EUROPEAN MIDDAY BRIEFING - Stocks Hit Again as -2-

France's Macron Faces Parliament Battle Over Pro-Business Agenda

PARIS-President Emmanuel Macron's pro-business agenda appeared in jeopardy Tuesday after France's conservative party Les Républicains rejected the idea of an alliance with the French leader to form a majority in Parliament.

Mr. Macron's centrist party, Renaissance, and its allies lost their majority in the National Assembly in Sunday's parliamentary elections after losing seats to the far right and the far left. An alliance with Les Républicains would allow Mr. Macron to retain the commanding majority that allowed the French leader to steamroll the opposition during his first term.

U.K. Rail Workers Strike as Inflation Soars

Tens of thousands of transport workers brought the U.K. to a standstill Tuesday during the country's largest rail strike in three decades.

The strike-prompted by disputes over jobs, pay and pensions-reflects a growing frustration among public workers in the U.K., many of whom feel their wages haven't kept up with soaring inflation.

Saudi Crown Prince's Visit to Turkey Marks Turning Point After Khashoggi Killing

ISTANBUL-Saudi Crown Prince Mohammed bin Salman is set to visit Turkey on Wednesday for the first time since the 2018 killing of journalist Jamal Khashoggi, as he looks to end years of international isolation that nearly jeopardized his grip on power, ahead of a trip by President Biden to the kingdom.

Mr. Khashoggi, a critic of the Saudi leadership, was killed and dismembered inside the Saudi consulate in Istanbul by men close to Prince Mohammed. The U.S. intelligence community concluded that the prince likely ordered the killing of the Washington Post columnist. The Saudi government initially denied the incident but later acknowledged that government officials carried out the killing and said the crown prince wasn't personally involved.

GLOBAL NEWS

Yellen Says Fed Can Combat Inflation Without Unemployment Increasing Significantly

MISSION, S.D.-Treasury Secretary Janet Yellen said she thought the Federal Reserve's efforts to combat inflation could be effective, without significantly increasing the unemployment rate.

The tight labor market that formed over the past two years, as the economy recovered rapidly from a brief pandemic recession, could aid the Fed in combating inflation, Ms. Yellen said while speaking at a press conference during a visit to the Rosebud Indian Reservation in South Dakota.

Biden Expected to Call for Temporary Federal Gasoline Tax Suspension

WASHINGTON-President Biden is planning to call for a temporary suspension of the federal gasoline tax, according to people familiar with the matter.

Mr. Biden and his advisers have been discussing the issue for months in the midst of increasing political pressure to take action to address record-high gas prices. The announcement is expected Wednesday, some of the people said. The White House said Mr. Biden would deliver remarks on gas prices at 2 p.m. Eastern Time, but didn't provide any details on the speech.

Glynn's Take: RBA Might Be Too Relaxed About Australia's Recession Risk

SYDNEY-The idea of a coming recession in Australia was calmly batted away this week by Reserve Bank of Australia Gov. Philip Lowe, but there are scenarios building that might plunge the resource-rich economy into a deep contraction, and the biggest influence on the outcome will be the central bank itself.

"I don't see a recession on the horizon here," Mr. Lowe said Tuesday. The lowest unemployment rate in nearly 50 years, labor market participation being at its highest ever, and the fact that more working-age Australians are in employment than ever before underpin his confidence.

Fed's Barkin Supported FOMC's Large Rate Increase

Federal Reserve Bank of Richmond President Thomas Barkin said Tuesday he was on board with last week's supersize rate rise by the Fed and expects more aggressive moves by the central bank as it seeks to lower high inflation levels.

"I was definitely supportive" of the 75-basis-point rate rise the Fed implemented last week, Mr. Barkin said in a virtual appearance. "We are in a situation where inflation is high, it's broad based, it's persistent, and rates are still well below normal...I think the spirit is you want to get back to where you want to go as fast as you can without breaking anything."

Trump Pick Wins Alabama GOP Senate Primary

Republican voters in Alabama selected Katie Britt as their nominee for Senate in a runoff primary election, after receiving the endorsement of former President Donald Trump, according to the Associated Press.

Polls closed Tuesday in Alabama, Arkansas, Georgia and Virginia, as well as in the District of Columbia. The most-watched race was in Alabama between Ms. Britt, the former chief of staff to retiring Sen. Richard Shelby (R., Ala.), and Rep. Mo Brooks (R., Ala.), a member of a group of the chamber's most conservative Republicans, the House Freedom Caucus. The two advanced to a head-to-head matchup after Alabama's May 24 primary, when none of the six GOP Senate candidates in that contest earned a majority.

Senate Begins Debate of Bipartisan Gun Control Bill

WASHINGTON-The Senate began debate Tuesday on bipartisan legislation intended to curb gun violence, in what would represent the first major federal change to gun laws in decades.

Senators easily cleared the simple majority threshold required to advance the package, 64-34; final passage will need at least 60 votes. Debate on the proposed legislation is expected to continue through the week. Lawmakers who worked on the bill said they hope to have it pass the Senate before the chamber breaks next week for a two-week recess.

Biden Administration Targets Removal of Most Nicotine From Cigarettes

The Biden administration is moving forward on a plan to mandate the elimination of nearly all nicotine in cigarettes, a policy that would upend the $95 billion U.S. cigarette industry and, health officials say, prompt millions of people to quit smoking.

The plan, unveiled Tuesday as part of the administration's agenda of regulatory actions, likely wouldn't take effect for several years. The Food and Drug Administration plans to publish a proposed rule in May 2023, though the agency cautioned that date could change. Then the agency would invite public comments before publishing a final rule. Tobacco companies could then sue, which could further delay the policy's implementation.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-22-22 0512ET