By Geoffrey Smith
Investing.com — The U.S. administration is getting more creative in finding ways to lower inflation ahead of the midterm elections. China is easing its measures on its tech giants, but its services sector remains in deep contraction in May. British Prime Minister Boris Johnson is facing a revolt from lawmakers in his own party, and oil prices are rising after Saudi Arabia indicated the market will remain tight in July no matter what OPEC+ says or does. Here’s what you need to know in the financial markets this Monday, June 6.
1. Desperate Democrats
US President Joe Biden’s administration is showing growing willingness to take politically contentious steps to reduce inflation ahead of the midterm elections in November.
Commerce Secretary Gina Raimondo told CNN the administration is considering removing some of the tariffs on Chinese imports imposed by Donald Trump during his presidency. She said the move would reduce price pressures on household products, but added that tariffs on steel and aluminum would remain in place.
Reuters has reported that the administration is ready to grant Spain’s Repsol (BME:) and Italy’s Eni (BIT:) sanctions waivers against Venezuela, which would allow them to ship Venezuelan crude oil to Europe to alleviate its fuel shortage. This in turn could reduce – if only marginally – European demand for U.S. crude and refined products that contributes to the compression of gasoline prices in the domestic market.
2. China eases pressure on Didi and others
According to the Wall Street Journal, Chinese regulators are ready to end their investigation into the cybersecurity practices of Didi Global (NYSE:) and two other U.S.-listed Chinese companies. If this information is confirmed, it would be the first tangible relaxation of government pressure on the technology sector for a year.
The news came too late to help Chinese stock indices, but pushed the yuan up about 0.2% against the dollar. The yuan was also supported by reports that Beijing is set to lift its COVID-19 restrictions after a steady decline in the number of cases.
China’s service sector has been ravaged by lockdowns in Beijing, Shanghai and elsewhere in recent months. The Purchasing Managers’ Index, a gauge of activity in the services sector, remained deep in contractionary territory in May, at 41.4, although it was a rebound from the level the lowest in two years of 36.2 in April.
Didi’s ADRs, meanwhile, jumped more than 50% in pre-market but are still more than 80% below their listing price last year.
3. Stocks set to open higher, helped by jobs report
U.S. stock markets are expected to open higher, extending their gains after Friday’s labor market report suggested continued strength in job creation without further acceleration in wage growth. As such, the report – for once – did not provide new evidence to tighten monetary policy faster than expected. The Conference Board’s Employment Trends Survey adds a coda to that at 4:00 p.m.
As of 1:30 p.m., were up 270 points, or 0.8%, while were up 1.0% and 1.5%.
Among the stocks likely to receive particular attention include Tesla (NASDAQ:), after Elon Musk tried to limit the damage caused by a report suggesting large-scale layoffs at the electric vehicle maker on Friday. .
4. Johnson faces a vote of no confidence
British Prime Minister Boris Johnson will face a vote of no confidence from his party’s lawmakers later on Monday after a sufficient number of backbench MPs demanded the measure.
The development comes just weeks after the publication of a damning report into illegal parties at 10 Downing Street, which breached lockdown rules the rest of the country was subject to at the time. The case has sharply dented Conservative support in opinion polls and contributed to heavy defeats in local elections last month.
The pound was little changed, rising 0.4% against the dollar, amid speculation that the Bank of England will have to tighten monetary policy more than it had expected at its last meeting .
5. Oil on the rise after Saudi Arabia raises official selling prices for July
The price of crude oil rose again to $120 a barrel as Saudi Arabia, the world’s largest producer, raised official selling prices for its July crude deliveries by more than expected.
The move was seen as a sign that supply remains extremely tight, despite the OPEC+ producer group’s pledge to accelerate the expected pace of production increases from next month. OPEC+ has agreed in principle to increase output by 632,000 barrels a day from July, but that will largely depend on the ability of Russia’s oil sector to weather a gradually tightening Western sanctions regime.
Around 1:30 p.m., the price of was up 0.7% at $119.75 per barrel, while the price of was up 0.7% at $120.56 per barrel.