European markets flat as global investors wait for Fed
European markets were muted on Wednesday as new hawkish comments from a U.S. Federal Reserve policymaker kept investors hesitant.
The pan-European Stoxx 600 index was flat in early trade, with telecoms shedding 0.5% while household goods gained 0.2%.
– Elliot Smith
Morgan Stanley says the ‘smart’ EV industry is tech’s next big thing. Here are its top stock picks
Morgan Stanley says tech supply chains are about to experience growth in the next big thing: smart tech features — from EV batteries to chips and self-driving tech.
The investment bank named its top stock picks that’s set to benefit from this trend.
Pro subscribers can read the story here.
— Weizhen Tan
Fed’s Kashkari says his biggest fear is inflation will be more persistent or hotter than anticipated
Federal Reserve bank of Minneapolis President Neel Kashkari says his biggest fear is that markets are underestimating how high inflation will go or how persistent it would be, adding that the Fed might need to be more aggressive than anticipated.
“The big fear I have at the back of my mind is if we’re wrong and markets are wrong, and that this inflation is much more embedded at a much higher level than we appreciate or markets appreciate,” he said, commenting on market expectations of inflation coming back down to 2% within the next two years.
“Then we’re going to have to be more aggressive than I anticipate, probably for longer, to bring inflation back down,” he said, speaking at an event at the University of Pennsylvania.
Kashkari also pointed towards supply-side shocks driving “half to two-thirds” of the nation’s high inflation.
“The more help we get from the supply side, the less the Fed has to do, and the better we’re able to avoid a hard landing,” he said. He did add, however, there’s some evidence that supply chains are beginning to normalize.
Kashkari is already considered the most hawkish of the U.S. central bank’s 19 policymakers, and expects the Fed to need to lift its policy rate — now at a target range of 2.25% to 2.5% — another two full percentage points by the end of next year.
– Jihye Lee
CNBC Pro: Citi names the energy stock with the ‘strongest balance sheet’
The energy sector has been a big winner in this year’s volatile stock market.
But one stock still stands out for its “strongest balance sheet,” according to Citi. It also delivered a set of second-quarter earnings that handily beat its major listed peers.
Pro subscribers can read the story here.
— Zavier Ong
Hawkish Fed?
Many are expecting hawkish talk from Fed officials later this week, which could spark a sell-off in risk assets. Some fear that the central bank’s continuous and aggressive tightening will tip a slowing economy into a recession.
“I fully expect Fed Chair Jay Powell and other Fed officials to remain hawkish,” said Invesco chief global market strategist Kristina Hooper, in an e-mail. “Aggressive rhetoric would be very likely to send stocks down globally in the near term, as markets are walking on eggshells, so asset owners should be prepared for short-term volatility.”
— Yun Li
Nordstrom shares tumble
Shares of Nordstrom dropped more than 13% in extended trading after the company slashed its financial forecast for the full year. Nordstrom said it’s challenged by excess inventory as well as a slowdown in demand.
“Customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack,” CEO Erik Nordstrom said in a press release.
The company did report fiscal second-quarter earnings and sales ahead of analysts’ estimates, however.
— Yun Li