By Peter Nurse
Investing.com -- Facebook joins the $1 trillion club as it wins a legal skirmish. ECB policymakers spar over tapering, U.S. banks promise larger dividends, crude slips ahead of OPEC+ meeting, while the U.K. feels more Covid pain. Here's what's moving markets on Tuesday, June 29th.
1. Facebook jumps on legal win
Facebook joined the $1 trillion club on Monday, boosted by the news that a U.S. judge dismissed the Federal Trade Commission’s antitrust case against the social media giant.
Facebook (NASDAQ:FB) stock closed Monday over 4% higher, pushing the company’s market capitalization over $1 trillion for the first time, joining Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) with that achievement.
The FTC was seeking a permanent injunction in federal court that could have forced Facebook to sell Instagram and WhatsApp, as well as requiring the company seeks approval for future mergers and acquisitions.
The dismissal was the first big blow to the various state and federal lawsuits levied against Big Tech firms, seeking to rein in alleged abuses of their massive market power.
That said, it’s important to point out that the judge dismissed the complaint, rather than the case. He said the FTC could file an amended lawsuit within 30 days, adding that he took issue not with the fact that Facebook might have a monopoly, but with the FTC’s failure to provide a method to calculate the extent of its dominance.
Further twists and turns lie ahead.
2. Stocks seen mixed; Banks in focus
U.S. stocks are seen opening mixed Tuesday, with the S&P 500 and Nasdaq Composite handing back gains after closing at record levels, ahead of potentially significant labor market data later in the week.
By 6:30 AM ET, Dow Jones futures were up 105 points, or 0.3%, S&P 500 futures were 0.4% higher and Nasdaq 100 futures climbed 0.6%.
The majority of the main indices closed higher Monday, with the broad-based S&P 500 advancing 0.2%, its third consecutive record close, and the tech-heavy Nasdaq Composite gaining nearly 1%, also a new high, helped by strong gains by Facebook. The blue-chip Dow Jones Industrial Average, however, dipped 0.4%.
The banking sector is likely to be in focus Tuesday after the major U.S. lenders announced plans to boost their dividends in the wake of the Federal Reserve’s stress tests. Citigroup (NYSE:C) bucked the trend, indicating it is keeping its dividend unchanged at 51 cents a share.
Ahead of Friday’s key nonfarm payrolls release, the economic data slate sees the release of the Conference Board's consumer confidence index at 10 AM ET (1400 GMT).
3. ECB policymakers spar over tapering
The debate about when to rein in its massive bond-buying program is starting to get heated in the European Central Bank, judging by comments this week by some of the central bank’s policymakers.
Both Germany's Jens Weidmann and Austria's Robert Holzmann openly discussed on Monday the winding down of the ECB’s 1.85 trillion euro Pandemic Emergency Purchase Programme.
"We don't know yet but at the moment it looks like the end is in March," Holzmann told a UBS virtual event.
However, these two belong to the hawkish side of the debate, and a known dove, Italy’s Fabio Panetta, was quick to respond.
"Experience shows that attempting to reduce the pace of asset purchases too early would lead to a tightening of financing conditions and a higher pace of purchases later," he said.
This debate has legs.
4. U.K. feels pain from new variant
New U.K. Health Secretary Sajid Javid has his hands full. Appointed over the weekend after the hasty departure of predecessor Matt Hancock, he was greeted by the news that the country reported over 22,000 new Covid-19 cases on Monday, the highest level since late January.
Cases have risen steadily since the end of May, with the seven-day average going from around 3,500 to over 16,000.
The highly-contagious delta variant makes up the vast majority of these new cases, and this is resulting in the U.K. becoming more isolated. Hong Kong will ban all passenger flights from that part of the world from Thursday, its government announced Monday, while Spain has Tuesday taken U.K. visitors off its list for restriction-free travel.
Javid stated on Monday that the country was still on track for all restrictions to be officially lifted on July 19. But doubts remain.
As an aside, British house prices jumped by the most in more than 16 years this month, soaring by 13.4% from June 2020, according to Nationwide, as buyers rushed to take advantage of a coronavirus emergency tax break and sought bigger homes after their experiences of lockdown.
5. Crude weakens; Covid cases rise ahead of OPEC+
Crude oil prices weakened Tuesday, retreating from recent highs as Covid cases rise, and ahead of a meeting of top producers later this week.
By 7 AM ET, U.S. crude was down 0.5% at $72.57 a barrel, while Brent was down 0.3% at $73.93, after reaching levels not seen since 2018 during last week’s trading.
Weighing on sentiment Tuesday has been growing concerns about the growth of Covid cases, not only in the U.K. but also a number of Asian countries, caused by the highly infectious delta strain.
There was also an element of traders taking some money off the table ahead of Thursday’s meeting of the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+.
Expectations are growing of the group agreeing to an increase in supply in August, particularly after Bloomberg reported that the group’s Joint Technical Committee is set to see Tuesday figures that show that demand is poised to exceed supply by 1.7 million barrels a day in August.
Continuing the supply theme, estimates of weekly U.S. crude oil inventory data by the American Petroleum Institute are due later in the day.