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North American Morning Briefing: Stock Futures Tick Up Ahead of Inflation Data

09/14/2021 | 06:01am EDT


Watch For:

U.S. CPI for August.

Opening Call:

Stock futures edged higher ahead of fresh data that is likely to show that inflation remained elevated in August.

Investors are showing signs of cautious optimism this week as they bet that the economy will continue to recover, bolstering corporate earnings. That marks a shift from last week, when a rise in Delta variant cases of Covid-19 had stoked concerns that measures to contain the virus could weigh further on economic activity or slow the shipping of goods and materials, adding to inflationary pressures.

"The skittishness in markets is down to the Delta variant and the effect on growth expectations," said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald.

Investors are also focused on whether the Federal Reserve will begin scaling back its easy-money policies in coming months, he added. "There is this interesting moment we've got in markets where Delta is still a concern, but at the same time you've got central banks tapering or about to taper," Mr. Park said.

Many Fed officials have said in recent interviews and public statements that they could begin reducing, or tapering, their monthly purchases of bonds by the end of this year if the economy performs as they anticipate. Both inflationary pressures and the recovery in the labor market are likely to be key gauges that could influence their timing.

The Fed has said it expects inflation to be temporary. But some investors expect that it could prove stickier than anticipated.

"It is hard for us to say, well folks, all these things are transitory and come January 2022, we expect everything to be back to normal," said Carsten Brzeski, ING Groep's global head of macro research. "Every data point that shows that inflation is more than only transitory, we get closer to tapering."

The inflation data for August are due to be released at 8:30 a.m. ET. Economists surveyed by The Wall Street Journal forecast that the consumer-price index gained last month.


The dollar edged lower, allowing the euro to rise back above $1.18, suggesting that Monday's gains in the U.S. currency were "probably mostly driven by some position adjustments ahead of U.S. CPI data," said UniCredit.

It expects U.S. inflation figures, due at 1230 GMT, to show the annual rate of CPI inflation not accelerating any further, which it says will likely be neutral or negative for the dollar.

The figures won't alter the likelihood that the Federal Reserve will start tapering asset purchases this year, likely in December, UniCredit said.


The yield on the benchmark 10-year U.S. Treasury note ticked up to 1.343% from 1.323% Monday.

Pimco's base case is that many near-term inflation pressures will prove transitory. Nonetheless, the asset manager remains "humble" in its forecasts and believes the upside risks to longer-term inflation are worth considering, Pimco's fixed-income strategists said.

Many investors remain vulnerable to higher inflation given they are "handcuffed" to high levels of duration and because rising inflation expectations put upward pressure on interest rates and, therefore, downward pressure on bond prices, Pimco said. Duration is a measure of sensitivity of bond prices to a change in interest rates.


Oil prices remained higher after the IEA released its monthly market report. The energy watchdog said that the impact of Hurricane Ida and other oil supply outages in Mexico, Russia, Nigeria and Libya will take a sizable chunk out of global oil production this year.

The agency also cut its supply rebound forecast for 2021 by 150,000 barrels a day and cut its demand forecast by 100,000 barrels a day, citing the impact of the coronavirus's Delta variant. "It is only by early 2022 that supply will be high enough to allow oil stocks to be replenished," the report said.

LME three-month copper futures were down 0.9% at $9,448 a metric ton, with the broader metals basket and equities indexes mostly drifting lower. Those losses come in the wake of heavier metals selling on Monday.

Marex Spectron's Anna Stablum cited profit-taking as being behind Monday's price losses. Open interest in Shanghai is down across most metals on the day, she added.

London gold prices were down in another lethargic session. Gold's "price action continues to be seriously underwhelming, unable to rally when the U.S. dollar falls and moving lower when it rises," OANDA's Jeffrey Halley said.


Apple Event: New iPhone Lineup to Be Revealed Tuesday

After weeks of turbulent headlines, Tim Cook is expected to take the virtual stage Tuesday in an attempt to return attention to the key driver of Apple Inc.'s success: the iPhone.

The Cupertino, Calif., tech giant is likely to reveal its newest phones and smartwatch during the annual September event, which will be livestreamed on the company's website from 1 p.m. ET instead of being held in person because of Covid-19 precautions.


Apple Cyber Flaw Allows Silent iPhone Hack Through iMessage

An Israeli cybersecurity firm has been exploiting a significant Apple Inc. software vulnerability since February to silently infect iPhones using iMessage, the company's messaging software, according to the research group that discovered the issue.

On Monday, Apple supplied a critical security update fixing the flaw, but the vulnerability had been used in attacks by Israel's NSO Group, according to Citizen Lab. Citizen Lab is an academic research group that investigates cyberattacks on journalists and dissidents.


Amazon's Contracts With Wholesalers Hurt Competition, D.C. Suit Alleges

WASHINGTON-The District of Columbia's attorney general accused Amazon.com Inc. of contracting with wholesalers in a way that drives up product prices on other websites and insulates the e-retail giant from competition, adding new allegations to a pending district antitrust lawsuit.

New sections recently added to the district's legal complaint, first filed in May, focus on Amazon's contracts with so-called first-party sellers-companies that sell to Amazon, which in turn sells products to customers. The earlier complaint focused on third-party sellers who directly sell to consumers via the Amazon marketplace, alleging that the company acted anti-competitively by effectively blocking them from offering better deals off Amazon's site.


Kroger, Instacart Aim for 30-Minute Grocery Delivery

Kroger Co. said it is partnering with Instacart Inc. to deliver food and household staples in as little as 30 minutes, bringing the supermarket giant further into a crowded grocery-delivery business.

Kroger tested 30-minute delivery about two years ago, but the grocer found it difficult to expand the service quickly with only its staffers, said Rodney McMullen, chief executive officer of Kroger. It will be easier to expand the service with Instacart, he said, because the grocery-delivery provider has the technology and shoppers in place to pick and deliver grocery staples, household products and prepared meals from Kroger's more than 2,700 stores.


China Evergrande Appoints Advisers as Finances Remain Stressed

China Evergrande Group has appointed financial advisers to assess its capital structure and explore ways to ease the cash-strapped conglomerate's liquidity issues.

Houlihan Lokey (China) Ltd. and Admiralty Harbour Capital Ltd. have been appointed as joint financial advisers, China Evergrande said Tuesday.


GPB Capital Sells Automotive Assets to Group 1 for $880 Million

Private-equity firm GPB Capital Holdings LLC, currently facing fraud allegations from the Securities and Exchange Commission and more than a half-dozen states, is selling its Prime Automotive Group of car dealerships for about $880 million.

The sale to Houston-based Group 1 Automotive Inc. by GPB Automotive Portfolio LP, the entity formed by the New York firm for its auto dealer assets, includes 30 stores and three collision repair shops in mid-Atlantic and Northeast markets, according to a regulatory filing Monday.


Intuit Agrees to Buy Mailchimp for About $12 Billion

TurboTax maker Intuit Inc. agreed to buy email-marketing pioneer Mailchimp for about $12 billion, in a move aimed at capitalizing on the growth of small and midsize businesses.

The cash-and-stock deal for closely held Mailchimp would be Intuit's largest deal ever and set it up to offer more services to small businesses such as marketing and customer-relationship management.


Paramount Pictures Revamp Includes Push for Paramount+ Streaming

ViacomCBS Inc. unveiled a new management team and operating structure for its iconic Paramount Pictures movie and television production unit that Chief Executive Bob Bakish said would better position it for the streaming era.

Among the changes expected as a result of the realignment is a greater push for Paramount to create content exclusively for its Paramount+ streaming service and other ViacomCBS networks and streaming platforms, people familiar with the company's thinking said.


Grab Trims Outlook as Covid Looms, Second-Quarter Loss Widens

Grab Holdings Inc., the Southeast Asian company preparing to list in the U.S. with a $40 billion valuation via a tie-up with a special-purpose acquisition company, posted a wider loss in the second quarter even as revenue more than doubled.

The Singapore-based provider of food-delivery, ride-hailing and finance services also lowered its full-year sales forecasts, citing the ongoing effects of Covid-19 in multiple countries in the region.


Inflation Likely Eased in August, Though Still High

Inflation likely cooled slightly in August, though remaining strong, as a surge in Covid-19 infections slowed economic growth and pandemic-related shortages of labor and supplies continued to drive up prices, economists say.

(MORE TO FOLLOW) Dow Jones Newswires

09-14-21 0600ET

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 0.23% 145.0879 Delayed Quote.9.16%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.35% 0.63782 Delayed Quote.1.56%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.14% 0.7411 Delayed Quote.-3.64%
BRITISH POUND / EURO (GBP/EUR) -0.43% 1.18144 Delayed Quote.5.89%
BRITISH POUND / US DOLLAR (GBP/USD) -0.23% 1.3727 Delayed Quote.0.55%
BROOKS MACDONALD GROUP PLC 3.38% 2750 Delayed Quote.61.95%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.12% 0.695851 Delayed Quote.8.31%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.05% 0.808 Delayed Quote.2.90%
CHINA EVERGRANDE GROUP -3.91% 2.95 End-of-day quote.-80.20%
DJ INDUSTRIAL -0.07% 35257.61 Delayed Quote.15.32%
EURO / US DOLLAR (EUR/USD) 0.19% 1.1618 Delayed Quote.-5.03%
GOLD -0.31% 1765.224 Delayed Quote.-6.93%
GROUP 1 AUTOMOTIVE, INC. -1.23% 179.58 Delayed Quote.38.64%
HOULIHAN LOKEY, INC. 1.80% 103.12 Delayed Quote.50.68%
INDIAN RUPEE / EURO (INR/EUR) -0.52% 0.011429 Delayed Quote.2.50%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.40% 0.013278 Delayed Quote.-2.64%
INTUIT INC. 0.59% 555.445 Delayed Quote.45.36%
LONDON BRENT OIL -1.23% 84.27 Delayed Quote.64.20%
MSCI SINGAPORE (GDTR) 0.53% 6764.805 Real-time Quote.16.23%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.02% 0.70809 Delayed Quote.-1.49%
S&P 500 0.16% 4478.18 Delayed Quote.19.04%
THE KROGER CO. 1.15% 39.055 Delayed Quote.21.51%
TIM S.A. 0.72% 12.57 End-of-day quote.-14.20%
US DOLLAR / EURO (USD/EUR) -0.18% 0.860674 Delayed Quote.5.29%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) 0.37% 71.273 Delayed Quote.-4.02%
VIACOMCBS INC. -0.05% 38.91 Delayed Quote.4.46%
WTI -1.06% 82.081 Delayed Quote.69.35%
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