MARKET WRAPS

Watch For:

Retail Sales for August; Import Prices for August; Weekly Jobless Claims; Industrial Production and Capacity Utilization for August

Opening Call:

Stock futures edged higher on Thursday, suggesting markets could be in for another muted session.

Data ahead that includes retail sales and jobless claims will likely give clues about the trajectory of the economy as the Federal Reserve raises interest rates.

"While the Fed is now almost certain to hike by 75 basis points next week and more in the months that follow than previously anticipated, the view still seems to be that Tuesday was a setback rather than a game changer," said OANDA.

"Confidence that we are at or near peak inflation is dented but not broken and this week serves as a reminder that as was the case on the way up, the path back to 2% will likely be littered with nasty surprises."

Read: Is the Stock Market Already Pricing in a Recession? What the S&P 500's Tumble Shows.

Forex:

The dollar is likely to remain firmer as economic data on Thursday should support the market's expectations for further interest rate rises, ING said.

Markets have priced in more rate rises by the Fed following Tuesday's higher-than-forecast inflation data, ING said. Fed funds futures are embedding a 3.4% peak rate in March 2023, compared with the current 2.25%-2.5% policy rate range.

"A fresh serving of U.S. data should keep the market's expectations hawkish."

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EUR/USD has dropped below parity after this week's inflation "shock" and traders are likely to continue selling it on any rallies, UniCredit Research said.

"Any upside potential for the common currency remains very limited and selling EUR-USD into a rally is likely to prevail," UniCredit said.

"Investors saw how rapidly the rally towards 1.02 was dismantled and, with the dollar index also exceeding 109.50," they will likely prefer to remain long of dollars before next week's Fed meeting.

Still, today's retail sales and industrial production data should be "sluggish" and might limit euro selling, UniCredit said.

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USD/JPY may eventually rise to 147 or higher, although this might take longer than expected owing to potential rate checks and FX intervention, JPMorgan said.

Some significant factors may result in further JPY weakness, such as a widening policy rate gap between Japan and other countries, and Japanese households beginning to accumulate foreign-currency deposits, JPM said.

Rate checks and actual intervention are unlikely to alter the path of JPY depreciation as current JPY weakness is in line with fundamentals, JPM added, noting data showing Japan posted Y2.8 trillion trade deficit in August, the largest-ever deficit for a single month.

Read: Japan Could Use Tax Break for Repatriated Earnings to Buoy Yen

Energy:

Oil futures were little changed in European trading, with "the deteriorating oil demand outlook weighing on market sentiment...although supply disruptions will offset some concerns," ANZ said.

The IEA has moderately lowered its demand growth forecasts for 2022 due to weaker demand in China but investors expect the market to tighten later this year as an EU embargo on Russian oil comes into force and in the absence of an Iranian nuclear deal.

Metals:

Base metals were higher in Europe, with potential reductions in output helping support prices in the near term, as "chatter continues to be about Yunnan electricity cuts," Marex said.

Estimates see electricity usage in Yunnan, China falling by 10%-20% during the rest of the year, which could reduce base metals production by 180,000-400,000 tons, Marex added.

Elsewhere, a slightly stronger dollar continued to weigh on gold, with prices at their lowest level since March 2021.

Other News:

Cutbacks to refined zinc production because of high electricity costs should prevent a deep slump in prices for the industrial metal, Fitch said.

While it expects prices to weaken to an average $3,215/ton in September-December, versus an average $3,643/tonne in January-August, that "would leave prices high by historical standards."

Fitch said prices are expected to be pressured lower by subdued demand, as higher energy costs, inflation and interest rates hit economic activity and, consequently, the need for zinc to galvanize steel.


TODAY'S TOP HEADLINES


HSBC Eyes Long-Awaited Turnaround

LONDON-HSBC Holdings PLC, Europe's largest bank, is counting on rising interest rates to help revive its share price after a sluggish decade-and to fend off an attack from its biggest shareholder.

The British bank has for years asked investors for patience as it retrenches from some major markets and sharpened its focus on Asia. That strategy has kept the bank's finances steady-but it has also kept a lid on profits and depressed its stock. HSBC's share price in Hong Kong remains roughly a third of its 2007 peak.


Shell Names New CEO as Longtime Boss Steps Down

Shell PLC named Wael Sawan, its head of integrated gas and renewables, as its next chief executive, replacing longtime CEO Ben van Beurden and marking a changing of the guard at one of the world's biggest oil companies.

The London-listed company said Thursday that Mr. Sawan would assume the position on Jan. 1, when Mr. van Beurden steps down after nine years in the role. Mr. van Beurden will continue working as an adviser to the board until June 30, after which he will leave the company.


Biotech May Be the Next U.S.-China Battleground

The U.S.-China relationship has gotten so bad that the market assumes the worst whenever a whiff of escalating tensions wafts through the news. The latest victim: Chinese biotech companies.

Shares of Chinese biotech companies, especially those with large revenue exposure to the U.S., tumbled after President Biden signed an executive order Monday to boost domestic manufacturing in the biotech industry. Shares of Wuxi Biologics, which provides research and manufacturing services to many global pharmaceutical companies, lost 19% of their value this week. Shares in Chinese peer Pharmaron slid 8% in Hong Kong, while Hangzhou Tigermed shares have fallen 6%.


TikTok Exec Says Agreement With U.S. Government to Address Concerns Over User Data

A top TikTok executive pushed back against senators grilling the company over its links to China, expressing confidence a deal with the U.S. government would safeguard American users' data.

The popular short-form video platform owned by Beijing-based ByteDance Ltd. has been under scrutiny in Washington over some of its data practices. At a nearly three-hour Senate Homeland Security and Governmental Affairs Committee hearing Wednesday, Democrat and Republican lawmakers pressed the company over issues of access that Chinese employees have to U.S. user data and whether any employees had ties to the Chinese Communist Party.


Disney's Chapek Hints at All-in-One Streaming App Once Hulu Secured

Walt Disney Co. Chief Executive Bob Chapek said the company could eventually group all its streaming products under its flagship Disney+ app, and could tie that service more closely to its theme-parks business.

Speaking Wednesday at a Goldman Sachs investor conference, Mr. Chapek said that "there's a little bit of consumer friction" for streaming customers who want to shift between Disney's family-focused and franchise content in Disney+-home to its Marvel superhero, Pixar and Star Wars movies and series-and the general entertainment content of Hulu or sports-focused content on the ESPN+ app.


McDonald's CEO Raises Crime Concerns for Business in Chicago

McDonald's Corp. Chief Executive Officer Chris Kempczinski said the burger giant is grappling with violent crime, homelessness and drug overdoses in its Chicago restaurants, and called on city and business leaders to find ways to address the problems.

Crime is having a corrosive effect on Chicago, where McDonald's is working to bring corporate employees back to its headquarters after the Covid-19 pandemic, Mr. Kempczinski said during a keynote speech Wednesday at the Economic Club of Chicago. The company is trying to convince employees that it is safe to return downtown and ride public transportation again, he said.


Expedia Poaches CFO From Home-Retailer Williams-Sonoma

Expedia Group Inc. hired a new finance chief, a move that comes as the online travel company works to build out its direct-to-consumer offering.

The Seattle-based online travel agency, which operates the Travelocity, Orbitz and Hotels.com brands, on Wednesday said it recruited Julie Whalen as chief financial officer and executive vice president, effective Sept. 26. Ms. Whalen will succeed Eric Hart, who has held the CFO role since December 2019.


Chinese Developers Soar Amid Policy Support Signals

Shares of Chinese property developers jumped Thursday amid growing signs of Beijing's commitment to shoring up the country's massive real-estate industry, which has been weighed down by a slowing economy and a yearlong liquidity crisis.

In Hong Kong, shares of Guangzhou R&F Properties Co., Country Garden Holdings Co. and Logan Group Co. were all up by nearly 10%. The Hang Seng Mainland Properties Index, a benchmark for Hong Kong-listed Chinese developers, was last up 4.1%. That marked a substantial outperformance compared with the broader market, with the Hang Seng Index ending 0.4% higher.


Patagonia Founder Is Giving His Company Away in Pledge to Fight Climate Change

Patagonia founder Yvon Chouinard is giving away the multibillion-dollar outdoor apparel business he founded nearly 50 years ago, with a goal of helping to tackle climate change.

Mr. Chouinard and his family have transferred their ownership of Patagonia to a trust and a nonprofit organization as opposed to taking the privately held company public or selling it, the 83-year-old founder said in a letter Wednesday, titled "Earth is now our only shareholder."


(MORE TO FOLLOW) Dow Jones Newswires

09-15-22 0537ET