reduced by more than half -- 51% -- when compared to placebo.
"These highly anticipated overall survival results, with 88 per cent of patients alive at five years, are a momentous achievement in the treatment of early-stage EGFR-mutated lung cancer," said Dr. Roy Herbst, deputy director and chief of medical oncology at Yale Cancer Center and Smilow Cancer Hospital in New Haven. "These data underscore that adjuvant treatment with osimertinib provides patients with the best chance of long-term survival."
AstraZeneca's U.S.-listed shares were marked 0.72% higher in pre-market trading to indicate an opening bell price of $73.11 each. The company's London-listed shares were up 0.5%.
