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Major U.S. stock indexes down slightly
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Materials down most among S&P sectors; comm svcs leads gainers
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Euro STOXX 600 index down ~0.8%
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Dollar ~flat; gold slips; crude up ~3%; bitcoin down
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U.S. 10-Year Treasury yield edges up to ~3.90%
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GLOBAL MINERS: TROUBLES ARE NOT OVER, SAYS JEFFERIES (1118 EDT/1518 GMT)
Jefferies foresees another tough earnings season for metals and miners as growing fears of a weaker economic recovery in China and the "perpetual threat" of Federal Reserve rate hikes still take a toll.
With global growth concerns hurting metals prices, the broker paints a challenging second-quarter scenario for the sector, with production misses, margin compression and smaller-than-expected capital returns. Consensus estimates continue to be too high in its view.
Possible mergers and acquisitions can bring a sigh of relief, but cyclical risks still overshadow the potential positives.
The directionless volatility with mining equities acts as a deterrent to investments in the sector, as it keeps traders away even if they believe there is value in these shares, according to Jefferies.
A greater-than-expected stimulus from Chinese government that leads to stability in the housing market would be a short-term positive factor for mining shares, as investors still have not priced it in.
Also, as mining equities are discounting a weakening U.S. economy, another key factor is how much further the Fed will push up interest rates.
A soft landing with inflation trending to below 3% would be ideal, but this "Goldilocks" scenario does not reflect Jefferies' view.
First Quantum and Antofagasta stand out among its preferred copper miners, while on the iron ore front, its picks are Rio and Vale.
(Matteo Allievi)
ARE FED MEETING MINUTES A TRADING EVENT, OR A SNOOZE? (1030 EDT/1430 GMT)
The Federal Reserve is due this afternoon to release minutes from its June 13-14 meeting, but according to Deutsche Bank that may not be that exciting for markets.
Analysts at the bank looked at the volatility in various asset prices on Fed meeting and minutes days since 2020, compared to other trading days. They found that the days when the Fed released its meeting minutes had slightly lower daily volatility, though the differences aren’t significant.
This compares to the meeting days, which for the past three years “have been associated with significantly higher volatility in rates, risk assets, and the dollar.”
The bank thus concludes that “the overall message is that one shouldn’t pay a minutes volatility premium.”
The Fed left interest rates unchanged in June but signaled in new projections that borrowing costs may still need to rise by as much as half of a percentage point by the end of this year.
WALL STREET DIPS BEFORE FED MINUTES (1000 EDT/1400 GMT)
Major U.S. stock indexes were down slightly in early trading Wednesday as investors await minutes from the last Federal Reserve policy meeting.
Investors are hoping to get some insights on the outlook for interest rates from the minutes. Traders are pricing in an 85.2% chance that the Fed will raise rates by another quarter-point in July.
The minutes are due at 1400 EDT (1800 GMT).
The materials sector is down the most of any major S&P 500 sector, followed by financials.
The FANG index is slightly green.
Here is the early market snapshot:
(Caroline Valetkevitch)
NASDAQ COMPOSITE: X MARKS THE SPOT? (0900 EDT/1300 GMT)
The Nasdaq Composite just saw its biggest first-six month start to a year since 1983. However, things may be about to turn a bit dicey given that the tech=laden index is now up against a formidable resistance zone:
The IXIC hit a high on Monday at 13,839.092 before closing at 13,816.773.
Inn terms of resistance, through this Friday, there is a weekly Gann Line intersection around 13,835. Gann Lines are trend lines running at certain angles off significant highs and lows. Intersections of these lines can be especially important in signaling the potential for trend change.
The June 16 high at 13,864.061 presents an additional hurdle as do several Fibonacci retracement levels: the 61.8% retracement of the November 2021-October 2022 decline is at 13,873.09 and the 23.6% retracement of the March 2020-November 2021 advance is at 13,951.158.
The Composite will need to clear these levels to continue its strong advance.
Meanwhile, with e-mini Nasdaq 100 futures dipping about 0.6% in premarket trade, the IXIC is likely to step back at the open.
The June 30 gap requires a dip to 13,618.529 for a fill. The June 26 low was at 13,334.
On a deeper setback, the Aug. 16, 2022 high was at 13,181 and the 50% retracement of the November 2021-October 2022 decline is at 13,150.
The rising 50-day moving average ended Monday around 12,850.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
