MARKET WRAPS

Watch For:

Germany industrial production index; meeting of eurozone finance ministers; trading update from Ryanair

Opening Call:

Shares may retreat at the open amid dashed hopes that China could ease its coronavirus policy and on continued worries over Fed interest-rate increases. In Asia, stocks were broadly higher; Treasury yields largely rose; the dollar was steady; while oil and gold were both lower.

Equities:

Stock futures point to declines for shares on Monday after gaining Friday on speculation that China could relax its strict coronavirus policy.

Chinese health officials on Saturday damped investor hopes for eased pandemic measures, saying they will stick to a zero-tolerance Covid strategy.

Meanwhile, the U.S. monthly jobs report on Friday did little to shift expectations for continued interest-rate increases from the Fed.

The stronger-than-expected U.S. job growth is likely to reinforce Fed Chairman Jerome Powell's message that the labor market is too tight and a higher terminal policy rate is required to tame inflation, Citi said.

"While the effects of monetary policy are lagged, [the data] is a good reminder of how difficult it may be for the Fed to use its blunt tool to slow down a broadly overheating economy," Citi said, adding that the report raises the probability of another 75-basis-point interest-rate hike in December.

Forex:

The dollar was steady in Asia amid divergent signals, after falling Friday.

Speculation that China could be easing its zero-Covid policy boosted most Asia ex-Japan currencies Friday, but the overall impact on these currencies may be mixed this week after Chinese authorities pledged over the weekend to "unswervingly" adhere to zero-Covid, MUFG Bank said.

Fed Chairman Powell's ultra-hawkish message "left little doubt that policymakers will maintain their aggressive tightening approach in the near term," Capital Economics said, noting that the U.S. payrolls report "strengthened the case for more tightening."

Bonds:

Treasury yields ticked higher after a mixed finish Friday, as investors assessed a stronger-than-expected October jobs report.

"As labor demand continues to cool, the Fed should take some comfort in the fact that wage growth still lags overall inflation and is decelerating, reducing the threat of the pass-through of wages to overall inflation. For investors, this report signals continued resilience in the labor market amidst recession fears, without additional warning signs on inflation," J.P. Morgan Asset Management said.

Energy:

Oil fell in Asia on global demand worries, after rallying on Friday on expectations that China may ease its Covid restrictions.

Markets are still coping with signs of weakness in oil demand stemming from already high prices and weak economic backdrop in developed markets, ANZ said.

Also, drivers of automobiles are spending less time on the road, while demand in Europe and the U.S. has dropped back below 2019 levels, ANZ Research added.

Metals:

Gold fell amid mild dollar strength after climbing Friday.

With U.S. inflation still a problem and the country's economy running hot, yields on the front end of the Treasury curve will likely continue to rise and the dollar will probably be firm, TD Securities said.

After Friday's strong rally, a potential correction in gold prices could be on the horizon in the not too distant future, TD Securities added.

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Copper fell after surging late last week supported by rumors that China would ease its Covid-19 restrictions.

"Despite Beijing reiterating its strict adherence to the zero-Covid strategy, unverified social media posts suggested a chief scientist told a meeting that the policy would soon be substantially changed," ANZ said.

Meanwhile, supply-side issues may offer some support, ANZ noted, adding that growing protests at mining company's MMG's giant Las Bambas mine in Peru has seen the company progressively halt operations.

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Chinese iron-ore futures rose, extending an uptrend from last week, as steel demand remains resilient for now, Soochow Futures said.

The recent rebound was also helped by speculation that China could be moving toward reopening, though many analysts don't expect that to happen anytime soon.

Soochow Futures added that iron-ore imports have been on the rise and port inventories could build up, which will boost supply.


TODAY'S TOP HEADLINES

China's October Exports Missed Expectations

BEIJING-China's exports unexpectedly fell in October, dragged by weakening global demand, official data showed Monday.

Outbound shipments declined 0.3% in October from a year earlier, compared with 5.7% growth recorded in September, according to China's General Administration of Customs. Economists polled by The Wall Street Journal had expected 4.0% growth in exports.


Frackers Say Oil Production Slowing in the Shale Patch

Despite an extended streak of strong profits, shale companies are slowing their oil-field activity, keeping U.S. oil production roughly flat and offering little relief for tight global markets.

What was expected to be a banner year for U.S. oil production has failed to materialize as creeping inflation-related costs, supply-chain snarls and disappointing well performance for some companies have coalesced to limit domestic output, executives and analysts said.


Hedging Against Currency Swings Separates Winners From Losers This Year

The dollar's recent rise has heightened the complexity of buying overseas stocks for investors used to focusing on metrics like company earnings and share-price valuations.

When U.S.-based investors hold international equities, their performance is driven by fluctuations in exchange rates as well as the performance of the underlying company shares. In periods like this year when the greenback is strengthening, that dynamic eats away at returns as the other currency is traded for fewer dollars.


Raising Money on Wall Street Hasn't Been This Hard in a Decade

It is quiet on Wall Street. Too quiet.

Autumn is usually one of the busiest times of the year in finance but new stock sales, debt raises and corporate mergers all slowed to a trickle in recent weeks. The supply of cash that fuels such deals is evaporating and the slowdown likely is here to stay, bankers, investors and corporate lawyers say.


COP27 Summit Begins as Economy, Ukraine War Overshadow Climate Concerns

Last year's United Nations climate conference in Glasgow was full of disagreements, but it may be a high-water mark for international cooperation on the issue.

This year, an energy crunch underscored the challenges of a transition to clean energy from fossil fuels. Climate concerns are being overshadowed by the war in Ukraine and related energy shortages; governments are worried about an economic downturn and some key alliances have broken down.


Elevated Inflation Presents Risk to U.S. Economy, Fed Report Finds

WASHINGTON-Elevated and persistent inflation is among the greatest near-term risks to the U.S. economy and financial system, the Federal Reserve said, while also warning about rising friction in trading of U.S. government debt.

Fed Vice Chairwoman Lael Brainard said Friday there is a risk that an unexpected shock could amplify existing vulnerabilities in the financial system, in a statement accompanying the release of the central bank's latest report on financial stability.


Senior White House Official Involved in Undisclosed Talks With Top Putin Aides

WASHINGTON-President Biden's top national-security adviser has engaged in recent months in confidential conversations with top aides to Russian President Vladimir Putin in an effort to reduce the risk of a broader conflict over Ukraine and warn Moscow against using nuclear or other weapons of mass destruction, U.S. and allied officials said.

The officials said that U.S. national-security adviser Jake Sullivan has been in contact with Yuri Ushakov, a foreign-policy adviser to Mr. Putin. Mr. Sullivan also has spoken with his direct counterpart in the Russian government, Nikolai Patrushev, the officials added.The aim has been to guard against the risk of escalation and keep communications channels open, and not to discuss a settlement of the war in Ukraine, the officials said.


U.K. Sees Record Numbers of Migrants Crossing English Channel in Small Boats

LONDON-Britain is grappling with a surge in migrants crossing the English Channel by boat that is overwhelming the country's asylum system and posing a challenge for Conservative Prime Minister Rishi Sunak.

Migrants from Africa have long undertaken perilous sea voyages across the Mediterranean to get to southern Europe. But such trips across the channel, which separates the U.K. from continental Europe, are relatively new and have increased rapidly.


West Sees Little Choice but to Keep Backing Ukraine

Washington and its allies see little prospect of a negotiated end to the war in Ukraine soon given the high stakes for Moscow and Kyiv, and the fact that both sides believe they can win, Western diplomats say.

The North Atlantic Treaty Organization and its members say they are determined to keep supplying economic and military assistance to Ukraine as it fights to roll back gains made by Russian forces, and to punish Moscow with sanctions for its attack on its smaller neighbor.


Apple Warns iPhone Production Disrupted by China Covid-19 Restrictions

Apple Inc. warned shipments of its high-end iPhone models would be hindered amid Covid-19 restrictions at one of its major suppliers in China, an inopportune disruption as the company enters its all-important holiday shopping season.

The Cupertino, Calif., tech giant on Sunday said the assembly factory in Zhengzhou is currently operating but at reduced capacity.


Twitter Rollout of Blue Check Mark Service Hits Snags

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11-07-22 0015ET