North American Morning Briefing: Stock Futures Tick Higher Before Payrolls Data

OPENING CALL

Stock futures rose on Friday with traders looking ahead to the nonfarm payrolls report.

"The hope...is that the labor market report shows a slowdown in new jobs and wages and provides support for inflation being tamed without the economy slowing down too much," SEB said.

But traders have reason to be on edge: The labor market has been surprisingly robust recently, denting hopes for interest-rate cuts.

Ahead of the report, markets are pricing in a first cut from the Federal Reserve in September, and a second by December, CME Group data showed.

Overseas Markets

The FTSE 100 edged up after the U.K.'s Labour Party won a landslide electoral victory. The more domestically focused FTSE 250 rallied 1.8%. The pound was little changed.

French assets gained ahead of Sunday's second-round election. The far-right National Rally has a smaller chance of winning a majority in parliament after its opponents cooperated in recent days.

Premarket Movers:

Coinbase stock fell more than 6% as the price of bitcoin slid below $55,000. Shares in online brokerage Robinhood Markets also traded lower.

Canada approved a $9 billion, Glencore-led deal to buy coal assets from Teck . Glencore shares gained modestly in London, while Teck's U.S.-traded shares were unchanged before the bell.

Eurofins further disputed recent allegations made by Carson Block's hedge-fund firm, Muddy Waters, about its accounting. The business's stock rebounded nearly 4% in Paris, but remains down 15% in the past month.

An investor group seeking to buy Macy's raised its offer for a second time, WSJ reported. Shares edged higher.

U.S.-listed shares of Smith & Nephew were up 8.6% after activist investor Cevian Capital disclosed a 5% stake in the British seller of medical equipment.

Tesla rose 2.1% in premarket trading. Its cars on Thursday were included on a local government procurement list in China for the first time, meaning the company's EVs can be used there as service cars by public organizations.

Watch For:

Employment Report for June; Canada Labour Force Survey for June, Canada Ivey Purchasing Managers Index

Today's Headlines/Must Reads:

- Private Credit Embraces Nontraded Business Development Companies

- Why the Walmart Model Doesn't Work in Healthcare

- Tempted by Japan's Booming Market? Be Like Warren Buffett

MARKET WRAPS

Forex:

The dollar fell to a three-week low ahead of payrolls data.

A weaker-than-expected set of data would fuel rate-cut bets and weigh on yields and the dollar, while a positive surprise would prompt a scaling back of rate-cut expectations, which have been rising recently after soft data and Fed comments, Swissquote Bank said.

Stirling could gain on the prospect of improving economic conditions and political stability in the U.K. MUFG Bank said.

Labour's large majority could bring a "positive political stability growth premium" for the economy at a time when growth is beginning to accelerate as the energy price shock fades and positive real income growth returns.

It expects sterling to rise to 1.2980 against the dollar and the euro to fall to 0.8400 by the fourth quarter.

Bonds:

The 10-year Treasury yield is poised to move in the 4.137%-4.622% range in the near term, based on the weekly chart, UOB Global Economics & Markets Research said.

German Bund and Treasury yields are expected to fall moderately in the months to come as slowly receding inflation should enable both the ECB and the Fed to cut key interest rates by 25 basis points in the third quarter, Generali Investments said.

"However, a strong downward movement is unlikely."

Energy:

Oil was on track for weekly gains on signs of strong demand over the summer and hopes that the U.S. central bank will cut interest rates soon.

According to ANZ, sentiment this week was also supported by strong mobility indicators and U.S. inventory data in line with a tightening market balance, as well as intensifying geopolitical tensions in the Middle East.

Meanwhile, Saudi Arabia cut the price of all crude grades it sells to Asia, underlining the pressure that OPEC producers face amid robust non-OPEC supply growth.

Metals:

Gold futures gained and if U.S. data fails to impress the market, we would expect significant moves in the dollar index to the downside which means gold price could potentially move higher, Zaye Capital Markets said.

Copper also rose and BMI maintains its view that "the decline in U.S. dollar strength in the second half of 2024 will add support to base metal prices, however, a later Fed cut could limit upside."

TODAY'S TOP HEADLINES

Sam Bankman-Fried's Campaign Spending Spree Was a Family Affair

Two of Sam Bankman-Fried's former lieutenants face the prospect of prison time over their role in his campaign-spending operation. But other insiders from the FTX chief executive's orbit were closely involved with his political-donation binge, including members of his family, according to previously unreported emails seen by The Wall Street Journal.

Prosecutors say Bankman-Fried used funds stolen from FTX customers for more than $100 million in political contributions as part of a wide-ranging influence scheme ahead of the 2022 election. Two former FTX executives, Ryan Salame and Nishad Singh, have pleaded guilty to taking part in an illegal straw-donor scheme to mask the source of their contributions. Salame steered money to Republicans so the FTX chief executive wouldn't be associated with the contributions, while Singh backed liberal candidates, prosecutors say.

JPMorgan Warns Customers: Prepare to Pay for Checking Accounts

The head of America's biggest retail bank has a warning for its 86 million customers: prepare to pay for your bank accounts.

Marianne Lake runs Chase Bank, the sprawling franchise inside JPMorgan Chase that is the country's biggest bank for consumers and one of its biggest credit card issuers. Lake is warning that new rules that would cap overdraft and late fees will make everyday banking significantly more expensive for all Americans.

Shell to Take Up to $2 Billion Impairment Hit, Expects Weaker Gas Trading

Shell expects to book up to $2 billion in post-tax impairments after delaying construction of a major biofuels plant as European energy majors grapple with weak market conditions, while trading in its core gas division is set to fall.

The British energy giant said Friday that it expects to book an impairment after tax of between $1.5 billion and $2 billion mainly due to pausing construction of its biofuels facility in Rotterdam, as well as the divestment of its chemicals refinery in Singapore.

Ford Is Making a Comeback. It's Time to Buy the Stock.

If the stock market is a race, Ford Motor is losing. But it may be ready to start closing the gap with General Motors.

Ford's shares have advanced 5.6% this year, trailing GM's 30% gain and the S&P 500's 16% rise. Not much separates the two U.S. auto makers. Sales are growing at both. Ford is expected to generate some $22 billion in operating profit over 2024 and 2025, while GM is expected to generate $26 billion. Both are growing electric vehicle sales faster than the market.

Why Trump's running-mate choice could matter for oil companies, banks, tech and other sectors

As Donald Trump gets closer to announcing his pick for running mate, the presumptive Republican presidential nominee's decision on his No. 2 could end up having an impact on industries.

For example, one running-mate candidate - North Dakota Gov. Doug Burgum, whose state is a major oil and gas producer - could help Trump implement the fossil-fuel policies that the former president has long espoused. That's according to Jeff Hauser, founder and executive director of the Revolving Door Project, a watchdog organization that tracks corporate influence on the executive branch.

Biden Sits for Interview to Try to Bounce Back From Debate Debacle

WASHINGTON-President Biden will sit for a high-profile interview and court voters in a key battleground state Friday as his campaign ramps up advertising at a crucial stretch aimed at turning back a tide of doubts about his candidacy.

Biden allies see the coming days as key to the president's re-election hopes, with a recent Wall Street Journal poll showing former President Donald Trump opening up a bigger lead and voters' concerns about the president's fitness mounting after his disastrous debate last week.

Battleground Map Shows Signs of Expansion for Trump as Biden Struggles

The 2024 battleground map is showing signs of possible expansion into traditionally blue states as President Biden tries to salvage his re-election bid following a poor debate performance that has shaken and divided the Democratic Party and heightened concerns about his age.

Only about a half-dozen states were thought to be in play in the race between Biden and former President Donald Trump, but in the wake of their June 27 face-off there is some evidence that the Republican might be competitive in states that have backed Democrats in recent elections.Minnesota, New Hampshire and Virginia are among those being closely watched. Trump's campaign had been trying to make a play in Minnesota and Virginia-announcing plans to open offices in both states-even before Biden's debate flop in Atlanta.While Trump is seen as a long shot to win these states even after the debate, the idea that Biden might have to divert resources from swing states to hold the line in bluer ones is a warning sign for Democrats about his strength as the presumptive nominee."The debate would not be the only thing that would cause the map to stretch into Minnesota, but it could be the piece that really opened it up," said Blois Olson, who publishes a newsletter about Minnesota politics.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators (ET):

0830 Jun Labour Force Survey

1000 Jun Ivey Purchasing Managers Index

Stocks to Watch:

(MORE TO FOLLOW) Dow Jones Newswires

July 05, 2024 06:27 ET (10:27 GMT)

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