MARKET WRAPS
Watch For:
Manufacturing PMI data for Eurozone, Germany, France, Italy; Germany
Germany trade data, unemployment; trading updates for Ferrari, A.P. Moller-Maersk, GSK, Ryanair, Wolters Kluwer
Opening Call:
Stock futures point to a muted opening on Wednesday. In Asia, stocks were mostly higher; Treasury yields were mostly lower; the dollar fell; while oil and gold rose.
Equities:
European shares could face a cautious opening Wednesday, amid hopes that the Federal Reserve may soon slow the pace of interest-rate rises.
The central bank is widely expected to announce another 0.75-percentage-point rate increase at the end of its two-day monetary-policy meeting. Some Fed officials have signaled they could consider a smaller half-point rate lift in December.
Comments from Fed Chairman Jerome Powell following the meeting could offer clues about whether the central bank will adjust its course on monetary policy.
"This recent rally sets us up for a bit of a disappointment if we don't get language on a pivot. There's a good chance that we end up down on Powell's statements tomorrow," said Liz Young, head of investment strategy at SoFi.
Forex:
The dollar fell ahead of the FOMC decision.
The important point is that even if the Fed were to signal a slower pace of rate hikes after tonight's expected 75bp increase, the Fed is likely to reiterate the need to keep rates "higher for longer" to give the impression that the battle against inflation is not yet over, MUFG Bank said.
The likely hawkish outcome of the FOMC meeting could lend support to dollar bulls tonight, MUFG Bank added.
"There is potential optimism and belief by some we may get some narrative tomorrow about a deceleration path possible," said Silicon Valley Bank's head of FX risk advisory, Ivan Asensio.
But he also said the Fed generally raises interest rates according to the problems they are trying to solve at the time until something changes.
Bonds:
Treasury yields were broadly lower, after the policy-sensitive two-year rate climbed to a more than one-week high and longer-term rates fell Tuesday, as traders prepared for the Fed's policy announcement.
"We look for the FOMC to deliver another 75 (basis point) rate hike this week," said TD Securities.
"The decision will bring policy to a level at which the Committee might feel more comfortable in shifting to a steadier hiking pace. The exact timing, however, will highly depend on the CPI data before the Dec meeting. Powell might offer some hints in the post-meeting presser."
Energy:
Oil prices gained in Asia, with sentiment supported by a weaker dollar and hopes for changes to China's Covid-19 policy.
"Potential changes to China's Covid-19 policy could have significant implications for oil demand," ANZ said. China is the world's largest oil importer.
There was speculation Tuesday on social media sites, such as Twitter, that Chinese authorities could set up a team to consider reopening options.
Metals:
Gold prices were higher early Wednesday, building on overnight gains on a weaker dollar.
There are expectations that the Fed will join the RBA in moving toward a slower pace of tightening, Oanda's senior market analyst Craig Erlam said.
"The expectations concerning the future course of U.S. monetary policy and the associated U.S. dollar trend will presumably dictate the direction for the gold price in the short term," Commerzbank analysts said.
---
Aluminum prices rose on a report that some Chinese smelters will halt production.
Three aluminum smelters in China's Henan province plan to halt 110 kilotons of combined annual capacity due to losses, and to curb pollution during the Northern Hemisphere winter heating season, ING said.
---
Chinese iron-ore futures were higher, following Tuesday's gains on improved investor sentiment. Overall commodities prices soared, which lifted the prices of iron-ore, Baocheng Futures said.
However, Baocheng expects prices will trend lower amid weaker demand from steel mills.
TODAY'S TOP HEADLINES
China PBOC Governor Pledges to Keep Yuan Stable
China will aim to keep the yuan's exchange rate stable at a reasonable and balanced level and for the economy's potential growth rate to be in a reasonable range, said People's Bank of China Gov. Yi Gang.
The remarks by the central bank governor came as the Chinese currency has faced mounting downward pressure against the U.S. dollar in recent months, while the economy remains pressured by a prolonged property-sector slump and a stringent Covid-19 policy.
Japan Finance Minister Says Concerned About Gradual Weakening of Yen
Japanese Finance Minister Shunichi Suzuki on Wednesday showed a broader concern about the yen's weakness, saying the slower pace of the yen's depreciation, not just sharp movements, isn't desirable for the Japanese economy.
"I am very concerned about the gradual weakening of the yen" because a weaker yen could accelerate inflation in Japan by increasing the cost of imports, Mr. Suzuki said in parliament.
Saudi Arabia, U.S. on High Alert After Warning of Imminent Iranian Attack
Saudi Arabia has shared intelligence with the U.S. warning of an imminent attack from Iran on targets in the kingdom, putting the American military and others in the Middle East on an elevated alert level, said Saudi and U.S. officials
In response to the warning, Saudi Arabia, the U.S. and several other neighboring states have raised the level of alert for their military forces, the officials said. They didn't provide more details on the Saudi intelligence.
Before OPEC+ Production Cut, Saudis Heard Objections From a Top Ally, the U.A.E.
ABU DHABI-The United Arab Emirates sent its national security adviser to Riyadh in September on a secret mission to dissuade Saudi Arabia's crown prince from pushing an oil-production cut that would anger the U.S. and risk painting oil producers as Russian allies, people familiar with the trip said.
The Emirati official, Sheikh Tahnoun bin Zayed Al Nahyan, a brother of the U.A.E.'s president, met with Saudi Crown Prince Mohammad bin Salman and echoed Washington's view that reducing output wasn't economically necessary and warned of geopolitical fallout, the people said.
HSBC CFO Ewen Stevenson Sought Top Job Before Surprise Resignation
LONDON-HSBC Holdings PLC's chief financial officer decided to leave the company after becoming impatient with the timetable for the chief executive job to open up, according to people familiar with the matter.
Ewen Stevenson, 56 years old, in recent months told board members he wanted to be HSBC's CEO and didn't want to wait too long, the people familiar with the matter said. The board was unwilling to provide timing for a change or an assurance that Mr. Stevenson would get the job, the people said. CEO Noel Quinn has said he plans to stay for several more years.
Denmark Prime Minister Poised for Re-Election Amid Surging Inflation, War in Ukraine
COPENHAGEN-Danish Prime Minister Mette Frederiksen looked poised to win re-election by a razor-thin margin Tuesday in an election dominated by a cost-of-living crunch and a disruption in gas supplies from Russia, which had added pressure on her government already under fire for its order to cull millions of mink during the Covid-19 pandemic.
Ms. Frederiksen's Social Democrats won 27.5% of the vote, making it by far the largest of the 14 parties on the ballot. The center-left coalition backing her had gained 87 of the 90 mandates needed to win a majority after all the votes had been counted in metropolitan Denmark.
China Evergrande Group Gets Enforcement Notices on $4.48 Billion Loan
China Evergrande Group has got enforcement notices for a 32.60 billion yuan ($4.48 billion) loan taken from a Shengjing Bank Co., the latest setback for the real estate conglomerate trying to revive itself from debt woes.
AMD Forecasts Deepening Slump in PC Sales as Consumer Demand Softens
Advanced Micro Devices Inc. issued a glum sales outlook for the current quarter and said it would cut spending as the chip maker responds to a deep slump in demand for consumer products.
AMD Chief Executive Lisa Su said the company was cutting expenses in businesses that weren't doing as well to adapt to the soft demand outlook. She didn't quantify the amount of the cuts on a call with analysts Tuesday after the company issued third-quarter earnings.
Airbnb Books Record Revenue as Travel Demand Remains Strong
Airbnb Inc. posted its most profitable quarter to date, with record revenue bolstering the case that travel demand remains strong despite continuing challenges from rampant inflation.
The home-sharing company said its results were driven by higher bookings in cities, stronger cross-border travel and longer stays. Airbnb said booked third-quarter nights and experiences, or activities reserved through the platform, were its highest ever, with a 25% increase.
Ad Giants Advise Brands to Pause Spending on Elon Musk's Twitter
Two large advertising companies recommended that their clients temporarily pause their paid advertising on Twitter, the latest example of Madison Avenue's cautious stance toward the site after Elon Musk's takeover.
"The current situation is unpredictable and chaotic, and bad actors and unsafe behaviors can thrive in such an environment," Interpublic Group of Cos. wrote in an email Monday that was reviewed by The Wall Street Journal. "At this moment, we cannot confidently state that Twitter is a safe place for brands."
Write to singaporeeditors@dowjones.com
Expected Major Events for Wednesday
00:01/UK: Oct Shop Price Index
00:01/UK: 4Q CBI SME Trends Survey
07:00/ROM: Sep PPI
07:00/GER: Sep Foreign Trade
08:00/POL: Oct Poland Manufacturing PMI
08:15/SPN: Oct Spain Manufacturing PMI
08:45/ITA: Oct Italy Manufacturing PMI
08:50/FRA: Oct France Manufacturing PMI
08:55/GER: Oct Labour market statistics (incl unemployment)
(MORE TO FOLLOW) Dow Jones Newswires
11-02-22 0113ET
