Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
News
All NewsCompaniesIndexesCurrency / ForexCommoditiesCryptocurrenciesETFInterest RatesEconomyThemesSectors 

North American Morning Briefing: China Reopening Hopes to Buoy Stocks

11/29/2022 | 06:02am EST

MARKET WRAPS

Watch For:

S&P CoreLogic Case-Shiller Home Px Index for September; Conference Board--Consumer Confidence for November; Canada GDP for September; earnings from CrowdStrike, Hewlett Packard Enterprise, Intuit, NetApp, Workday

Opening Call:

Today's Headlines/Must Reads

- China Stocks Rebound on Reopening Hopes, Help for Property Sector

- China Property Stocks Rise as Regulators Step Up Support

- Musk's Apple Attack Sets Stage for Public Spat With Risks for Apple, Twitter

- Yield Curve Inversion Reaches New Extremes

Follow WSJ markets coverage here .

Stock futures nudged higher premarket, suggesting a steady start on Wall Street, as investors bet on a further loosening of Covid restrictions in China following nationwide protests there that hit global markets on Monday.

Risk appetite revived somewhat on Tuesday, led by a rebound in Asian stocks after Chinese officials held a media briefing on Tuesday on the country's pandemic-control policies.

During the briefing, authorities said "long-term restrictions must be rectified and avoided." The comments likely eased market concerns and confusion over Beijing's Covid-19 strategy.

"Once again, the easing of Covid-19 measures, at least the expectation for it, is the market focus," said KGI Asia.

It maintained its expectation for a postpandemic reopening in China in the first half of 2023.

Also on Tuesday, China's National Health Commission said it would ramp up Covid vaccinations for the elderly, a move that may allow less draconian restrictions to be imposed.

Stocks to Watch

Coinbase Global: Its shares added 2% off hours as the prices of major cryptocurrencies drifted higher. Bitcoin rose 1.8% on Tuesday from its 5 p.m. ET level on Monday to around $16,484.

Pinduoduo: The Chinese e-commerce company was on course for a second day of gains, after reporting a strong set of quarterly results on Monday. Its ADRs added nearly 5% premarket, while counterpart JD.com advanced roughly 7%. Other China tech stocks including NetEase and Baidu also rose.

Roku: Keybanc cut its rating of the stock, according to Benzinga. The shares fell 3.2% premarket.

United Pacific Railway, United Parcel Service: Deutsche Bank lifted its price targets for shares of both companies, according to Benzinga. Shares of United Pacific added 1.3% premarket and UPS stock gained 1.6% premarket.

Wynn Resorts: The stock added about 3% premarket. Reopening hopes had earlier helped buoy Chinese stocks listed in Hong Kong and mainland China.

Forex:

The dollar could rise this week as a speech by Jerome Powell and the jobs report are likely to dent any speculation about interest rates peaking soon, ING said.

Powell is expected to sound hawkish and job data to stay strong, which "may cause the Fed's communicated and perceived narrative to drift away from dovish pivot expectations," ING said.

The dollar could rise in anticipation of these events and the DXY dollar index could reach 107.00-107.50 ahead of Powell's speech, ING said.

---

Sterling could move in response to Bank of England Governor Andrew Bailey's testimony before the Lords Economic Affairs Committee at 10am ET on Tuesday, ING said.

"A significant shift in Bailey's policy rhetoric two weeks before the BOE meeting appears unlikely, but the proximity to the meeting also means that markets tend to over-interpret Monetary Policy Committee members' comments," ING said.

The BOE is likely to raise interest rates 50 basis points at the Dec. 15 meeting while markets are pricing in 57bp. GBP/USD could fall into the end of 2022 as the dollar rises and the pound suffers from a bleak U.K. economic outlook, ING said.

Energy:

Crude oil prices made gains of close to 2% in Europe on increased speculation that China will rollback on Covid-19 regulations following protests in the country.

That said, oil markets are likely to be driven by the OPEC+ meeting on Sunday, according to Peak Trading Research.

"OPEC+ wants higher prices and a crude oil rally would be a bullish macro tailwind for the whole commodity complex."

Further volatility could come from EU discussions over the Russian oil price cap, Peak said.

Read Barrons.com Don't Expect Energy Stocks to Keep Gaining. They Can't Ignore Falling Oil Prices Forever

Thermal Coal

Expect a bumpy ride in the thermal-coal market over the year ahead, Goldman Sachs said.

For now, the market remains tight due to supply constraints in Australia, while Europe's ban on Russian coal could deepen the shortfall during the northern hemisphere winter when demand is high.

However, in 2023, increased Indonesian and Chinese coal production and demand destruction, combined with a potential increase in gas supply, are likely to offset benefits from coal-plant restarts in Western Europe, Goldman Sachs said.

"Bottom-line though, we see high price volatility as likely" over the next 12 months, and the thermal-coal price is likely to be lower than today in a year's time.

Metals:

Base metals and gold made solid gains in London trading, boosted by improved sentiment over spending in China.

In Asia, the market had been "risk on," with the offshore yuan strengthening, alongside Chinese equities for white goods also rising, Marex said.

It added that demand for white goods has been driven by real-estate strength amid new support for developers--one of the biggest drivers for base metals.

"All this highlights that China is definitely not bearish, and there have been continued expectations to support the economy," Marex said.

Market Insight

Commonwealth Bank of Australia said commodity markets are likely to remain volatile until there is a clearer view on how China will handle its Covid-19 policy going forward.

"It's too soon to rule out the risk of a return to China's strict Covid-zero policy, especially in light of the protests across China in recent days."

But that scenario is "the worst case" for China's economy and commodity demand, and could create longer-run challenges for policymakers to transition away from that zero-Covid approach, CBA said.


TODAY'S TOP HEADLINES


Elon Musk's Apple Attack Sets Stage for Public Spat With Risks for Apple, Twitter

Twitter Inc.'s new owner Elon Musk on Monday declared war against Apple Inc. and a cornerstone of the iPhone business empire, setting the stage for a potentially bruising battle between the world's richest man and the world's most valuable company.

Apple and its Chief Executive Tim Cook have the ability to hold great sway over Twitter's potential success, as the iPhone maker is a major advertiser and tightly controls the software on its App Store.


Kroger, Albertsons Expected to Defend Grocery Merger at Senate Hearing

Chief executives of the two largest U.S. supermarket chains are set to testify Tuesday at a Senate subcommittee hearing, where they are expected to defend their companies' proposed $20 billion merger and address questions about how it could affect American grocers and consumers.

Kroger Co. CEO Rodney McMullen and Albertsons Cos. CEO Vivek Sankaran are expected to testify before the Subcommittee on Competition Policy, Antitrust and Consumer Rights, led by Sens. Amy Klobuchar (D., Minn.) and Mike Lee (R., Utah).


Apple Has No Easy Road Out of China

Apple Inc.'s short-term problems depend on the patience of its most lucrative iPhone buyers. Its long-term problems will require the patience of a much larger constituency.

Growing unrest in China has affected production of Apple's devices there. The company warned on Nov. 6 that Covid restrictions at an assembly plant in Zhengzhou were resulting in significantly reduced capacity for producing its iPhone 14 Pro and Pro Max models. The situation has only grown worse since, as the lockdowns have helped spark more protests across the country to a level unseen in decades.


Crypto Exchange Kraken Settles Alleged Sanctions Violations

Cryptocurrency exchange Kraken has agreed to pay more than $362,000 to settle allegations it violated U.S. sanctions against Iran, the U.S. Treasury Department said Monday.

Kraken violated U.S. sanctions laws by failing to prevent users in Iran from accessing its platform, which allowed them to conduct transactions worth more than $1.68 million between October 2015 and June 2019, the Treasury Department's Office of Foreign Assets Control said.


China Property Stocks Rise as Regulators Step Up Support

Chinese property developers are up in early Tuesday trade after regulators stepped up support for the embattled sector with some measures aimed at broadening equity-financing channels.

Country Garden Services Holdings Co. rises 16%, Country Garden Holdings Co. jumps 8.6% and Longfor Group Holdings Ltd. advances 8.0% in morning trade.


Yield Curve Inversion Reaches New Extremes

Yields on longer-term U.S. Treasurys have fallen further below those on short-term bonds than at any time in decades, a sign that investors think the Federal Reserve is close to winning its inflation battle regardless of the cost to economic activity.

A scenario in which short-term yields exceed long-term yields is known on Wall Street as an inverted yield curve and is often seen as a red flag that a recession is looming.


Tech Selloff Catches Up With Private Startups

Tech startups are plunging in value in private trades, mirroring the big markdowns of their publicly listed brethren over the past year.

Before companies go public, their shares are often traded by employees, founders and institutions in secondary deals. The trades allow existing holders to cash out before a startup goes public, and buyers to make new investments or add to existing holdings.


Chinese Startups Try to Make It Big in the U.S.-but Without the Backlash

As U.S.-China ties fray and decoupling trends rise, dozens of Chinese startups are going against the tide, seeking ways to expand into the U.S. and other international markets.

(MORE TO FOLLOW) Dow Jones Newswires

11-29-22 0601ET

Stocks mentioned in the article
ChangeLast1st jan.
ALBERTSONS COMPANIES, INC. 0.28% 21.4 Delayed Quote.2.89%
APPLE INC. 2.44% 154.5 Delayed Quote.18.91%
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.00% 0.5737 Delayed Quote.2.78%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.00% 0.6917 Delayed Quote.3.81%
BAIDU, INC. -5.44% 143.06 Delayed Quote.25.07%
BITCOIN (BTC/EUR) -0.48% 21600 End-of-day quote.39.37%
BITCOIN (BTC/USD) -0.45% 23332.1 End-of-day quote.40.44%
BRENT OIL -2.83% 79.73 Delayed Quote.-4.54%
BRITISH POUND / US DOLLAR (GBP/USD) 0.00% 1.2053 Delayed Quote.1.04%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) -0.09% 0.618846 Delayed Quote.0.71%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.09% 0.7454 Delayed Quote.1.68%
COINBASE GLOBAL, INC. -8.38% 74.63 Delayed Quote.130.18%
COMMONWEALTH BANK OF AUSTRALIA 1.29% 111.15 Delayed Quote.8.33%
COUNTRY GARDEN HOLDINGS CO. LTD. -3.78% 2.8 Delayed Quote.4.87%
COUNTRY GARDEN SERVICES HOLDINGS COMPANY LIMITED -7.25% 18.92 Delayed Quote.-2.67%
DEUTSCHE BANK AG 0.65% 11.53 Delayed Quote.8.90%
DOW JONES FXCM DOLLAR INDEX 0.93% 12808.36 Real-time Quote.-0.28%
EURO / BRITISH POUND (EUR/GBP) -0.05% 0.895 Delayed Quote.0.80%
EURO / US DOLLAR (EUR/USD) 0.00% 1.0793 Delayed Quote.1.89%
FLOKI INU (FLOKI/USD) 0.00%End-of-day quote.0.00%
HEWLETT PACKARD ENTERPRISE COMPANY -0.49% 16.33 Delayed Quote.2.32%
INDIAN RUPEE / BRITISH POUND (INR/GBP) 0.96% 0.010067 Delayed Quote.-0.26%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.30% 0.012168 Delayed Quote.0.82%
INTUIT INC. -6.28% 423.76 Delayed Quote.8.87%
JD.COM, INC. -2.83% 57.63 Delayed Quote.2.67%
KROGER CO. (THE) -1.22% 44.42 Delayed Quote.0.87%
LONGFOR GROUP HOLDINGS LIMITED -2.74% 24.85 Delayed Quote.2.26%
NETAPP, INC. -2.07% 67.62 Delayed Quote.14.97%
NETEASE, INC. -0.91% 89.9 Delayed Quote.24.92%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -2.31% 0.63245 Delayed Quote.1.98%
PINDUODUO INC. -3.98% 95.65 Delayed Quote.22.15%
PX INDEX 0.23% 1355.1 Real-time Quote.12.76%
ROKU, INC. -4.02% 62.84 Delayed Quote.54.40%
S&P GSCI CRUDE OIL INDEX -3.40% 402.2251 Real-time Quote.-5.35%
TESLA, INC. 0.91% 189.98 Delayed Quote.54.23%
UNITED PARCEL SERVICE INC. 0.19% 191.66 Delayed Quote.10.04%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 1.08% 6.8055 Delayed Quote.-1.66%
US DOLLAR / BRITISH POUND (USD/GBP) 0.00% 0.829669 Delayed Quote.-1.04%
WTI 0.00% 73.419 Delayed Quote.-5.67%
WYNN RESORTS, LIMITED 0.00% 102.96 Delayed Quote.24.85%
Latest news
09:21aUkraine has reserves to repel possible Russian offensive this month - minister
RE
09:17aGreens want to regulate index rents
DP
09:00aWall St Week Ahead-Signs of market strength cheer U.S. stocks bulls
RE
08:58aAnalysis-China has reasons to keep cool after U.S. downs suspected spy balloon
RE
08:30aUkraine says it will not strike Russian territory with new missiles
RE
08:00aPegasus Hava Tasimaciligi Anonim Sirketi : About Our Canceled Flights Due to Weather Conditions
PU
08:00aPegasus Hava Tasimaciligi Anonim Sirketi : About Our Canceled and Delayed Flights on 3 January 2023 due to the Dense Fog Expected in Istanbul
PU
07:51aChina's oil demand bounce may push producers to reconsider output - IEA
RE
07:35aQatar sends envoy to Afghan capital to meet with Taliban
RE
07:35aIndia needs to invest $10 trillion for energy transition by 2070 - official
RE
Latest news