Here are five things you must know for Wednesday, June 1:
1. -- Stock Futures Edge Higher, But Inflation Worries Linger
U.S. equity futures edged modestly higher Wednesday, while the dollar extended gains against its global peers, as markets continue to gauge the impact of soaring inflation on global growth prospects and question central banks' ability to tame it.
President Joe Biden met with Federal Reserve Chairman Jerome Powell in the White House yesterday, in fact, to plot a course for the world's largest economy out of its inflation trap, which is hammering consumer confidence and squeezing discretionary budgets.
Biden vowed to "respect the Fed’s independence" but the messaging of the meeting -- including photographs from the Oval Office -- left observers in little doubt as to the importance of inflation on both the President's economic agenda and the Democrats mid-term election prospects in November.
In the meantime, data from Europe showed another slowdown in manufacturing activity last month, as surging input costs, supply chain disruptions and softening demand took their tool on the region's most important economic driver.
European stocks were marked modestly lower as a result, with the Stoxx 600 down 0.27% in early Frankfurt trading following a 0.5% slide for the region-wide MSCI ex-Japan index in overnight trading.
Here in the U.S., investors will look to a Bank of Canada interest rate decision at 10:00 am Eastern time as the central bank looks to slow inflation, and a red-hot housing market, ahead of planned rate hikes from the Federal Reserve later this month.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 115 point opening bell gain while those linked the S&P 500 were priced for a 2 point bump. Futures linked to the tech-focused Nasdaq are indicating a 30 point opening bell slip.
2. -- Fed Begins 'Quantitative Tightening' With Balance Sheet Run-Off
The Federal Reserve will begin to deploy one its more powerful, but lesser-known, inflation-fighting tools Tuesday as the central bank begins the slow reduction of its $9 trillion balance sheet.
The Fed will start selling around $47.5 billion worth of Treasury and mortgage-backed bonds each month, for the next three months, as part of its overall strategy to add upward pressure on market interest rates and slow demand in the world's largest economy.
The pace of those sales will accelerate further, however, to around $95 billion a month by September, putting the Fed on pace to dump around $3 trillion worth of securities on to the market over a span of three years - a rate more than double the last time the Fed began its so-called "quantitative tightening" in 2018.
Alongside the Fed's planned rate hikes, which Chairman Jerome Powell has said will likely include 50 basis point increases over the next two policy meetings in June and July, the asset sales represent the most significant central bank tightening in a generation.
3. -- Salesforce Shares Leap After Q1 Earning Beat, Profit Forecast Boost
Salesforce (CRM) shares leaped higher in pre-market trading after the enterprise software group posted stronger-than-expected first quarter earnings and boosted its near-term profit forecast.
Salesforce said its sees full-year profits in the region of $4.75 per share, around 12 cents ahead of its prior estimate, following non-GAAP profits of 98 cents per share over the three months ending in April as demand for its work-flow solutions, particularly from companies looking to incorporate hybrid work, continues to grow.
Group revenues were up 24% to $7.41 billion, the company said, but noted that foreign exchange headwinds, thanks to the strongest U.S. dollar in two decades, would likely keep full-year revenues muted at $31.8 billion.
"While there is uncertainty in the macroenvironment, our customers are continuing to come to Salesforce to transform their businesses," said CFO Amy Weaver. "The demand we are seeing from our customers is a testament to the strength of these strategic relationships and the relevance of our product portfolio."
"This gives us confidence in the durability of our business model, and we're excited to help our customers navigate in this changing economy," she added.
Salesforce shares were marked 8.4% higher in premarket trading to indicate an opening bell price of $173.50 each.
4. -- Pfizer To Exit Consumer Healthcare JV With GlaxoSmithKline
Pfizer (PFE) shares edged higher in pre-market trading after the pharma group said it will exit its consumer health joint venture with Britain's GlaxoSmithKline (GSK).
GSK said it plans to list Haleon, which hosts home healthcare brands such as Advil and Sensodyne, on both the London Stock Exchange and the New York Stock Exchange over the coming months, noting that Pfizer, which owns a 32% stake in the division, will exit its holding in a 'disciplined manner'.
The spin-off may also provide cover for under-fire Glaxo CEO Emma Walmsley, who has faced a long campaign of pressure from activist investors at Elliot Management.
Pfizer shares were marked 0.11% higher in premarket trading to indicate an opening bell price of $53.10 each.
5. -- Elon Musk Weighs-In On Work-From-Home
Tesla CEO Elon Musk, who has shared his views on everything from the war in Ukraine to the bitter court battle between Johnny Depp and Amber Heard in recent weeks, has now weighed-in on work-from-home trends last night on his soon-to-be-privately owned Twitter (TWTR) account.
Musk, who leads a handful of companies and work seemingly around-the-clock, claimed last night that he told Tesla's executive staff to work "a minimum" of forty hours per week in the company's offices or "they should pretend to work somewhere else".
Musk added that the work commitment must be made in a "main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office be in another state.”
Tesla shares were marked 1.1% lower in pre-market trading to indicate an opening bell price of $750.22 each, a move that would extend their year-to-date decline to around 38%.
