MARKET WRAPS
Stocks:
European equities edged lower in a cautious opening session with investors focused on the latest U.S. inflation data and watching for evidence the Federal Reserve's interest-rate increases are having their desired effect of tamping down price pressures.
"With neither the Fed nor the labour market fully delivering--and one could argue they never were likely to--today's inflation report becomes ever more important," said OANDA.
"Another hot reading could be the latest in a growing list of setbacks for investors, who have been all too keen to buy at discounted levels in the hope the data rewards them. So far it hasn't."
Economic Insight:
Norwegian core inflation rose to 5.9% year-on-year in October, well above the central bank's expectation at 5%, increasing uncertainty around the size of Norges Bank's next rate hike, Nordea said.
Norges Bank shifted stance at the September meeting, signalling a more gradual approach to future hikes, so it will take a lot for them to hike by more than 25bp at future meetings, Nordea said.
"However, if all stars are aligned and the economy shows a much better development than Norges Bank has assumed, we cannot completely rule out a 50bp hike at the December meeting."
Either way, today's figure should mean a higher terminal rate, Nordea said.
Read: Norway Inflation Pushes Norges Bank Into Tricky Balancing Act
U.S. Markets:
Stock futures edged up as investors awaited inflation data, monitored midterm election results and watched for spillover from turmoil in cryptocurrencies.
Bonds rallied, with the 10-year Treasury yield edging down to 4.108% from 4.149% on Wednesday.
Inflation data due at 1330 GMT could give clues about future Fed policy.
Annual consumer-price growth is seen at 7.9% for October, a slight slowdown. Core inflation is expected to edge down to 6.5%, according to economists surveyed by The Wall Street Journal.
In September, it hit 6.6%, the fastest pace since 1982.
Forex:
U.S. October inflation data are expected to remain elevated and this should still lift the dollar, UniCredit Research said, as evidence of continued price pressures will question the room the Fed has to start slowing the pace of interest rate rises as soon as December.
"EUR/USD is set to weaken in this case, but we doubt that the market reaction will be heavy enough to drag the pair below the 0.99 handle."
If inflation undershoots expectations, the DXY dollar index could fall below 110, offering EUR/USD the chance to break above 1.01, UniCredit Research said.
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MUFG Bank said recent eurozone inflation and wage growth data should protect the euro from the prospect of the European Central Bank shifting away from its resolve to raise interest rates.
"The euro-zone rate market is still looking for the ECB to keep raising the deposit rate up towards 3% next year which has been backed up by the release of the latest inflation and wage data from the euro-zone," MUFG said.
Since the ECB's last meeting, eurozone inflation data for October hit a fresh high of 10.7% year-on-year and wage growth has accelerated this year, it said.
Bonds:
Eurozone government-bonds edged higher in early European trading, extending the previous session's rally on Ukraine headlines, with the U.S. consumer-price inflation data the key market driver of the day.
"European rates staged a significant rally late in the afternoon amid geopolitical headlines of Russia leaving the Kherson region" of Ukraine, Danske Bank said.
But it said it finds it hard to attribute the entire move to such headlines even in the absence of other market-moving news. The 10-year German Bund yields gradually declined 10 basis points into the close.
Energy:
Oil prices edged lower still ahead of the U.S. inflation data, with rising Covid-19 cases in China undoing any optimism that Beijing might ease its lockdown measures sooner than expected.
Fears about a selloff in cryptocurrencies were further dragging on risk assets.
SPI Asset Management said: "Adding to the oil spill, broad-based risk de-grossing, and a sturdy dollar ahead of the hotly anticipated U.S. CPI data is not helping matters for many oil investors."
Metals:
Base metals were slightly firmer.
Goldman Sachs said that stronger activity in China would be a diversifier for commodities demand "at a time when western demand is slowing but inventories remain critically tight."
Marex added that nickel demand was rising in China on short covering, after a white paper presented at the China International Lithium Battery Industry Conference in Suining showed that global battery demand will reach 490 gigawatt hours this year and 1,406 Gwh by 2025.
Read Barrons.com: Copper Is Down on Falling Demand. But a Shortage Looms
https://newsplus.wsj.com/article/realtime/DNCO20221110004345
Iron Ore:
Macquarie has closed an August bearish call on iron ore, but with a caveat: "We stress that real signs of improving activity on the ground in China are needed for a sustained rally in ferrous markets to take place."
Macquarie said the balance of risks for iron-ore prices is starting to shift as some miners cut output. Still, it's watching for a clear improvement in property sales, construction activity and steelmaking margins.
"We are skeptical on China's ability to ease its Covid-19 policies ahead of Chinese New Year and remain cautious on any rally until we see substantiated signs of improving steel demand," Macquarie said.
Aluminum:
Fitch said aluminum prices are likely to be held down through to the first quarter of 2023 amid Covid-19 lockdowns in China and weak Western demand.
Fitch expects prices to average $2,725 a metric ton in the final quarter of this year, from its previous expectation of $2,800 a ton, "in light of weaker than expected growth and demand led by the slowdown in Mainland China, an emerging recession in the eurozone, and evidence of market oversupply based on stocks data."
A strong dollar and rising interest rates have acted as further downside risks for aluminum, Fitch said, as it lowered its 2023 forecast to $2,600 a ton from $2,700 a ton.
DOW JONES NEWSPLUS
EMEA HEADLINES
Credit Suisse Faces Fresh Pressure Over Untaxed Americans
Credit Suisse Group AG pleaded guilty in 2014 to conspiring to help thousands of Americans cheat on their taxes. Eight years later, a set of problematic customer accounts still haunts the bank.
U.S. Justice Department officials have found deficiencies in the bank's handling of its 2014 plea agreement, according to people familiar with the case. In a sign of the seriousness the bank places on the tax case, new general counsel Markus Diethelm attended recent meetings with the DOJ to give personal pledges toward reaching a resolution.
AstraZeneca Lifts 2022 Guidance After Swing to 3Q Profit, Higher Sales
AstraZeneca PLC on Thursday lifted its guidance for the full year after reporting a swing to net profit and higher sales for the third quarter of the year, which both beat consensus expectations.
The Anglo-Swedish pharma major swung to a pretax profit of $922 million from a pretax loss of $2 billion the year prior, when it took hits from fair-value adjustments to Alexion inventories after acquiring the company.
Centrica Sees Full-Year Earnings at Top End; To Launch Buyback
Centrica PLC said Thursday that it now expects full-year adjusted earnings per share toward the top end of analyst expectations after booking continued strong operational performance since its interim results and that it will launch a buyback.
The British energy group said that it plans to start a share buyback program of up to 5% of its issued share capital.
RWE Backs 2022 View After Nine-Month Earnings Rose on Renewables, Trading
RWE AG on Thursday said that earnings rose in the first nine months of the year boosted by the expansion of renewables and a strong international trading performance, and backed its 2022 outlook.
The German energy company posted adjusted net income of 2.12 billion euros ($2.14 billion) for the period, up from EUR1.03 billion the year earlier.
Allianz 3Q More Confident for 2022 After 3Q Results; Plans Buyback
Allianz SE late Wednesday said that it is more optimistic for 2022 after third-quarter earnings grew, and that it is planning a share buyback that would start this month.
The German insurer said net income in the three months to the end of September was 2.46 billion euros ($2.46 billion), up about 17% a year earlier. Net income was driven by a rise in operating profit and higher realized gains, Allianz said.
Credit Agricole Profit, Revenue Ticks Down as Market Volatility Bites
Credit Agricole SA said Thursday that third-quarter profit and revenue fell on year amid market volatility.
The French bank said net profit in the three months to the end of September was 2.00 billion euros ($2.00 billion), down from EUR2.22 billion in the same period last year.
Telecom Italia Backs 2022 Guidance; 3Q Revenue Returned to Growth
Telecom Italia SpA backed its guidance for the year after third-quarter revenue returned to slight growth thanks to its service performance in Brazil.
The Italian telecommunications company said late Wednesday that revenue for the July-September period rose 1.1% organically to 3.97 billion euros ($3.98 billion), compared with declining revenue earlier this year.
Merck KGaA 3Q Sales, Earnings Rose; Fine-Tunes 2022 Outlook
Merck KGaA on Thursday posted rising earnings and sales for the third quarter and revised its outlook for 2022, raising it for the life-science business while cutting the forecast for its electronics arm.
(MORE TO FOLLOW) Dow Jones Newswires
11-10-22 0512ET
