Here are the top five things you need to know in financial markets on Tuesday, June 11:
1. China provides stimulus amid promises of ‘firm resolve’ vs. U.S.
Beijing signaled fresh fiscal stimulus for its slowing economy, announcing it would allow local governments to use proceeds from special bonds as capital for major investment projects.
While traders breathed a sigh of relief as the U.S. opted not to proceed with tariff increases on Mexico this week, the U.S.’s dispute with China continues to simmer. The Chinese Foreign Ministry said Tuesday that Beijing would “resolutely respond and fight to the end” if the U.S. insists on escalating it.
The response came after President Donald Trump said the U.S. would impose further tariffs if no deal is reached at the G20 summit on June 28-29.
2. Fed expected to cut rates in July ahead of inflation data
With the Federal Reserve in a blackout period ahead of next week’s policy decision, markets are “convinced” the U.S. central bank will need to cut rates at the following meeting in July.
The ongoing Sino-U.S. trade tensions and a series of weak global macro data have steadily pushed up bets on an easing and, while expectations are for no move in June, fed funds futures now put the probability of a July cut at nearly 80%.
Policymakers will get a fresh handle on pipeline inflation pressures – or the lack of them – later Tuesday.
Annualized readings of the producer price index, out at 8:30 AM ET (12:30 GMT), are forecast to have eased in May. The PPI is considered a leading indicator as manufacturers often pass price changes at the factory gate onto consumers.
The May consumer price index itself will be released on Wednesday, with economic forecasts pointing to a slowdown in headline inflation while the core reading is projected to hold steady at 2.1%.
3. Global stocks receive further boost from Chinese stimulus
Global stocks moved higher on Tuesday, as signs of stimulus in China enhanced a positive mood created by the suspension of tariffs on Mexico and expectations of Fed easing.
U.S. futures pointed to a higher open, with the S&P 500 on track to notch a sixth consecutive session of gains. Dow futures advanced 108 points, or 0.4% by 5:37 AM ET (9:37 GMT), S&P 500 futures rose 13 points, or 0.4%, while Nasdaq 100 futures traded up 48 points, or 0.6%.
Elsewhere, the positive close on Wall Street and Beijing’s move to ease financing sent Chinese stocks soaring, with the Shanghai Composite ending up 2.6%.
European stocks were also pulled higher. Germany’s DAX led the charge, jumping more than 1% in a game of catchup as investors returned to their desks after a holiday.
4. Amazon overtakes Google, Apple as most valuable brand
Amazon.com (NASDAQ:AMZN) managed to overtake Google (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL)as the world’s most valuable brand with a price tag of $315.5 billion, according to a global ranking released on Tuesday.
The 2019 BrandZTM Top 100 Most Valuable Global Brands ranking, compiled by WPP research agency Kantar, explained that the move was due to “Amazon’s smart acquisitions, that have led to new revenue streams, excellent customer service provision and its ability to stay ahead of its competitors by offering a diverse eco-system of products and services”. The report calculates that those acquisitions led to a 52% increase in brand value, moving Amazon from third place in 2018 to the head of the pedestal this year.
Microsoft (NASDAQ:MSFT), Visa (NYSE:V), Facebook (NASDAQ:FB), McDonald’s (NYSE:MCD) and AT&T (NYSE:T) were among other American companies in the top 10.
5. Pressure on Musk to extend Tesla rally
Tesla (NASDAQ:TSLA)shareholders assemble for their annual meeting, scheduled to start in Mountain View, California at 5:30 PM ET (21:30 GMT) Tuesday.
While shares of Tesla remain down 35% year-to-date, they have rallied nearly 15% this month (including a 4.1% jump on Monday), as the market slowly digests a $2.7 billion capital raising last month.
Ahead of the meeting, optimism is growing that deliveries are set to rebound in the second quarter following a leaked Musk e-mail that hinted at the company potentially exceeding its record deliveries in Q4 2018, when it delivered more than 90,000 vehicles.
–Investing.com
