US EARLY MORNING: US equity futures are softer; FOMC minutes ahead

US equity futures are a little below neutral (ES -0.3%, NQ -0.3%; RTY -0.3%; YM -0.3%), Treasuries are little changed, and the Dollar Index is a touch softer. Crude futures are higher after Tuesday’s plunge. Recession fears drove yields lower on Tuesday, but ultimately buoyed duration sensitive sectors like technology, leaving the equity complex mixed by the close. Overnight, equity futures slipped, but picked-up after a constructive European cash equity open. However, the European price action has been choppy too, leaving US futures softer. Treasury yields are around flattish, with a slight steepening bias. Crude benchmarks are also trading with gains after a rough session on Tuesday, where WTI slid over USD 8, settling below USD 100/bbl, while its Brent counterpart slumped by more than USD 10. Goldman Sachs told its clients that it views Tuesday's moves as being driven by growing recession fears in the face of low trading liquidity, with technicals exacerbating the sell-off. "The declines in prices and refining margins since mid-June are now equivalent to the oil market pricing in an 1.1% downward revision to 2H22-2023 global GDP growth expectations," the bank wrote, "we believe this move has overshot - while risks of a future recession are growing, key to our bullish view is that the current oil deficit remains unresolved, with demand destruction through high prices the only solver left as still declining inventories approach critically low levels." Meanwhile, the US Day Ahead has the ISM Services PMI data, JOLTs, and FOMC meeting minutes (our primer is here). Fed’s Williams is also on the speaker’s docket, but the subject of his talk suggests he may stay clear of monetary policy remarks. After the US close, the API will report weekly crude inventories. Full Day Ahead here.

EQUITY NEWS:

TECH:

• 
  ASML Holding N.V. (ASML) - US is pushing the Netherlands to ban ASML from selling mainstream technology essential in making a large chunk of the world’s chips to China, expanding its campaign to curb the country’s rise, Bloomberg reported. The report said that if the Dutch agreed, it would significantly broaden the range and class of chipmaking gear forbidden from heading to China, potentially dealing a serious blow to Chinese chipmakers.


• 
  Alibaba Group Holding Limited (BABA) - Broker estimates for the retailer’s earnings for the next 12 months has climbed more than 7% from a three-year low in late May, as a crackdown on the tech sector may be drawing to a close, according to data compiled by Bloomberg, with more than 10 brokerages reinforced their buy calls over the past week.


• 
  Uber Technologies, Inc. (UBER) - Uber to relaunch ride-hailing operations in Israel with licensed cab drivers, Times of Israel reported. The company will compete for passengers and drivers with Gett and Yango, in a return to the local market 5 years after being restricted.

CONSUMER DISCRETIONARY:

• 
  Amazon, Inc. (AMZN) - Amazon will share more data with rivals and offer buyers a wider choice of products, as part of a deal with EU antitrust regulators that will close two of the most high-profile probes in Brussels, FT reported, adding that details of the deal were being shared with Amazon’s rivals to make sure that they would remove competition concerns before regulators can announce an agreement. Elsewhere, Germany's Cartel Office said Amazon was now subject to stricter antitrust rules due to its market position.


• 
  Just Eat Takeaway (JSTTY), Amazon, Inc. (AMZN) - Just Eat and Amazon enter into a commercial agreement in the US, offering US Prime members a one-year membership for Grubhub+. Will have a neutral impact on Grubhub in 2022, but accretive to earnings and cash flow from 2023.

CONSUMER STAPLES:

• 
  Altria Group, Inc. (MO) - The FDA said it would allow Juul Labs Inc. to stay on the US market while the e-cigarette maker appeals the agency’s ban on its products, MarketWatch reported. NOTE: Altria owns a 35% stake in Juul.


• 
  Unilever PLC (UL) - Ben & Jerry’s sued its parent Unilever Plc to block the sale of its Israeli business to a local licensee, saying it was inconsistent with its values to sell its ice cream in the occupied West Bank, Reuters reported.


• 
  Walmart Inc. (WMT) - Walmart tells suppliers that new fuel and pickup fees are coming, WSJ reports. Walmart said that the new charges were going into effect August 1st, and were in response to higher transportation costs, a move recently made by some other retailers like Amazon.

COMMUNICATIONS:

• 
  Netflix, Inc. (NFLX) - Announced that the latest season of “Stranger Things” has pushed total viewership for the series to more than 1.15bln hours, Reuters reported, becoming the most popular English-language series on Netflix.


• 
  Twitter, Inc. (TWTR) - Twitter has mounted a legal challenge in India against “several” government orders to take down content, BBC reported. Twitter was reacting to a June letter from the government warning of “serious consequences” of non-compliance of such orders.


• 
  Ubisoft Entertainment SA (UBSFY) - Announced the return of two Ubisoft Forward events on July 7th (showcasing Skull and Bones gameplay) and September 10th (a multi-game showcase).

HEALTH CARE:

• 
  Biogen Inc. (BIIB), Eisai Co., Ltd. (ESALY) - FDA accepts and grants priority review for Eisai’s biologics license application of Lecanemab for early Alzheimer’s disease under the accelerated approval pathway. Decision due by January.


• 
  Roche (RHHBY) - FDA has granted a priority review to Lunsumio, for people with relapsed or refractory follicular lymphoma.

ENERGY:

• 
  Exxon Mobil Corporation (XOM), Oil Majors - Wall Street analysts sharply raised estimates for Exxon’s Q2 results after it last week projected it could almost double Q1 earnings. Exxon’s announcement signalled strong results ahead by oil companies and refiners, Reuters reported, and brought renewed criticism from the White House and fresh calls for a windfall profit tax by lawmakers.


• 
  Norway Supply - Norwegian government intervened in the industrial actions impacting oil and gas output. The government imposed a forced settlement, and as such, striking members will return to work as soon as possible.


• 
  TechnipFMC plc (FTI) - Signed a Letter of Intent with an Equinor subsidiary for an integrated Front End Engineering and Design study on an offshore project in Brazil (FTI considers a major contract to be over USD 1.0bln).

INDUSTRIALS:

• 
  Southwest Airlines Co. (LUV), Spirit Airlines, Inc. (SAVE) - The DoT conditionally reassigned 16 peak-hour runway timings, previously operated by Southwest Airlines, at Newark-Liberty International Airport to Spirit Airlines. DoT said the action secures low-cost service options for Newark customers, improves competition in the market, which was affected when Southwest Airlines discontinued service there.


• 
  Tesla, Inc. (TSLA) - Two laid-off Tesla workers filed an emergency motion to stop the automaker for allegedly seeking separation agreements for far less severance than legally required, Reuters reported. Tesla has been asking employees to agree to release it of all claims, in exchange for a severance of just one or two weeks’ pay and benefits, the motion alleges.


• 
  Lockheed Martin Corporation (LMT) - Was awarded a USD 185.9mln Navy contract modification, and another USD 22.6mln Navy contract modification.


• 
  Rocket Lab USA, Inc. (RKLB) - Announced its next two launches will be responsive space missions for the US Government’s National Reconnaissance Office.


• 
  Kornit Digital Ltd. (KRNT) - Fell by 20% after updating its Q2 outlook. Sees Q2 revenue between UDS 56.4-59.4mln (exp. 91.4mln), sees Q3 revenue at or above Q2 levels (exp. 102.3mln). Said that the overall re-calibration of e-commerce growth, macro headwinds which accelerated in the last few weeks of the quarter, as well as delays in the completion of customer production facilities, resulted in a significantly slower pace of direct-to-garment systems orders in Q2. Said it has entered a period where some customers were working through excess capacity built throughout the pandemic.

REAL ESTATE:

• 
  Life Storage, Inc. (LSI) - Raises quarterly dividend from USD 1.00 to USD 1.0/shr.

06 Jul 2022 - 09:45- Research Sheet- Source: Newsquawk