MARKET WRAPS
Watch For:
Canadian Housing Starts for June, U.S. Retail Sales for June, U.S. U. Michigan Preliminary Consumer Survey for July
Opening Call:
Stock futures edged up ahead of retail sales data that are expected to provide fresh insight into the strength of the American consumer.
Retail sales for June are set to be released at 8:30 a.m. ET. Economists expect a drop for the second straight month, as consumers spent more on services and less on big-ticket items like cars. A gauge of consumer sentiment by the University of Michigan is scheduled for 10 a.m.
Shares traded choppily this week as investors digested a higher-than-expected inflation reading Tuesday. This was followed by Jerome Powell seeking to reassure markets that the central bank sees the rise in prices as uncomfortable but transitory and isn't in a hurry to adjust its supportive policies.
"The Fed is still being pretty patient, Powell has made it clear that they will remain pretty accommodative for some time," said Salman Baig, a multiasset investment manager at Unigestion. "That's a relatively good environment for risk taking-good growth, bond yields being relatively stable, investors will be OK with taking on more risk."
Shares of Intel rose 0.6% in after hours trading when The Wall Street Journal reported that the semiconductor giant was exploring a deal to acquire chip maker GlobalFoundries for around $30 billion.
U.S.-listed Chinese ride-hailing firm Didi Global tumbled 7% in premarket trading after state security and police officials were sent to the company's offices Friday as part of a cybersecurity investigation.
Financial firms State Street and Charles Schwab are scheduled to post their quarterly results ahead of the opening bell, with earnings season in full swing.
Overseas, the pan-continental Stoxx Europe 600 added 0.2%, while most major benchmarks in Asia ended the week on a downward note.
Stocks to Watch:
Shares of Corvus Pharmaceuticals traded almost 8% lower in Thursday's after-hours session, following the company's announcement it was discontinuing a Phase 3 study of mupadolimab, or Anti-CD73, for Covid-19, "due to positive trends exhibited by Covid-19 vaccines in lowering serious infection and hospitalizations." The company said "the discontinuation is not related to any safety or efficacy issues observed in study patients." Richard A. Miller, the company's co-founder, president and chief executive, said, "We are prioritizing resources on mupadolimab in oncology and intensifying our efforts in our cancer programs."
Off-price retailer Ross Stores is expected to stick to its current strategy as it looks for a chief financial officer, said Zain Akbari, an equity analyst Morningstar. The company said that CFO Travis Marquette had resigned to accept a position at another company. "I think ... that the company is unlikely to look for a major departure from the course he helped set," Akbari said about Marquette. Ross Stores is benefiting from having a well-proven playbook and a strong market position, he said.
Forex:
The dollar and the euro were steady in early European trading and UniCredit expects little prospect of this changing, leaving them stuck in a tight range.
The dollar has retreated from higher levels earlier this week after Jerome Powell reiterated in testimony that high inflation would only be temporary and suggested monetary tightening wasn't imminent.
However, these falls haven't resulted in a "strong appreciation of the other [forex] majors," said UniCredit. EUR/USD is "struggling trendless at around 1.18," with investors await next week's European Central Bank decision for direction, it said.
Bonds:
Societe Generale said the 10-year Treasury yield seems to be settling into a new trading range of 1.25%-1.50% but it sees the risks skewed toward higher yields on the back of improving economic fundamentals.
With the sharp rise in inflation and tangible progress on the Fed's inflation target, "we still need to see a steady pace of job creation before the Fed begins to feel comfortable about tapering asset purchases, " said Societe Generale. The bank's rates strategists consider the November or December announcement with tapering starting early next year as the most likely outcome.
Separately, Societe Generale has recommended investors stay overweight on eurozone noncore government bonds on the view that the ECB's ending of the Pandemic Emergency Purchase Programme will be carried out in a cautious manner, mitigating risks. "The PEPP will have to end, but it will likely transition into an increased and more flexible Asset Purchase Programme," said SocGen.
The bank's strategists believe that any widening of government bond yield spreads due to the Delta coronavirus variant should be considered as an opportunity.
Commodities:
Oil prices edged down for a third day, with WTI futures around 0.2% lower and on course to end the week 4% lower. Even so, investors remain generally optimistic about prices, with both the IEA and OPEC forecasting that demand will outstrip supply in the coming 18 months and with UBS expecting Brent at $80 this summer.
Copper prices rose 0.2% at the end of a range-bound week as investors weighed demand and inflation risks.
The metal is on course to end the week down 0.6% as concerns about slowing demand have helped weigh, said Malcolm Freeman, CEO of brokerage Kingdom Futures.
"Demand is expected to continue to seasonally fall and the warnings issued by Beijing over price speculation are adhered to," he said. "In the USA and elsewhere the spectre of rising inflation and slowdown in growth is starting to put pressure on economic activity."
China's efforts to lower air pollution and energy consumption by aluminum smelters has "the potential to drive significant positive change in the global aluminum fundamentals," Alcoa Chief Executive Roy Harvey told analysts during a conference call.
Harvey said he's encouraged that China's aggressive reduction strategies will lower aluminum production in the coming years by idling older, inefficient production capacity and curbing new capacity growth. China's aluminum industry has been a major contributor to the global oversupply in recent years.
TODAY'S TOP HEADLINES
Intel Is in Talks to Buy GlobalFoundries for About $30 Billion
Intel Corp. is exploring a deal to buy GlobalFoundries Inc., according to people familiar with the matter, in a move that would turbocharge the semiconductor giant's plans to make more chips for other tech companies and rate as its largest acquisition ever.
A deal could value GlobalFoundries at around $30 billion, the people said. It isn't guaranteed one will come together, and GlobalFoundries could proceed with a planned initial public offering. GlobalFoundries is owned by Mubadala Investment Co., an investment arm of the Abu Dhabi government, but based in the U.S.
Read More ->
Didi Faces a Cybersecurity Probe From Officials in China
SINGAPORE-China sent state security and police officials to Didi Global Inc.'s ride-hailing business on Friday as a part of a cybersecurity investigation, the country's internet regulator said, escalating a regulatory saga that has gripped China's tech industry.
Regulators from government units including the Ministry of Public Security, the Ministry of State Security, the Cyberspace Administration of China and the Transport Ministry will be stationed at Didi starting Friday for the investigation, the cyberspace administration said in an online statement.
Read More ->
3-D Printing Company Fathom Nears $1.4 Billion SPAC Deal to Go Public
Fathom Digital Manufacturing Corp. is close to an agreement with a special-purpose acquisition company to go public in a deal that values the 3-D printing firm at about $1.4 billion, people familiar with the matter said.
Based in Hartland, Wis., Fathom uses digital manufacturing techniques to quickly make prototypes and complex manufacturing parts for its customers. Fathom says it helps blue-chip companies innovate and solve operational challenges.
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Rio Tinto's Mines Hit By Covid-19 Restrictions
SYDNEY-Rio Tinto PLC said pandemic-related restrictions are affecting its mining operations from Australia to Mongolia, slowing iron-ore shipments, raising production costs and delaying projects.
The disruptions come as governments around the world grapple with the impact of higher commodity prices as the global economy bounces back from Covid-19 and spending on infrastructure rises. Several countries in South America and Europe have recently raised interest rates to counter inflation concerns.
Read More ->
Ericsson Cautions on Falling Sales in China
Ericsson AB on Friday announced an $8.3 billion multiyear 5G deal from Verizon Communications Inc. as it posted a second-quarter net profit that beat expectations, but cautioned that delayed 5G deployments in mainland China weighed on sales.
The telecommunications-equipment company reported second-quarter net profit attributable to shareholders of 3.68 billion kronor ($424.6 million) compared with SEK2.45 billion for the year-earlier period.
Read More ->
Richemont Books Big 1Q Sales Rise; Shakes Up Management Structure
Compagnie Financiere Richemont SA said Friday that sales jumped in the first quarter of the fiscal year, driven by jewelry and watch sales and a strong performance in the Americas, and that it is implementing a change to the group management structure.
Sales at the Swiss luxury-goods group rose 129% on year at constant exchange rates to 4.4 billion euros ($5.20 billion) in the period to end-June. The figure is 18% higher than in the same period of 2019, a sequential acceleration from the 10% rise over two years seen in the last quarter of fiscal 2021.
Read More ->
Foxconn Partner Byton Faces Challenge for Bankruptcy
A creditor of Chinese electric-car startup Byton filed a court petition for the embattled company's bankruptcy on Monday, a local court record showed.
(MORE TO FOLLOW) Dow Jones Newswires
07-16-21 0609ET
