MARKET WRAPS
Watch For:
Durable Goods for July; Weekly Jobless Claims; Earnings from Royal Bank of Canada, Toronto-Dominion Bank
Today's Top Headlines/Must Reads:
- Didn't Get Get Invited to the Fed's Mountain Retreat? Here's What to Watch
- Arizona Labor Spat Signals Challenges for U.S. Chip Manufacturing
- Nvidia's AI Surge Is Just Getting Started
- Iran, Saudi Arabia, Others Invited to Join Brics Group
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Opening Call:
Stock futures jumped on Thursday as well-received earnings from Nvidia has triggered a bout of risk-on activity across markets.
"The Nvidia news has [had] a boosting effect on technology stocks...by confirming that all the talk around the AI-craze was not empty, after all," Swissquote Bank said.
Hargreaves Lansdown agreed, saying "Nvidia smashing the forecast ceiling has also lifted the mood elsewhere."
In Europe, The Stoxx 600 index rose, with AI-related stocks gaining. Dutch semiconductor-equipment maker ASML Holding and German chip maker Infineon Technologies were among those that advanced.
Falling implied borrowing costs were also helping the mood.
"The rally in stocks and the retreat of Treasury yields followed underwhelming economic reports as the market fell back into the 'bad news is a good' mode," SPI Asset Management said.
"But encouragingly for equity investors, the weaker U.S. data lens more weight to the argument for the Federal Reserve to pause its interest rate hikes."
Read Powell Expected to Highlight Fed's Ability to Return Inflation to Target
Pre-Market Movers
AMC Entertainment was falling 1.5%. The company will conclude a 10-for-1 reverse stock split on Thursday.
Autodesk posted second-quarter adjusted profit and revenue that topped Wall Street forecasts. The stock rose 6.6%.
Boeing was down 2.4%. Spirit AeroSystems said it was aware of a quality issue on some models of the 737 fuselage that it makes but would continue to deliver units to Boeing.
Guess rose 19% after second-quarter adjusted earnings at the retailer beat analysts' expectations and revenue rose 3% to $664.5 million, also higher than forecasts.
Nike was up 0.4% in premarket trading. Shares fell 2.7% on Wednesday, extending the stock's losing streak to 10 sessions.
Nvidia rose 8.2% in premarket trading after it reported second-quarter revenue of $13.5 billion, smashing estimates of $11.2 billion.
Snowflake earned 25 cents a share on an adjusted basis in the second quarter, higher than forecasts of 10 cents, while revenue of $674 million rose 36% and also topped estimates. Shares rose 4.3%.
Splunk reported second-quarter adjusted earnings of 71 cents a share, easily surpassing analysts' estimates. Shares rose 12%.
Forex:
The safe-haven dollar could edge lower as equities rose following strong Nvidia results, ING said.
Following the weak PMI data, focus now turns to jobless claims data, ING added.
"Any tick higher [in jobless claims] to the 250,000 area could slightly weigh on U.S. yields and the dollar."
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Growing evidence of a weak eurozone economy could increase prospects of the ECB keeping rates unchanged rather than raising them in September, which should push eurozone bond yields and the euro lower, MUFG said.
Unless eurozone inflation figures next week show "significant upside surprise for core inflation in August," MUFG would expect market participants to grow less confident that the ECB will hike rates in September, a decision which would pose "some downside risk for eurozone yields and the euro in the month ahead."
Energy:
Oil prices slipped on reports that the U.S. could be considering easing sanctions on Venezuelan oil exports.
The Biden administration has drafted proposals that would ease sanctions on the South American nation's oil exports if Caracas moves toward fair elections, according to Reuters, citing five people with knowledge of the proposal.
Extra oil exports from Venezuela would come as Iran has been ramping up its own oil exports, alleviating tightness in the oil market and weighing on prices.
Metals:
Base metals prices were falling but gold edged higher in early London trading, as worries around China's property sector continued to pressure industrial goods.
"China's beleaguered property sector shows no signs of improving," ANZ said.
It pointed to a lack of sufficient support measures as well as consumer reluctance to buy as key reasons noting a 25% on-year drop in floor space sold in July.
"New starts and buildings under construction have fallen nearly 50% year-on-year. That looks unlikely to reverse in the short term."
TODAY'S TOP HEADLINES
Target Goes Local to Speed Up Order Deliveries
One of the nation's largest retailers has been making big changes to its distribution network using smaller warehouses.
Target said its move to add regional hubs with specific roles to its supply chain over the past five years has helped pare its inventories, deliver online orders faster and speed up store replenishment.
Cava CFO Bets on Distinct Menu to Attract Consumers
Even as consumers are facing pressure on their wallets, Mediterranean-style restaurant chain Cava Group is betting that its ingredient mix and the challenge that comes with re-creating its menu offerings at home will keep its locations busy.
Consumers are continuing to spend even as they are grappling with inflation on everything from gasoline to groceries, and staring down the resumption of student-loan repayments after a more than three-year pause. But they are starting to make more judicious decisions about where they take their dollars, buying cheaper and fewer items at supermarkets and cutting back on eating out at restaurants, or ordering less when they do visit.
Woodside Heads Off Australian Labor Dispute Roiling Gas Markets
SYDNEY-Woodside Energy reached a preliminary deal with disaffected workers at some of its natural gas export facilities in Australia, a move that could head off a walkout that risked disrupting global gas supply and jolting worldwide energy prices.
Workers at three Woodside-operated offshore liquefied natural gas platforms had threatened to strike over issues including pay after the Australian company and union officials had failed to find common ground after months of talks.
Will Powell crush stocks again during Friday's Jackson Hole speech? Here's one reason investors shouldn't worry.
Worried that Jerome Powell might smash stocks lower on Friday when he steps up to the microphone in Jackson Hole, Wyo.? Good news: Last year's market-crushing speech was an outlier, according to an analysis by Bespoke Investment Group.
Usually, market reactions to Fed chiefs' speeches at the Kansas City Fed's annual Jackson Hole Economic Symposium are much more muted than the washout that stocks experienced on Aug. 26, 2022, the date of last year's Jackson Hole speech.
How Oil and Tech Giants Came to Rule a Vital Climate Industry
The technology to remove carbon from the atmosphere is unproven at scale and the economics are just taking shape. What has become clear this year is that carbon removal is now the realm of giant companies and big government support.
The Energy Department this month committed $1.2 billion to create two carbon-removal hubs in Texas and Louisiana, home to a large portion of the U.S. fossil-fuel industry. The biggest competitor in the Texas project will be Occidental Petroleum, which has its own billion-dollar bet on the technology.
China Casts CIA as Villain in New Anti-Spying Push
SINGAPORE-Chinese leader Xi Jinping is expanding a campaign to harden the country against foreign efforts to steal its secrets, with his spymasters warning citizens abroad to guard against enticement from the U.S. Central Intelligence Agency.
The Ministry of State Security-China's main civilian intelligence agency-recently accused two Chinese nationals of spying for the U.S., saying both were recruited by the CIA while living overseas. It publicized the cases soon after CIA Director William Burns said the agency had made progress in rebuilding its spy network in China, an assertion that drew widespread attention on Chinese social media.
Tracking the Charges in Trump's Indictments
Donald Trump is expected to surrender in Georgia on Thursday, after bond for the former president was set at $200,000 in the election-interference case. He is facing criminal charges at both the federal and state levels while seeking the Republican nomination for president in 2024. Here is a look at the status of the most prominent criminal prosecutions, investigations and lawsuits involving the former president and declared presidential candidate, and how the timing of the protracted legal processes could run up against the demands of a presidential campaign.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Foran Mining 2Q
Royal Bank of Canada 3Q
Toronto-Dominion Bank 3Q
Economic Calendar (ET):
0830 2Q Quarterly financial statistics for enterprises
Stocks to Watch:
ABC Technologies Holdings to Buy Plastikon Industries' Automotive Business; Deal for Plastikon Industries Unit for $130 Million
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Constellation Software Declares Special Dividend , Prepares Rights Offering of Series 1 Debentures; to Issue Rights for Up to C$700M in Unsecured Subordinated Floating-Rate Notes; Rights to Be Issued Under Rights Dividend at One Right/Common Shr; Holders Entitled to C$100 in Notes for Every 3.03 Rights Held; Series 1 Debentures Mature March 31, 2040, Bear Interest at 13.3%; to Use Proceeds of Offering to Pay Down Debt Under Credit Facility
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Parex Resources Names Sanjay Bishnoi CFO, Effective Oct. 2
Expected Major Events for Thursday
05:00/JPN: Jul Supermarket sales
06:45/FRA: Aug Monthly business survey (goods-producing industries)
10:00/FRA: 2Q OECD trade statistics release
10:00/UK: Aug CBI Distributive Trades Survey
12:30/US: Jul Chicago Fed National Activity Index (CFNAI)
(MORE TO FOLLOW) Dow Jones Newswires
08-24-23 0616ET
