MARKET WRAPS
Watch For:
Pending Home Sales for November; Johnson Redbook Retail Sales Index; Richmond Fed Business Activity Survey for December; API Weekly Statistical Bulletin
Opening Call:
Today's Headlines/Must Reads
- Negative-Yielding Bonds Could Be Approaching Their Final Days
- Hong Kong Scraps Required PCR Covid Test for Arrivals
- U.S. Weighs New Precautionary Measures for Travelers From China
- Wall Street's Bankers Brace for Big Pay Cuts, But Bosses Don't Want Whining
Follow WSJ markets coverage here.
With just three sessions left in 2022, traders were looking to greet Wall Street's opening bell cautiously, with equity futures struggling for direction.
Failed rallies--of various duration--are an established feature of bear markets and investors clearly remain wary of applying overly bullish bets as the year draws to a close, especially given the holiday-thinned trading.
Indeed, there are few fresh catalysts on Wednesday to distract investors from the underlying theme that has driven markets for much of the year: multi-decade high inflation and how the central banks' attempts to quash it will hurt the global economy and crimp company earnings.
One development of note this week was news that China was further relaxing its Covid-19 restrictions. It's a strategy deemed positive for the global economy but investors have focused on the inflationary potential of Beijing's move.
"If the Chinese reopening story is positive for oil and commodity prices--and for the massively battered Chinese stocks, it's bad news for global inflation," Swissquote Bank said.
"This is why we don't see U.S. stocks gain on China reopening news...as the surge in Chinese demand will certainly boost inflation through higher energy and commodity prices. And in response to higher inflation, the central banks will continue hiking rates."
Stocks to Watch
Clene said it will cease further development of CNM-ZnAg as a Covid-19 treatment. Shares fell 6.6% in after-hours trading.
Jounce Therapeutics will receive $67 million after amending a license agreement with Gilead Sciences, which will acquire all outstanding rights to GS-1811 as part of the transaction. Shares gained 83% in after-hours trading.
Kala Pharmaceuticals said the FDA had accepted its investigational new drug application for the treatment of an eye condition through its lead product candidate, KPI-012. Shares rose 51% in after-hours trading.
Southwest Airlines declined 0.6% in premarket trading as the carrier said it would limit new bookings on the planes it plans to fly in the coming days following thousands of flight cancelations over the Christmas weekend.
Tesla shares dropped over 4% in premarket trading after an analyst at Baird Equity Research lowered the car maker's price target. Read more here.
ADRs of Chinese electric-vehicle makers NIO and XPeng fell in the premarket session following NIO's cut Tuesday to its fourth-quarter delivery targets. NIO declined 0.4% after dropping more than 8% on Tuesday. In Hong Kong on Wednesday, NIO plunged as much as 11%. XPeng ADRs fell 1.8% on Wednesday.
Energy:
Crude futures prices edged lower in holiday-thinned European trading despite Russia making good on its pledge to ban oil sales to nations behind a price cap.
Metals:
Base metals made solid gains in London as the LME reopened, with prices lifted by China's decision over the weekend to relax Covid-19 restrictions on inbound travelers, a boost to demand hopes.
"The assumption is being made that the influx of tourists and no doubt business travelers will kick start the economy which in my view is a little optimistic to say the least," Kingdom Futures said.
TODAY'S TOP HEADLINES
Chinese Auto Makers Plunge as Covid-19 Surge Prompts Delivery Cuts
Shares of Chinese auto makers plunged as growing Covid-19 outbreaks across China halted vehicle production, triggering delivery cuts and sparking worries of a sales decline in the world's biggest car market.
Electric-vehicle makers XPeng Inc., Li Auto Inc. and NIO Inc. dropped by as much as 9.0%, 8.4% and 11%, respectively, in Hong Kong. Shenzhen-listed BYD Co. shed as much as 3.5% in Wednesday morning trading.
Hong Kong Scraps Required PCR Covid Test for Arrivals
Hong Kong on Wednesday scrapped a requirement that all inbound travelers must undergo a PCR Covid-19 test, effective Thursday, the latest easing of the city's pandemic policy.
Hong Kong will also stop requiring vaccine passes, which are needed to enter some public venues, the government said at a press briefing. The local government will continue to push for high vaccination rates, Hong Kong Chief Executive John Lee said at the briefing. He added that Hong Kong is planning to reopen its border with mainland China by Jan. 15.
Negative-Yielding Bonds Could Be Approaching Their Final Days
Negative yields on government bonds look like they are about to ride off into the sunset.
The worldwide sum of negative-yielding debt has almost completely evaporated, another effect of central bankers' efforts to fight inflation around the world. It now stands at $271 billion, down from more than $18.4 trillion two years ago, according to Bloomberg index data accessed via FactSet.
U.S. Weighs New Precautionary Measures for Travelers From China
The Biden administration is weighing new precautionary measures for travelers entering the U.S. from China, according to American officials, as sales of air tickets out of China soared following Beijing's decision to reopen its borders to international travel for the first time in almost three years.
The officials declined to lay out in detail which policies the administration is considering, but they pointed to Japan and Malaysia as potential models for the types of measures that could be put in place. On Tuesday, Japanese Prime Minister Fumio Kishida said the country will require a negative Covid-19 test upon arrival for travelers from China due to the rapid spread of the virus there.
Supreme Court Leaves Pandemic Border Controls in Place
WASHINGTON-The Supreme Court kept pandemic-era border controls in place Tuesday while it considers whether nearly two dozen Republican-led states can intervene in a lawsuit over those restrictions, leaving thousands of asylum-seeking migrants stranded in northern Mexico.
By a 5-4 vote, the court acted in the wake of a temporary stay that Chief Justice John Roberts imposed on Dec. 19, two days before so-called Title 42 regulations were to end. Border officials had started observing an increase in land crossings in the days ahead of the policy's expected end on Dec. 21, with at least 10,000 additional migrants waiting in Mexican border cities with the expectation that the measure would soon be lifted.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
None scheduled
Economic Calendar (ET):
None scheduled
Stocks to Watch:
Dialogue Health Announces Divestiture of German OHS Business; Expects to Close Transaction by Dec. 31; Business Had Rev of C$4.7M for 12 Months Ended Sept. 30; Dialogue Health: Core Digital Business in Canada 'Seeing Robust Growth in Excess of 50% This Year'
Expected Major Events for Wednesday
01:00/JPN: Nov Steel Imports & Exports Statistics
04:30/JPN: Nov Preliminary Report on Petroleum Statistics
13:55/US: 12/24 Johnson Redbook Retail Sales Index
15:00/US: Dec Richmond Fed Business Activity Survey
15:00/US: Nov Pending Home Sales Index
21:30/US: 12/23 API Weekly Statistical Bulletin
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Wednesday
ALJ Regional Holdings Inc (ALJJ) is expected to report for 4Q.
Allena Pharmaceuticals Inc (ALNAQ) is expected to report $-0.48 for 3Q.
Allied Healthcare (AHPI) is expected to report for 1Q.
Barnwell Industries (BRN) is expected to report for 4Q.
Cal-Maine Foods Inc (CALM) is expected to report $2.70 for 2Q.
Great Panther Mining Ltd (GPL,GPR-T) is expected to report for 3Q.
Schmitt Industries (SMIT) is expected to report for 1Q.
Taylor Devices (TAYD) is expected to report for 2Q.
Powered by Onclusive and Dow Jones.
ANALYST RATINGS ACTIONS
Applied Molecular Trnsprt Cut to Market Perform From Outperform by SVB Leerink
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
12-28-22 0554ET
