1. Final countdown to Fed decision
The Federal Reserve is set to deliver a fresh monetary policy announcement following the end of its two-day meeting on Wednesday, with investors keen to find out if the central bank will push pause on its long-running rate-hiking cycle or increase borrowing costs further.
Most estimates point to the former, particularly after data on Tuesday showed that headline inflation growth in the world’s largest economy cooled by more than expected in May. At 4.0% on an annual basis, the consumer price index stood at its lowest level since early 2021 and has now eased for eleven months straight.
But the figure is still well above the Fed’s stated 2% target and the labor market is displaying signs of strength, suggesting that while Fed officials may choose to halt rate increases, they may flag that the move is only temporary.
2. Futures mixed with Fed announcement ahead
U.S. stock futures were mixed on Wednesday as investors awaited the latest policy decision from the Federal Reserve.
At 04:51 ET (08:51 GMT), the Dow futures contract slipped by 35 points or 0.10%, S&P 500 futures added 9 points or 0.19%, and Nasdaq 100 futures rose by 41 points or 0.27%.
The main indices all posted solid gains on Tuesday following the weaker-than-anticipated U.S. inflation data. The Dow Jones Industrial Average increased by 0.43%, the S&P 500 jumped by 0.69%, and the tech-heavy Nasdaq Composite climbed 0.83%.
According to Investing.com’s Fed Rate Monitor Tool, there is a more than 91% chance that the Fed will keep its benchmark interest rate unchanged at a range of 5.00% to 5.25%. Meanwhile, the probability that the bank chooses to hike borrowing costs by a quarter basis point stands at under 10%.
3. Federal court temporarily blocks Microsoft-Activision merger
A federal court in California has ruled in favor of a request from U.S. antitrust regulators to place a temporary block on the completion of Microsoft’s (NASDAQ:MSFT) massive $69 billion merger with Activision Blizzard (NASDAQ:ATVI).
The FTC had previously asked the court to order a preliminary injunction on a final tie-up until after the agency has carried out its own administrative review — due to start later this year — over the legality of the deal.
A judge in a U.S. district court in California subsequently placed the merger on hold pending a two-day evidentiary hearing next week. At that hearing, a federal court will choose whether the preliminary injunction is warranted.
The FTC has already signaled that it believes the deal, the largest ever in the video games industry, will lessen competition. Microsoft has disagreed, saying it will be a boon for both gamers and companies alike.
Microsoft and Activision must submit their legal arguments against the preliminary injunction by Friday. The FTC will then have until June 20 to respond.
4. Nvidia closes with over $1T valuation
Shares in Nvidia (NASDAQ:NVDA) edged up in premarket dealmaking after a milestone session that saw the chipmaking giant’s valuation end the trading day at above $1T for the first time.
California-based Nvidia first cracked the vaunted Trillion Dollar Club late last month, when the stock price surpassed the threshold level of $404.87. However, they had yet to close above that mark until yesterday.
The company has been a massive beneficiary of a boom in interest in artificial intelligence, with the graphics cards maker saying that it expects the trend to power robust demand. The optimism has helped spur other firms with links to automated technology.
Nvidia is one of a number of major tech industry players, including Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and Microsoft, to reach a trillion-dollar valuation.
5. Shell outlines plan to boost dividend
Shell (LON:SHEL) has said it will aim to lift its dividend and cut spending as chief executive Wael Sawan looks to restore wavering investor confidence in the business through “performance, discipline and simplification.”
Europe’s largest energy company said it will raise overall shareholder distributions to 30% to 40% of cash flow from operations, up from its prior level of 20% to 30%. As a part of this plan, Shell will bump up its dividend by 15% from the second quarter, while the rate of share buybacks will go up to at least $5B for the second half of 2023.
Meanwhile, capital expenditures will be slashed to $22B to $25B per year for 2024 and 2025, down from a range of $23B to $27B planned for this year.
Shell will present these proposals at an investor conference in New York later today. According to Reuters, Sawan has been keen to support the company’s stock price at a time when shareholders have been skeptical of its plans to shift away from oil and gas in favor of its renewables and low-carbon businesses.
Source: Economy - investing.com
