Stock futures point to gains after June 19 holiday
US Stock Futures are on the rebound in early morning trading today. It looks like investors are keen to buy into the current weakness in stocks ahead of this week’s opening bell. After the June 16 holiday, however, there are still plenty of broad-based headwinds threatening the stock Exchange today. Namely, this follows the Federal Reserve’s latest decision to raise its benchmark interest rate by 75 basis points last week. For reference, this would be the largest increase in almost three decades.
On top of that, Fed Chairman Jerome Powell also complements the move by noting that further aggressive policy tightening may be in line. This would be the case as the central bank continues its protracted fight against runaway inflation. With all of this in mind, market analysts continue to suggest that an eventual Fed soft landing is less likely. Simply put, analysts at JP Morgan (New York Stock Exchange: JPM) claim that the current S&P 500 losses imply an 85% chance of a recession. For the week ahead, investors will likely be listening again to Fed Chairman Jerome Powell. As a result, he is due to testify before the US Senate Banking Committee on Wednesday morning.
In Powell’s words, Let’s not try to induce a recession now, let’s be clear about this, He adds that he and his team are resolutely focused on getting inflation back to our 2% target. As of 4:48 a.m. ET, Dow, S&P 500 and Nasdaq futures are trading up 1.65%, 1.86% and 2% respectively.
Spirit Airlines in the spotlight as JetBlue lifts takeover bid
On the side of the air transport industry, the shares of Spirit Airlines (NYSE: SAVE) once again return to the center of attention. For the most part this is probably due to the latest update of JetBlue (NASDAQ: JBLU) regarding the takeover saga. In short, JetBlue is currently in the running to acquire Spirit alongside rival airline Frontier Group (NASDAQ: ULCC). As travel demand continues to rise across the board, ultra-low-cost carriers such as Spirit would be go-tos for consumers looking to fly. For this reason, JetBlue’s Monday offer update would make this story headline news in the stock market today.
By entering, JetBlue is increasing its current offer to acquire Spirit to $33.50 per share. This would represent a considerable price increase of $2 per share on the side of JetBlues. Following this increase, Spirit shareholders could receive a payment of $32 per share if JetBlue wins the takeover war. Additionally, there will also be a prepayment of $1.50 per share in cash, according to JetBlues’ official statement.
Speaking about all of this in more detail, Jetblues CEO Robin Hayes. He declares, After discussions with the Spirit team last week and an extensive due diligence review, we are more confident than ever that a JetBlue-Spirit transaction would create a true domestic competitor for the Big Four and bring value to all of our stakeholders. Not to mention, even JPMorgan analysts seem bullish on SAVE stocks because of all of this. The company recently upgraded SAVE stock to an overweight rating of neutral, citing the likelihood of a deal. For this reason, I could see investors eyeing SAVE stocks at the opening bell later in the day.
Pfizer acquires 8.1% stake in Valneva to boost Lyme disease vaccine
In other news, The titan of the pharmaceutical industry Pfizer (NYSE: PFE) seems to be working hard to expand his portfolio. Since yesterday, the company bought an 8.1% stake in a French biotechnology company, Valneva (NASDAQ: VALN). In a certain context, Valneva operates primarily as a manufacturer of vaccines. Its development pipeline is currently focused on the commercialization of infectious disease vaccines. Among these would be Lyme disease. Notably, this would be one of the main reasons why Pfizers would move into the business. Overall, the duo, since 2020, has been working and is still working on the development of a vaccine against Lyme disease, VLA15. According to Pfizer and Valneva, VLA15 is expected to enter late-stage trials in the third quarter of this year.
Under the current agreement, Pfizer will invest $95 million in Valneva. That would represent 8.1% of its share capital at around $9.99 per share. According to Valneva, this latest round of investment will directly contribute to the development of Phase 3 of its VLA 15 program. On the one hand, Pfizer appears to be working hard to expand its offerings even as the pandemic persists globally. As the company continues to diversify beyond Covid-19, investors might consider PFE shares in the stock market now.
Chevron and Egypt mull new Mediterranean gas deal
Meanwhile, Chevron (NYSE: CLC) is currently building its relationships in the Middle East. Overall, this is evident from its latest operational update regarding its operation in Egypt. According to Chevron, it has signed a memorandum of understanding with Egypt’s state-owned gas company EGAS. Through the current deal, the duo plans to explore sending natural gas from offshore Mediterranean fields to Egypt. Once there, it will go through processing for export.
According to the Egyptian oil ministry, Chevron plans to drill its first exploration well in the eastern Mediterranean. That would be off the coast of Israel. Additionally, Chevron is also considering gas monetization options in the region. According to the report, the likes would include floating liquefied natural gas (LNG) technology. If the duo reach an agreement, Chevron notes that they aim to make the gas available in Egypt’s domestic market. As such, it wouldn’t surprise me to see the CVX stock gain some attention later on.
Bitcoin regains momentum after hitting 2017 levels over the weekend
Bitcoin (BTC) seems to be finding its footing after two consecutive weekends of selling. As it stands, the major cryptocurrency is currently worth over $20,000. Even so, over the past weekend, Bitcoin hit a low of $17,601.58. This comes at a time when waves of economic uncertainty continue to impact riskier assets. Accordingly, this would include the likes of cryptocurrencies such as Bitcoin and Ethereum (ETH) among others.
Crypto market analyst Yuya Hasegawa of Japanese bitcoin exchange Bitbank weighs in on this. He argues, Bitcoin’s weekend drop was, to put it simply, not deep enough. Hasegawa explains, The macro environment hasn’t really changed since last week’s FOMC meeting: there’s still no clear sign of lower inflation and the Fed could still drag the economy into recession by raising rates too aggressively or simply by not controlling inflation. After considering all of this, we might see more volatility in the crypto space this week.