WSJ City: Fed Hints at June Rate Rise, Bayer Approaches Monsanto

Good morning from London. Here’s essential reading today from WSJ City:

MUST READS FROM WSJ CITY

Fed officials said an interest-rate increase in June was possible if data showed an improving economy.

Bayer has approached Monsanto about a takeover. A deal would create the world's largest seed company.

EgyptAir said one of its aircraft disappeared while flying from Paris to Cairo with 66 people aboard.

Emerging markets have been on a tear since January. But Moody's warns of potential 'shocks' from the region.

City Talk: Thomas Cook expects lower earnings, BP raises debt, Julius Baer increases managed assets.

The stepson of Malaysia's Najib Razak bought a £23 million London house with 1MDB funds.

Strong wage growth in the UK would be a welcome boost to a world awash with debt. Sadly, it's proving elusive.

Donald Trump as president isn't factoring into many investors' plans, despite his success at the polls.

Global investors are struggling to reconcile low US Treasury yields with signs of economic strength.

A startup that helps insurers detect fraudulent claims has raised new venture capital funding.

Deutsche Bank will face a fresh assault over its conduct, culture and pay at Thursday's annual meeting.

Burberry plans to save £100 million a year and buy back shares, but it's being targeted by short sellers.

For updates throughout the day, download WSJ City for iPhone here.

IN THE PAPERS

Andy Haldane, the Bank of England’s chief economist, has admitted to being baffled by the British pensions system, warning that it’s over-complicated and has damaging consequences for consumers. FT (£)

Aziz Tayub, the man who owns the Poundstretcher discount chain is the latest bidder to enter the fray to buy BHS. The Telegraph.

Some of the City’s top accountants and lawyers will be summoned as witnesses by MPs as parliament seeks answers to the collapse of BHS last month The Times (£)

Official figures show the number of EU nationals working in the UK has climbed to a record 2.1m, accounting for 6.8% of the workforce. FT (£)

Billionaire investors Paul Singer, Carl Icahn, Barry Rosenstein, William Ackman and Daniel Loeb are setting aside their political differences to launch a Washington-based lobbying group to fight mounting attacks on shareholder activism. WSJ

MARKETS TODAY

The FTSE 100 was expected to suffer deep losses on Thursday after the Fed sent sceptical investors a sharp warning that an interest-rate rise is still in play for June if the economy keeps improving.

Fed officials concluded a rate increase in June was a distinct possibility when they last gathered to discuss the economy, according to minutes of their April 26-27 policy meeting released on Wednesday. After the release of the minutes, traders in futures markets put a 34% probability on a move by the June 14-15 meeting, up from just a 4% chance a few days ago.

The shift in expectations shocked US markets. The Dow dropped by more than 180 points after the release of the minutes, then rallied late into the day and finished nearly flat. Bonds sold off and the dollar gained against a broad basket of currencies. Similar choppy trading patterns were evident in Asia, where the stronger dollar took its toll on commodities too. Brent was recently trading just above $48 a barrel, almost a buck lower than its closing price in New York.

Stocks to Watch: BP to raise £400m of new debt financing; National Grid FY pretax profit £3.03bn and sale of a majority stake in UK gas distribution on track; Hargreaves Lansdown net inflows of £2.30bn in 4 months to April 30; Royal Mail FY pretax profit £267m and raises dividend; 3i assets under management £14bn vs £13.5bn; Investec reported net inflows of £5.3bn; Merlin Entertainment thinks market conditions in London remain challenging; Informa backs 2016 view.

COMING UP

UK retail sales figures for April are published at 9.30am BST, while the Council of Mortgage Lenders releases its latest gross mortgage lending data.

WSJ City Event: Come and hear top investors discuss navigating turbulent markets at WSJ City's first panel discussion, on June 9 at The News Building, next to The Shard, from 7am. Sign up here.