MARKET WRAPS
Watch For:
Retail sales for EU, Italy; France estimate of job creation, foreign trade, balance of payments; meeting of eurozone finance ministers; trading updates from Deutsche Post, Henkel, Munich Re, Bayer, Porsche, Renault, Associated British Foods, Aveva, DCC, Sberbank, Pandora, Compass Group, Direct Line, SAS, Finnair
Opening Call:
Shares may be off to a mixed start in Europe ahead of U.S. midterm elections and inflation data. In Asia, stocks were mixed; Treasury yields climbed; the dollar was steady; while oil and gold declined.
Equities:
European stocks could consolidate in mixed trade as investors wait out corporate earnings, as well as U.S. inflation data and midterm elections.
"After the earnings and central-bank decisions of recent weeks, calm has descended across markets, which perhaps offers hope a decent rebound's in the works," IG said.
"The one cloud on the horizon is U.S. CPI, but if the market's bullish mood is this strong, then any hint of weakness could accelerate the rally's momentum."
Investors say they are watching for the possibility that Tuesday's election results in the U.S. could boost stocks, especially if Republicans take the majority in the House of Representatives-a scenario that nonpartisan analysts are projecting. That would lead to a divided U.S. government, which some investors like because it reduces policy uncertainty.
This year, however, investors and strategists say any boost from the elections will likely be outweighed by interest-rate expectations, corporate results and economic data.
Forex:
The dollar was steady in Asia, but could weaken ahead of tonight's U.S. midterm elections.
A further retracement in the dollar has pointed toward improved risk sentiment, IG said.
The optimism could be attributed to the U.S. midterm elections, where odds are presently pointing to a possible split Congress, which could lead to a political gridlock that may create more resistance for regulations to pass through, IG added.
"But the big event of the week is U.S. CPI on Thursday night, as this has the potential to dramatically reshape Fed policy expectations," ANZ said.
Bonds:
Treasury yields extended their rise as investors await this week's October inflation report for further clues to how high the Fed could ultimately raise interest rates and how long they will keep them there.
On Thursday, October core annual CPI is expected to slow slightly to 6.5% from 6.6% in September. "Cost pressures will continue to stem from the services industry, with wages the key input," BMO said.
Meanwhile, the results of Tuesday's midterm elections could have a fiscal impact, according to analysts. That, in turn, could swing bond markets.
Energy:
Oil futures retraced earlier gains stemming from near-term bullish fundamentals.
Crude oil futures had opened sharply lower Monday after ending down overnight, as traders weighed the potential for changes to China's Covid restrictions. But, they slowly rose during the session as focus returned to supply-side issues, ANZ Research said.
OPEC+ has started lowering production in line with its last meeting's agreement to reduce quotas by 2 million barrels a day, while markets are facing the deadline for European imports of Russian oil before sanctions kick in Dec. 5, ANZ added.
"The oil market still is a little bit nervous about the demand prospects and we want to get more clarity on China's reopening plans," Phil Flynn, senior market analyst at The Price Futures Group, said.
Looking a bit ahead, he said there will be a lot of focus on the demand numbers in this week's U.S. petroleum supply report due out Wednesday, as well as a focus on U.S. oil production, as frackers are reluctant to raise oil production in the "uncertain environment."
Metals:
Gold edged lower in Asia ahead of the U.S. midterm elections and U.S. CPI data.
The best-case scenario for gold is for a Republican sweep of the elections and further signs that pricing pressures are easing, Oanda said.
The precious metal looks like it will closely track the dollar, and that means it could hinge on this week's inflation report, Oanda added.
---
Copper prices were little changed after Monday's losses, which came as China reaffirmed its zero-Covid commitment, dashing market hopes for a reopening.
Galaxy Futures said downstream buyers in China have turned conservative about stocking up given rising local infection cases, stricter movement curbs in some cities and overall caution amid a hawkish Fed.
"Further upside momentum looks limited for copper," Galaxy Futures said.
---
Chinese iron-ore futures edged higher, building on recent gains amid continued speculation on when China may eventually lift Covid-19 restrictions.
The main driver of price rises in the near term is a reversal of market pessimism, as iron-ore supply is greater than demand, China Futures said.
Steel mills' profitability is at its lowest this year, and end-demand is unlikely to be significantly lifted for now, it added.
TODAY'S TOP HEADLINES
Corporate Executives Call for Action-Based Approach at COP27
Business leaders are pushing for specific actions to combat climate change and asking for clearer policies to support such initiatives from governments at the United Nations climate summit in Egypt.
Top executives of 101 companies penned an open letter last week urging governments and companies to support existing solutions to meet the goals of the 2015 Paris Agreement, which aims to keep global warming well below 2 degrees Celsius by the end of the century.
Russia Presses Evacuation of Kherson as Ukrainian Offensive Looms
Russia stepped up the evacuation of civilian institutions from the occupied Ukrainian city of Kherson, where looting has become widespread and squatters have taken over the abandoned government headquarters, as Ukraine received sophisticated Western air-defense systems that could help it protect its cities.
Moscow's decision to mobilize roughly 300,000 reservists has allowed Russian forces, for now, to stabilize the front line in most areas, halting the Ukrainian offensives that reclaimed large parts of the Kharkiv, Donetsk and Kherson regions in September and October.
Elon Musk Says Twitter Will Permanently Ban Users Who Impersonate Others
Elon Musk is cracking down on people who impersonate others on Twitter, tightening policies and banning celebrities including Kathy Griffin who had posed as him.
The move is one of the first by Mr. Musk, a self-described free-speech absolutist, to tighten Twitter Inc.'s free-speech policies. He said Sunday that impersonating accounts will be permanently suspended unless they are specified as parody.
Write to singaporeeditors@dowjones.com
Expected Major Events for Tuesday
00:01/UK: Oct BRC-KPMG Retail Sales Monitor
05:30/NED: Oct CPI
07:00/ROM: Sep Retail trade
07:45/FRA: 3Q Flash estimate of job creation
07:45/FRA: Sep Foreign trade
07:45/FRA: Sep Balance of payments
08:00/HUN: Sep Retail Sales
08:00/SVK: Sep Internal trade, incl Wholesale & Retail
08:00/CZE: Sep Retail trade
08:00/HUN: Sep Preliminary Industrial Production
08:00/CZE: Oct Unemployment data
08:00/AUT: Aug Foreign Trade
09:00/ITA: Sep Retail Sales
10:00/EU: Sep Retail trade
10:00/CRO: Oct PPI
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
11-08-22 0015ET
