MARKET WRAPS
Watch For:
Weekly Jobless Claims; Revised Productivity and Costs for 2Q; EIA Weekly Petroleum Status Report; The Fed's Raphael Bostic delivers remarks at Broward College event; Bostic speaks at Prosperity Partnership/Greater Fort Lauderdale Alliance Foundation dinner
Today's Top Headlines/Must Reads:
- Why Higher Unemployment Is Good News Now
- U.S., Allies Should Reduce Dependence on China, Speaker McCarthy Says
- Health-Insurance Costs Are Taking Biggest Jumps in Years
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Opening Call:
Stock futures pointed lower on Thursday, as markets continued to struggle against the backdrop of rising bond yields.
An unusually strong reading of the ISM services index on Wednesday set the stage for a further move higher in yields, and added to evidence that the economy continues to run hot, stoking fresh worries that the Federal Reserve will need to keep policy tight.
The data also underscored the growing economic gap between the U.S. and the rest of the world. Weak data from Europe and China Thursday pressured stocks and currencies in both regions.
Asian stocks were lower following news that China's exports had dropped for a fourth straight month.
Read China Exports Fall for Fourth Month as Once-Reliable Growth Engine Sputters
European indexes initially slipped after data showed Germany's industrial production fell more than expected in July.
Read Feeble German Economy Faces Fresh Contraction as Factories Falter
Premarket Movers
Apple, Nvidia, and Tesla all slipped more than 1% in early premarket trading, suggesting Wednesday's selloff could extend into a new session.
https://urldefense.com/v3/__http://C3.ai__;!!F0Stn7g!Etze3aCk98UycXRCd-MV952uZ1U6ixt1GvrlvWQoV43aPPtTLWLnNJczV1dY3b101bVljc6E6u5O048D2rKANkbTiqo3KCkNTVKuCiFt5tU$ fell 10% in premarket trading after the company forecast a wider-than-expected fiscal-year loss and withdrew its previous forecast that it would reach profitability on an adjusted basis by the end of fiscal 2024.
ChargePoint declined 9.5% after reporting a second-quarter loss that was wider than a year earlier and a loss on an adjusted basis worse than analysts' estimates.
GameStop was rising 5.6% after it reported a narrower-than-expected adjusted second-quarter loss.
Smurfit Kappa confirmed it was in talks with WestRock over a potential merger. WSJ had reported that Europe's Smurfit Kappa was nearing a deal to acquire WestRock in a move that would create a global paper and packaging company worth about $20 billion. WestRock shares rose 9.9%. Read more .
Adjusted second-quarter earnings from UiPath beat Wall Street expectations and the stock rose 5.4%.
Forex:
The EUR/USD remained weak around 1.07, given poor economic data in the eurozone and despite the possibility of an interest-rate rise by the ECB next Thursday, UniCredit Research said.
The weakness of the single currency prevails "despite efforts by different ECB members to convince investors that they are currently underestimating the possibility of another rate hike by the ECB next week."
Read EUR/USD in Need of Patience Before Central Banks Spark New Triggers
Read Unchanged ECB Rates Could Hurt Euro, Says SEB Research
Sterling could weaken on raised expectations of a BOE interest-rate pause, coming after Wednesday's comments by the central bank which indicated that interest rates are near the peak, ING said.
"Markets are now for the first time starting to cast some doubts about whether the BOE will hike rates at all at the Sept. 21 meeting, with pricing having dropped below 20 basis points after Wednesday's Parliament testimony," ING added.
"EUR/GBP upside potential remains decent in our view."
Read Sterling Falls Vs Dollar After Strong US Services Data, BOE Governor Comments
Energy:
Oil prices edged lower in Europe, halting a run of gains, as traders awaited U.S. inventory data.
Department of Energy data on changes in U.S. stocks is due later Thursday, offering investors a clue on crude oil demand.
Traders were also mulling Chinese trade data, which showed imports and exports both fell in August, though the declines were less than forecasted.
Metals:
Base metals and gold prices were falling in early London trading, as concerns over China's economy continued to hurt sentiment.
Data from China showed exports in August had fallen for a fourth month in a row, showcasing the country's current economic malaise.
However, ANZ highlighted a bright spot within commodities, that a number of imports rose on month. Copper ore, for example, rose by more than 36%, while iron ore also was up more than 13%.
"With inventories relatively low, the prospects of further stimulus measures triggered restocking across commodities, which should keep demand strong in the short term," ANZ said.
TODAY'S TOP HEADLINES
China's Microsoft Email Cloud Hack Began With a 2021 Computer Crash
A series of technical missteps by Microsoft, including the hack of a company engineer, gave the Chinese government access to emails of top Biden administration officials, according to new information released by the company Wednesday.
The cyber-espionage attack, which Microsoft disclosed in July, has prompted congressional inquiries because it compromised the unclassified email systems of several State Department officials ahead of a state visit to China. Commerce Secretary Gina Raimondo and the U.S. ambassador to China, R. Nicholas Burns, were among those affected. Email accounts at about 25 organizations were breached in the attack, Microsoft has said.
Microsoft Will Use Carbon-Absorbing Rocks to Meet Climate Goals
Most of the world's efforts to remove carbon from the atmosphere use giant, vacuum-like devices that suck in air and isolate the carbon. Microsoft is funding a new approach that uses crushed-up limestone to achieve the same result.
The tech company said Thursday it agreed to buy credits from startup Heirloom Carbon for the removal of up to 315,000 metric tons of carbon dioxide over 10 years. That would amount to a purchase commitment of at least $200 million based on market prices and would offset the equivalent of the annual emissions of around 70,000 gasoline-powered cars.
America's Wind-Farm Revolution Is Broken
Offshore wind farms should be one of the best solutions to the climate crisis but are turning out to be a lousy business. Getting the struggling industry back on its feet will require a new approach from companies and politicians alike.
The public face of the crisis is Ørsted, a former oil and gas producer that became the world's largest offshore wind-farm developer. The Danish company's stock has lost more than $10 billion, or a third of its market value, since warning last week that it may take impairments of up to $2.3 billion on its U.S. projects. On Tuesday, ratings provider Moody's downgraded the stock, a further challenge for a company that, like a property developer, needs debt to fund its plans.
China's Forex Reserves Fell in August
China's foreign-exchange reserves dropped in August amid a weakening yuan, according to data released by the People's Bank of China on Thursday.
Forex reserves fell $44.17 billion in August to $3.160 trillion, according to data released by the central bank. The result was slightly lower than the median forecast of $3.184 trillion made by economists surveyed in a Wall Street Journal poll.
Trump's 2024 Eligibility Ignites Debate-and Litigation
Since the day Donald Trump supporters rampaged through the Capitol in 2021, legal scholars have pondered whether a post-Civil War clause in the Constitution that disqualifies insurrectionists from public office can prevent him from ever reclaiming the presidency.
As polls show Trump surging toward another Republican presidential nomination, the question of his eligibility under the 14th Amendment is no longer merely academic.
Texas Ordered to Remove Buoy Barrier From Rio Grande
Texas must remove the 1,000-foot floating border barrier it installed in the middle of the Rio Grande, a federal judge ruled on Wednesday.
Judge David A. Ezra, of the Western District of Texas, forbade Texas from lengthening the barrier-made up of giant orange buoys anchored by concrete blocks-and ordered the state to remove the existing barrier by Sept. 15.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
BRP 2Q
Enghouse Sys 3Q
TECSYS 1Q
Economic Calendar (ET):
0830 Jul Building permits
1000 Aug Ivey Purchasing Managers Index
1430 Bank of Canada Governor Tiff Macklem speech at Calgary Chamber of Commerce event
Stocks to Watch:
Aura Minerals Announces Full Construction Decision for the Borborema Project and Secures Term Loan of $100M to Fund Construction
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BlackBerry Sees 2Q Rev $132M; Sees 2Q IoT Unit Revenue $49 Million; Sees 2Q Cybersecurity Revenue $80 Million; Backs FY24 Cybersecurity Revenue View; Sees FY24 IoT Unit Revenue $225 Million-$240 Million
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DIRTT to Voluntarily Delist From Nasdaq Exchange; Public Trading on Toronto Stock Exchange Will Continue; Sees Recurring Annual Cost Savings $400,000
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Novo Resources Completes Oversubscribed A$7.5M IPO via Issue of 37.5M Shares; ASX Trading Scheduled to Commence Sept. 11 at 11 a.m AEST
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Profound Medical Announces At-the-Market Offering of Up to $30 Million
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Treasury Metals Names James Gowans as Chair; Gowans Succeeds David Whittle
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West Fraser Timber to Buy Spray Lake for C$140M; Spray Lake Has Annual Lumber Capacity of 155M Board Feet
Expected Major Events for Thursday
05:00/JPN: Jul Indexes of Business Conditions - Preliminary Release
05:30/FRA: 2Q Job creation
06:00/GER: Jul Industrial Production Index
06:00/UK: Aug Halifax House Price Index
06:45/FRA: Jul Foreign trade
06:45/FRA: Jul Balance of payments
08:00/ITA: Jul Retail Sales
09:00/GER: Ifo Economic Forecast
12:30/CAN: Jul Building permits
(MORE TO FOLLOW) Dow Jones Newswires
09-07-23 0629ET
