MARKET WRAPS
Watch For:
Procter & Gamble annual shareholders meeting
Opening Call:
Stock futures fell on Tuesday, putting indexes on course for a fifth consecutive day of losses, as worries about further rate hikes pushed Treasury yields to fresh highs.
Traders' risk appetite continued to be crushed by concerns the Federal Reserve's desire to combat rampant inflation with still-higher borrowing costs will hurt economic activity and crimp corporate earnings.
"With the 10-year yield back at the 4% level this morning, we expect the pressure to continue in U.S. equities and our thesis is also that the upcoming Q3 earnings season starting this week will lead to earnings downgrades and disappointments in the outlook," said Peter Ganry, head of equity strategy at Saxo Bank.
The market must contend with producer prices data on Wednesday and the consumer prices data on Thursday, reports that should further impact investors' thinking on the Fed's policy trajectory.
"Stay long dollars and stay short risk continue to be heard loudly in virtually every market discussion," said Stephen Innes, managing partner at SPI Management.
Overseas, U.K. assets were volatile after the Bank of England took fresh steps to try to arrest a sell-off in government bonds, while in Asia, the Hang Seng closed down 2.2%, hitting a 13-year low.
Stocks to Watch:
DWAC, the company that is trying to take public Donald Trump's social-media platform pushed back the deadline for its shareholders to vote on giving the company more time to close its deal. Its shares fell 1% off hours, building on Monday's 7.6% decline.
Tesla, Rivian, GM, Ford were extending declines premarket, a day after they suffered losses deeper than those of the broader stock market.
Forex:
GBP/USD dropped 0.3% to a 12-day low of 1.0999 following the latest U.K. labor market data and the BOE's decision to widen its emergency bond-purchase operations.
"We continue to see downside risks for the pound, as levels around [GBP/USD] 1.10 do not mirror the fragility of the UK bond market," ING said.
ING said the dollar could strengthen further as there are still few signs the Federal Reserve will pivot from its aggressive interest rate rise cycle this year, adding that a pivot is unlikely until the first quarter of 2023 at the earliest.
The Fed looks set to push ahead with tightening policy into a recession with rates peaking at 4.25-4.50% early next year from 3.00-3.23% currently, which should keep the dollar firm, ING said.
"We could easily see further [dollar] gains of 5-7% across the board."
Bonds:
The Bank of England expanded its bond-market rescue on Tuesday as it warned that the threat of a fire sale in some U.K. government debt posed a risk to the country's financial stability.
The central bank said it would buy up to GBP5 billion of index-linked gilts each day through Friday, equivalent to $5.5 billion. On Monday, the bank doubled the total daily amount of bonds it could buy to GBP10 billion.
Read more here.
---
German government bond yields hovered near 11-year highs after reports Chancellor Olaf Scholz was prepared to back European Union-wide joint debt issuance to help the bloc's members tackle the energy crisis.
The new stance, first reported by Bloomberg, would mark a notable about turn by the leadership of Europe's biggest economy, who have long resisted the idea of raising funds in conjunction with countries it considers more fiscally profligate.
Read more here.
Energy:
Oil futures fell more than 1% in Europe as concerns about demand returned to the fore, with a weak outlook for the Chinese economy also weighing on prices.
Oil prices are unwinding the gains they made after the 2 million barrel-a-day supply cut by OPEC+. Brent has declined nearly 3% so far this week.
"Oil is trading lower as demand concerns temporarily outweigh tight markets," SPI Asset Management said.
Metals:
Metals prices were weaker early in the European session as traders looked to mitigate against risk assets.
Rising tensions within Ukraine have pushed a number of commodity markets lower, with investors piling toward the dollar.
Marex said that "chatter in Asia's time zone has increasingly been more about the Covid situation within China."
It said that "sentiment remains weak under such a backdrop, which might attract Western selling given recent support has been reliant on optimism that there will be a reopening."
TODAY'S TOP HEADLINES
Bio-Rad Laboratories in Talks to Combine With Qiagen
Bio-Rad Laboratories Inc. is in talks to combine with fellow life-sciences company Qiagen NV in a deal that would be worth more than $10 billion, according to people familiar with the matter.
The talks have been going on for a while but any agreement isn't likely for another few weeks or more-and there may not be one.
XPO Logistics Names CFO Ahead of Planned Spinoff of Freight Brokerage Business
XPO Logistics Inc. named a new finance chief ahead of the planned spinoff of its freight brokerage business later this year, part of an ongoing effort to split the sprawling transportation company into smaller pieces.
Carl Anderson will take over as chief financial officer on Nov. 8, Greenwich, Conn.-based XPO Logistics said Monday. Mr. Anderson was most recently finance chief at Meritor Inc., an auto-parts supplier that was acquired in August by Cummins Inc., a Columbus, Ind.-based engine maker. He succeeds Ravi Tulsyan, who served as CFO for just over a year and will leave the company after assisting with the transition. XPO Logistics declined to make Mr. Anderson available for an interview.
BIO Chief Executive Michelle McMurry-Heath Exits After Clashes With Board
The chief executive of the biotechnology industry's top lobbying group in Washington resigned on Monday, the organization said.
Michelle McMurry-Heath left the Biotech Innovation Organization after she was on leave following disagreements with some board members, The Wall Street Journal reported.
Maker of Bang Energy Drinks Files for Bankruptcy After Monster, Pepsi Litigation
The maker of Bang energy drinks filed for bankruptcy protection after a federal jury ordered it last month to pay Monster Beverage Corp. nearly $293 million for interfering with its rival's dealings with retailers and falsely advertising the mental and physical benefits of Bang drinks.
The chapter 11 filing on Monday in the U.S. Bankruptcy Court in Fort Lauderdale, Fla., immediately halts Monster's lawsuit against Vital Pharmaceuticals Inc., or VPX, as well as costly litigation with other companies that has been a drag on the Bang parent company and its flagship energy drink.
Samsung Electronics Shares Fall, Hurt by New U.S. Curbs on Tech Exports to China
Samsung Electronics Co. shares fell sharply early on Tuesday as global semiconductor stocks were dragged lower by new U.S. restrictions on advanced-tech exports to China.
Shares in the South Korean tech giant lost as much as 3.9% to 54,000 won ($37.78) before coming off their lows. They were last down 3.0% at KRW54,500, underperforming the benchmark Kospi's 2.3% decline.
TSMC Shares Slump After U.S. Restrictions on Chip Exports to China
Taiwan Semiconductor Manufacturing Co. shares fell sharply Tuesday after new U.S. restrictions on chip exports raised concerns about the prospects of the company's business opportunities in China.
TSMC's shares were recently down 6.7% at 408.50 New Taiwan dollars after falling as much as 7.1% earlier.
Moody's Withdraws Ratings on China Evergrande Group, Kaisa Group
Moody's Investors Service has withdrawn its credit ratings on Chinese real-estate developers China Evergrande Group and Kaisa Group Holdings Ltd., citing insufficient information.
"Moody's has decided to withdraw the ratings because it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings," the ratings firm said in separate statements on Tuesday.
Bank of England Further Expands Bond-Market Rescue
LONDON-The Bank of England expanded its bond-market rescue on Tuesday as it warned that the threat of a fire sale in some U.K. government debt posed a risk to the country's financial stability.
The central bank said it would buy up to GBP5 billion of index-linked gilts each day through Friday, equivalent to $5.5 billion. On Monday, the bank doubled the total daily amount of bonds it could buy to GBP10 billion.
German bond yields near 11-year highs on reports Scholz will sanction joint debt sales
German government bond yields BX:TMBMKDE-10Y hovered near 11-year highs after reports Chancellor Olaf Scholz was prepared to back European Union-wide joint debt issuance to help the bloc's members tackle the energy crisis.
The new stance, first reported by Bloomberg, would mark a notable about turn by the leadership of Europe's biggest economy, who have long resisted the idea of raising funds in conjunction with countries it considers more fiscally profligate.
Japan Finance Minister to Explain Yen Intervention at G-20 Meeting
Japanese Finance Minister Shunichi Suzuki said he plans to explain the nation's recent yen-buying intervention to the Group of 20 nations at the coming meeting.
Mr. Suzuki said Tuesday that he has made efforts to gain the understanding of other nations on Japan's currency intervention and believes that Japan has gained a certain level of understanding from the U.S.
PC Shipments Plunge Nearly 20%, Steepest Drop in More Than 20 Years
Demand for personal computers is sliding at the fastest pace in decades after elevated pandemic-related sales were followed by a slowdown in consumer spending on electronics.
(MORE TO FOLLOW) Dow Jones Newswires
10-11-22 0549ET
