MARKET WRAPS

Watch For:

Flash PMI data for EU, U.K., Germany, France; U.K. public sector finances; Germany ifo business climate index; France business survey; trading updates from BT Group, easyJet, Pershing Square Holdings, Generali, British Land, Tate & Lyle

Opening Call:

European stock futures were tracking lower on a negative lead from Asian equities. U.S. Treasurys were broadly lower. The dollar weakened slightly; oil futures were mixed while gold gained.

Equities:

European futures were pointing to a lower open following the sharp selloff on Wall Street on Wednesday, and as investors parse the latest headlines on tariffs and geopolitics.

EU's Commissioner for Economy and Productivity Valdis Dombrovskis said the U.S.-led deals with key trading partners could help reduce heightened uncertainty in the business community and financial markets, but represented a 'suboptimal' solution.

The WSJ reported that President Trump, on a call Monday, told European leaders that Russian President Vladimir Putin isn't ready to end the Ukraine war because he thinks he is winning.

U.S. major indexes tallied their worst session since April 21 on Wednesday after a disappointing auction of 20-year Treasury bonds sent yields climbing to fresh highs.

Many investors have grown increasingly concerned about the Treasury issuance that could follow President Trump's multitrillion-dollar fiscal package.

"When you have yields jumping up like this, it's a tough crosscurrent for stocks," Peter Cardillo, chief market economist at Spartan Capital Securities, said.

Forex:

The dollar could fall further in the near term, although losses could prove limited amid a relatively resilient U.S. economy, Barclays analysts said. Bond market volatility is creating an unfavorable environment for the dollar, while U.S. trade policy missteps, rhetoric shifts around tariffs, or soft data could weaken it further.

However, the recent de-escalation in tariffs means the U.S. economic damage might be smaller than feared, they said. Beyond near-term jitters over the U.S. budget deficit, Trump's plans for fiscal easing will more likely strengthen the dollar than if he opted for fiscal tightening.

Bonds:

U.S. Treasury yields gave up gains and were broadly lower early Thursday as fiscal deficit concerns continue to weigh.

Governments' need for 'deficit financing' may lead to higher bond yields across the world should their demand for borrowing be higher than the willingness for investors to fund it, Dan Shaykevich, a senior portfolio manager and head of multi-sector strategy in Vanguard's fixed-income group, said.

"The latest [U.S.] tax reform proposal is projected to add over $3.3 trillion to the national debt over the next decade, prompting questions about the long-term sustainability of U.S. public finances and the willingness of global markets to continue absorbing Treasury issuance," Sucden Financial's Research team said.

Energy:

Oil prices were mixed, weighed by an unexpected increase in U.S. crude inventories. Data released Wednesday by the EIA showed commercial crude oil stocks excluding the Strategic Petroleum Reserve rose by 1.3 million barrels in the week ended May 16. Analysts surveyed by The Wall Street Journal had predicted an 800,000 barrel decline.

Sentiment hasn't been helped by the EIA data, ANZ Research analysts said. There's also a risk-off tone sparked by weak U.S. Treasurys' auction, the analysts added.

Metals:

Gold should gradually rise to $3,750/oz by 4Q on likely safe-haven demand and a weakening U.S. dollar, said CBA. "The threat of military strikes against Iran can't be ruled out and raises the stakes if U.S.-Iran talks remain deadlocked," it said.

Safe-haven demand will probably favor gold more than it has in the past, it said, noting that the precious metal has outperformed both USD and Treasurys following the increase in U.S. tariffs.

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Copper prices fell and may remain rangebound with a slight downward bias in the short term, Nanhua Futures analysts said.

"The continuation of a sideways trend is highly probable, as macroeconomic conditions appear to be stabilizing and no major adjustments to domestic or international monetary or fiscal policy are expected in the near future," the analysts said.

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Iron ore futures gained amid positive sentiment. The current profit margin of steel mills is relatively high, and the temporary easing of U.S.-China trade tensions has brought new demand for replenishment, New Century Futures said.

The 90-day tariff reprieve has led to a rush of steel export demand, providing some support for iron-ore prices in recent months, it added.

TODAY'S TOP HEADLINES

U.S. Trade Deals With Allies 'Suboptimal' Solution to Tariff Drag, EU's Dombrovskis Says

BANFF, Alberta-A string of U.S.-led deals with key trading partners could help reduce heightened uncertainty in the business community and financial markets but represent a "suboptimal" solution, says the European Union's top economic official.

Valdis Dombrovskis said those deals are bound to entrench higher tariffs on goods and services relative to before President Trump returning to the White House this year. The individual deals are an "economically suboptimal outcome, but at least it's clarity," said Dombrovskis, the EU's Commissioner for Economy and Productivity.

The Fortress That China Built for Its Battle with America

The storm clouds for China were gathering when leader Xi Jinping convened the country's top scientists at the Great Hall of the People in Beijing in May 2018. The U.S. was beginning to clamp down on selling technology to China, with more restrictions on the way.

China must not be forced to beg others for technology, Xi said. Only through self-reliance "can we fundamentally safeguard national economic security," he said.

Trump Tells European Leaders in Private That Putin Isn't Ready to End War

On a call Monday, President Trump told European leaders that Russian President Vladimir Putin isn't ready to end the Ukraine war because he thinks he is winning, according to three people familiar with the conversation.

The acknowledgment was what European leaders had long believed about Putin-but it was the first time they were hearing it from Trump. It also ran counter to what Trump has often said publicly, that he believes Putin genuinely wants peace.

Sanofi to Buy Vigil Neuroscience for About $470 Million

Sanofi said it entered an agreement to acquire Vigil Neuroscience for approximately $470 million, a deal that adds a new investigational treatment for Alzheimer's disease to the French pharmaceutical company's pipeline.

The transaction would see Sanofi purchase all of Vigil's outstanding shares for an upfront payment of $8 a share, the companies said Wednesday. Vigil's shareholders would also receive the right to an additional $2 a share in cash, payable following the first commercial sale of the in-development Alzheimer's disease treatment, if achieved within a set period.

Walmart to Cut 1,500 Corporate Jobs in Restructuring

Walmart plans to cut around 1,500 corporate jobs in a U.S. restructuring aimed at trimming its expenses and speeding up decision-making.

Walmart and other retailers have been cutting costs, putting pressure on suppliers, shifting production to other countries and increasing prices to offset the cost of tariffs. Last week, Walmart said that it would raise some prices because of tariffs, prompting President Trump to criticize the company. The company reported strong sales growth in the latest quarter and executives said they would work to manage profits to keep prices as steady as possible.

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Expected Major Events for Thursday

04:30/NED: Apr House Price Index

05:00/FIN: Apr Labour force survey, incl unemployment

06:00/UK: Apr Public sector finances

06:00/NOR: Apr Labour force survey SA, incl unemployment

06:45/FRA: May Monthly business survey (goods-producing industries)

07:15/FRA: May France Flash PMI

07:30/GER: May Germany Flash PMI

08:00/EU: May Eurozone Flash PMI

08:00/GER: May ifo Business Climate Index

08:30/UK: May Flash UK PMI

09:00/MLT: Apr RPI

10:00/UK: May CBI Industrial Trends Survey

10:00/IRL: Apr WPI

10:00/FRA: 1Q OECD Quarterly National Accounts: GDP growth

10:00/IRL: 1Q Labour Force Survey

13:00/BEL: May Business Confidence Survey

17:59/POR: Mar ICSG Copper Report

23:01/UK: May UK Consumer Confidence Survey

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-22-25 0014ET