MARKET WRAPS
Watch For:
ADP National Employment Report for December; Trade for November; Weekly Jobless Claims; Canada Trade for November; EIA Weekly Petroleum Status Report; Federal Reserve Bank of St. Louis President James Bullard speaks at CFA Society St. Louis event
Walgreens Boots Alliance to release earnings.
Today's Top Headlines/Must Reads
- Greener, More Secure Supply Chains Won't Come Cheap
- China Service-Sector Activity Continued to Fall in December
- Amazon Layoffs to Hit Over 18,000 Workers
- Foxconn's 2022 Revenue Hits Record High
- Venture Firms' Strategy of Holding Stocks for Longer Backfires During Market Rout
Follow WSJ market coverage here
Opening Call:
Stock futures dipped Thursday as the prospect of the Federal Reserve keeping interest rates higher for longer smothered any of investors' bullish impulses.
Fears that the Fed will persevere with interest rate rises to damp inflation, at the risk of triggering recession and hurting corporate earnings, has left Wall Street's benchmark S&P 500 down 19.7% from its record close touched a year ago.
"The Federal Reserve repeated its determination to keep fighting inflation with further rate hikes, and warned that this determination should not be underestimated by investors," Swissquote Bank said.
"Yes, there are some data pointing at slowing economic activity in the U.S., but the jobs market - which is closely watched by the Fed - remains surprisingly tight - while the Fed keeps saying that bringing inflation back to the 2% target requires some 'softening' in the jobs market," Swissquote added.
To that end, traders will be keeping a close eye on data, particularly jobs reports, in the next two days.
Stocks to Watch
Amazon.com will slash more than 18,000 jobs as it looks to cut costs amid economic uncertainty. Salesforce announced Wednesday it would be cutting its work force by about 10% under a plan intended to reduce operating costs and push toward profitable growth.
Amazon shares rose 2.4% in premarket trading. Salesforce was down 0.5%; it rose 3.6% on Wednesday.
GE Healthcare rose slightly in premarket trading. Shares gained more than 8% on Wednesday in their first day of trading on the Nasdaq stock exchange.
Geron disclosed plans of a public offering late Wednesday. Shares ended the regular trading session on Wednesday with a 33% gain to $3.19. Shares declined 12% in after-hours trading.
Homology Medicines said the first participant was recently dosed in the Phase 1 trial with HMI-103 for phenylketonuria and that additional participants are in screening. Shares increased 7.7% in after-hours trading.
Personalis said preliminary revenue figures for the fourth quarter should help it beat its full-year revenue guidance. Shares increased 7.8% in after-hours trading.
Vyant Bio said Wednesday that it has engaged LifeSci Capital to assist in exploring strategic alternatives to enhance shareholder value. Shares for the biotechnology company surged 116% in after-hours trading.
Western Digital shares rose 7.4% in premarket trading following a report from Bloomberg that said the data storage company has restarted merger talks with Japan's Kioxia Holdings.
Forex:
The Fed's latest meeting minutes on Wednesday showed no policymakers expect interest rate cuts in 2023 but the dollar failed to benefit because the market doesn't trust that view, Commerzbank said.
That remains the "central aspect dominating the dollar outlook," it added.
As long as this divergence between the Fed and market expectations persists, there's a risk that sentiment in the currency market will tilt in the direction of Fed expectations eventually and the dollar will appreciate significantly once again even if this isn't justified over the medium term, Commerzbank said.
Bonds:
Short-term investment-grade bonds look a good investment in the current economic climate, said Indosuez.
The current environment of high interest rates, an economic slowdown and extreme volatility in government bonds makes very short-term bonds more appealing, Indosuez added.
"The environment is very conducive to the reconstitution of 3-5-year investment grade bond portfolios brought to maturity with yields well in excess of expected inflation over the next five years."
Energy:
Oil prices rose almost 1% in Europe as investors balance China reopening hopes with concerns about global recessions.
Hong Kong said it would begin reopening its border with China on Sunday.
"Oil prices bounced higher in Asia on retail buying, but so far, the more actively traded London session has no part of it, with market sentiment lathered in recession angst," SPI Asset Management said.
Metals:
Metal prices were moving lower in early trading in London as worries about the macroeconomic environment persisted.
"The macro environment is back on the negative side of the ledger," Peak Trading Research said.
"Recession is winning the 'Inflation vs Recession' debate this week."
Gold
"Going forward, it will be the US ADP data that is likely to bring higher volatility for the metal," AvaTrade said, adding that if the number comes in strong, it is more than possible that the gold price may move lower as the dollar index could strengthen further.
"If the number comes in weak, we could see strength coming back for the gold price and the current retracement in prices could look like an opportunity to bag bargains," said AvaTrade.
Read Barron's Gold's Rally May Last. Economic Uncertainty Is Great for the Price.
TODAY'S TOP HEADLINES
Foxconn's 2022 Revenue Hits Record High
Foxconn Technology Group said Thursday that 2022 revenue rose 10% to a new record, as operations at the Zhengzhou campus in China returned to normal in December.
The electronics maker, formally known as Hon Hai Precision Industry Co., said unaudited revenue in 2022 rose to a record high of 6.622 trillion New Taiwan dollars (US$215.84 billion) from NT$5.994 trillion in 2021.
RWE, Equinor Partner to Ramp Up Low-Carbon Hydrogen in Europe
RWE AG and Equinor ASA have agreed to collaborate on large-scale projects that will contribute to strengthening Europe's security of supply and ramp-up the production of low-carbon hydrogen.
The strategic partnership between the two energy companies includes the construction of new gas power plants in Germany that will be initially fueled with natural gas and eventually use hydrogen, Equinor said Thursday. It also foresees building production facilities in Norway to produce low-carbon hydrogen from natural gas with carbon capture and storage, exporting the hydrogen from Norway to Germany by pipeline, and developing offshore wind farms for the production of renewable hydrogen.
Amazon Layoffs to Hit Over 18,000 Workers, the Most in Recent Tech Wave
Amazon.com Inc.'s layoffs will affect more than 18,000 employees, the highest reduction tally revealed in the past year at a major technology company as the industry pares back amid economic uncertainty.
The layoffs are concentrated in the company's corporate ranks and represent roughly 5% of that element of its workforce, and 1.2% of its overall tally of 1.5 million employees as of September.
New York Financial Regulator Notches $100 Million Settlement With Coinbase
A $100 million settlement made public by the New York State Department of Financial Services on Wednesday underscores the agency's intent to set the regulatory agenda for digital currencies.
The regulator said cryptocurrency exchange Coinbase Global Inc. has agreed to pay a $50 million penalty to settle allegations it violated anti-money-laundering laws by allowing customers to open accounts without conducting sufficient background checks. Coinbase also will spend $50 million to improve its compliance program over the next two years.
Next Raises Full Year 2023 Profit Guidance But Expects Tighter Year Ahead
Next PLC on Thursday raised its pretax profit guidance for fiscal 2023 after better-than-expected Christmas sales, but said it expects earnings to fall in fiscal 2024 as the economy is squeezed by inflation and consumers deal with increased mortgage payments as fixed interest-rate deals expire.
The London-listed fashion retailer now expects pretax profit for the year ending January of 860 million pounds ($1.04 billion) compared with previous guidance of GBP840 million, with full-price sales are seen at GBP4.6 billion compared with GBP4.5 billion previously.
Samsung's Consumer-Products CEO Expects Tech Slump to Persist
SUWON, South Korea-Samsung Electronics Co.'s consumer-gadgets chief expects tech demand to remain sluggish as high inflation, rising interest rates and a strong dollar weigh on sales.
Han Jong-hee, vice chairman and co-CEO of the South Korean technology company, said he hoped the current industry downturn, which has pulled Samsung back from a run of record profits, will begin to improve in the second half of the year.
Greener, More Secure Supply Chains Won't Come Cheap
As 2023 dawns, the supply-chain snarls that characterized much of 2021 and 2022 are clearly untangling. But the new year brings new challenges: the rise of "green protectionism" and an accelerated effort by multinationals to diversify away from China.
These two interrelated trends both promise substantial long-term benefits-namely a more livable planet and a more resilient global supply chain-but will probably entail significant costs for companies and consumers in the meantime.
China Service-Sector Activity Continued to Fall in December
A private gauge of China's service-sector activity improved in December but stayed in contraction territory, as Covid-19 infections swept the country after an abrupt reopening during the month.
The Caixin services purchasing managers index rose to 48.0 in December from 46.7 in November, Caixin Media Co. and S&P Global said Thursday.
Germany's Trade Surplus Increased by More Than Expected in November
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01-05-23 0618ET
