MARKET WRAPS
Watch For:
Existing Home Sales for November; Conference Board Consumer Confidence survey for December; EIA Weekly Petroleum Status Report; CA Consumer Price Index for November
Today's Headlines/Must Reads:
- Uniper's Bailout by Germany Gets EU Green Light
- Sam Bankman-Fried Expected Back in Bahamas Court
- Cybersecurity Firms Cut Staff as Fears About Economy, Funding Mount
- High Commodity Prices Feed a Boom in the U.S. Farm Belt
- Ukraine Defends Bakhmut Against Russian Assaults as Zelensky Heads to U.S.
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Stock futures advanced on Wednesday, with Wall Street poised to build on its climb out of a four-straight losing hole as the long Christmas weekend nears.
Well-received results from Nike and FedEx were also in focus.
Investors will be watching out for the third-quarter current-account deficit, followed by the Conference Board's December consumer confidence index and November existing home sales.
Investors are not ready to let go of the idea that the U.S. economy remains on firmer footing, despite recession worries, AvaTrade said.
"Yes, the concerns are there that going in 2023, we are likely to see a recession taking place in the U.S., which the Fed denies for the time being. But given the robustness of the economy and the resilience in the economic numbers, it is unlikely to anticipate a scenario under which we will see a massive and prolonged period of crisis in the U.S.," AvaTrade added.
Stocks to Watch
BlackBerry, the Canadian cybersecurity company, was down 2.7% in premarket trading after it swung to a loss and reported lower revenue in the latest quarter.
Calavo Growers's revenue fell in the fourth quarter due to lower profit in its avocado division as a result of input cost pressure. Shares dived 14% in after-hours trading.
FedEx said it continues to encounter weak demand for packages, resulting in another quarter of lower profit and fresh plans to cut more costs from its operations. Shares were up 4.1% premarket.
Micron Technology is scheduled to report earnings after the close of trading Wednesday. Shares were up 1.4% in premarket trading.
Nike's shares jumped 14% premarket after it raised its revenue outlook and said that its inventory challenges are abating.
Tesla was rising 2.3% in premarket trading after Elon Musk said he would step down as CEO of Twitter.
Worthington Industries shares dropped 4.8% off hours after it reported a decline in quarterly sales.
Forex:
The dollar could fluctuate considerably in coming days as liquidity is likely to be thin and a raft of economic data will be released, Commerzbank said.
The market will probably keep an eye on data to assess what extent the economy is weakening and whether the Federal Reserve might be "overshooting" with its monetary policy tightening, Commerzbank added.
"Thin markets, U.S. data and the market's attempt to get a better idea of future monetary policy do not necessarily but could potentially constitute an explosive mix."
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The sterling may remain near current levels against the dollar over the Christmas period but looks set to fall in 2023 as the outlook looks challenging, ING said.
ING added that it "continues to see mostly downside risks for the pound in the new year, as a recessionary environment and sensitivity to market instability may cause a return to the 1.15-1.18 range in cable [GBP/USD]."
"For this festive season, GBP/USD may hold around 1.2100-1.2250."
Energy:
Oil prices were little changed in Europe as investors balanced concerns about demand with the U.S. decision to begin refilling its strategic reserves.
U.S. plans to refill its oil reserve in February are backstopping oil prices, SPI Asset Management said.
Of concern though are the outcomes of China's reopening, which could see Covid-19 cases spike.
"Oil prices are wedged between the Biden Administration's bid to refill the SPR and demand implication" of rising Covid-19 cases in China, SPI added.
Metals:
Metals prices were mixed in London opening trade, with investors weighing how much material will be needed ahead of China's likely opening next year.
China's possible reopening next year is being weighed against recession headlines in western markets helping to give a mixed picture across risk assets, SPI Asset Management said.
Aluminum was 1.2% higher at $2,400 after Indonesia's President Joko Widodo on Wednesday confirmed an export ban for bauxite--the preliminary material for aluminum production--starting in June next year.
Indonesia produces nearly 5% of global bauxite, according to the USGS.
TODAY'S TOP HEADLINES
Uniper's Bailout by Germany Gets EU Green Light
Uniper SE's rescue package from Germany has been approved by the European Commission, the final clearance needed to implement the measures set out by the government to avoid the utility's collapse.
"The measure aims at restoring the balance sheet position and liquidity of Uniper in the exceptional situation caused by Russia's war of aggression against Ukraine, while maintaining the necessary safeguards to limit competition distortions," the European Union's executive arm said late on Tuesday. "It's necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state."
Cybersecurity Firms Cut Staff as Fears About Economy, Funding Mount
Cybersecurity companies have laid off hundreds of workers in recent months, as concerns mount that an economic downturn will delay funding rounds, and squeeze the amounts investors are willing to commit.
Since midyear, cyber services and technology providers across the industry have been shedding staff, sometimes in multiple rounds of cuts to their workforces. The layoffs have spanned departments, including sales, marketing, research and development, and technical roles.
Google's YouTube in Talks for Rights to NFL Sunday Ticket
The National Football League is in advanced talks to give Google's YouTube exclusive rights to NFL Sunday Ticket, a subscription-only package that allows football fans to watch most Sunday afternoon games, people familiar with the matter said.
An agreement could be reached as early as Wednesday, following a meeting of NFL owners, who approve rights deals.
Elon Musk Plans to Step Down as Twitter Head After Casting Doubt on Poll
Elon Musk said he planned to step down as Twitter Inc. chief executive officer after casting doubt on a poll he initiated on the future leadership of the social-media platform that ended up calling for him to hand over the top job.
Nearly 58% of the more than 17 million Twitter accounts that responded to Mr. Musk's poll by the time it closed Monday morning voted for him to step down as head of Twitter. Mr. Musk, who has used Twitter polls to validate his statements or decisions, had said when he launched the poll that he would abide by the results.
Nike Raises Outlook After Making Progress With Inventory Woes
Nike Inc. on Tuesday raised its revenue outlook and said that its inventory challenges are abating, signs that the sneaker giant's efforts to use discounts to clear out excess merchandise are helping the business.
The company said revenue in its second quarter rose 17% from a year ago and profits were roughly flat, a better-than-expected result than analysts estimated that helped send shares up more than 11% in after-hours trading.
Citadel, Other Big Hedge-Fund Winners in 2022 to Return Some Profits to Clients
Citadel expects to return about $7 billion in profits to its clients on the back of what is expected to be its most profitable year ever, said people familiar with the firm, highlighting the banner year some hedge funds have had even as others nurse deep wounds.
Citadel's flagship fund gained about 32% for the year through November, benefiting from bets across the firm's strategies, the people said. The firm plans to return some profits from all four of its funds in early January but still expects to start 2023 with more than $50 billion in assets under management, one of the people said.
Sam Bankman-Fried Expected Back in Bahamas Court
NASSAU, Bahamas-Jailed FTX founder Sam Bankman-Fried is expected to return to court here Wednesday to seek his transfer into U.S. custody, paving the way for him to fly to New York to face criminal charges connected to the collapse of the crypto exchange.
Mr. Bankman-Fried has agreed not to contest his extradition, according to a person familiar with the matter, but must formally inform the court and get a magistrate judge's approval. Mr. Bankman-Fried has signed paperwork that triggered such a hearing, the person said. A court administrator said the hearing is scheduled for 11 a.m.
High Commodity Prices Feed a Boom in the U.S. Farm Belt
High prices for crops and livestock are fueling a boom in the U.S. Farm Belt, making farmers, ranchers and agricultural companies rare winners as the broader American economy softens.
U.S. net farm income is expected to surge to $160.5 billion this year, boosted by increased prices for farm goods ranging from wheat to milk, according to a key U.S. Department of Agriculture forecast in December. If realized, farm income would reach the highest level since 1973 in inflation-adjusted dollars, marking a sharp recovery from an agricultural recession that battered farmers and their suppliers during the past decade.
Ukraine Defends Bakhmut Against Russian Assaults as Zelensky Heads to U.S.
LVIV, Ukraine-The Ukrainian military said it had repelled a fresh wave of Russian assaults around the eastern city of Bakhmut following a visit there on Tuesday by President Volodymyr Zelensky, who is due to visit the U.S. on Wednesday.
(MORE TO FOLLOW) Dow Jones Newswires
12-21-22 0631ET
