US markets struggled to make progress in a shortened trading week as concerns over the Israel-Iran conflict clouded the outlook.
Energy prices rose, with WTI crude futures pushing though $75 per barrel to a three-month high, while the dollar continued its descent against other major currencies.
The Federal Reserve meeting, normally the highlight of the week, passed almost unnoticed as the central bank left rates on hold.
Inflation in goods prices is likely to rise this summer, as President Trump's tariffs work their way through to consumers, and rates are unlikely to change until their effect becomes clear, said analysts.
In a statement, the bank's rate-setting committee kept its outlook for two cuts this year, but a rising minority said they expected no rate cuts at all, and the 'dot plot' slowed slightly with just a single quarter-percentage-point cut now expected in each of 2026 and 2027.
ENPHASE ENERGY
Shares in solar energy company Enphase Energy (ENPH:NASDAQ) plummeted after president Donald Trump proposed changes to current tax legislation which would eliminate solar, wind and energy credits by 2028, two years earlier than the previous administration had established.
Analysts didn’t take to kindly to the news, cutting their share price targets for Enphase, SolarEdge Technologies (SEDG:NASDAQ) and Sunrun (RUN:NASDAQ) on fears they will face weaker residential solar demand under the proposed US Senate reconciliation bill restrictions and the early elimination of tax credits.
Enphase, which makes the equipment to convert direct current from solar modules into alternating current, known as inverters, is also facing mounting challenges in its core US residential solar market.
Higher-for-longer interest rates have reduced consumer interest in solar installations, and regulatory changes in California, the largest solar market, have taken away some of the benefits to households of installing solar panels.
FEDEX
The world’s largest express-parcel delivery firm FedEx (FDX:NYSE) is due to report earnings for the fourth quarter and the full year to the end of May on 24 June, and there is a lot hanging not just on the results but also the outlook.
Six months ago, the firm lowered its revenue growth forecast for the full year from a low single-digit increase to flat, and cut its EPS (earnings per share) guidance from around $18 to between $16.45 and $17.45 before accounting adjustments for its mark-to-market retirement plans.
The company also said it would spin off its FedEx Freight division, which generated around 10% of group revenue in the year to May 2024, through a separate stock market listing.
However, three months ago the firm revised its revenue growth forecast down from flat to ‘slightly down’, and cut its EPS guidance to a range of $15.15 to $15.75, or 14% lower at the mid-point than its original forecast.
The group also lowered its capital spending target for the year to May by $300 million to $4.9 billion saying it would prioritise network optimisation and improved efficiency, including facility modernisation and automation.
MASTERCARD/VISA
Shares in payment processing giants Mastercard (MA:NYSE) and Visa (V:NYSE) have been under mounting pressure over the last week following a Wall Street Journal report that large merchants such as Amazon (AMZN:NASDAQ) and Walmart (WMT:NYSE) are exploring issuing their own ‘stablecoins’.
In an echo of the 19th century, when mines would issue their own form of currency known as ‘scrip’, to be used in the local company-owned store, big companies are assessing whether stablecoins could save them paying fees and offer quicker payment processing.
‘Stablecoins could allow merchants to circumvent traditional payment rails, which cost them billions of dollars in fees each year, including the interchange fee they pay when customers make purchases using their cards,’ wrote the Journal.
Stablecoins are backed by reserves of cash or cash-like assets such as Treasury Bills and maintain a one-to-one exchange ratio with dollars or other official currencies.
The decision whether to go ahead with stablecoins likely depends on a new bill called the ‘Genius’ Act (Guiding and Establishing National Innovation for US Stablecoins), which was passed by the Senate earlier this week but has yet to pass the House.
