Here are five things you must know for Thursday, July 7:
1. -- Stock Futures Nudge Higher After Fed Minutes
U.S. equity futures bumped higher Thursday, potentially extending a modest three-day winning streak for the S&P 500, as investors move past a hawkish Fed minutes to focus on jobs data that could provide significant clues as to the true health of the domestic economy.
Minutes from the Federal Reserve's June policy meeting, where is lifted rates by 75 basis points and signaled more to come, indicated that Chairman Jerome Powell and his colleagues were more concerned with entrenched inflation than the impact of higher interest rates on broader economic growth.
"Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist," the minutes read.
That stand could be crucial as the economy threatens to slip into recession and rate traders bet on the near-certainty of another 75 basis point hike later this month. Weekly jobless claims numbers today, however, as well as the June non-farm payroll report tomorrow, could either cement the Fed's case or trigger a re-think as data suggests the economy contracted for a second straight quarter over the three months ending in June and continues to weaken at a 2.1% clip.
Bond market pricing is also flashing its own recession warning, with 2-year Treasury note yields trading at 3.012% -- a 10 basis point jump from yesterday -- to reflect the Fed's hawkish stance on rates. That leaves the yield curve between 2-year and 10-years notes inverted by around 5 basis points, a further clue that markets are expecting a prolonged period of weakness in the world's biggest economy.
Still, against that backdrop, stocks are nudging higher around the world, with markets in Asia boosted by reports of fresh China stimulus and tech getting some support from the strongest quarterly earnings from chipmaker Samsung in at least four years.
Europe's Stoxx 600 was marked 1.29% higher in early Frankfurt trading, following on from a 1.03% gain for the Asia-region MSCI ex-Japan index and a 1.18% bump for the Nikkei 225 in Tokyo.
On Wall Street, futures tied to the S&P 500 are indicating a 10 point opening bell dip while those liked to the Dow Jones Industrial Average are priced for a 100 point advance. Futures linked to the tech-focused Nasdaq are indicating a 35 point gain.
2. -- Samsung Posts Strongest Quarterly Profit In Four Years
Samsung Electronics shares surged higher in South Korea trading Thursday after the world's biggest chipmaker, and key rival to Apple in the smartphone market, posted its strongest quarterly profit in four years.
Samsung said profits for its June quarter rose 11% last year to $10.7 billion, with revenues rising 21% to $58.58 billion.
Chip sales are likely to have driven the bulk of Samsung's profits, although memory and data center prices are starting to wane in the face of over-stocked customers and cooling demand. The preliminary report is customarily released in early July, with a more detailed update from Samsung expected later in the month.
The stronger-than-expected profits, however, will provide some much-needed confidence for the chip and smartphone sectors, each of which has suffered from supply-chain disruptions and demand erosion as a result of faster consumer price inflation.
Samsung shares closed 3.2% higher in South Korea at 58,200 Korean won each, a move that still leaves the stock with a year-to-date decline of around 25.7%.
3. -- Seagen Shares Jump On Report of $40 Billion Takeover By Merck
Seagen (SGEN) shares moved higher in pre-market trading following a report from the Wall Street Journal that it's in advanced takeover talks with drugmaker Merck & Co. (MRK) that could value the cancer specialist at around $40 billion.
The Journal said Merck and Seagen are looking towards a $200 per share price for the Bothell, Washington-based group, and hope to unveil a deal prior to Merck's second quarter earnings report, which is due on July 28. Analysts suggest the loss of patent exclusivity on its blockbuster cancer treatment Keytruda in 2028 is driving the group's near-term need for a revenue replacement.
Last year, Merck's larger rival, Pfizer (PFE), paid $2.3 billion for immuno-oncology specialists Trillium Therapeutics (TRIL) as it expanded its cancer-related portfolio, with Gilead Sciences paying $21 billion for cancer treatments specialists Immunomedics Inc. (IMMU) in 2020.
Seagen shares were marked 2.8% higher in pre-market trading to indicate an opening bell price of $180 each while Merck shares fell 1% to $92.20 each.
4. -- GameStop Share Surge After 4-For-1 Stock Split Plans
GameStop (GME) shares surged higher in pre-market trading after the money-losing video game retailer unveiled plans for a four-for-one stock split.
A favorite of retail investors and one of the original 'meme-stocks' that spearheaded last year's trading frenzy, said shareholders will receive a three-stock dividend for each share they own after the close of trading on July 21, with dealing set to begin on a split-adjusted basis the following day.
Short interest in the shares remains elevated, as well, with data from S3 Partners showing just over $2.2 billion in bets against the group, a figure that represents around 16.02 million shares, or 25.2% of the stock's outstanding float.
GameStop, which is hoping to transition from a reliance on brick-and-mortar sales to a larger and more dynamic presence online, said revenues for the three months ending in April rose 8.1% from last year to $1.38 billion, with around half of that total coming from its digital channels.
The group still posted a loss of $2.08 per share, however, and decline to take questions from analysts -- as has been the case for several quarters -- on its regular post-earnings conference call.
GameStop shares were marked 9.2% higher in pre-market trading to indicate an opening bell price of $128.22 each.
5. -- Boris Johnson To Resign, But Seek to Stay On As Prime Minister until Autumn
Boris Johnson will step-down as leader of the Conservative Party Thursday, reports indicated Thursday, but will seek to stay-on on Prime Minister until the early autumn despite a scandal-plagued term that culminated yesterday with the resignation of more than 50 members of his ruling government.
Johnson, who once served as London Mayor and lead Britain's Brexit campaign in 2016, was elected Prime Minister in 2019 amid a wave of support from traditionally Labour voting regions around the country. He term in 10 Downing Street, however, has been marred by a series of personal and political scandals, including the breaking of Covid restrictions, dealing with lobbyists, the appointment of a Russian oligarch to the House of Lords and, most recently, the promotion of close political colleague who had been accused on multiple occasions of sexual impropriety.
"It is good news for the country that Boris Johnson has resigned as prime minister," said Labour and Opposition leader Keir Starmer. "But it should have happened long ago. He was always unfit for office. He has been responsible for lies, scandal and fraud on an industrial scale. And all those who have been complicit should be utterly ashamed."
