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Futures lower, Salesforce to report - what's moving markets

Published 05/29/2024, 03:45 AM
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Investing.com -- U.S. futures point lower following a mixed session on Wall Street on Tuesday, with traders keeping a close eye on upcoming inflation data later this week. Salesforce (NYSE:CRM)'s Data Cloud unit is set to be in the spotlight when the business software company reports its latest quarterly results after the bell, while American Airlines (NASDAQ:AAL) cuts its outlook for the current three-month period. Elsewhere, BHP requests an extension to a looming deadline facing its negotiations over a multi-billion pound takeover of rival Anglo American (JO:AGLJ).

1. Futures lower

U.S. stock futures edged down on Wednesday, as investors looked ahead to key inflation data later this week that could influence how the Federal Reserve approaches potential interest rate cuts in 2024.

By 03:38 ET (07:38 GMT), the S&P 500 futures contract had shed 21 points or 0.4%, Nasdaq 100 futures had dipped by 70 points or 0.4%, and Dow futures had dropped by 168 points or 0.4%.

The tech-heavy Nasdaq Composite closed higher in the prior session thanks in part to a jump in shares in artificial intelligence chipmaker Nvidia (NASDAQ:NVDA). A closely-watched monitor of semiconductors added 1.9%, boosting the benchmark S&P 500. The blue-chip Dow Jones Industrial Average dipped, weighed down by an uptick in U.S. Treasury yields.

Traders are awaiting the release of the monthly personal consumption expenditures price index on Friday. The figure is widely considered to be the Fed's preferred gauge of inflation, meaning it could factor into how policymakers regard the trajectory of price gains. Signs of sticky inflation have led several officials to suggest in recent days that they would like to see more evidence of cooling prices before starting to bring rates down from more than two-decade highs.

2. Salesforce to report

Salesforce is due to report its fiscal first quarter earnings after the bell on Wednesday, with Wall Street likely on the lookout for updates on the business software group's Data Cloud division.

The unit stands to be a beneficiary of a boom in interest in artificial intelligence. Analysts at Goldman Sachs said in a note to clients that they expect demand for the segment to "remain strong" partly due to Salesforce's ability to "enhance its products via AI."

Data Cloud's fourth-quarter annual recurring revenue neared $400 million, growing by almost 90% versus the year-ago period. Salesforce President Brian Millham told investors in February that the result "should be an indicator of the demand that we're seeing for people to get ready for the AI transformation they want to put their company through."

However, market observers have flagged that California-based Salesforce still faces headwinds from uncertainty hovering over the broader economic backdrop and a recovery in spending by inflation-squeezed small- and medium-sized companies.

3. American Airlines slashes second-quarter earnings outlook

Shares in American Airlines slumped in extended hours trading after the carrier warned that it expects to earn less per share in the current quarter.

The company lowered its forecast for second-quarter earnings per share to between $1.00 to $1.15, down from $1.15 to $1.45 previously. Total revenue per available seat mile, or TRASM, is also now expected to fall by 5% to 6%, versus a prior estimate for a decline of 1% to 3%.

Quarterly flying capacity is now forecast to match the corresponding three-month period in 2023. American had said that the number would increase by 7% to 9%.

Meanwhile, the firm announced the departure of Chief Commercial Officer Vasu Raja in June.

4. BHP asks for extension in Anglo American takeover talks

BHP Group (NYSE:BHP) said it would need more time to hold negotiations with Anglo American, as a deadline for the Australian miner to submit a formal takeover offer for its rival loomed large.

Last week, London-listed Anglo rejected a bid from BHP that was reportedly worth 38.6 billion pounds. The firms now have until 5 p.m. London time on Wednesday to reach an agreement, following a week-long extension of a prior deadline.

In a statement to Australia's securities exchange, BHP said that the extension would allow for "further engagement on its proposal."

BHP, the world's largest listed mining group, has put forward a range of measures to alleviate Anglo's concerns regarding the deal structure, which includes Anglo unbundling its platinum and iron ore assets in South Africa.

"BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American," it said.

CNBC has reported that Anglo American said it would respond to BHP's request in "due time."

5. Crude gains prior to U.S. inventory data

Crude prices rose Wednesday, adding to recent gains on hopes that demand will pick up with the onset of the travel-heavy U.S. summer season ahead of a meeting by major producers to decide future output levels.

By 03:34 ET, the U.S. crude futures (WTI) traded 0.5% higher at $80.20 per barrel, while the Brent contract climbed 0.4% to $84.25 a barrel.

Both benchmarks gained over 1% on Tuesday.

The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, is set to take place online over the weekend, and the group is expected to extend its current voluntary output cuts of 2.2 million barrels per day into the second half of the year.

Meanwhile, the Memorial Day holiday on Monday signaled the start of the peak demand season in the U.S., the world's biggest oil consumer, supporting sentiment in the market. Upcoming inventory data is expected to further the notion of growing demand, with analysts predicting a 2 million barrel draw in overall inventories.

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