MARKET WRAPS
Watch For:
Employment report for October; Canada Labour Force survey for October; Inc. 3Q earnings; Fed's Susan Collins speaks at Brookings Institution event; earnings from Enbridge, Berkshire Hathaway
Opening Call:
Today's Headlines:
-Chinese Shares Surge as Covid Reopening Hopes Emerge, U.S. Audit Inspections End
-Layoffs Hit Tech Sector With Force as Amazon, Lyft Warn of Economic Downturn
-Musk's Twitter Tells Staff Layoffs Will Be Announced Friday
-Tiger Global Halts New Chinese Equities Investments
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Stock futures rose ahead of a jobs report that could provide signals on the outlook for Federal Reserve policy, and following speculation China may loosen Covid-19 rules.
"If we see stronger-than-expected jobs growth, the market won't take it well. That will further play into the narrative that the Fed may need to hike rates further than we'd expected," said Kiran Ganesh, a multiasset strategist at UBS Global Wealth Management. "A case of good news that would be bad news."
Early Movers:
Starbucks rose 2.4% premarket after it said its sales hit a record, while a planned multimillion-dollar investment in cafe equipment and higher wages cut into store-level profit.
Coinbase Global posted a loss, as its main revenue driver-crypto trading-remains depressed in the wake of the market's crash. Its shares rose 7.6% premarket.
PayPal delivered an earnings beat but lowered its revenue outlook. Its shares slid 7.1% premarket.
Warner Bros. Discovery posted revenue below analysts' estimates and said it was speeding up the launch of a combined HBO Max/Discovery+ streaming service. Its shares slipped 3.9% premarket.
Carvana reported a wider loss and didn't provide an outlook for 2023. Its shares fell 7.3% premarket.
DoorDash surged 11% premarket after it unveiled stronger-than-expected results.
Rocket delivered an earnings beat, though the results also highlighted the slowdown in the housing market. Its shares were down 6.8% premarket.
Block reported a loss after having broken even a year earlier, but the results were far better than analysts had expected. Its shares soared 14% premarket.:
Forex:
Friday's jobs data could cause the dollar to build on its gains since Wednesday's Fed rate rise, prompting investors to increase expectations for where rates will peak, ING said.
"We expect today's release to leave markets still searching for a higher Fed terminal rate, ultimately keeping the dollar bid." A "decisive break" above 113.00 in the DXY dollar index looks likely, either Friday or in the coming days, ING said.
It expects payrolls to have risen by 220,000 in October, versus 205,000 expected in a poll by The Wall Street Journal.
Bonds:
UOB said the 10-year Treasury yield could rise further before peaking, based on technical charts.
As long as the 55-day exponential moving average of 3.705% isn't broken, the 10-year yield may rise above 4.338% before it risks hitting a peak.
However, upward momentum isn't strong and it is worth noting that the daily moving average convergence divergence indicator is in negative territory and there's negative divergence on the daily MACD chart.
A negative divergence is typically a bearish signal on charts.
Pictet Wealth Management aid said rising volatility in the Treasury market has been linked to uncertainties surrounding the Fed's interest-rate rise cycle, with the central bank's shift to quantitative tightening contributing to a deterioration in liquidity.
"This new environment has led to a rebuilding of risk premiums on Treasuries, but we expect the Fed to maintain large bond holdings, meaning that risk premiums could remain well below the pre-QE averages," Pictet said.
Energy:
Oil prices rose around 2% in Europe as fresh rumors surfaced that China could soon move away from the strict lockdown restrictions it has imposed and which have dragged on the world's second largest economy.
SPI Asset Management said the sharp moves being driven by mere rumors point to how significant the reopening of the Chinese economy would be.
"Markets will pre-position very early for a China reopening as getting on this bandwagon will be the most in-demand ticket in town."
Metals:
Prices of base metals and gold jumped in London trading, after news in Asia of a possible Chinese reopening led Chinese equities and the yuan higher, with Marex noting increased copper buying on renewed optimism.
TODAY'S TOP HEADLINES
Elon Musk's Twitter Tells Staff Layoffs Will Be Announced Friday
Twitter Inc. has told employees it would notify them about head-count reductions on Friday, a move that comes about a week after billionaire Elon Musk acquired the social-media company.
The company, in a message sent to staff on Thursday, didn't spell out the extent of the cuts. Twitter had more than 7,500 employees at the start of this year, according to a regulatory filing.
Layoffs Hit Tech Sector With Force as Amazon, Lyft Warn of Economic Downturn
The outlook for tech industry jobs worsened on Thursday, with ride-hailing company Lyft Inc. and payments company Stripe Inc. both announcing major layoffs and Amazon.com Inc. saying it will freeze corporate hiring for months.
The stream of grim news for the industry came as the Federal Reserve has moved again to raise interest rates to combat inflation, signaling greater risk that the U.S. economy is sliding into a recession. Faced with that possibility, tech company executives are warning of tougher times ahead.
Washington State Commissioner Temporarily Blocks Albertsons Dividend Payout
A Washington state court commissioner temporarily blocked a $4 billion dividend that Albertsons Cos. had intended to pay its shareholders next week, announced when the grocer agreed to merge with rival Kroger Co. in a $20 billion deal last month.
Commissioner Henry Judson for the King County Superior Court in Washington said during a hearing Thursday that he will grant a temporary restraining order to stop the planned dividend. The ruling came after the state's attorney general filed a lawsuit this week against the companies to block the payment, which was initially scheduled for Nov. 7.
Starbucks Rings Up Record Sales, Though Cafe Investments Erode Profit
Starbucks Corp. said its sales hit a record in its most recent quarter, while a planned multimillion-dollar investment in new cafe equipment and higher wages for employees cut into store-level profit.
The coffee giant reported $8.41 billion in revenue for the three months ended Oct. 2, up about 3% from the comparable year-ago period and above expectations of analysts polled by FactSet. The company said Thursday its same-store sales globally increased 7% year-over-year, and Interim Chief Executive Howard Schultz said global demand for Starbucks's coffee was strong.
Healthcare Stocks Offer Investors Refuge in Bruised Market
Soaring interest rates and a shaky economic outlook have hit stock prices this year. Health stocks are holding up better than most.
The S&P 500's healthcare sector index is down 7.9% in 2022, on pace for its worst year since 2008. Yet it is still outperforming the broader market by 14 percentage points, the widest gap since 2000, according to Dow Jones Market Data. Only the energy and utilities sectors have fared better.
Exxon Considers Leasing, Selling Unused Office Space at Houston Campus
Exxon Mobil Corp. is considering leasing or selling unused office space at the sprawling Houston-area campus set to become its global headquarters next year, part of its ongoing effort to cut billions in structural costs.
In recent months, the U.S. oil giant has found that on a typical day it uses less than 50% of the available space at its 385-acre campus, which is large enough to house more than 10,000 workers, according to an internal memo viewed by The Wall Street Journal. Exxon spokesman Casey Norton confirmed the company is considering options for unused space.
Jobs Report to Give Latest Labor-Market Snapshot as Fed Raises Rates
Friday's employment report will offer a fresh read on the state of the labor market at a time of aggressive Federal Reserve interest-rate increases.
The figures come in the midst of signs the job market has cooled somewhat compared with the first half of the year but remains strong. The overall economy, which grew at a 2.6% annual rate in the third quarter, is showing evidence of a slowdown.
Chinese Shares Surge as Covid Reopening Hopes Emerge, U.S. Audit Inspections End
Shares of Chinese companies listed in Hong Kong jumped on Friday, after U.S. officials wrapped up a crucial audit inspection in the city and a transcript circulated on social media suggesting China was considering reversing its strict coronavirus policies.
The Hang Seng Index closed the day more than 5% higher after Chinese stocks in a variety of sectors saw heavy buying. Tech giant Alibaba Group Holding Ltd., vehicle maker Geely Automobile Holdings Ltd. and restaurant chain Haidilao International Holding Ltd. were all up by double-digits in percentage terms. China's CSI 300 index ended the day up 3.3% and the Shanghai Composite Index was 2.4% higher.
Tiger Global Halts New Chinese Equities Investments
Longtime China investor Tiger Global Management has hit pause on investing in Chinese equities, said people familiar with the matter, as the firm reassesses its exposure to the world's second-largest economy after President Xi Jinping cemented his control over the country.
Tiger executives, including founder Charles "Chase" Coleman, have told others that Mr. Xi's reelection and his stacking of the Communist Party's leadership with loyalists at the recent party Congress could increase geopolitical tensions and means the country's Zero-Covid policy will likely continue, the people said.
Hospitals Say They're Still Ailing From Covid-19. Their Investors Feel Better.
(MORE TO FOLLOW) Dow Jones Newswires
11-04-22 0615ET
