EMEA Morning Briefing : Stock Futures Rise; Trump’s China Trip in Focus
MARKET WRAPS
Watch For:
Eurozone GDP, industrial production; France unemployment; trading updates from Siemens, Allianz, Deutsche Telekom, Merck, Hapag-Lloyd, RWE, ABN Amro, E.ON, TUI, Alstom
Opening Call:
European stock futures rose early Wednesday. Asian stock benchmarks declined; the dollar and Treasury yields were little changed; oil fell and gold rose.
Equities:
Stock futures point to a higher open in Europe early Wednesday as the upcoming Trump-Xi summit comes into view.
The meeting is likely to bear little fruit, Danske Bank said, anticipating minor impact on financial markets in the near term. President Trump has neither the incentives nor the means to pressure China, with his focus remaining on the Iran War and a court ruling that constrains his tariff weapon.
China might agree to buy more American agricultural products, extend the tariff truce and establish trade and investment boards that would be largely symbolic, the bank added.
Forex:
“While UK political instability and rising gilt yields would ordinarily be expected to weigh on sterling, recent price action suggests broader USD sentiment and swings in global risk appetite remain the dominant drivers for now,” said Forex.com’s David Scutt.
Deteriorating political fundamentals are being offset by a market still reluctant to embrace the dollar even amid a context of higher crude prices and geopolitical tensions, he added.
Bonds:
Tuesday’s hot readout on U.S. consumer prices is intensifying Wall Street’s anxiety about inflation.
The gap between the yields of ordinary U.S. Treasurys and TIPS-known as the break-even rate-recently hit its highest level since October 2022, according to Federal Reserve data, suggesting that investors expect annual inflation to average around 2.7% over the next five years.
Jan Nevruzi, U.S. rates strategist at TD Securities, said that he would be a little more concerned if the 10-year break-even rate reached 2.6%, and even then, it isn’t clear if the Fed should worry too much if the increase is being driven by energy prices.
Energy:
Oil prices fell in Asia after settling higher overnight. There’s still room for oil prices to climb if the Iran conflict worsens, said Kudotrade’s Konstantinos Chrysikos. The extended shutdown of the Strait of Hormuz continues to disrupt global flows of crude oil, Chrysikos added.
Metals:
Gold edged higher early Wednesday after U.S. consumer prices gained in April.
Structurally stronger safe-haven demand, particularly in response to Fed independence concerns and aggressive U.S. tariff policy, could help gold find support around $6,000 an ounce by year-end, said Commonwealth Bank of Australia’s Vivek Dhar.
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Copper rose in Asia amid signs of stronger Chinese demand and mounting supply risks, ANZ said. Recent economic data showing better-than-expected industrial activity in China, which has seen only limited impact from the Iran war, has boosted market sentiment.
The rally in AI stocks has also strengthened expectations for further investment in data centers, supporting copper demand. Meanwhile, concerns over a looming supply crunch continue to build as disruptions to sulphuric acid supplies from the Persian Gulf persist, adding upward pressure to prices.
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Iron ore fell slightly in Asia. Molten iron output, a strong signal of iron ore demand, remains steady, Nanhua Futures said. However, further demand upside is limited due to a seasonal slowdown. While port stocks are still falling, the current price level looks stretched, Nanhua added.
TODAY’S TOP HEADLINES
Wall Street Is Getting More Anxious About Long-Term Inflation
Tuesday’s hot readout on consumer prices is intensifying Wall Street’s anxiety about inflation.
Even before the latest release of the consumer-price index, inflation expectations had been climbing, a potential trouble spot in a market where stocks have largely shrugged off the U.S.-Iran conflict and the resulting energy shock.
What Trump and Xi Want to Achieve at Their High-Stakes Summit
BEIJING-President Trump touches down here on Wednesday for a two-day summit with Xi Jinping, where he will be face-to-face with the Chinese leader for the seventh time, reuniting with a man who has become a pen pal of sorts.
The leaders of the world’s two most powerful nations have corresponded through letters, according to people familiar with the practice, one of many ways that they have sought to build a personal rapport despite longstanding tensions between Washington and Beijing and their positions overseeing vastly different political systems.
Trump Can Keep Collecting Global 10% Tariffs After Appeals Court Stays Decision
A federal appeals court has granted the Trump administration’s request to pause last week’s ruling by the Court of International Trade declaring Trump’s latest global tariffs unlawful.
The decision last week affected tariffs paid by two small businesses and Washington state. The Trump administration appealed the trade court’s ruling, and today the appeals court granted the administration a temporary but immediate stay “until further notice” while it considers the administration’s appeal of that ruling.
How a Trump Loyalist Manages One of the Toughest Jobs in Diplomacy
BRUSSELS-Building bridges between the U.S. and Europe these days isn’t easy. Andrew Puzder, America’s envoy to Brussels, is trying.
The challenges are enormous. Trans-Atlantic tensions have rarely, if ever, been this bad. There is a deep ideological divide between Trump administration officials and many in Brussels.
Private-Credit Blowup Leaves $1.7 Billion Missing, Six Ferraris Found
U.K. mortgage lender Market Financial Solutions left Barclays, HSBC and Apollo Global Management facing hundreds of millions of dollars in potential losses when it collapsed in February.
Now, bankruptcy administrators allege its owner, Paresh Raja, moved around $550 million of MFS-borrowed funds into personal bank accounts and then bought luxury cars including six Ferraris and three Rolls-Royces.
SpaceX and Google Are in Talks to Launch Data Centers in Orbit
Google is in talks with SpaceX for a rocket-launch deal as the search giant expands its own efforts to put orbital data centers in space, according to people familiar with the discussions.
A launch deal would put the two companies in partnership as they gear up to compete on orbital data centers, an unproven technology that SpaceX Chief Executive Elon Musk has said is the next frontier for his rocket company.
OpenAI CEO Sam Altman Defends His Leadership, Personal Investing at Trial
OpenAI Chief Executive Sam Altman offered a calm defense of his leadership of OpenAI in the third week of a blockbuster trial brought by Elon Musk that could shape the future of artificial intelligence.
When peppered with questions by Elon Musk’s attorney, Steven Molo, who tried to paint him as a liar, Altman pushed back. He said he misspoke in 2023 when he told a U.S. Senate committee that he had “no equity” in OpenAI, and acknowledged that he holds a “passive stake” through Y Combinator, a venture capital fund he ran before becoming CEO of OpenAI.
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Expected Major Events for Wednesday
04:30/NED: Apr CPI
05:00/FIN: Mar Balance of Payments
05:00/FIN: Apr CPI
05:30/FRA: 1Q ILO Unemployment and Labour Market-related indicators
06:00/ROM: Apr CPI
06:00/ROM: Mar Industrial production
06:00/SWE: Apr CPI
06:00/ROM: 1Q Evolution of GDP (estimated data)
06:00/GER: Apr WPI
06:30/HUN: Mar Construction
06:45/FRA: Apr CPI
07:00/CZE: Apr CPI
07:00/CZE: Mar Import & export price indices
07:00/TUR: Mar Balance of Payments
07:00/SVK: 1Q Flash estimate of GDP
07:00/SVK: 1Q Flash estimate of total employment
08:00/BUL: Feb Trade with EU Member States – preliminary data
08:00/BUL: Mar Trade with third countries – preliminary data
08:00/EU: Apr Long term interest rates statistics
08:00/FRA: May IEA Oil Market Report
08:00/BUL: 1Q Flash Estimate GDP
09:00/POR: Apr CPI
09:00/EU: Mar Industrial Production
09:00/CYP: 1Q GDP (Flash Estimate)
09:00/EU: 1Q Flash Estimate GDP
09:00/EU: 1Q Flash estimate employment EU and euro area
16:59/GER: Mar Balance of Payments
16:59/AUT: May OPEC Monthly Oil Market Report
23:01/UK: Apr RICS Residential Market Survey
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-13-26 0019ET
