Here are five things you must know for Thursday, June 16:
U.S. equity futures slumped lower Thursday, giving back all of yesterday's post Fed decision gains, as investors re-set prices on risk assets around the world in anticipation of faster near-term rate hikes and relentlessly high inflation.
The Federal Reserve delivered its biggest rate hike since 1994 yesterday, boosted its Fed Funds rate by 75 basis points to a range of between 1.25% and 1.5%.
Fed Chair Jerome Powell said similarly-sized rate hikes won't be 'common', but he nonetheless indicated another could follow in July, with smaller hikes into the autumn, as the central bank raised its forecasts for annual inflation and slashed its GDP growth rate.
Powell's indication that a bigger, perhaps even 100 basis point rate hike appears off the table gave stocks an initial boost, but the expectation of slower growth, faster inflation and rising unemployment gave way to concerns over a near-term recession, particularly after the Atlanta Fed's GDPNow forecasting tool indicates U.S. growth has stalled.
"We're not trying to induce a recession, let's be clear about that," Powell told reporters in Washington. "Our goal is to get 2% inflation while keeping the labor market strong. This is a strong labor market. The pathways ahead have become much more challenging."
The Fed's hike, its third under Powell, was followed by a surprise move by the Swiss National Bank, which lifted its key lending rate for the first time in 15 years Thursday as the alpine economy attempts to fend off inflationary pressures from its Eurozone neighbors.
The Bank of England is also likely to boost rates today, taking its benchmark Bank Rate 25 basis points higher to 1.25%, as inflation in the Brexit hit economy looks to surpass 10% in the coming months,
The collective central bank tightening kept stocks in the red overnight, with Asia's MSCI ex-Japan index falling 1% and Europe's region-wide Stoxx 600 down 1.4% in early Frankfurt trading.
In the U.S., benchmark 10-year Treasury bond yields dipped to 3.83% while and the dollar index fell 0.03% against a basket of six global currencies to 105.1227 in early European trading.
On Wall Street, futures tied to the Dow Jones Industrial Average indicating a 560 point opening bell slump while those linked the S&P 500 are priced for an 88 point retreat. Futures linked to the Nasdaq are looking at 330 point opening bell pullback.
Tesla (TSLA) – Get Tesla Inc. Report shares moved lower in pre-market trading after the carmaker unveiled across-the-board price hikes for its U.S. models, indicating input cost pressures that could pressure near-term profit margins.
Tesla boosted the cost of its long-range Model Y by around 5%, to $65,990, while the base cost for the Model 3 long range sedan rose $2,000 to $57,990. Model S prices were increased by $5,000 to $104,990.
The carmaker is looking at a difficult second quarter this year, given the 22-day shutdown at its Shanghai factory, muted China-based sales owing to that country's Covid lockdowns and the impact of a likely writedown of its $1.5 billion holding in bitcoin, which has fallen some 40% since the end of March.
Tesla shares were marked 393% lower in pre-market trading to indicate an opening bell price of $673.96 each.
Revlon (REV) – Get Revlon Inc. Report shares slumped lower in pre-market trading after the cosmetics group filed for Chapter 11 bankruptcy protection.
Saddled with around $3.3 billon debt and suffering from supply chain snarls and increasing competition from nimbler rivals, Revlon listed liabilities of between $1 billion and $10 billion in its Chapter 11 filing with the Bankruptcy Court for the Southern District of New York.
Last month, the group said it was hoping to "ensure sufficient liquidity to support both our growth and our capital structure" as it faced supply chain headwinds and other "emerging macroeconomic challenges that continue to impact businesses across most industries."
CEO Debra Perelman, the daughter of billionaire financier Ron Perelman, told investors on May 7 that "lack of availability or long lead times for raw materials and components, along with shortages and delays across all modes of transportation, are resulting in reduced", adding that "we are faced with rising costs due to global inflation putting pressures both on consumers' wallets as well as on our margins."
Revlon shares were marked 4.44% lower in premarket trading to indicate an opening bell price of $2.15 each.
Twitter (TWTR) – Get Twitter Inc. Report shares moved higher in pre-market trading as staff at the microblogging website prepared for their first face-to-face encounter with their prospective owner: billionaire Tesla CEO Elon Musk.
Musk, who unveiled his plans to buy the group, and immediately take it private, has since indicated reluctance to close the $44 billion deal, given its impact of Tesla shares, his personal finances, the fall in Twitter stock and a dispute over the level of 'fake accounts' on the popular social media website.
Musk is reportedly set to tell employees at today's 'town hall' meeting of his desire to complete the takeover, while attempting to reassure staff concerns over Twitter's remote work culture — which Musk has essentially banned at Tesla — and his increasingly right-wing political leanings made public through his controversial Twitter account.
Twitter shares were marked 2.66% higher in pre-market trading to indicate an opening bell price of $37.99 each, a move that would still leave the stock around 30% shy of Musk's 'best and final' offer of $54.20 per share.
McDonald's (MCD) – Get McDonald's Corporation Report shares nudged higher in pre-market trading after the world's biggest restaurant chain agreed to settle a $1.3 billion tax dispute with authorities in France.
McDonald's said it will pay €1.245 billion ($1.3 billion) as part of a settlement that links back to a years-long dispute with French tax authorities tied to is operations in Europe. France had said McDonald's was diverting profits from its domestic restaurants to Luxembourg, a low-tax jurisdiction in the European Union, in order to avoid higher levies from Paris.
Amazon (AMZN) – Get Amazon.com Inc. Report was accused by British lawmaker Margaret Hodge last year of diverting profits to Luxembourg in what she called an "appalling campaign of tax avoidance".
Amazon EU Sarl, the unit through which it sells products in Europe and registered in Grand Duchy, reported €44 billion in sales in 2020, yet paid not corporate income tax.
McDonald's shares were marked 0.25% higher in premarket trading to indicate an opening bell price of $239.50 each.
Here are five things you must know for Thursday, June 16: