stocks, news, data, U.S. debt ceiling

Companies are continuing to generate cash for shareholders despite a tough year, says Ben Lofthouse, head of global equity income at Janus Henderson.

Shares of Embracer were down as much as 45% after a partnership deal fell through, prompting guidance cuts. The would-be partnership was described as “groundbreaking” in a press release by the gaming giant, who said the deal would have “set a new benchmark” for the industry.

The deal would have been worth around $2 billion in revenue over a six-year period, but late Tuesday night Embracer “received a negative outcome” from the counterparty, which was “unexpected” to Embracer’s management and board of directors.

British retailer Marks & Spencer saw its shares bounce 13% on strong trading results.

Profit before tax was up to £475.7 million ($590 million) for the year to April 2023, compared to £391.7 million in the previous 12-month period.

U.S. stocks fell Wednesday, with debt ceiling talks stretching on as the earliest expected date that the U.S. could default draws nearer.

Negotiators for both sides are expected to meet again Wednesday, according to Reuters.

— Samantha Subin

The ifo Business Climate Index, a widely-watched gauge of German economic sentiment, declined in May after six consecutive increases.

The survey flagged “significantly more pessimistic expectations,” with manufacturing registering a “particularly steep decline,” and trade indicators down sharply.

On Tuesday, S&P Purchasing Managers’ Index figures indicated overall German business output grew month-on-month but manufacturing experienced a downturn.

— Jenni Reid

It’s “time for a pause, not a stop” on rate hikes to tackle inflation says Vitor Constancio, former vice president of the ECB.

Julien Lafargue, chief market strategist at Barclays, says there is more room for upset in stock markets as the U.S. debt ceiling negotiations roil on. He adds that a long-anticipated U.S. recession remains a possibility.

The British pound fell 0.3% against the dollar and slipped by 0.1% against the euro after U.K. inflation came in hotter than forecast, with headline CPI at 8.7%, versus the 8.2% predicted in a Reuters economist poll.

Core inflation accelerated from 6.2% to 6.8%, fueling bets that the Bank of England will raise interest rates further.

Economists at Berenberg said a 25 basis point hike to 4.75% in June was now their base case, followed by one cut in the fourth quarter.

U.K. bond yields were sharply higher, with the 10-year gilt yield up 8 basis points to 4.243% and the 2-year gilt yield up 22 basis points to 4.353%.

Sophie Lund Yates, lead equity analyst at Hargreaves Lansdown, weighs in on the economic outlook as U.S. debt ceiling deal negotiations continue.

Alistair Phillips-Davies, CEO of SSE, says more investments needed to ensure flexible and security of energy.

European stocks were sharply lower early Wednesday, with the benchmark Stoxx 600 index down 1.4% and all sectors and major bourses trading in the red.

Auto stocks fell 2.3% and mining dropped 2.25%. France’s CAC 40 was down 1.54%, with the U.K.’s FTSE 100 and Germany’s DAX lower by 1.4% and 1.3%, respectively.

U.K. inflation dropped sharply in April, as energy prices retreated and the impact of Russia’s invasion of Ukraine began to drop out of the annual consumer price comparison.

Headline CPI inflation came in at 8.7% year-on-year, the Office for National Statistics said, down from 10.1% in March but above a consensus estimate of 8.2% from a Reuters poll of economists.

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— Elliot Smith

Goldman Sachs has named Amazon, Uber, and Meta as three tech stocks that offer the “most compelling risk/reward” looking ahead to the rest of the year.

In a note to clients on May 19, Goldman also ranked the three companies in order of preference.

CNBC Pro subscribers can read more here.

— Ganesh Rao

There’s an opportunity for investors in pharmaceuticals that’s been “underrepresented for a very long time,” according to fund manager Philip Ripman of Storebrand Asset Management.

He names three stocks to play the theme.

CNBC Pro subscribers can read more here.

— Weizhen Tan

European markets are expected to open in negative territory Wednesday.

The U.K.’s FTSE 100 index is expected to open 32 points lower at 7,727, Germany’s DAX 74 points lower at 16,074, France’s CAC 37 points lower at 7,345 and Italy’s FTSE MIB 124 points lower at 27,074, according to data from IG.

Earnings are set to come from M&S, SSE, Aviva and Julius Baer. Data releases include U.K. inflation figures for April and Germany’s Ifo survey of current business conditions.

— Holly Ellyatt