MARKET WRAPS
Watch For:
Durable Goods for October; Weekly Jobless Claims; University of Michigan Final Consumer Survey for November; New Home Sales for October; EIA Weekly Petroleum Status Report
Opening Call:
Today's Headlines/Must Reads
- IPhone Factory Workers Clash With Police at Covid-Hit Plant in China
- Digital Currency Group Says Revenue Will Fall This Year
-New York Law Limits Cryptocurrency Mining
-Disney's Robert Iger Loomed Over His Successor as CEO, Creating Tensions
-Credit Suisse Warns of $1.6 Billion Loss After Clients Pull Money
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Stock futures hovered near the flat line on Wednesday, as investors awaited a heavy batch of pre-Thanksgiving data, which will include the latest minutes of the FOMC meeting.
In likely holiday-thinned trade, markets may struggle to follow up on Tuesday's gains, which were in part driven by continued hopes of a softening stance in the Fed's rate-hiking plans.
November's meeting minutes due at 2 p.m. Eastern, will be watched closely for clues as to how high the fed-funds rate needs to go and how long it will stay there in order to bring inflation under control.
The Fed hiked its rate by 0.75 percentage points to a range of 3.75% to 4% at that meeting.
Wednesday will also bring a bucketload of data, kicking off with durable goods for October and initial jobless claims due at 8:30 a.m., followed by the flash S&P manufacturing and services purchasing managers indexes at 9:45 a.m.
The University of Michigan's final November consumer sentiment index and five-year inflation expectations are due at 10 a.m., alongside October new home sales.
Stocks to Watch
HP said it would slash up to nearly 10% of its workforce, with a sharp slump in demand for PCs expected to stretch into next year. Its shares added 1.2% premarket.
Autodesk cut its billings outlook and said its board authorized the repurchase of $5 billion of its common stock. Its shares dropped 9.1% premarket.
VMware logged higher revenue but dwindling profit. Its shares fell 1.2% off hours.
Nordstrom swung to a loss as it offered higher markdowns to clear through excess inventory. Its shares fell 9.1% premarket.
Forex:
Economic data later Wednesday could show a lack a further acceleration in durable goods orders and still-sluggish new home sales, thwarting any attempts by the dollar to recover, UniCredit Research said.
"We also doubt that the minutes of the latest Federal Open Market Committee meeting...will impact markets in depth as they are likely to reflect the policy intentions Jerome Powell already outlined in his press conference," UniCredit said.
ING said the dollar's downward correction is pushing sterling towards $1.20 but the exchange rate may struggle to break above that level.
"Expect some resistance around that level given the lack of strong domestic bullish drivers for the pound," ING said.
However, sterling's greater sensitivity to risk sentiment compared to the euro means any further improvements in global risk sentiment could see EUR/GBP test 0.8600 in the coming days, ING said.
Crypto Latest
-Bitcoin rose 2.3% from its late-Tuesday level, to around $16,502
-Ethereum stood at about $1,162, up 7.5% from 24 hours earlier, according to CoinDesk
-Tether was just below parity with the dollar, with the biggest stablecoin trading at around $0.9991, according to CoinDesk
Read Bitcoin Recovery Could Prove Limited
Bonds:
Bond volatility is off its peak but still elevated, highlighting major uncertainties about rates and the Fed's reaction function in particular, Generali Investments said.
"With U.S. inflation starting to recede and the economy set to slip into recession by spring, long-term Treasury yields may well have peaked."
This depends, to a large extent, on the Fed's terminal rate, Generali said. It sees the federal-funds rate peaking around 5%.
As interest-rate cuts may not come as fast as expected next year, given the slow inflation deceleration, the pullback in Treasury yields could be slower than in previous recessions, Generali said.
Generali also said the 10-year Treasury at a yield of around 4% is a good safe-haven investment, while 10-year German Bund yields just above 2% offer less value.
"While the recession will be even deeper in the euro area, we find 10-year Bunds, just above 2%, less attractive."
The European Central Bank's quantitative tightening hasn't started yet, and both repayments under the Targeted Longer-Term Refinancing Operations and slower reinvestment under the Asset Purchase Programme next year "will exert upward pressure on yields," Generali said.
Energy:
Oil futures gained around 1% in Europe despite worries over demand in China, with attention instead turning to supply and with prices boosted by the latest API data.
"Oil markets are seemingly shaking off today's edition of China Covid blues and shifting back to supply concerns," SPI Asset Management said.
Oil markets have been very sensitive to China's Covid-19 headlines, given the near-term worries over demand associated with it.
"Given the demand and recessionary concerns building, OPEC+ will only stick its neck out once they have had a chance to monitor and quantify the price impact of the EU embargo and the G7 oil price cap," SPI said.
Prices had risen in Asia on the latest API data that showed a bigger-than-expected decline in U.S. commercial inventories of crude, ING said.
Read EU Natural Gas Price Cap Unlikely to Be Triggered
Metals:
Base metals were mixed and gold slightly higher, with dollar weakness and possible changes in attitude to Covid-19 in China helping to improve sentiment around long-term metals demand.
The dollar has weakened in recent days, helping to strengthen dollar-backed commodities but Marex pointed to a weakening yuan keeping trading volumes light in Asia.
In terms of Covid-19 in China, "there has not been any new control measures announced but there's continued mentions of reducing disruptions/lockdowns as much as possible," Marex said.
TODAY'S TOP HEADLINES
iPhone Factory Workers Clash With Police at Covid-Hit Plant in China
HONG KONG-Workers at the world's biggest iPhone assembly plant in China clashed with scores of police officers after protests erupted at the factory, which has been under Covid-19 lockdowns in recent weeks.
Videos circulating among workers' online chat groups on Tuesday showed chaotic scenes at the factory in Zhengzhou where Foxconn Technology Group assembles most of the world's latest iPhone models. Police officers in Covid-protective suits holding long shields and wielding batons faced off with workers who threw plastic water bottles and pieces of metal from dismantled barriers, the videos showed.
Elon Musk's Twitter Takeover Triggers Partisan Clash on Government's Role
WASHINGTON-Elon Musk's takeover of Twitter Inc. is fueling a partisan clash in Washington, as Democrats raise concerns about the platform's security and Republicans counter that the criticism is a thinly veiled attempt to stamp out conservative voices on the site.
Democrats including President Biden have pointed to Mr. Musk's ownership of Twitter, most recently over staff cutbacks that some Democrats say could potentially compromise the platform's ability to secure the personal data of its users.
Credit Suisse Warns of $1.6 Billion Loss After Clients Pull Money
Credit Suisse Group AG warned it would lose around $1.6 billion in the fourth quarter after customers pulled their investments and deposits over concerns about the bank's financial health.
Switzerland's No. 2 bank by assets said outflows were around 6% of its total $1.47 trillion assets, or around $88.3 billion, between Sept. 30 and Nov. 11. Customers in its wealth-management arm-its main business serving the world's rich-removed $66.7 billion from the bank. Credit Suisse in late October said a social-media frenzy around its health was causing large outflows.
Digital Currency Group Says Revenue Will Fall This Year
Digital Currency Group Inc. said 2022 revenue is on track to reach $800 million, down about 20% from what the cryptocurrency-focused conglomerate expected to generate last year.
DCG is the parent company of Genesis Global Capital, a crypto lending firm that paused redemptions and loan originations on Nov. 16 after it couldn't meet client withdrawal requests. DCG owes Genesis around $575 million that is due in May 2023, in addition to a $1.1 billion promissory note to Genesis due in June 2032, DCG Chief Executive Barry Silbert said in a letter to investors that was viewed by The Wall Street Journal.
Disney's Robert Iger Loomed Over His Successor as CEO, Creating Tensions
LOS ANGELES-Robert Iger never really left Walt Disney Co.
On Feb. 25, 2020, Mr. Iger announced he was handing over the chief executive job to Bob Chapek but would remain at the company in a less-hands-on position as executive chairman.
Disney's 'Avatar: The Way of Water' Cleared for December Release in China
Chinese authorities have notified Walt Disney Co. that "Avatar: The Way Of Water" will be released in China on Dec. 16, the same day it is slated to be released globally, according to people familiar with the matter.
Executives at Disney and at movie-theater chains had been closely watching for a decision from Chinese censors on the movie, director James Cameron's sequel to the 2009 science- fiction epic. It will be distributed by Disney-owned 20th Century Studios.
Goldman Sachs to Pay $4 Million to Settle Investigation Over ESG Funds
WASHINGTON-Goldman Sachs Group Inc.'s asset-management arm agreed Tuesday to pay $4 million to settle a regulatory investigation into how it managed mutual funds and other products that pick stocks based on environmental, social and governance criteria.
(MORE TO FOLLOW) Dow Jones Newswires
11-23-22 0546ET
