MARKET WRAPS
Watch For:
U.S. Weekly Jobless Claims; Chicago Business Barometer - ISM-Chicago Business Survey - Chicago PMI.
Opening Call:
Stock futures held steady as investors awaited data that will give an indication of whether the recent uptick in Covid-19 infections is hurting the labor market.
Stocks typically rise during the last five trading days of the year and the first two trading days of the new year-a phenomenon known as the "Santa Claus rally."
Since 1950, the S&P 500 has ended higher about 77% of the time during the period, according to Dow Jones Market Data, with an average gain of 1.3%.
Despite Covid-19 cases hitting a record in the U.S., some investors expect that high vaccination rates and signs of milder symptoms caused by the Omicron variant mean the economy will avoid a repeat of the disruption seen at the start of the pandemic. Many decision makers are more focused on hospitalizations than cases and are seeking to avoid stricter measures.
Lower-than-average trading volumes, with many investors off for the holiday season, could cause choppy trading or outsize moves in markets.
"On the equity side, we're grinding higher," said Des Lawrence, a senior investment strategist at State Street Global Advisors. "It looks like markets are a little bit more stable but liquidity is very thin at the moment, volumes are really light."
In premarket trading, shares of Biogen fell almost 5% after Samsung Biologics called a media report that it was about to buy the company "not true." U.S.-listed shares of Didi Global fell more than 5% premarket after the ride-hailing firm said its third-quarter revenue dropped.
Investors are awaiting data on U.S. jobless claims, which have remained near decade lows in recent weeks. That reflects a tight labor market in which employers are holding on to their workers despite concerns around the Omicron variant of the coronavirus. Economists surveyed by The Wall Street Journal expect that first-time applications for unemployment benefits, a proxy for layoffs, will stay near that level in the week ended Dec. 25 when figures are released at 8:30 a.m. ET.
Forex:
Despite modest gains this morning, the U.S. dollar could weaken if Omicron coronavirus variant fears continue to fade, said Jeffrey Halley OANDA's Senior Market Analyst, Asia Pacific.
Easing fears about possible harsh lockdowns to tame the spread of Omicron prompted some investors to sell the dollar, which hit an intraday low of 95.86 Wednesday.
"After trading sideways for a few sessions, receding Omicron concerns amongst investors saw the U.S. dollar resume its gentle retreat overnight as traders moved out of defensive positioning," Halley said.
"Support at 95.85 remains marginally intact, and a daily close below 95.80 should signal further losses to 95.50," he added. However some traders are buying back the dollar, with the DXY index up.
In cryptocurrency markets, Bitcoin, the leading digital asset, continued to slide. Bitcoin was down around 2% to below $47,000, bringing declines that began at the beginning of this week close to 10%.
Bonds:
In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 1.529% from 1.542% Wednesday.
Trade has been typically slow in the last week of the year, with investors trying to assess how the Omicron wave will impact the Fed's decision to tighten monetary policy. News that the variant may not be as bad as initially feared indicates that inflation is likely to remain strong and labor shortages may not be aggravated
Commodities:
Oil prices weakened after conflicting signals from China and the U.S. on the demand outlook.
The muted moves come after the U.S. Energy Information Administration released data Wednesday showing stockpiles dropped by 3.6 million barrels in the week to Dec. 24, suggesting strong demand for oil and lifting prices.
Brent pared those gains early Thursday after Reuters reported that China had issued its first 2022 crude import quotas at 11% less than during the same period a year earlier.
Gold prices wavered, caught between a stronger dollar and falling U.S. Treasury yields. The precious metal is being pressured by a rising dollar, as the ICE Dollar Index gains 0.3%, making gold--which is bought and sold in dollars--more expensive for holders of other currencies.
Losses are being capped by falling U.S. bond yields. Other precious metals also fell, with silver down 0.5% at $22.74 an ounce and platinum down 0.2% at $967.80 an ounce.
Aluminum gained on renewed supply concerns. Major producer Alcoa said Wednesday that it would close a smelter in Spain for two years as a result of high energy prices, driven by Europe's gas-supply crunch.
The smelter has an annual capacity of 228,000 tons. Europe's industrial companies have been hit hard by sky-high natural gas prices. A lack of supply to meet the winter months helped push gas prices to record levels earlier this year, raising concerns that metal smelters, unable to pay their energy bills, would be forced to close.
Copper prices edge lower in thin, holiday-period trading. LME prices edge down 0.1%.
TODAY'S TOP HEADLINES
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Tesla Inc. has emerged as one of the auto industry's biggest winners in a year plagued by semiconductor shortages and snarled global supply chains. It owes that success in some measure to its Silicon Valley roots.
Elon Musk's electric-vehicle maker is poised to manufacture roughly 80% more vehicles this year than it did in 2020, analyst forecasts indicate, on pace for its fastest annual production growth since 2018. The global auto industry, hit hard by supply-chain disruptions, is expected to produce around 1% more vehicles than last year and 15% fewer than in 2019, according to IHS Markit.
China Evergrande Shares Drop on Reports It Missed Coupon Payments
China Evergrande Group's shares fell 8.5% to 1.51 Hong Kong dollars by midday Thursday on reports it missed coupon payments on offshore bonds.
The cash-strapped developer had US$255 million in new coupon payments due Tuesday for its June 2023 and 2025 notes, Reuters reported. This caused its US$19 billion in international bonds to be in cross-default, according to Reuters.
SenseTime Shares Jump in Hong Kong Market Debut
HONG KONG-Shares of SenseTime Group Inc. jumped in their Hong Kong market debut, after the Chinese artificial-intelligence leader completed a $744 million initial public offering that had been delayed by tensions between Washington and Beijing.
SenseTime shares closed 7.3% above their IPO price Thursday, after rising as much as 23%.
Didi's Revenue Falls After Beijing's Crackdown Hurts Its China Business
Didi Global Inc. said Wednesday its third-quarter revenues dropped 11.5% from the preceding three months, after Chinese regulators launched a cybersecurity probe into the ride-hailing firm and forced many of its apps to be taken down.
Beijing-headquartered Didi also said Daniel Zhang, the chairman and chief executive of Alibaba Group Holding Ltd., has resigned from its board. He has been succeeded by Yi Zhang, a senior legal director at the Chinese e-commerce giant who has previously worked at several international law firms.
Victoria's Secret Shares Rise on Buyback Plan, Holiday Sales
Shares of Victoria's Secret & Co. soared Wednesday after the lingerie seller said it plans to buy back $250 million of its own shares and reported strong sales growth during the holidays.
Shares rose as much as 15% before closing up 12% at $54.50.
SpaceX Project's FAA Review Delayed After Receiving 18,000 Comments
Federal regulators have delayed the release of an environmental review of SpaceX's plan to launch a new rocket from Texas by two months. One of the reasons? Too many comments from the public.
The Federal Aviation Administration said it received more than 18,000 public messages on the project, causing it to push back the release of its environmental review from Dec. 31 to Feb. 28. The agency said SpaceX is working on responses to the comments.
JetBlue Trims Flights Through Mid-January as Omicron, Weather Challenge Airlines
JetBlue Airways Corp. said it would trim its schedule through mid-January as more of its crews are sickened by the latest coronavirus variant.
The New York-based carrier said it would cancel about 1,280 flights through Jan. 13 to give passengers a head start on adjusting their plans, rather than face last-minute cancellations at airports.
Strong Labor Market in 2021 Faces Down Omicron Threat
U.S. employers added a record number of jobs in 2021, a gauge of layoffs fell to a half-century low and available positions surged, but the pace of the labor market's strong recovery could slow early next year due to the uncertainty posed by the Omicron variant of Covid-19.
U.S. Stocks End a Wild Year With Big Gains
U.S. stocks are racing toward a third consecutive year of big gains, with major indexes near records to end 2021.
Even with the recent turbulence from the Omicron coronavirus variant, the S&P 500 is headed toward a 28% advance for 2021 and has hit 70 highs. It is the third straight year of double-digit gains for the broad index, and the second in the midst of the Covid-19 pandemic. The Dow Jones Industrial Average and Nasdaq Composite have gained 19% and 22%, respectively, this year, helping send the major indexes to their best three-year performance since 1999.
As Chinese IPOs Stumble, Investors Look Elsewhere in Asia
For investors looking to bet on new share offerings in Asia, the center of gravity is shifting away from China.
In a year during which Beijing's regulatory assaults on its companies riled the market and upended a yearslong record of great returns from Chinese new-economy stocks, India, South Korea and Southeast Asia have become alternative sources of alluring, big-ticket initial public offerings.
(MORE TO FOLLOW) Dow Jones Newswires
12-30-21 0610ET
