MARKET WRAPS
Watch For:
Weekly Jobless Claims; Existing Home Sales for July; EIA Weekly Natural Gas Storage Report; Federal Reserve Bank of Kansas City President Esther George speaks at the Fairfax Industrial Association 100th Anniversary Luncheon; Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a Q&A session at Young Presidents Organization Gold Twin Cities Chapter luncheon; Canada Employment Insurance for June; Canada Industrial product & raw materials price indexes for July.
Opening Call:
Stock futures declined Thursday after Federal Reserve officials agreed they need to keep raising interest rates to cool inflation, but indicated the pace of those hikes could slow if economic data supported such a move.
Stocks fell for the first time in four sessions on Wednesday following the release of the minutes from the Fed's July 26-27 meeting, at which the central bank boosted the fed-funds rate target by three-quarters of a percentage point for the second straight month.
The minutes also revealed the Fed was worried that if rates were tightened too much it would hurt the economy. But for now, with central bankers concerned inflation could become entrenched and with a "very tight" labor market, rates will have to be moved beyond neutral and into "restrictive" territory.
"Some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2%," according to the minutes, which were released Wednesday.
"It's a no-brainer to expect rate hikes to continue near-term," said Bill Adams, chief economist at Comerica Bank.
Comerica forecasts the Fed will raise rates by half a percentage point at its next meeting in September, but "it's a close call between that and another hike of three quarters of a percent," Adams said.
CME FedWatch indicates that 59.5% of investors anticipate the Fed will boost rates by 50 basis points in September and 40.5% expect a hike of 75 basis points.
Data on weekly jobless claims and existing-homes sales for July will be released Thursday, with earnings reports from Estee Lauder and Kohl's scheduled for before the opening bell, and Applied Materials after markets close.
Overseas, stocks in Europe were flat while markets in Asia were firmly in the red.
Forex:
The DXY dollar index wavered in early trading. Fed minutes from Wednesday showed policy makers look content with the dollar's strength as they felt this helped suppress import prices and would therefore help bring down inflation, ING analyst Chris Turner said in a note.
"The Fed seems to welcome dollar strength and there were no linkages of dollar strength depressing any sectors in the U.S. economy," he said.
The Fed attributed the dollar's recent rise, especially against the euro, to interest-rate differentials and ING expects those differentials to widen further into year-end, keeping EUR/USD at levels between 1.00 and 1.02.
Energy:
Oil prices were up, with declining inventories in the U.S. helping to improve sentiment.
"U.S. petroleum inventories including SPR declined 12.6 million barrels and crude exports surged to all-time-high levels," Helge André Martinsen, senior oil analyst at DNB Markets, said in a note--helping to improve sentiment on tight supply.
"Amid oil demand worries we highlight that implied U.S. oil demand increased sharply, up by 1.75 million barrels a day week on week to 21.22 million barrels a day, the highest level since February," Martinsen added.
Metals:
Metals prices fell in early trading, with central-bank hawkishness--particularly from the Fed--damping the sentiment that peak inflation is over.
Rising inflation rates in the U.K. and hawkish notes from the Fed among others "poured cold water on the prospect that central banks were about to let up on hiking rates," Deutsche Bank analyst Henry Allen said in a note.
This sentiment is pushing investors away from "risk assets" once again, he said.
TODAY'S TOP HEADLINES
Oil Giants Must Face Climate-Liability Suits in States, Appeals Court Rules
A federal appeals court ruled that lawsuits by Delaware and Hoboken, N.J., seeking compensation from oil companies for the impacts of climate change should be decided in state, not federal courts.
The decision Wednesday is the latest procedural victory by state and municipal governments, which have sought to bring climate-liability cases against companies such as Exxon Mobil Corp., Chevron Corp. and Shell PLC under state laws, after similar earlier efforts under federal laws proved unsuccessful.
Amazon Seeks Top Film Executive Amid Expansion of Entertainment Arm
Amazon.com Inc. is searching for a senior movie-studio executive to help lead its growing entertainment division, turning to rivals for a chance to poach an experienced Hollywood player.
Amazon Studios has held conversations with several Hollywood leaders about the role, including Netflix Inc.'s film head, Scott Stuber, one of the streamer's most powerful and visible executives, according to people familiar with the matter.
Country Garden Holdings' Shares Fall After Warning of First-Half Profit Slump
Shares of Country Garden Holdings Co. fell Thursday morning in Hong Kong after the Chinese property developer warned of a big drop in first-half net profit.
Shares declined 4.4% to HK$2.41, taking year-to-date losses to 65%.
Geely Automobile First-Half Profit Falls on Higher Costs
Geely Automobile Holdings Ltd. posted a 35% decline in first-half net profit, as higher raw material and operating costs ate into its profit margins.
The Chinese car maker on Thursday said its net profit for the period ended June was 1.55 billion yuan ($228.6 million) versus CNY2.38 billion net profit a year earlier. Revenue rose 29% to CNY58.18 billion, as better product pricing and product mix offset a decline in sales volume, it said.
A Top Gas Producer Considers Cutting Exports. Its Timing Couldn't Be Worse.
SYDNEY-Australia is shipping so much natural gas overseas that authorities could block some exports to plug shortages at home.
Such a move would put global energy supply under further strain as Europe faces the prospect of severe fuel shortages this winter and Asian economies including Japan and China store more gas ahead of seasonal peaks in demand. The Ukraine war cut gas supplies at a time when much of Europe experienced a severe heat wave that drove demand higher.
Norway Central Bank Lifts Rate to 1.75%, Sees Next Hike in September
Norway's central bank raised its key policy rate to 1.75% from 1.25% on Thursday, and said it expects to raise the rate further in September.
Analysts polled by The Wall Street Journal had expected the central bank to raise its key rate to 1.75%, despite guidance from the central bank at its last meeting in June suggesting it would increase to 1.50%.
Philippines Central Bank Raises Policy Rate to Help Curb Inflation
The Philippine central bank decided to raise its benchmark interest rate in an attempt to help control rising inflation.
The Bangko Sentral ng Pilipinas said Thursday that it would increase its benchmark overnight borrowing rate by 50 basis points to 3.75%, effective Friday, and its corresponding lending rate by the same amount to 4.25%.
U.S., Taiwan to Begin Formal Talks for Trade, Investment Pact This Fall
WASHINGTON-The U.S. announced Wednesday that it and Taiwan will start negotiations for a bilateral trade and investment initiative this fall to deepen ties on a range of issues including technology and agriculture.
The new pact will also address ways to respond to "distortive practices of state-owned enterprises and nonmarket policies and practices," the U.S. Trade Representative's office said, in a clear reference to China's policies without naming the country.
Write to nihad.ahmed@wsj.com TODAY IN CANADA
Earnings:
None scheduled.
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Economic Indicators (ET):
0830 Jun Employment Insurance
0830 Jul Industrial product & raw materials price indexes
Expected Major Events for Thursday
12:30/US: Aug Philadelphia Fed Business Outlook Survey
12:30/CAN: Jun Employment Insurance
12:30/US: 08/13 Unemployment Insurance Weekly Claims Report - Initial Claims
12:30/US: U.S. Weekly Export Sales
12:30/CAN: Jul Industrial product & raw materials price indexes
13:00/RUS: Weekly International Reserves
14:00/US: Jul Leading Indicators
14:00/US: Jul Existing Home Sales
14:30/US: 08/12 EIA Weekly Natural Gas Storage Report
20:30/US: Federal Discount Window Borrowings
20:30/US: Foreign Central Bank Holdings
23:01/UK: Aug UK Consumer Confidence Survey
23:30/JPN: Jul CPI (Nation), CPI ex-food (Nation)
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Thursday
AltiGen Communications (ATGN) is expected to report for 3Q.
Applied Materials Inc (AMAT) is expected to report $1.76 for 3Q.
BJ's Wholesale Club Holding Inc (BJ) is expected to report $0.77 for 2Q.
Bill.com Holdings Inc (BILL) is expected to report for 4Q.
Canadian Solar (CSIQ) is expected to report $0.48 for 2Q.
Cato Corp (CATO) is expected to report for 2Q.
Cenntro Electric Group Ltd (CENN) is expected to report for 1Q.
Clearday Inc (CLRD) is expected to report for 2Q.
EQ is expected to report for 2Q.
Estee Lauder (EL) is expected to report $0.40 for 4Q.
ICPEI Holdings is expected to report for 2Q.
Kohl's Corp (KSS) is expected to report $1.42 for 2Q.
Koss Corp (KOSS) is expected to report for 4Q.
LSI Industries (LYTS) is expected to report $0.12 for 4Q.
Latch Inc (LTCH) is expected to report for 2Q.
Liquid Media Group Ltd (YVR) is expected to report for 2Q.
Madison Square Garden Sports Corp (MSGS) is expected to report $-0.42 for 4Q.
Melco Resorts & Entertainment Ltd (MLCO) is expected to report $-0.41 for 2Q.
(MORE TO FOLLOW) Dow Jones Newswires
08-18-22 0541ET
