MARKET WRAPS

Watch For:

U.S. Housing Starts for October; U.S. EIA Weekly Petroleum Status Report; Canada Consumer Price Index for October; Target Corp. 3Q Earnings; Cisco Systems 1Q Earnings.

Opening Call:

Stock futures were muted ahead of earnings from retailers Lowe's, Target and TJX ahead of the opening bell.

A strong earnings season has propelled stocks to fresh highs in recent weeks, offsetting investors' concerns that supply-chain issues and higher-than-anticipated inflation would weigh on profits. Cisco Systems, Bath & Body Works and Nvidia are slated to release earnings after the market closes. Low returns on government bonds have also driven investors to buy stocks.

"Equities are incrementally earning significantly more than bonds," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. "There is still a fear of missing out in markets at the moment driven by that relative valuation."

Shares of Tesla rose 1.4% in premarket trading. Chief executive Elon Musk sold another 934,000 shares Tuesday for roughly $973 million, continuing a recent selling spree, forms filed with the Securities and Exchange Commission showed.

La-Z-Boy shares gained 3.9% premarket after the furniture maker said its fiscal second-quarter sales hit a record high, with the company able to increase its capacity to meet heightened demand.

Home builders have been caught between strong demand for housing, and rising material costs and supply and labor shortages. That has left new-home construction data choppy in recent months, though economists surveyed by The Wall Street Journal are forecasting a slight pickup in housing starts for October when figures are released at 8:30 a.m. ET.

Forex:

The dollar should continue to strengthen in 2022 even though investor sentiment towards the currency is turning negative, RBC Capital Markets said.

"As [the DXY dollar index] hits another 16-month high, analysts are turning increasingly bearish and as we head into end-year, it seems likely that consensus views for 2022 will be dominated by an expectation of broad USD losses, as they have been for each of the last four years," RBC currency strategist Adam Cole said.

"Our forecasts are outside that consensus and we continue to look for moderate, but broad-based USD gains."

The dollar extended its rise against the low-yielding euro after stronger-than-expected U.S. retail sales data Tuesday, which pushed EUR/USD to a 16-month low of 1.1264 overnight, according to FactSet, while the DXY dollar index hit a 16-month high of 96.2410.

MUFG global markets analyst Derek Halpenny said the data "will inevitably reinforce the positive momentum for the U.S. dollar over the short term." MUFG sees scope for the market to fully price in three U.S. interest-rate increases in 2022, allowing the dollar to advance further.

However, the speed of EUR/USD declines in recent days suggests some consolidation "may be imminent," Halpenny said.

The pound rose to its strongest against the euro since February 2020 after data showed U.K. annual CPI inflation accelerated to 4.2% in October, from 3.1% in September and above the consensus forecast in a WSJ poll of 4.0%.

The data points to persistent inflationary pressures and supports the case for the Bank of England to raise interest rates in December, said Sam Cooper, vice president of market risk solutions at Silicon Valley Bank.

"Sterling has welcomed the release," he said, but notes "a degree of caution" after the BOE unexpectedly left rates unchanged in November.

Bitcoin's dollar value edged down 1.9% from its 5 p.m. ET level Tuesday to $59,435.94 Wednesday. The move adds to a recent decline as the cryptocurrency has come off record highs.

Bonds:

In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 1.625% Wednesday from 1.632% Tuesday.

BNP Paribas Asset Management closed its short position in eurozone sovereign debt because yields rose near to their target, it said. The asset manager, however, remains short in U.S. government debt which it sees as a funding leg for their equity exposure, it said.

Being underweight duration is a strategic position in government bonds given the favourable economic outlook, the current low level of yields and the prospects of a normalization of monetary policies, "even if only gradually and cautiously," it said. Duration is a measure of the sensitivity of a bond to changes in interest rates.

Commodities:

Oil prices weakened following reports that the U.S. asked China to release oil stockpiles and API data showed a rise in inventories.

Prices were edging lower after reports that President Biden asked China to release oil from inventories to help stabilize the oil market. President Biden is reported to have made the request at a virtual meeting with China's President Xi Jinping on Tuesday.

The U.S. itself has been considering whether to tap supplies from its Strategic Petroleum Reserve. Meanwhile, the American Petroleum Institute said Tuesday that U.S. oil inventories rose by 700,000 barrels.

Gold prices rose as investors look to the precious metal as an inflation hedge. Gold is rising in spite of a higher dollar. But the prospect of central banks raising interest rates is a risk for the metal, said TD Securities.

"The yellow metal remains an ideal hedge against rising stagflationary winds, but the tug-of-war between high inflation prints and market pricing for central bank hikes hasn't definitively concluded," the bank said.

TODAY'S TOP HEADLINES

U.S. Boosts Order for Glaxo's Covid-19 Antibody Drug

The U.S. government has agreed to buy more doses of an antibody drug for the early treatment of Covid-19 developed by GlaxoSmithKline PLC and Vir Biotechnology Inc., bringing its total order to nearly $1 billion for a treatment found to reduce the risk of hospitalization.

Even as vaccination rates tick up, antibody drugs, which imitate part of the body's natural immune response to the virus, have proven useful in fighting Covid-19 and preventing hospitals from being overwhelmed when cases surge.

Companies Push Suppliers to Disclose More Climate Data

Companies are pressing their suppliers to disclose data on greenhouse-gas emissions amid a struggle to more precisely account for something that's hard to quantify: their pollution.

It Isn't Just Tesla's Stock That Needs to Slow Down

Whatever your view on Tesla, pulling money out of the car industry right now makes sense.

Two years ago, the world's top 10 auto makers by market value outside China were together worth about $680 billion. Now they are valued at more than $2 trillion. Tesla has jumped from third place to an enormous lead, and this month electric-vehicle makers Rivian and Lucid replaced Honda and Ferrari in the ranking. Rivian's stock has more than doubled since its initial public offering last Wednesday.

Siemens Healthineers Sets Medium-Term Earnings, Revenue Growth Targets

Siemens Healthineers AG on Wednesday set revenue and earnings-per-share growth targets for fiscal years 2023 to 2025 as it launched the third phase of its strategy through 2025.

The German medical-equipment maker said it expects revenue growth of 6% to 8% annually for fiscal years 2023 to 2025, while adjusted earnings-per-share growth is expected at 12% to 15% a year based on broad-based margin expansion.

SSE 1H Profit Rose; FY Performance Seen at Least in Line With Views

SSE PLC on Wednesday reported higher profit for the first half of the financial year, and said full-year earnings would be at least in line with market consensus.

The Scotland-based energy company made a pretax profit of 1.69 billion pounds ($2.27 billion) for the six months ended Sept. 30, up from GBP779.4 million a year earlier. The result included mark-to-market revaluation gains on derivatives of GBP1.2 billion, as a result of recent market volatility, it said.

Qualcomm Shares Rise to Record High on Ambitious Growth Targets

The push by Qualcomm Inc.'s new chief executive to diversify into everything from cars to connected devices now comes with ambitious targets that are boosting investor sentiment for the company best known for providing cellphone chips.

Qualcomm shares climbed to a record close Tuesday after Chief Executive Cristiano Amon said the company's roughly $1 billion automotive business would reach $10 billion in 10 years and that its sales linked to connected devices, the so-called Internet of Things, could advance more than 75% through 2024 and reach $9 billion.

Rogers to Replace CEO Joe Natale After Board Fight

TORONTO-Rogers Communications Inc. said Chief Executive Joe Natale had left and was being replaced on an interim basis by former finance chief Tony Staffieri.

The company said it has begun searching for a permanent CEO and that Mr. Staffieri, who was fired in September, is a candidate. News of the management change was earlier reported by the Toronto Star.

Activision Blizzard Employees Demand CEO Bobby Kotick's Resignation

More than 100 current and former Activision Blizzard Inc. employees participated in a protest Tuesday to demand the resignation of Chief Executive Bobby Kotick after publication of a Wall Street Journal article about his handling of sexual misconduct issues at the videogame company, participants said.

The demonstration was held outside Activision's Blizzard campus in Irvine, Calif., and organized by a recently formed Activision employee group called the ABK Workers Alliance. ABK is shorthand for Activision Publishing, Blizzard Entertainment and King, the company's three main business units responsible for its Call of Duty, World of Warcraft and Candy Crush franchises, respectively.

Executive Pleads Guilty in Internet Address Fraud Case

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11-17-21 0613ET