MARKET WRAPS
Watch For:
Canada Labor Force Survey
Opening Call:
Stock futures were solidly higher on Friday, pointing to a third day of gains for the major indexes, as investors bet that tough talk from Federal Reserve officials now won't prevent a pivot down the road.
Markets have absorbed two days of hawkish speeches from Fed officials, as well as 75-basis point rate hikes from the Bank of Canada and the European Central Bank.
Some analysts have attributed the gains to a favorable technical picture. There also are expectations the Labor Department will report a month-on-month decline in consumer prices next week, as market-derived measures of inflation expectations also are falling.
"We think this remains a setup where downside reads in inflation means Fed has less work to do," said Tom Lee, head of research at Fundstrat, in a note to clients.
A noon speech from Fed Gov. Christopher Waller, speaking in Austria, is the highlight of a quiet day on the U.S. economics calendar. At the same time, the quarterly flow of funds report from the Fed is due.
Overseas, the pan-European Stoxx 600 gained 1.6% and Tokyo's Nikkei 225 pushed 0.5% higher.
Forex:
The dollar fell to a one-week low in European trading, with the DXY Dollar Index dipping below 109.00, even after Jerome Powell underlined his commitment to fight inflation.
"The driver of this USD pullback seems to be some reversal of the recent JPY weakness, with USD/JPY drifting back below 143 on the back of Bank of Japan Governor Haruhiko Kuroda's warning that the rapid weakening of the JPY is undesirable after a meeting with Japan Prime Minister Fumio Kishida," UniCredit Research said.
EUR/USD rose to a 3-week high.
Morgan Stanley said it remained short on EUR/USD, expecting it to trade below parity again and targeting 0.97, with a stop at 1.05.
The backdrop to its view is that the ECB's monetary policy normalization may be inefficient to support the currency if the normalization is taking place in a stagflationary environment.
It considers Italian elections on Sept. 25, eurozone inflation data at the end of the month, and the prospect for price supports on European energy as key catalysts.
Danske Bank said it continued to see further downside risk for the euro, targeting EUR/USD of 0.95 on a 12-month horizon, adding that medium-term valuation drivers are set to weigh more persistently on the cross in the quarters ahead.
"Until we see a broad rebound in global growth, a capex boom, a sharp drop in energy prices and/or the Fed cutting rates, we think EUR/USD has more downside in store and the ECB decision does not change that."
Energy:
Oil prices were higher, gaining some support from Vladimir Putin's threat to cut off crude supplies to nations that back the price cap plan and as investors judge the recent selloff as "overdone," ANZ said.
In Europe, government ministers are debating plans for an intervention in the continent's energy markets at an emergency meeting that is aimed at tamping down soaring electricity prices.
Read more here.
Metals:
Base metals and gold pushed higher in early London trading ahead of a national festival in China, with commodities rallying on an easing dollar.
Marex said that traders may be looking to cover positions with the closure of the SHFE index for the Mid-Autumn Festival, as well as a possible LME closure following the Queen's death in the U.K.
TODAY'S TOP HEADLINES
Caterpillar Settles Tax Dispute With IRS, Will Pay No Penalties
Caterpillar Inc. said Thursday it reached a settlement with the Internal Revenue Service that resolves a yearslong tax dispute without any penalties.
The construction equipment maker said in a regulatory filing that the settlement included the resolution of the disputed tax treatment of profits earned from 2007 to 2016 by a subsidiary in Switzerland, called Caterpillar SARL, from sales of replacement parts.
Judge Voices Skepticism of Justice Department's Antitrust Challenge to UnitedHealth Acquisition
WASHINGTON-A federal judge grilled the Justice Department on Thursday over its antitrust claims that UnitedHealth Group Inc.'s $13 billion acquisition of health-technology firm Change Healthcare Inc. would suppress competition and limit innovation in health insurance markets.
During closing arguments, U.S. District Judge Carl J. Nichols questioned the department's arguments that he should block the deal because it would limit competition for technology used in claims processing and would give UnitedHealth access to sensitive industry data that it could use to harm competitors.
White House Weighs Order to Screen U.S. Investment in Tech in China, Other Countries
WASHINGTON-The Biden administration is weighing an executive order to screen and possibly restrict U.S. overseas investment in cutting-edge technology development in China and other potentially hostile countries.
The White House is aiming to issue such an order within the next couple of months to monitor and potentially block outbound investment by American companies and investors, according to people familiar with the matter.
Cineworld Gets Approval for $785 Mln of First Day Relief by Bankruptcy Court
Cineworld Group PLC said Friday that it has received court approval for "first day" relief from a U.S. bankruptcy court, giving it immediate access to around $785 million from a $1.94 billion line of credit to support operations.
Shares at 0730 GMT were up 0.21 pence, or 5% at 4.35 pence.
Europe Holds Emergency Talks on Energy-Market Intervention
BRUSSELS-European energy ministers are debating plans for an intervention in the continent's energy markets at an emergency meeting that is aimed at tamping down soaring electricity prices.
Diplomats said many countries-including the European Union's biggest economies, Germany and France-appeared to agree ahead of Friday's meeting on the idea of imposing a cap on the revenue earned by nuclear, renewable and other nongas producers of electricity, and redistributing the money to businesses and consumers.
Inflation Eases in China as Growth Challenges Pile Up
Inflation in China unexpectedly retreated in August, a fresh sign of trouble in the world's second-largest economy as new lockdowns in large cities again imperil growth.
Consumer prices rose 2.5% in August compared with a year earlier, China's National Bureau of Statistics said Friday, down from July's 2.7%. Economists polled by The Wall Street Journal had expected 2.8%.
North Korea Passes Law Allowing Pre-Emptive Nuclear Strikes
SEOUL-North Korea passed a new law allowing pre-emptive nuclear strikes as leader Kim Jong Un declared he would never abandon nuclear weapons in order to counter the U.S.
Mr. Kim delivered a speech Thursday to North Korea's rubber-stamp parliament, where members passed legislation outlining the country's nuclear status. The law included a provision requiring North Korea's military to launch nuclear strikes if the leadership comes under attack.
Justice Gorsuch Said Findings of Probe Into Leaked Roe Draft Opinion Will Be Made in Report
COLORADO SPRINGS, Colo.-Justice Neil Gorsuch said Thursday that the Supreme Court's investigation of the May leak of the draft opinion overruling Roe v. Wade was continuing, and that a report on the incident is coming.
"The chief justice appointed an internal committee to oversee the investigation," Justice Gorsuch told the 10th Circuit Bench and Bar Conference here at the Broadmoor resort. "That committee has been busy and we're looking forward to their report, I hope soon."
DOJ to Appeal Judge's Order Appointing Special Master in Trump Mar-a-Lago Probe
The Justice Department asked a federal judge to put on hold part of her order halting its criminal inquiry into documents seized in the search of former President Donald Trump's Mar-a-Lago home, saying Mr. Trump had no right specifically to the 100 classified documents at the heart of the probe.
Prosecutors also said they would file a broader appeal of U.S. District Judge Aileen Cannon's Monday order that an independent lawyer, known as special master, should review the 11,000 government and other documents found at the Florida resort to determine whether any are protected by attorney-client or executive privileges. That order temporarily blocked the government from using any of the materials for its criminal investigation.
Michigan Supreme Court Orders Abortion-Rights Proposal Be Included on November Ballot
Michigan voters will decide in November whether to enshrine abortion rights in their state's constitution, after the Michigan Supreme Court ruled Thursday that an abortion-access initiative must be included on the ballot.
The state high court overrode an election board decision that had declined to place the measure on the November ballot after opponents of the measure argued that poor spacing between the words in the proposal rendered some of the text incomprehensible.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
Dollarama 2Q
Economic Indicators (ET):
0830 Aug Labour Force Survey
0830 2Q Industrial capacity utilization rates
Stocks to watch:
Enghouse Systems 3Q EPS C$0.33; Net C$18.1M
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Telus Prices C$2.0B of Senior Unsecured Notes in Three Series; Offering 5.25% Sustainability-Linked Notes With 10-Year Maturity; Offering 5.65% Notes With 30-Year Maturity; Offering 5.00% Notes With Seven-Year Maturity;
Telus Notes Offered via Syndicate of Agents Led by CIBC Capital Markets, RBC Capital Markets, Scotiabank; Telus Expects Offering to Close on or About Sept. 13; Telus Expects to Use Net Proceeds to Repay Debt, for Other Purposes
Expected Major Events for Friday
06:45/FRA: Jul Industrial production index
08:30/UK: Aug Bank of England/Ipsos Inflation Attitudes Survey
10:00/FRA: Jul OECD Harmonised Unemployment Rates
12:30/CAN: Aug Labour Force Survey
12:30/CAN: 2Q Industrial capacity utilization rates
(MORE TO FOLLOW) Dow Jones Newswires
09-09-22 0534ET
