Aurelia Butler

LONDON (Reuters) – U.S. stock index futures rebounded ahead of the Wall Street open on Friday, keeping fears of a bear market at bay, though Twitter (NYSE:TWTR) shares slid after Elon Musk put his $44 billion deal for the company temporarily on hold.Markets are becoming anxious about the possibility of recession, with the S&P getting close to a bear market on Thursday, at nearly 20% off its January all-time high. [.N]In an interview late on Thursday, U.S. Federal Reserve Chair Jerome Powell said the battle to control inflation would “include some pain”. Powell repeated his expectation of half-percentage-point interest rate rises at each of the Fed’s next two policy meetings, while pledging that “we’re prepared to do more”.The war in Ukraine has aggravated supply chain disruptions and inflationary pressures already in place after more than two years of the COVID-19 pandemic, but stocks enjoyed a bounce on Friday.”There’s an awful lot of negative sentiment out there, we’re looking at a 40% chance of recession,” said Patrick Spencer, vice chairman of equities at Baird Investment Bank.”A lot of fund managers have cut their equity allocations and raised cash, though we think this is a correction rather than a bear market.”S&P futures jumped 1.09% after the S&P index dropped 0.13% overnight, though the index is still eyeing a sixth straight week of declines.Graphic: S&P 500 set for a sixth straight week of falls- https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoglxgvx/stx1305.PNGTwitter shares fell 17.7% to $37.10 in pre-market trading after Musk suspended his plans to buy the company, saying he was awaiting details in support of calculations showing spam and fake accounts represent less than 5% of users.”This is straight out of the Musk playbook, keeping shareholders on their toes,” said Michael Hewson, chief markets analyst at CMC Markets.MSCI’s world equity index rose 0.34% after hitting its lowest since November 2020 on Thursday, though it was heading for a 4% fall on the week, its sixth straight week of losses.European stocks rallied 1.44% and Britain’s FTSE 100 gained 1.64%.Markets are likely to experience a short-term rebound before resuming the sell-off which has sent Wall Street’s Nasdaq tech index down over 25% since the beginning for of the year, BofA analysts wrote in a weekly strategy note.Investors liquidated global equity funds worth $10.53 billion in the week ended May 11, compared with $1.65 billion of net selling in the previous week, according to Refinitiv Lipper.The U.S. dollar was unchanged at 104.77 against a basket of currencies, but remained close to the previous day’s 20-year highs due to safe-haven demand.Russia has bristled over Finland’s plan to apply for NATO membership, with Sweden potentially following suit. Moscow called Finland’s announcement hostile and threatened retaliation, including unspecified “military-technical” measures.The dollar rose 0.47% to 128.83 yen, while the euro was steady at $1.038, above Thursday’s five-year lows.Headline inflation in the euro zone will fall in the second half of the year but so-called core prices, which strip out food and energy, will keep rising, the European Central Bank’s vice-president Luis de Guindos said on Friday.Cryptocurrency bitcoin also turned higher, cracking through $30,000 after the collapse of TerraUSD, a so-called stablecoin, drove it to a 16-month low of around $25,400 on Thursday.”Some traders may see the sharp fall this month as an opportunity to buy the dip, but given the hugely volatile nature of the coins, the crypto house of cards could tumble further,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV).The moves higher in equities were mirrored in U.S. Treasuries, with the benchmark U.S. 10-year yield edging up to 2.8985% from a close of 2.817% on Thursday.The policy-sensitive 2-year yield was at 2.582%, from a close of 2.522%.German 10-year government bond yields edged up to 0.8870%. MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 1.6% from Thursday’s 22-month closing low. Japan’s Nikkei stock index jumped 2.64%.In China, the blue-chip CSI300 index was up 0.75% and Hong Kong’s Hang Seng rose 2.68%, encouraged by comments from Shanghai’s deputy mayor that the city may be able to start easing some tough COVID restrictions this month.Oil prices were headed for their first weekly loss in three weeks as worries about inflation and China’s COVID lockdowns slowing global growth offset concerns about dwindling supplies from Russia. [O/R]U.S. crude rose 1.99% to $108.10 a barrel, and global benchmark Brent crude was up 1.86% at $109.45 per barrel. Spot gold, which has been under pressure from the soaring dollar, fell 0.3% to a three-month low of $1,806.49 per ounce. [GOL/] More

(Reuters) – Gold fell on Friday and was headed for a fourth consecutive weekly decline pressured by overall strength in the dollar on prospects of aggressive interest rate hikes by the U.S. Federal Reserve.Spot gold fell 0.2% to $1,817.39 per ounce by 1039 GMT, after hitting $1,810.86, its lowest since Feb. 7. Bullion has lost over 3% so far this week. U.S. gold futures dropped 0.5% to $1,816.40 per ounce.The Fed being the most hawkish of major central banks and safe-haven flows into the greenback are weighing on gold, said Fawad Razaqzada, market analyst at City Index”Gold has not found any kind of support in times like now, when you’d expect haven demand to be strong… We’ve seen lots of support levels breakdown, which is discouraging for short-term traders,” Razaqzada added.The dollar index was bound for a sixth consecutive weekly gain, hovering near a 20-year high, as concerns persisted the Fed’s actions to tame inflationary pressures would crimp global economic growth. [USD/]Last week, the Fed increased its benchmark overnight interest rate by an aggressive half-a-percentage point. Rising U.S. interest rates and bond yields raise the opportunity cost of holding bullion. [US/] “Gold’s current trading level below $1,830 looks too cheap, yet any gains are likely to be capped with a series of rate hikes diminishing gold’s appeal as a non-yield bearing asset,” Kinesis Money analyst Rupert Rowling said in a note.Gold’s recent slide has wiped out most gains made in an initial rally driven by safe-haven demand amid Russia’s invasion of Ukraine, which had pushed prices to near-record levels in mid-March. Spot silver rose 0.6% to $20.78 per ounce, but has fallen about 7% this week, the most since late January.Platinum rose 0.7% to $950.06 and palladium gained 1.5% to $1,936.55 though both were on track for weekly losses. More

Global wheat production is likely to fall for the first time in four years, according to a closely watched US government forecast of the upcoming crop season, confirming fears of a further tightening of supply and rising food inflation. Wheat prices rose after the US Department of Agriculture issued its first world estimates for the 2022-23 crop season on Thursday. Futures for the new crop for September delivery traded in Chicago rallied as high as $12 a bushel, up 8 per cent on the week, before easing slightly. Euronext wheat futures traded at a two-month high of €411.50 a tonne.Grain traders, food companies and governments have been keeping a close eye on supplies since Russia’s invasion of Ukraine disrupted farming in the country, one of the top five wheat exporters. The USDA predicted on Thursday that Ukraine’s wheat production would fall by a larger than expected 35 per cent from the year before, to 21.5mn tonnes. The USDA forecast 2022-23 total global wheat output at 774.8mn tonnes, the first decline since the 2018-19 season. Global buffer stocks are expected at 267mn tonnes, down for the second year in a row and the lowest level in six years. The war in Ukraine had exposed the interconnected nature and fragility of agricultural systems, with serious consequences for food security, the UN World Food Programme said in reference to a report on the global food crisis published earlier this month. The number of people facing acute food insecurity totalled a record 193mn in 2021, the WFP said. The US supply estimates and the rise in wheat prices on Thursday pointed to continuing food inflation at a time when the UN Food and Agriculture Organization’s food price index is already at record highs. Wheat output in China, the world’s largest producer, was forecast to fall 1.4 per cent to 135mn tonnes, the USDA said. The agency said production is also likely to fall marginally in important exporters including the EU, Argentina and Australia. Abnormally dry or hot weather has raised concerns about smaller crops in producing countries such as France and India, while drought conditions in the US and Canada are also worrying farmers, analysts said. “The world requires good weather globally but we’re not getting it,” said Matt Ammerman at commodity brokers StoneX. The USDA did, however, forecast that Canadian production would bounce back after a scorching heatwave last year. Output in the US, a leading exporter, is predicted to rise 5 per cent as a rebound in spring-planted wheat offsets an expected decline in the impending harvest of winter wheat. The outlook gave a forecast for Russian production of 80mn tonnes, far lower than Moscow’s own estimate of 87mn and the market consensus of about 85mn, “making the report very bullish on wheat”, said Carlos Mera at Rabobank. More

Investing.com — Elon Musk put his Twitter (NYSE:TWTR) bid on hold, ostensibly due to due diligence reasons. Financing problems may also be behind the announcement. Crypto rebounds as Tether withstands a bout of intense demand for redemptions. Stocks and risk assets in general are also set to open higher, but are still on course for a losing week. New data show the scale of China’s economic slowdown in April, and G7 ministers meet to discuss raising the pressure on Russia. Here’s what you need to know in financial markets on Friday, 13th May.1. Crypto reboundCryptocurrencies rallied violently as the panic triggered by the collapse of algorithmic stablecoin TerraUSD and its associated LUNA token faded.Confidence returned as the world’s largest stablecoin network Tether successfully negotiated a period of intense demand for redemptions as crypto holders rushed to convert their assets back into dollars or other fiat currency. In contrast to TerraUSD, Tether is backed by real assets, over 40% of which is highly-liquid and risk-free Treasury bills.Tether returned to trading around its 1:1 peg with the dollar in early dealings in Europe. Bitcoin surged by as much as 13% before paring its gains to be up 8.6% at $30,409 as of 6:15 AM ET. It’s still down around 16% on the week, however, after a rough few days for risk assets in general. TerraUSD’s network tried to resume trading overnight but quickly shut down again.2. Musk puts Twitter deal on holdElon Musk said his bid for Twitter is “temporarily on hold”. The Tesla (NASDAQ:TSLA) CEO said that the move was a response to a filing by Twitter on Thursday that claimed fewer than 5% of the accounts on its network are spam bots or vehicles for fake news. Musk has indicated he thinks the proportion is much higher and has made their removal one of his top priorities.However, the arithmetic behind Musk’s leveraged buyout offer had become more complicated as the value of his Tesla shares has fallen some 16% in the last week. They’re now nearly 30% of this year’s high. Musk was set to borrow some $12 billion against his shareholding through a margin loan under the original terms of the deal.Twitter stock fell over 20% premarket in response to the news, while Tesla stock rose 4.8% as the risk of a significant equity overhang faded.  3. Stocks set to open higher on short-covering; chipmakers in focus after price hike reportU.S. stocks are set to open higher later, with some short-covering overdue at the end of a volatile week. Sentiment improved toward the end of the day already on Thursday, as Federal Reserve Chair Jerome Powell again pushed back against the idea of raising key interest rates by 75 basis points at the central bank’s next policy meeting.By 6:20 AM ET, Dow Jones futures were up 216 points, or 0.7%, while S&P 500 futures were up 1.0% and Nasdaq 100 futures were up 1.6%. That would still leave them on course for losses of between 2.8% and 4.2% this week.Stocks likely to be in focus later include chipmakers, after Bloomberg reported that industry leader Samsung (KS:005930) is looking to put prices for its semiconductors up by 20%, while Duolingo (NASDAQ:DUOL) stock is bouncing 17% in premarket after its quarterly update.Also due to report Friday are Jessica Alba’s Honest Company (NASDAQ:HNST), while Honda (NYSE:HMC) ADRs were up 3.9%, after the Japanese auto giant put out better-than-expected earnings – even if it cut its guidance at the same time.4. Chinese loan growth slows sharplyChina’s credit growth slowed sharply in April under the impact of spreading lockdowns to stop the spread of COVID-19. These affected nearly 400 million people during the month, according to some estimates, including the key economic hub of Shanghai, much of which remains under severe restrictions. New loans fell to 645 billion yuan from over 3.1 billion yuan in March, while the broader credit aggregate known as Total Social Financing also collapsed to its slowest growth since the start of the pandemic. The data underline the scale of the slowdown in China, where surveys indicate that both manufacturing and services activity fell in April. The lockdowns are doing nothing to help the balance sheets of the country’s beleaguered real estate developers: Shimao Property (HK:0813), one of the largest, said its contracted sales in April were down 76% from a year earlier, a stark illustration of how the sector’s ability to service its debt load is deteriorating.5. Oil rises further amid fears of Russian output hit; Baker Hughes rig count dueCrude oil prices extended Thursday’s gains as G7 foreign ministers met to coordinate raising the diplomatic and economic pressure on Russia to abandon its faltering invasion of Ukraine.By 6:30 AM ET, U.S. crude futures were up 1.7% at $017.99 a barrel, while Brent futures were up 1.8% at $109.36 a barrel.The International Energy Agency estimated on Thursday that Russian oil output could fall to some 1.6 million barrels a day below its pre-war level by June, due to the difficulties of rearranging the large part of its oil export trade due to western sanctions.Baker Hughes’ rig count and the CFTC’s net positioning data are due later. More

How well did you keep up with the news this week? Take our quiz. Elon Musk tweeted this morning that he is putting his $44bn takeover of Twitter “temporarily on hold” pending details supporting the calculation that spam and fake accounts represented fewer than 5 per cent of users.After the tweet appeared on the billionaire’s Twitter page shares in the social media company fell nearly 20 per cent to $37.10 in pre-market trading as investors worried the deal to take the company private would collapse. Musk offered $54.20 per share for the company last month but the shares have failed to reach that level, suggesting investors remain sceptical that the deal will get done.Twitter, which has yet to respond to the development, yesterday announced an immediate hiring freeze, cost-cutting measures and the departure of two of its senior leaders as it prepared for the takeover by the Tesla chief executive.This is a developing story. For updates go to FT.com.Thanks for reading. FirstFT US will be back in your inbox on Monday morning. For now, here’s the rest of the day’s news — GordonFive more stories in the newsCrypto industry shaken as Tether’s dollar peg snaps The $1.3tn cryptocurrency industry was shaken yesterday after the biggest operator in the so-called stablecoin market failed to maintain its link with the dollar, leading to a warning of the growing threat to the broader financial sector.Go deeper: Markets editor Katie Martin says fund managers in traditional finance need to pay attention to the recent ructions in the crypto sector.1. Jay Powell warns that taming US inflation will cause ‘some pain’ The Federal Reserve chair yesterday warned that bringing inflation down to the US central bank’s target of 2 per cent will cause “some pain”, in his most bearish comments to date. He reiterated the Fed’s commitment to bringing down inflation and underscored the challenge of doing so without triggering job losses and a possible recession.2. US to increase baby formula imports to tackle national shortage The White House announced officials were working on ways to remove barriers to increase imports of baby formula as families report not being able to feed their children. Republicans have been criticising the Biden administration for days, saying it is not doing enough to alleviate the supply shortage.3. North Korea reports first Covid-19 death A day after the isolated country confirmed the presence of coronavirus within its borders for the first time, it said today that six people have now died from the disease and 350,000 have received treatment. State news agency KCNA reported that 18,000 people had been identified as having symptoms and 187,800 were in quarantine.5. The supermassive black hole at centre of Milky Way Astronomers have unveiled the first images of the closest black hole to Earth, located at the centre of the Milky Way galaxy, from which they hope to glean new information about the mysterious celestial bodies.

This image of the supermassive black hole Sagittarius A* is the product of pooling data from a global network of eight radio observatories © EHT Collaboration

The days aheadEconomic data The University of Michigan will release the results of its consumer sentiment index for May. Pessimism has become more pronounced in recent months, with the index largely trending downward since July 2021. Separately, the Bureau of Labor Statistics will release imports and export prices for April which are expected to increase slightly compared with March. Monetary policy Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, will speak about energy prices and their effect on inflation. The Federal Reserve Bank of New York will host a symposium on climate change and macroeconomics.Earnings: Biotech company EQRX will report before the market opens, along with video game maker Gravity and The Honest Company, a consumer goods business founded by Jessica Alba.Outlook for markets Global stocks were on track for their sixth straight week of falls despite expected gains for US equities when Wall Street opens later. Investors have been shaken in recent sessions by the speed of planned increases in US interest rates by the Federal Reserve and an economic slowdown in China. Swedish parliament debates joining Nato The ruling Social Democrats will make a decision on Sunday whether to join Nato. A formal application is expected next week.Sign-up to the Week Ahead newsletter for a guide to what’s coming up. Sent every Sunday, it previews the economic, political and corporate agenda around the world.What else we’re readingWilliam Burns on the new world disorder Fifty years after Nixon’s cold war coup, the US is facing a new global realignment, according to the head of the CIA. Edward Luce, who interviewed Burns at the FTWeekend Festival, writes on the foreign policy challenges for the US for the Weekend magazine. Plus: Simon Kuper argues that although democracy might be in crisis, autocracy certainly is.Reasons why the tech stock crash may be far from over West Coast editor Richard Waters says there are reasons to suggest there is more pain to come for investors in technology companies. He says if you value the sector on multiples of revenue, a favourite gauge used by growth investors, there is ample room for further declines.Can Ukraine push out the Russian army? Some former Ukrainian officials believe the country’s army could force Russian troops to leave before the end of the year, including from the eastern Donbas region. “If we have everything we needed by June, we could get them out by October,” said Andriy Zagorodnyuk, a former defence minister. Dublin can no longer treat Irish unity as a distant aspiration With a new generation in Ireland squeezed by inflation and an acute housing shortage, the days when Sinn Féin represented the ballot box placed alongside the IRA’s Armalite are ancient history. But to be clear, Philip Stephens writes, Irish unity is not suddenly around the corner. Space station shows adversaries can — and should — collaborate The International Space Station is the world’s most expensive and successful infrastructure project. This, says Sinead O’Sullivan of Harvard Business School, is a landmark example of the strategic deployment of “co-opetition” — collaborating with competitors to achieve goals you could not reach alone. Frieze New York 2022As the art fair prepares to return to The Shed in Manhattan, we speak to this year’s festival director Christine Messineo who has designed a more intimate experience for participants.

Frieze New York at The Shed in 2021 © Casey Kelbaugh/Frieze More