MARKET WRAPS

Stocks:

European stocks edged lower Tuesday, while U.S. stock futures edged higher ahead of fresh data that is likely to show that inflation remained elevated in August.

Data in focus:

Job creation remained strong over summer in the U.K., Pantheon Macroeconomics said. The number of people employed was 183,000 higher in the three months to July than in the previous three months, according to the Labour Force Survey.

"The strength of the employment indicators of Markit's purchasing managers index survey and the KPMG/REC Report on Jobs in August suggest that employment growth will remain brisk throughout the third quarter," Pantheon Macroeconomics' chief U.K. economist Samuel Tombs said.

Further growth in employment will likely push down the unemployment rate even further toward its pre-Covid low of 3.8%, he said.

However, the winding up of the furlough program will probably lead to an increase in unemployment and underemployment in 4Q, Tombs said.

U.S. Markets:

Stock futures edged higher ahead of fresh data that is likely to show that inflation remained elevated in August.

Investors are showing signs of cautious optimism this week as they bet that the economy will continue to recover, bolstering corporate earnings. That marks a shift from last week, when a rise in Delta variant cases of Covid-19 had stoked concerns that measures to contain the virus could weigh further on economic activity or slow the shipping of goods and materials, adding to inflationary pressures.

"The skittishness in markets is down to the Delta variant and the effect on growth expectations," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald.

Investors are also focused on whether the Federal Reserve will begin scaling back its easy-money policies in coming months, he added. "There is this interesting moment we've got in markets where Delta is still a concern, but at the same time you've got central banks tapering or about to taper," Mr. Park said.

Many Fed officials have said in recent interviews and public statements that they could begin reducing, or tapering, their monthly purchases of bonds by the end of this year if the economy performs as they anticipate. Both inflationary pressures and the recovery in the labor market are likely to be key gauges that could influence their timing.

The Fed has said it expects inflation to be temporary. But some investors expect that it could prove stickier than anticipated.

"It is hard for us to say, well folks, all these things are transitory and come January 2022, we expect everything to be back to normal," said Carsten Brzeski, ING Groep's global head of macro research. "Every data point that shows that inflation is more than only transitory, we get closer to tapering."

The inflation data for August are due to be released at 8:30 a.m. ET. Economists surveyed by The Wall Street Journal forecast that the consumer-price index gained last month.

Forex:

The dollar edged lower, allowing the euro to rise back above $1.18, suggesting that Monday's gains in the U.S. currency were "probably mostly driven by some position adjustments ahead of U.S. CPI data," said UniCredit.

It expects U.S. inflation figures, due at 1230 GMT, to show the annual rate of CPI inflation not accelerating any further, which it says will likely be neutral or negative for the dollar.

The figures won't alter the likelihood that the Federal Reserve will start tapering asset purchases this year, likely in December, UniCredit said.

Sterling and some U.K. stocks which are sensitive to interest rates could rise if the unemployment rate continues to decline after the furlough scheme ends, said Emma Mogford, fund manager at Premier Miton Monthly Income Fund.

If the unemployment rate continues to fall after a government-backed employee retention scheme ends on Sept. 30, "that should provide a boost to sterling and interest rate sensitive stocks," she said.

Official data from the Office for National Statistics showed employee numbers were back at pre-Covid levels in August. Higher consumer prices and a robust labor market could potentially prompt the Bank of England to tighten monetary policy earlier than anticipated.

The election of Norway's Labour Party leader Jonas Gahr Store as prime minister is fully in line with expectations based on opinion polls, said ING. While the party has pledged a gradual transition from fossil fuels to greener energy, it has opposed ending exploration, which was instead championed by environmentalist parties, it said.

"Arguably, that was the only topic that could have caused any significant impact on Norway's krone, which has instead been (and should remain so as coalition talks start) quite unreactive to political developments."

Bonds:

The yield on the benchmark 10-year U.S. Treasury note ticked up to 1.343% from 1.323% Monday.

Pimco's base case is that many near-term inflation pressures will prove transitory. Nonetheless, the asset manager remains "humble" in its forecasts and believes the upside risks to longer-term inflation are worth considering, Pimco's fixed-income strategists said.

Many investors remain vulnerable to higher inflation given they are "handcuffed" to high levels of duration and because rising inflation expectations put upward pressure on interest rates and, therefore, downward pressure on bond prices, Pimco said. Duration is a measure of sensitivity of bond prices to a change in interest rates.

Commodities:

Oil prices remained higher after the IEA released its monthly market report. The energy watchdog said that the impact of Hurricane Ida and other oil supply outages in Mexico, Russia, Nigeria and Libya will take a sizable chunk out of global oil production this year.

The agency also cut its supply rebound forecast for 2021 by 150,000 barrels a day and cut its demand forecast by 100,000 barrels a day, citing the impact of the coronavirus's Delta variant. "It is only by early 2022 that supply will be high enough to allow oil stocks to be replenished," the report said.

LME three-month copper futures were down 0.9% at $9,448 a metric ton, with the broader metals basket and equities indexes mostly drifting lower. Those losses come in the wake of heavier metals selling on Monday.

Marex Spectron's Anna Stablum cited profit-taking as being behind Monday's price losses. Open interest in Shanghai is down across most metals on the day, she added.

London gold prices were down in another lethargic session. Gold's "price action continues to be seriously underwhelming, unable to rally when the U.S. dollar falls and moving lower when it rises," OANDA's Jeffrey Halley said.

EMEA HEADLINES

World's Oil Supply Pressured by Hurricane Ida, Other Outages

The impact of Hurricane Ida and other oil supply outages will take a sizable chunk out of global oil production this year, the International Energy Agency said Tuesday.

In its monthly market report, the energy watchdog cut its supply rebound forecast for 2021 by 150,000 barrels a day and cut its demand forecast by 100,000 barrels a day, citing the impact of the Delta variant of Covid-19.

Pandora Increases Share Buyback, Sets New Growth Targets

Danish jeweler Pandora AS on Tuesday set new financial targets and increased its share buyback program by 3 billion Danish kroner ($476.5 million) to DKK3.5 billion.

The company said it is entering a new chapter of growth, with significant value creation potential and a wide range of growth opportunities in or close to the existing core business that will drive earnings before interest and tax margin expansion and continued strong cash generation.

JD Sports Posts Record-High 1H Earnings, Sees 2021 Headline Pretax Profit of at Least GBP750 Mln

JD Sports Fashion PLC said Tuesday that its first-half profits rose to record-high levels, and that it expects to achieve a headline pretax profit of at least 750 million pounds ($1.04 billion) for the whole of 2021.

The sports-goods retailer made a pretax profit of GBP364.6 million for the six months ended June 30, up from GBP41.5 million in the same period of 2020 and GBP129.9 million in the first half of 2019.

Ocado Group's 3Q Ocado Retail Revenue Fell

Ocado Group PLC said Tuesday that revenue from its joint venture Ocado Retail declined in the third quarter of fiscal 2021, and that the latest seven weeks of the period were hit by the orders lost in a fire at its customer fulfillment center in Erith, England, in July.

The online grocer and retail-technology specialist said Ocado Retail revenue fell to 517.5 million pounds ($716.1 million) for the 13 weeks ended Aug. 29, from GBP578.8 million a year earlier.

Steinhoff Raises $516 Mln in Pepkor Share Placing

Steinhoff International Holdings NV said Tuesday that it had placed 370 million shares in Pepkor Holdings Ltd., raising 7.3 billion rand ($516 million).

The South Africa-based retail company said it placed the Pepkor shares at ZAR19.75 per share, a 9.0% discount to their closing price on Monday.

U.S., Europe Seek to End Export Financing for Coal

PARIS-The U.S., the European Union, South Korea and other wealthy nations are moving to forbid their export-financing agencies from supporting coal-fired power projects overseas, in an effort to end government support for a fuel that is one of the world's biggest sources of greenhouse gases.

The proposed ban, which will be made this week at the Organization for Economic Cooperation and Development, is part of the West's campaign to push China, India and other big developing countries to take a tough position against coal ahead of the November climate summit in Glasgow, Scotland. China and India have resisted entreaties by the U.S. and Europe to commit to end subsidies for coal-fired electricity, raising fears that deadlock over the issue could result in the collapse of climate negotiations in Glasgow.

Iran Intends to Resume Nuclear Talks in the Near Future

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09-14-21 0639ET