UK monthly retail sales figures; Euro area balance of payments;
EU Construction output; EU Harmonised CPI.
Stocks could open higher at open, but uncertainty about economic
growth and the impact of the Delta variant continue to weigh on
investors. Stocks in Asia mixed, with Chinese stocks down. Dollar
rises. Oil declines while gold edges higher.
European stocks are set to open higher as investors weighed
mixed signals in the latest U.S. economic data and a stock-market
pullback in China.
Chinese stocks are broadly lower in early trade, tracking
overall declines in other Asian equity markets. Although China's
near-term economic prospects appear to be more challenged, partly
due to Covid-19 outbreaks in some provinces, Aberdeen Standard
Investments expects to see more support for growth via local
government bond issuance and fixed asset investment.
Japan's Nikkei was higher as gains in tech and shipping stocks
offset losses in steel and energy stocks. Investors are closely
watching any developments regarding the ruling-party chief's
election set for later this month as another female candidate Seiko
Noda joins the race.
In the U.S., major indexes have lost ground this month as
investors worry that stocks may be due for a setback after climbing
throughout 2021. Analysts also are considering how the spread of
the Delta variant of Covid-19 could damp economic growth.
"It can make consumers less confident to spend, for example, if
they have some uncertainty about where the economy is headed based
on what happens with case loads," said Lisa Erickson, co-head of
the public markets group at U.S. Bank Wealth Management.
While many recent sessions have seen losses for stocks, they
haven't been large ones: The S&P 500 on Thursday notched its
20th consecutive trading day without a 1% move-its longest stretch
without a move of that size since a span from October 2019 to
January 2020, according to Dow Jones Market Data.
New data added to the cloudy forecast for the economy. The
number of Americans who applied for first-time unemployment
benefits rose in the week ended Sept. 11 to 332,000, up from
312,000 in the week prior.
Meanwhile, retail sales rose 0.7% in August, a sign of
resilience despite the Delta-driven surge in Covid-19. Economists
surveyed by The Wall Street Journal had expected retail sales to
"This summer and then into the fall, it's all been about Delta,"
said Jim Smigiel, chief investment officer at asset management firm
SEI. "We've been in this back and forth and back and forth, and
we're seeing more of that today."
In equities, Danish boxship giant AP Moller-Maersk added $4B to
its 2021 profit guidance on the back of record volumes and surging
container freight rates. Maersk, the world's biggest container ship
operator, said it expects a full year Ebitda of $22B to $23B from
$18B to 19B previously.
"The strong result is driven by the continuation of the
exceptional market situation, which has led to further increases in
both long and short-term container freight rates," Maersk said,
adding that it upped its guidance because its performance in the
first two months of the third quarter was "significantly ahead" of
The dollar rose after data showed an unexpected rise in U.S.
retail sales during August, but Capital Economics says the details
of the data "were far less positive."
Senior U.S. economist Michael Pearce notes there were "big
downward revisions" to previous months, while a rise in online and
grocery store spending suggests "Delta fears are playing a
Spending at bars and restaurants was "stagnant," while a pick-up
in spending on goods ex-autos could add to widespread shortages in
recent months and add to inflationary pressure, he said.
Soaring gas prices could worsen the U.K.'s current account
deficit and stop the pound from rising in line with U.K.
bond-market trends, Deutsche Bank strategist Shreyas Gopal
The U.K. runs a small surplus in oil and a slightly larger
deficit in natural gas, and this composition is causing "a larger
deterioration in the UK's terms of trade compared to European
peers," he said.
High gas prices would feed into inflation, which may increase
the likelihood of earlier Bank of England interest-rate rises but
supply-linked inflation could concern sterling investors as it
would hurt growth, he said. "Any hawkish BOE reaction is only
likely to dampen trend-growth and weigh on the UK's terminal rate,"
Treasury yields rose to 1.337% from 1.302% Wednesday as August
retail sales rose. Inflation concerns remain one of the forces
driving investors away from US government debt, according to some
economists, amid high expectations of taper discussion in the Fed's
meeting next week.
Oil declined in early Asia trade, pulling back after the global
crude benchmark eked out a fresh, roughly seven-week high. The
market appears to be undersupplied now, partly due to still
existing OPEC+ production restrictions, Commerzbank said.
There are also lingering concerns over supply disruptions in the
Gulf of Mexico in the wake of Hurricane Ida. Commerzbank expects
the tight market situation to remain until year's end, despite
planned production increases from OPEC+.
It expects Brent crude to end the year at $75/barrel and to fall
slightly to $70/barrel next year.
Gold nudged higher in a likely technical rebound after suffering
its sharpest daily drop in nearly six weeks overnight. The
overnight move in gold is short-term oversold, said
However, the question is whether this gives a signal for trading
long gold positions or will rallies be short-lived, where strength
of the precious metal could offer entry points for short positions
on hopes of a bear-trending market into next week's FOMC meeting,
Copper and aluminum were higher in early Asian trade, as
supply-chain disruptions exacerbate low base metal inventories,
Goldman Sachs said.
"Both aluminum and copper are now seeing synchronized inventory
draws both onshore and in the ex-China market, reducing stock
buffers just as supply frictions are starting to escalate," the
investment bank said, noting that the global copper and aluminum
markets are already in deficit.
Prices are therefore likely to remain elevated. The three-month
LME copper and aluminum contracts were both 0.4% higher, at $9,400
a ton and $2,890 a ton, respectively.
TODAY'S TOP HEADLINES
Biden Steps Up Efforts to Advance $3.5 Trillion Spending
WASHINGTON-President Biden is taking a more public role in the
negotiations around Democrats' roughly $3.5 trillion social welfare
and climate bill, as lawmakers work through thorny policy
At the White House Thursday, he touted proposals to increase
taxes on high-income households and U.S. companies to finance the
plan, saying, "Big corporations and the super wealthy have to start
paying their fair share of taxes."
U.S., China Jockey for Position in Pacific With Moves on
China on Thursday moved quickly to counter an effort by the
U.S., U.K. and Australia to contain its ambitions in the Pacific,
saying it would apply to join a regional economic pact the U.S. had
eschewed, as Washington and Beijing maneuvered for economic and
military position in the theater that will define their great power
The U.S. has been amassing a network of alliances, including
India and Japan. The latest among the three English-speaking allies
will be an effort to provide Australia with nuclear submarines to
strengthen deterrence in the Indo-Pacific region, White House
officials said. Australia scrapped a multibillion-dollar submarine
deal with France as a result, prompting Paris to accuse the three
Fed to Review Financial Trading Rules for Officials
The Federal Reserve is launching a review of its internal rules
governing the financial activities of its officials in the wake of
news last week that the leaders of the Dallas and Boston regional
Fed banks actively traded in financial markets.
"Because the trust of the American people is essential for the
Federal Reserve to effectively carry out our important mission,
Chair [Jerome] Powell late last week directed Board staff to take a
fresh and comprehensive look at the ethics rules around permissible
financial holdings and activities by senior Fed officials," a Fed
spokesperson said Thursday.
MassMutual Fined for Failing to Oversee GameStop Trader Keith
A Massachusetts Mutual Life Insurance Co. subsidiary agreed to
pay a $4 million fine to settle an inquiry from Massachusetts
securities regulators into the social-media and trading activity of
its employees, including well-known GameStop Corp. investor Keith
Mr. Gill, known as "Roaring Kitty" on YouTube and
"DeepF-ingValue" on Reddit, became an Internet folk hero in
January, thanks to his prescient bets on GameStop stock. For months
leading up to the GameStop trading frenzy in January-during which
nonprofessional traders sent the company's shares soaring to a
record high-Mr. Gill posted videos and messages discussing why he
was putting large sums of money into the stock.
Glynn's Take: Review of RBA Is Something for Post-Covid Era
SYDNEY--Calls for a thorough review of the Reserve Bank of
Australia's practices reached fever pitch this week amid
suggestions that it is failing in key areas of its policy
It seems that the central bank, which controls interest rates
and has deployed unconventional policy to battle the pandemic and
avoid recession, is being singled out as the root cause of
Australia's economic woes.
Surging Energy Prices Close U.K. Factories, Another Bottleneck
in a World Full of Them
Soaring natural-gas prices in Britain have prompted U.S.
fertilizer maker CF Industries Holdings Inc. to close two U.K.
plants, in a sign that Europe's energy crunch is affecting industry
as the economy struggles with several other disruptions amid the
recovery from the pandemic.
Businesses across Britain are complaining about high energy
costs, with some steelmakers forced to halt production for periods
during the day as the price of electricity rises almost seven times
higher than at the same point last year. Power markets have also
jumped in France, the Netherlands and Germany, ahead of anticipated
higher demand in the winter.
China Casts Itself as Ally to Workers in Battle With Big
HONG KONG-China's communist state has made a show in recent
months of supporting the lowest-level workers in the country's
bare-knuckle tech industry, an emerging plank in leader Xi
Jinping's campaign to shrink the country's wealth gap and usher in
a new era of "common prosperity."
The moves also bolster a sweeping effort by Mr. Xi to exert more
control over one of the nation's few strategic sectors that is
dominated by private capital.
U.S. Economy Shows Resilience During Delta Surge
The U.S. economy is proving resilient in the face of the Delta
Americans briskly increased spending at retailers last month,
while employers have largely resisted the urge to lay off workers,
the government reported Thursday, both signs of strong demand in
U.S. Jobless Claims Remained Near Pandemic Low Last Week
Jobless claims rose slightly last week but remained near a
pandemic low, as layoffs stabilize amid an economic slowdown tied
to rising coronavirus cases.
Initial unemployment claims rose to 332,000 last week from a
pandemic low of 312,000 a week earlier, the Labor Department
reported Thursday. Layoffs due to Hurricane Ida, which hit
Louisiana at the end of August, appeared to contribute to the small
claims increase, economists said.
Italy to Impose Strict Covid-19 Health Pass for All Workers
ROME-Italy is making Covid-19 health passes mandatory for all
workers in the private and public sectors, in one of the toughest
vaccine-promoting measures adopted by any major Western
Prime Minister Mario Draghi's government passed a decree
Thursday requiring workers, including those who are self-employed,
to have a digital certificate known as a green pass. This shows a
person has been fully vaccinated, has recently recovered from
Covid-19 or has freshly tested negative for the virus.
Hezbollah Brings Iranian Fuel to Lebanon as Shortages Deepen
BEIRUT-A convoy of trucks carrying Iranian fuel rolled into
Lebanon from Syria on Thursday, a delivery arranged by
Tehran-allied Hezbollah to help alleviate a domestic energy crisis
and contain growing public anger against the ruling elite over the
country's economic collapse.
The powerful militant and political group brought the fuel in
via Syria in a likely effort to avoid embroiling Lebanon in U.S.
sanctions targeting Iranian oil exports.
France Calls U.S.-Australia Submarine Deal a Betrayal
France said it had been betrayed by the U.S. after being pushed
out of a multibillion-dollar deal to supply submarines to
Australia, in a public rupture between NATO allies that is shaping
up to be among the most bitter trans-Atlantic disputes of the Biden
administration's first year.
French Foreign Minister Jean-Yves Le Drian on Thursday called
the U.S.-backed deal a "stab in the back." President Biden on
Wednesday announced a new security pact with Australia and the U.K.
that would include a long-term agreement to build nuclear-powered
submarines for Australia. Australia on Thursday confirmed it was
withdrawing from the French contract.
France Says It Has Killed Islamic State Leader Responsible for
Deaths of U.S. Soldiers
France said Thursday it had killed Adnan Abu Walid al-Sahrawi,
the Islamic State leader who led the killing of four U.S.
servicemen in Niger in 2017 and was the architect of one of the
terrorist outfit's most successful franchises following the group's
loss of its Middle East territories.
"This is another major success in our fight against terrorist
groups in the Sahel," French President Emmanuel Macron said,
referring to the vast semiarid region south of the Sahara that has
become home to some of the world's most deadly jihadist cells.
Without Angela Merkel, Germany's Conservatives Face Possible
This is Germany's first general election without Angela Merkel
running for chancellor since 2002. For her conservative bloc, it is
shaping up as a debacle.
A gaffe-prone new candidate, the popular chancellor's almost
complete absence from the campaign, and voter fatigue after 16
years of conservative rule could converge to deliver the bloc's
worst national electoral result ever, according to pollsters and
Former Boeing Pilot Expected to Face Prosecution in 737 MAX
Federal prosecutors plan to criminally charge a former Boeing
Co. pilot they suspect of misleading aviation regulators about
safety issues blamed for two fatal crashes of the 737 MAX,
according to people familiar with the matter.
Mark Forkner, who was Boeing's 737 MAX chief technical pilot
during the aircraft's development, is likely to face prosecution in
the coming weeks, these people said. In his former role, Mr.
Forkner served as the plane maker's lead contact with the Federal
Aviation Administration for how airline pilots should be trained to
fly the new jet.
Invesco in Talks to Merge With State Street's Asset-Management
Invesco Ltd. is in talks to merge with State Street Corp.'s
asset-management business, people familiar with the matter
A deal isn't imminent, and the discussions might not result in
an agreement, the people said. It isn't clear what the terms of a
potential deal would look like, but it would likely be one of the
industry's biggest in recent memory, given State Street's
asset-management unit manages nearly $4 trillion in assets.
U.S. Steel Plans New U.S. Mill as Prices Surge
United States Steel Corp. said it plans to begin construction of
a new steel mill in the U.S. next year, as the company chases
rising demand from a rebounding manufacturing sector.
The Pittsburgh-based company said Thursday the new mill will
have the capacity to produce three million tons of sheet steel
annually, boosting its sheet-steel capacity by about 20% and
helping to alleviate tight supplies of steel in the domestic
market. The U.S. Steel mill would increase new production capacity
under construction or planned in the U.S. to about 12 million tons
annually, or almost 21% of sheet-steel consumption in 2019.
GM Plans to Idle Factories Longer Amid Chip Shortage
General Motors Co. is extending its plans to idle some of its
North American factories, compounding the effects of the world-wide
semiconductor shortage on the auto maker's production.
The company said Thursday it will add to scheduled downtime at
seven plants in the U.S., Canada and Mexico. The move builds upon
curtailments that have slammed GM and the broader auto industry
throughout the year as supply constraints on computer chips
continue to hold back car production.
Facebook Employees Flag Drug Cartels and Human Traffickers. The
Company's Response Is Weak, Documents Show.
In January, a former cop turned Facebook Inc. investigator
posted an all-staff memo on the company's internal message board.
It began "Happy 2021 to everyone!!" and then proceeded to detail a
new set of what he called "learnings." The biggest one: A Mexican
drug cartel was using Facebook to recruit, train and pay hit
The behavior was shocking and in clear violation of Facebook's
rules. But the company didn't stop the cartel from posting on
Facebook or Instagram, the company's photo-sharing site.
SpaceX Inspiration4 Crew Wraps Up First Day in Space
The first all-civilian crew to orbit the Earth traveled nearly
six times around the planet during the mission of Elon Musk's
The four-person crew aboard the Crew Dragon space capsule made
history Wednesday evening when a Falcon 9 rocket lifted off from
Kennedy Space Center in Florida.
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Expected Major Events for Friday
06:00/UK: Aug UK monthly retail sales figures
06:00/ROM: 2Q Employment and unemployment
07:00/SVK: Aug Harmonized CPI
07:00/AUT: Aug CPI
08:00/POL: Aug Average gross wages
08:00/EU: Jul Euro area balance of payments
08:30/UK: Aug Bank of England/Kantar Inflation Attitudes
08:30/UK: 2Q Bank of England statistics on UK banks' external
09:00/CRO: Aug CPI
09:00/MLT: Aug Harmonised CPI
09:00/CYP: Aug Harmonised CPI
09:00/EU: Aug Harmonised CPI
09:00/EU: Jul Construction output
09:00/ITA: Jul Balance of Payments
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(END) Dow Jones Newswires
September 17, 2021 00:15 ET (04:15 GMT)
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