MARKET WRAPS
Watch For:
Personal Income & Outlays for November; Durable Goods for November; New Home Sales for November; University of Michigan Consumer Survey for December
Today's Headlines/Must Reads:
- Consumer-Spending Report to Offer Holiday Insights
- Massive Government Borrowing Looms Over European Markets
- Japan Inflation Hits Four-Decade High, Pressuring Central Bank in 2023
- Microsoft Tech to Boost London Stock Exchange's Quest for Data Dominance
- Businesses Hope for Legal Clarity on Trans-Atlantic Data Privacy in 2023
Follow WSJ markets coverage here
Stock futures edged higher on Friday ahead of inflation data, which could be the most important data release left this year.
Economists polled by the Wall Street Journal expect core PCE to have climbed 0.2% for a second month.
Stocks to Watch
AMC Entertainment's common stock continued to fall premarket, following Thursday's declines. AMC said Thursday it would raise cash and planned a 1-for-10 reverse stock split.
Applied Molecular Transport issued mixed results for AMT-101 for patients with ulcerative colitis and chronic pouchitis. Shares ticked down 1.9% in after-hours trading.
Centogene posted revenue growth of roughly 22% and a narrower loss in the second quarter. Shares traded on Nasdaq edged up 6.4% after-hours.
iMedia Brands said it is selling three buildings for $48 million to reduce its debt position. Shares surged 26% in after-hours trading.
Meta Platforms and its users agreed to settle a class action suit for $725 million, lawyers for the plaintiffs said. Meta shares edged lower premarket.
Micron Technology declined 0.5% in premarket trading, following fiscal first-quarter results that missed analysts' estimates and saying it would be cutting staff by about 10% in 2023 because of softening demand.
Microsoft was falling slightly Friday after the company rejected claims made by the Federal Trade Commission that its planned purchase of videogame maker Activision Blizzard would hurt competition. Activision rose 0.4%.
Mission Produce posted fiscal fourth-quarter revenue of $238 million, missing analysts' estimates of $250 million. The volume of avocados sold in the quarter rose 6%. The stock tumbled 12.5% in after-hours trading Thursday.
Tesla shares edged higher premarket. Increased U.S. discounts have added to concern that demand might be softening, while Elon Musk has vowed to pause sales of Tesla stock.
Forex:
The dollar could benefit from its safe haven status as a collapse in global purchasing managers' index surveys points to a recession, Bank of America said.
Markets are either underestimating the risk of a recession or risk assets are trading on the view that "bad news is good news" with a recession meaning the Fed may stop raising interest rates or start cutting rates, BofA added.
However, high inflation means the Fed "cannot afford to stop monetary policy tightening."
Equities could fall in the first half of 2023, which could drive safe haven flows to the dollar, BofA said.
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The dollar declined amidst thin volumes ahead of Christmas.
A key area of focus for dollar traders Friday is the core personal consumption expenditures price index, the Fed's preferred measure of inflation.
Economists in a WSJ poll expect the index to rise 4.6% on year in November after a 5.0% increase in October.
Higher-than-expected inflation readings would be an "interesting test for markets in coming months as the market has a strong view that the Fed is poised to halt rate hikes as soon as Q2 of next year and will be cutting by year end," Saxo Bank said.
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The euro could fall if the European Central Bank's interest rate rise cycle hurts indebted eurozone countries including Italy, Bank of America said.
"A hawkish ECB usually brings support to the euro but if periphery countries come under pressure it becomes negative for the euro," BofA said.
Read more here
Bonds:
The sharp rise in government bond yields this year, a function of investors' repricing of the outlook for interest rates, is painful for investors but it bodes well for longer-term returns on government bonds, UBS Global Wealth Management said.
"Historically, current yields have been good indicators of expected returns in local-currency terms."
Given large financing for infrastructure spending, UBS GWM said it expects real rates to be higher in the coming decade than in the past one.
With expectations of inflation moving lower over the medium-term, the correlation between stocks and high-quality bonds should turn negative again, stabilizing traditional portfolio diversification, UBS GWM said.
Read Rate Volatility Expected to Decline in 2023
Energy:
Oil prices rose around 1% in Europe after Russia's deputy prime minister said that Russia might cut its oil output by 500,000 barrels a day to 700,000 barrels a day next year, in response to a price cap imposed on its oil sales.
The comments are the first detail of what Russia's response to the Western plan to cap its oil price might look like. Still, the threat comes as the U.S. faces an intense winter storm, leaving some traders skeptical of whether the threats are genuine or an attempt to drive oil prices higher, SPI Asset Management said.
"The conspicuous timing has not gone unnoticed by oil traders."
Metals:
Metal prices were moving higher ahead of the Christmas holiday weekend, with liquidity thinning into the seasonal break. Dollar weakness also provided some support.
TODAY'S TOP HEADLINES
Retailers Need a Last-Minute Holiday Gift From Shoppers
Lands' End has winter coats, fleece and sweaters discounted by as much as 70% in a promotion lasting through Christmas Eve. Artificial Christmas trees are 25% off at Walmart, breaking with a tradition of not putting those items on sale until after the holiday. Tommy Hilfiger has everything on its website reduced by 50% through Tuesday.
Holiday discounts are back. Whether stores and sellers cut prices enough to save their season will be decided during a final flurry of shopping this weekend, ending with Christmas on Sunday.
Microsoft Tech to Boost London Stock Exchange's Quest for Data Dominance
LONDON-The London Stock Exchange Group PLC has staked its future on financial data. A new deal with Microsoft Corp. means it poses a bigger threat to industry leader Bloomberg LP, analysts say.
LSEG said last week it would spend $2.8 billion over the next decade on Microsoft products, mainly the latter's cloud service. As part of the deal, Microsoft will take a 4% equity stake in LSEG, buying stock from some of the company's major existing shareholders.
Businesses Hope for Legal Clarity on Trans-Atlantic Data Privacy in 2023
Companies expect to move personal data between the European Union and the U.S. with less legal risk in 2023, when a new trans-Atlantic deal on data privacy is set to take effect after more than two years of geopolitical wrangling.
An agreement allowing companies to transfer data between the jurisdictions is expected to be in place in the next few months, European officials have said. This month, the European Commission, the EU's executive arm, published a draft deal that would allow simpler data transfers to the U.S.
Meta and Users Agree to Settle Privacy Class Action Suit
Meta Platforms Inc. and its users have agreed to settle a class action suit for $725 million, the largest settlement ever of a privacy class action in the U.S, according to counsel for the class-action plaintiffs.
"Today, plaintiffs filed a motion seeking preliminary approval of the settlement," counsel for plaintiffs Keller Rohrback L.L.P. and Bleichmar Fonti & Auld LLP said in a statement Friday.
Hitachi-Thales Deal Referred by UK Antitrust Regulator for In-Depth Probe
The U.K. competition regulator said Friday that it will refer Hitachi Ltd.'s planned acquisition of Thales SA's rail-infrastructure business for a more in-depth, phase 2 investigation, after the parties declined to provide undertakings.
The Competition and Markets Authority said the parties had until Dec. 16 to offer an undertaking to remove competition concerns, but that both had declined.
Top Executive for Financier Greg Lindberg Pleads Guilty to Charges Related to Insurance Fraud
A former top lieutenant of North Carolina insurance mogul Greg Lindberg agreed to plead guilty to a federal criminal conspiracy charge.
The plea is the latest episode in prosecutors' pursuit of Mr. Lindberg and his associates, a saga that has had many twists. The guilty plea indicates that prosecutors are continuing with their investigation and could be seeking a second indictment of Mr. Lindberg.
Microsoft Responds to FTC Suit Over Activision Deal
Microsoft Corp. has filed a rebuttal to a Federal Trade Commission lawsuit aimed at blocking the software giant's $75 billion purchase of Activision Blizzard Inc., saying the deal will not hurt competition in the videogaming industry.
The software giant said in its defense of the deal that it is not the videogame industry's top console company or software developer and its acquisition is aimed at becoming more competitive through its Xbox videogaming unit.
Target Recalls Over 200,000 Weighted Blankets After Deaths of Two Children
Target Corp. has recalled more than 200,000 weighted blankets after receiving reports that two young children died by suffocation earlier this year, the retail giant and the U.S. Consumer Product Safety Commission said Thursday.
The federal agency said a young child can unzip the cover of the Pillowfort Weighted Blanket and become trapped inside. A 4-year-old girl and a 6-year-old girl in North Carolina reportedly became trapped in the cover and died due to asphyxiation this April, according to the CPSC.
Massive Government Borrowing Looms Over European Markets
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12-23-22 0623ET
