Morning Bid: Markets calm down after Powell poser
LONDON (Reuters) - What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Wednesday's market drama on reports of an imminent ouster of Federal Reserve Chair Jerome Powell has calmed quickly, with President Donald Trump saying it was "highly unlikely" he would fire the central bank boss even as speculation continue to brew.
I'll dig into all of today's market news below, and then I'll discuss how U.S. markets may soon shift focus from tariffs to the more pressing economic threat of labor shortages driven by aggressive immigration crackdowns and deportations.
Today's Market Minute
* U.S. President Donald Trump said Wednesday he is not planning to fire Federal Reserve Chair Jerome Powell, but he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates.
* Canada's Alimentation Couche-Tard on Thursday pulled its $46 billion bid to buy Seven & i Holdings, saying the retailer refused to engage constructively on the deal, which would have been Japan's largest ever foreign buyout.
* The deadly Air India crash last month has renewed a decades-old debate in the aviation industry over installing video cameras monitoring airline pilot actions to complement the cockpit voice and flight data recorders already used by accident investigators.
* While almost no one thinks Donald Trump's verbal attacks on Federal Reserve Chair Jerome Powell are a positive development, writes ROI columnist Jamie McGeever, they have electrified the debate about whether the U.S. president is right that interest rates are too high.
* The idea of simplifying the federal tax code used to enjoy widespread bipartisan political support. Times have changed in this regard, and not for the better. That's bad news, says Income Securities Advisor publisher Marty Fridson, and not just because of the headaches it causes taxpayers each April.
Markets calm down after Powell poser
The Fed episode overshadowed otherwise decent set of U.S. economic updates - showing relatively subdued producer prices and above-forecast industry output last month and offsetting anxiety about some tariff-related price rises in Tuesday's consumer inflation report.
The Powell story also obscured another decent set of bank earnings, with individual stock reactions for Goldman Sachs, Morgan Stanley and Bank of America underwhelming - much like the prior day's results. Johnson & Johnson did surge 6%, however, after halving its expectations for costs related to new tariffs and raising full-year profit projections.
But the burst of speculation about Powell's exit did reveal something of the market's reaction function on the long festering issue and also, to some extent, the potential size of those reactions.
The dollar and short-term Treasury yields kneejerked lower on the Bloomberg report that claimed Trump was about to fire the Fed boss. With Trump's insistence on steep and immediate interest rate cuts as a backdrop, the prospect of Powell's removal upped monetary easing speculation instantly.
But concern about damage to Fed independence and possibly overeager rate cuts now in the face of above-target inflation saw long-term Treasury yields surge, the yield curve steepen and stocks drop almost 1%.
Trump quickly walked back the report and said he discussed firing Powell with Republican lawmakers on Tuesday but now felt he was "highly unlikely" to do so. Markets quickly reversed all their initial moves, puzzling over just what happens next.
Many investors felt the whole piece was just calculated to heap pressure on the Fed Chair to resign of his own accord, with fresh angles of attack from the White House on Powell's responsibility for cost overruns in renovating Fed headquarters.
"I'd love it if he wants to resign, that would be up to him," Trump added later.
But relatively limited extent to which punters believe Trump will pull the trigger this year can be seen in only betting sites. Even at the height of Wednesday's tension, Polymarket's site showed just a one-in-four chance of Powell's ouster this year. And they ebbed back since to show roughly a 20% chance.
The upshot in wider financial markets today is that a full recovery in stock prices and the dollar has been sustained - with long bond yields also returning to early Wednesday levels just over 5%.
Two-year Treasury yields remained about 5 basis points lower and 10-year inflation expectations in the bond markets edged above 2.4% for the first time since February.
Wall Street stock futures were higher again ahead of the bell.
Thursday brings another heavy slate of economic updates, with June retail sales and weekly jobless claims topping the list. The corporate earnings season is now in full swing, with Netflix and General Electric and regional banks among those reporting.
Given the Fed anxiety, speaking appearances from top board members will be watched especially closely - not least the dovish Christopher Waller, tipped by some as a possible Powell replacement and in favor of resuming rate cuts as soon as this month.
On Wednesday New York Fed President John Williams refused to comment on Powell's position but said monetary policy is in the right place and warned the impact of trade tariffs is only just starting to hit the economy.
Overseas markets were in relatively buoyant mood too, with Asia and European shares up 0.5-1.0%.
Taiwan chip giant TSMC reported results that topped analyst forecasts, undoing some of the pessimism in the sector from Dutch chip-making tool supplier ASML's revenue warning the previous day.
European shares rose on Thursday after four consecutive sessions of losses, supported by strong quarterly results from Switzerland's ABB and some renewed optimism over a potential U.S. trade deal.
Ahead of weekend elections, Japan's Nikkei recovered from early losses to end higher as a weakening yen that hit three-month lows this week bolstered sentiment chip shares were lifted by TSMC results.
G20 finance chiefs will meet in South Africa on Thursday under the shadow of President Donald Trump's tariff threats and questions over their ability to tackle global challenges together. U.S. Treasury Secretary Scott Bessent will not attend the two-day meeting in the coastal city of Durban, marking his second absence from a G20 event in South Africa this year.
Chart of the day
President Donald Trump said Wednesday it was "highly unlikely" he would fire Fed Chair Jerome Powell shortly after a Bloomberg report claiming he would oust the central bank boss soon hit the dollar briefly and disturbed stock and bond markets. Criticizing Powell's monetary policy stance yet again, Trump confirmed he had floated the idea of firing him with Republican lawmakers on Tuesday, marking the latest chapter in an escalating campaign by Trump against the independent central bank. "I'd love it if he wants to resign, that would be up to him," he added later. Online betting markets moved to show almost a 1-in-4 chance of Powell ouster this year, but have fallen back again to about a 21% chance since.
Today's events to watch
* U.S. weekly jobless claims (8:30 AM EDT), June retail sales (8:30 AM EDT), Philadelphia Federal Reserve July business survey (8:30 AM EDT), July NAHB housing market index (10:00 AM EDT), May business/retail inventories (10:00 AM EDT), Treasury TIC data on flows to and from U.S. securities (4:00 PM EDT)
* U.S. corporate earnings: Netflix, US Bancorp, Snap-On, Pepsico, Abbott Laboratories, Travelers, General Electric, Marsh & McLennan, Cintas, Citizens Financial, Fifth Third, Elevance
* Federal Reserve Board Governor Christopher Waller, Fed Board Governor Adriana Kugler, Fed Board Governor Lisa Cook and San Francisco Fed President Mary Daly all speak
* G20 Finance and Central Bank Meeting in South Africa
Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(by Mike Dolan; editing by Ros Russell)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
8 minutes ago
- Yahoo
Trainline plc's (LON:TRN) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?
It is hard to get excited after looking at Trainline's (LON:TRN) recent performance, when its stock has declined 3.6% over the past three months. However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at. Specifically, we decided to study Trainline's ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. Put another way, it reveals the company's success at turning shareholder investments into profits. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. How To Calculate Return On Equity? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Trainline is: 21% = UK£58m ÷ UK£283m (Based on the trailing twelve months to February 2025). The 'return' is the income the business earned over the last year. So, this means that for every £1 of its shareholder's investments, the company generates a profit of £0.21. View our latest analysis for Trainline What Has ROE Got To Do With Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. Trainline's Earnings Growth And 21% ROE To start with, Trainline's ROE looks acceptable. Especially when compared to the industry average of 8.7% the company's ROE looks pretty impressive. This probably laid the ground for Trainline's significant 71% net income growth seen over the past five years. We reckon that there could also be other factors at play here. For example, it is possible that the company's management has made some good strategic decisions, or that the company has a low payout ratio. We then compared Trainline's net income growth with the industry and we're pleased to see that the company's growth figure is higher when compared with the industry which has a growth rate of 32% in the same 5-year period. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. What is TRN worth today? The intrinsic value infographic in our free research report helps visualize whether TRN is currently mispriced by the market. Is Trainline Making Efficient Use Of Its Profits? Trainline doesn't pay any regular dividends currently which essentially means that it has been reinvesting all of its profits into the business. This definitely contributes to the high earnings growth number that we discussed above. Conclusion In total, we are pretty happy with Trainline's performance. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
8 minutes ago
- Yahoo
Investing in JTC (LON:JTC) five years ago would have delivered you a 89% gain
Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term JTC PLC (LON:JTC) shareholders have enjoyed a 77% share price rise over the last half decade, well in excess of the market return of around 29% (not including dividends). Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. JTC's earnings per share are down 9.7% per year, despite strong share price performance over five years. This was, in part, due to extraordinary items impacting earning in the last twelve months. This means it's unlikely the market is judging the company based on earnings growth. Because earnings per share don't seem to match up with the share price, we'll take a look at other metrics instead. The modest 1.5% dividend yield is unlikely to be propping up the share price. In contrast revenue growth of 24% per year is probably viewed as evidence that JTC is growing, a real positive. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment. The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers). We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for JTC in this interactive graph of future profit estimates. What About Dividends? When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of JTC, it has a TSR of 89% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return. A Different Perspective While the broader market gained around 11% in the last year, JTC shareholders lost 17% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
8 minutes ago
- Yahoo
With 61% ownership of the shares, Jadestone Energy plc (LON:JSE) is heavily dominated by institutional owners
Key Insights Significantly high institutional ownership implies Jadestone Energy's stock price is sensitive to their trading actions 51% of the business is held by the top 8 shareholders Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. A look at the shareholders of Jadestone Energy plc (LON:JSE) can tell us which group is most powerful. With 61% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company. Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute. Let's delve deeper into each type of owner of Jadestone Energy, beginning with the chart below. See our latest analysis for Jadestone Energy What Does The Institutional Ownership Tell Us About Jadestone Energy? Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. Jadestone Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Jadestone Energy, (below). Of course, keep in mind that there are other factors to consider, too. Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 17% of Jadestone Energy. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Looking at our data, we can see that the largest shareholder is Tyrus Capital S.A.M. with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.9% and 6.8% of the stock. On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones. While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future. Insider Ownership Of Jadestone Energy The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our data suggests that insiders own under 1% of Jadestone Energy plc in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It appears that the board holds about UK£155k worth of stock. This compares to a market capitalization of UK£101m. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling. General Public Ownership The general public-- including retail investors -- own 21% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. Next Steps: It's always worth thinking about the different groups who own shares in a company. But to understand Jadestone Energy better, we need to consider many other factors. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph. If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
