MARKET WRAPS
Watch For:
U.K. Bank of England's Funding for Lending and Term Funding
schemes data; trading updates from DS Smith, British American
Tobacco, Frasers Group, FirstGroup, Harbour Energy
Opening Call:
Shares look poised for a cautious open amid lingering Fed rate
fears. Asian stock benchmarks and Treasury yields were mixed; the
dollar recovered; oil futures rose and gold fell.
Equities:
European stock futures point to a cautious open on Thursday, as
investor focus turns to U.S. PPI data due Friday and the FOMC
decision next week, against the backdrop of China easing more Covid
curbs.
Lack of clarity in how central bankers may respond to economic
data has led to choppier performance in the stock market, said
Edward Park, chief investment officer at Brooks Macdonald.
"Risk markets are highly dependent and seesawing with each new
data print and central bank comment," said Stuart Katz, chief
investment officer of Robertson Stephens.
"Fears are growing that economies are in for a rough time ahead
as feverish inflation and the bitter interest rate medicine being
used to bring it down take effect," said Susannah Streeter, senior
investment and markets analyst, Hargreaves Lansdown.
However, Fundstrat reckons equities will benefit in coming weeks
as investors start to get greater clarity on when the Fed may stop
tightening policy.
"We don't think the end of the inflation war in 2022 is the Fed
cutting rates. It is when Fed and markets see sufficient progress
in inflation to remove the upside risks to higher rates. We think
this could happen as early as the November CPI report. This will be
released on 12/13," it said.
Forex:
The dollar strengthened in Asia, recovering from its overnight
weakness.
There's no real clear driver right now for the dollar, Oanda
said, but some of the weakness has to do with the decline in
Treasury yields as recession risks rise.
Most major currencies rallied against the dollar because their
worst-case scenarios are already priced in but now that's happening
in the U.S., it said.
"As the yield-curve inversion deepens to a four-decade low,
chances are we're not going to see just a mild recession."
ANZ said it was skeptical about the sustainability of lower U.S.
bond yields given Fed rhetoric.
"Markets clearly want to move onto the next cycle, and are
fading end-of-cycle factors and hawkish Fed overtones."
That speaks to volatility going into and in the wake of next
week's Fed meeting.
Bonds:
Treasury yields were mixed early Thursday.
Yields on longer-dated Treasury bonds tumbled to their lowest
levels in about three months on Wednesday, on investor concerns
that inflation-fighting interest rate hikes by the Fed could
trigger a sharper downturn than anticipated.
"Bonds are mesmerized by the fact that oil can't hold a rally,"
said Jim Vogel, a fixed income strategist at FHN Financial.
The trend raises questions about whether traders in the oil
complex "see something wrong with the economy" that economists and
the Federal Reserve don't, he said.
Energy:
Crude-oil futures were higher early Thursday.
"With the tug-of-war between a worsening Covid situation in
China and increased reopening expectations, oil markets could trade
in yo-yo mode, " SPI Asset Management said.
While market expectations that China could gradually reopen were
continuing to rise, increasing Covid-19 infection numbers could
drag on prices, it said.
Metals:
Gold prices fell slightly in Asia. The precious metal could
continue to perform well due to stronger demand for safe havens
amid rising recession risks, Oanda said.
The precious metal is likely to trade back and forth around the
$1,800/oz level until next week's FOMC decision, it said.
Investors are "trying to assess where gold sits in the current
environment," Kinesis Money said.
"A global recession with a subsequent flight to haven assets
should benefit gold, as should a [Fed] forced to be less aggressive
with its rate hikes to avoid tipping the U.S. economy into
recession," it added.
-
Copper prices were unchanged following soaring gains overnight,
as investors welcomed China's latest move to further relax Covid
curbs.
ANZ said the easing of restrictions would continue to brighten
the outlook for copper demand from China, one of the world's
largest copper-consuming countries, and help sustain the metal's
recent rally.
The bank also said China's November import data beat market
expectations, a sign that restocking was picking up, as buyers
prepare for a demand rebound.
-
Chinese iron-ore futures gained, adding to the rally in recent
weeks as China reopening hopes buoy investor sentiment.
ANZ pointed to "signs of rising demand" from the latest official
data showing 4% growth in China's iron-ore imports in November.
Supply side issues are another positive that could support
prices, after a major miner cut output guidance.
However, Galaxy Futures analysts warned of potentially limited
upside from the current elevated price levels.
TODAY'S TOP HEADLINES
Canada Proposes New Powers in Foreign-Investment Reviews
OTTAWA-Canada on Wednesday unveiled a series of changes to the
country's foreign-investment laws that officials said updates tools
the cabinet has at its disposal to deal with transactions that pose
a national-security risk.
Among the changes Canada is proposing: allowing cabinet to
impose conditions on a tentative transaction while it undergoes a
government-led security review, and compelling investors eyeing
investments in certain sensitive sectors - such as in quantum
science, critical minerals and other sensitive technologies such as
artificial intelligence-to file early notification with Ottawa
about their intentions.
High Oil Prices Lift Saudi Arabia, Bolster Prince's Economic
Plans
RIYADH, Saudi Arabia-The Saudi government posted a $27 billion
budget surplus Wednesday, as this year's high oil prices accelerate
Crown Prince Mohammed bin Salman's ambitious plans and boost
resource-rich economies across the Persian Gulf.
Buoyant crude prices helped the kingdom's economy expand at one
of the fastest rates globally, with the government spending $47
billion more than planned. In a year when global growth is pegged
at 3.2%, the International Monetary Fund predicts growth of 7.6%
this year in Saudi Arabia. The kingdom's output is expected to
reach $1 trillion for the first time, cementing its place among the
world's biggest economies.
EU Officials Pursue Additional Sanctions Against Russia Over
Ukraine War
European Union officials proposed a new round of sanctions on
Russia on Wednesday over its invasion of Ukraine, including a ban
on exports of drone engines to Russia and other potential suppliers
of the machines to its military, a prohibition on investing in
Russia's mining sector and new financial restrictions.
The sanctions, the ninth package of restrictions on Russia since
its February invasion of Ukraine, come days after the EU and the
Group of Seven advanced democracies placed a price cap on Russian
oil and after European countries began their embargo on imports of
Russian crude.
Sister of Iran's Supreme Leader Calls for Overthrow of His
'Despotic Caliphate'
A sister of Iranian Supreme Leader Ali Khamenei said she had cut
ties with her brother, calling him a despotic caliph who ignored
the voice of Iranians, a sign that people near the top echelons of
the system are growing bolder in expressing opposition to the
clerical leadership.
The sister, Badri Hosseini Khamenei, also called on security
forces to lay down arms and join the protesters demanding an ouster
of the country's Islamic leadership.
Google Combines Maps and Waze Teams Amid Pressure to Cut
Costs
Alphabet Inc.'s Google plans to combine the team working on the
mapping service Waze with the group overseeing the company's Maps
product, as the search giant faces pressure to streamline
operations and cut costs.
Google plans to merge Waze's more than 500 employees with the
company's Geo organization, which oversees the Maps, Earth and
Street View products, beginning on Friday, according to a Google
spokeswoman.
FTX Hires Forensic Team to Probe Money Trail
FTX's new management has hired a team of forensic investigators
from advisory firm AlixPartners to help track the billions of
dollars that have gone missing from the failed cryptocurrency
exchange, people familiar with the matter said.
The AlixPartners team is led by Matt Jacques, a former chief
accountant for the Securities and Exchange Commission's enforcement
division, people familiar with the matter said. Mr. Jacques didn't
respond to a request for comment.
Apple Plans New Encryption System to Ward Off Hackers and
Protect iCloud Data
Apple Inc. is planning to significantly expand its
data-encryption practices, a step that is likely to create tensions
with law enforcement and governments around the world as the
company continues to build new privacy protections for millions of
iPhone users.
The expanded end-to-end encryption system, an optional feature
called Advanced Data Protection, would keep most data secure that
is stored in iCloud, an Apple service used by many of its users to
store photos, back up their iPhones or save specific device data
such as Notes and Messages. The data would be protected in the
event that Apple is hacked, and it also wouldn't be accessible to
law enforcement, even with a warrant.
Write to singaporeeditors@dowjones.com
Expected Major Events for Thursday
00:01/UK: 3Q Household Finance Review
00:01/UK: Nov RICS Residential Market Survey
01:01/UK: Nov KPMG and REC UK Report on Jobs
05:30/NED: Nov CPI
07:00/DEN: Oct Industrial production & new orders
08:00/CZE: Nov Unemployment data
08:00/HUN: Nov CPI
08:00/HUN: Oct Preliminary External Trade
10:00/GRE: Oct External Trade (provisional data)
11:00/FRA: Oct OECD Composite Leading Indicators
11:00/IRL: Nov CPI
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(END) Dow Jones Newswires
December 08, 2022 00:15 ET (05:15 GMT)
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