By Peter Nurse and Ana Beatriz Bartolo
Investing.com – Wall Street is heading towards a positive close of the week, breaking a three-week negative run ahead of the release of the widely watched Michigan Consumer Confidence Index. European Union (EU) leaders continue their summit amid economic difficulties.
Electoral polls may make the government of President Jair Bolsonaro (PL) spend more in pursuit of popularity. The market looks forward to next week’s OPEC+ meeting.
Here’s what you need to know about the financial markets on Friday, June 24th.
CHECK IT OUT: Investing.com Economic Calendar
1. Investors digest Powell’s comments
Investors will take advantage of this last day of the week to review Jerome Powell before Congress as they study the latest data on the state of the US economy.
Powell made clear the central bank’s commitment to containing the rally, calling it “unconditional”, even while acknowledging that the sharply higher hikes needed to do so could raise the price and increase the .
Friday’s economic data includes for May at 11 am, which should show a slight slowdown, and for June.
Analysts expect Michigan’s June figure to be 50.2, which would be in line with the previous month. The price tumbled in May as rising energy prices and the threat of gas shortages upset businesses in Europe’s biggest economy, and the UK fell to a record low.
2. EU meeting continues
European Union leaders continue their summit on Friday, a day after they made the historic decision to grant Ukraine, as well as Moldova, candidate status on the road to EU membership.
With that potentially thorny issue out of the way, the conversation will likely turn more to the economic situation the bloc finds itself in, with the rise and the likelihood of a recession increasing.
Comments by , ECB Vice President, at 10:30 am will be carefully studied after central bank policymakers paved the way for an increase in the next month.
A Reuters poll showed that all but two of 55 economists expected the ECB to deliver a 0.25 percentage point increase on July 21 to -0.25%, and 50 of 55 expected it to raise its key rate by 50 basis points in September, taking the deposit rate out of negative territory to 0.25%.
CHECK: Quotation of the main exchange rates
3. Bolsonaro fights for reelection
The most recent election poll by DataFolha, released this Thursday, 23, pointed out that the distance between President Jair Bolsonaro and former President Luiz Inácio Lula da Silva (PT) remains wide. The PT has 47% of the voting intentions, with 53% of the valid votes, which would lead to a victory for the PT in the first round. Bolsonaro appears in second place in the poll, with 28% of voting intentions (32% of valid votes).
100 days before the elections, the risk of losing the election could lead the president to intensify the use of the public machine in his favor. Yesterday, Bolsonaro signed into law the law passed by Congress that limits the collection of ICMS on fuel, energy, public transport and communications to 17%. The objective is to try to reduce the damage these items cause to the general population and, as a consequence, alleviate some of the voters’ discontent with the government with the high price of fuel.
Bolsonaro kept the trigger for compensation for states that lose more than 5% of tax revenue, but vetoed some of the rules for compensation to non-indebted states.
On the BRL 29.6 billion that was intended to mitigate the losses of States that would zero ICMS on diesel, cooking gas and until the end of the year, Bolsonaro now plans to use the amount to expand Auxílio Brasil from BRL 400 to R$ 600 and also to offer a voucher of R$ 1 thousand to truck drivers. The two proposals would be valid until the end of 2022, when the government’s term ends.
At 8:09 am, the ETF (NYSE:) was up 2.21% to $27.74 in the US premarket. In addition, the market is also waiting for the June release, which should be released at 9 am, a preview of the country’s price level this month.
The BDRs of Petrobras (SA:) advanced 1.08% to US$ 11.22 in the pre-market, while those of Vale (SA:) rose 0.57% to US$ 14.00.
CHECK: Brazilian share price
4. US equities open higher
US equity markets are set to open higher on Friday, set to record a rare positive week during these turbulent times.
At 8:10 am, the Nasdaq 100 futures were up 0.88%, while the S&P 500 and Dow Jones futures were up 0.74% and 0.65%, respectively.
All three cash indices are on track to break three-week streaks of losses, with the top tier up 2.6% so far this week, the broad-based 3.3% higher and the 4th up 4%.
Stocks likely to be in focus include FedEx (NYSE:) (SA:), after the transportation company, widely regarded as a beacon of online shopping and the wider remote economy, impressed with its quarterly earnings following the Thursday closing. Carnival (NYSE:) (SA:) will also release its latest quarterly earnings report, amid signs that summer travel is on the rise.
CHECK: Real-time US stock quote in premarket on Wall Street
5. Oil tends to fall weekly
Crude oil prices rose on risk sentiment on Friday, but the market is heading for its first straight weekly loss since early April on fears that aggressive monetary tightening will slow global growth, weighing on demand.
As of 8:13 am, U.S. crude oil futures were up 1.72% at $106.06 a barrel, while U.S. crude futures were up 1.53% at $111.73. Both benchmarks are on track for weekly losses of over 2%
Attention will quickly turn to the meeting of the Organization of Petroleum Exporting Countries and allies next week to discuss the group’s production levels.
The cartel, known as OPEC+, is expected to stick to its plan to increase production by 648,000 barrels a day in July and the same amount in August, despite US President Joe Biden’s plans to visit Saudi Arabia, the de facto leader of the group, to defend lower oil prices.