Market Wraps
Watch For:
Personal Income and Outlays; Employment Cost Index; University of Michigan Final Consumer Survey for July; Canadian GDP; earnings from Chevron, Exxon Mobil, Procter & Gamble
Today’s Headlines/Must Reads
– Banks Are Halting Stock Buybacks Again as New Capital Rules Loom
– China’s Housing Troubles Derail a Developer’s Comeback
– Facebook Bowed to White House Pressure, Removed Covid Posts
Opening Call:
Stock futures bounced higher on Friday ahead of the release of two indicators that Federal Reserve officials will use to judge inflation pressures.
Friday will see two major releases on inflation: the PCE price index, which is the Fed’s preferred measure of inflation, as well as the quarterly employment cost index, a crucial measure of wages. Both are due at 8:30 a.m. Eastern.
Expectations are that the core PCE price index will rise 0.2% on a monthly basis, and that the employment cost index will climb 1.1%.
“A soft ECI number can wipe out the final 8bp that is priced for the U.S. tightening cycle this year and will probably knock the dollar 0.5-1.0% lower. This would be a good story for risk assets, where both the Fed and seemingly the ECB would be closer to ending tightening cycles,” ING said.
Investors will also note the latest Bank of Japan policy decision in which the central indicated it would tolerate higher interest rates as inflation picks up.
The BOJ also said it would consider its 0.5% cap on the 10-year government bond yield as a suggestion, not a rigid limit.
Premarket Movers
Enphase Energy issued a weaker-than-expected revenue forecast in its earnings Thursday, pushing shares down more than 15%.
Ford stock fell roughly 1% after it warned of steeper-than-expected losses in its electric-vehicle business. The company delivered healthy quarterly profits and raised its profit outlook for the full year.
Intel shares rose over 7% as a resurgent personal-computer market helped it bounce back from two quarters of record losses and it forecast new demand from the artificial-intelligence boom.
Forex:
With both the Fed and the ECB saying that future rate decisions will depend on upcoming economic data, the short-term outlook for the dollar looks more favorable than the euro, Commerzbank said.
“The risk reward ratio seems considerably more attractive on the dollar side in view of the economic data from the U.S. and the eurozone over the past few days.”
Energy:
Oil futures remained on course for a fifth consecutive weekly increase, with strong U.S. economic data on Thursday the latest factor giving prices a boost.
“Crude oil gained as strong economic data improved the outlook for demand. This strengthened the case for a soft landing following the aggressive rate hike cycle by the Fed,” ANZ said.
Metals:
Copper prices were firmer and on course for a weekly gain as expectations of Chinese stimulus have overcome fears about the nation’s metals demand.
“Industrial metals continue to face headwinds from weak activity in mainland China. Nevertheless, prices have jumped in recent weeks on account of expectations of a stimulus announcement from the Mainland Chinese government,” BMI said.
Beijing has hinted that it is planning stimulus measures to support China’s property developers, potentially boosting home building and with it copper demand.
Today’s Top Headlines
Yellow in Talks to Sell Its Logistics Business
Trucking company Yellow said it is in talks with multiple parties about selling Yellow Logistics as the financially ailing operator seeks to raise cash.
Yellow didn’t say who the company is talking with but said in a statement Thursday that discussions are “active and ongoing.”
Sequoia Capital Slashes Crypto Fund as It Downsizes Amid Startup Crunch
Sequoia Capital pared back the size of two major venture funds, including its cryptocurrency fund, as part of a dramatic downsizing the storied venture firm is undertaking amid a broad startup downturn.
Sequoia cut the size of its cryptocurrency fund to $200 million from $585 million, according to people familiar with the matter. It also slashed the size of its so-called ecosystem fund, which invests in other venture funds, to $450 million from $900 million, the people said.
German Economy Stagnated in 2Q, Missing Expectations of Growth
The German economy avoided its recession continuing into second quarter of 2023, posting no growth, as household consumption stabilized after contracting in the winter.
Germany’s gross domestic product flatlined from April to June compared with the previous quarter, according to preliminary data from the country’s statistics office released Friday, from a upwardly revised 0.1% decline in the first quarter of the year.
China’s Housing Ministry Urges More Property Rescue Efforts
China’s housing minister Ni Hong has sought cuts on home mortgage rates and down-payment ratios for first-time home buyers, among other measures, that Beijing hopes will help ease a protracted property slump amid sluggish economic growth.
In a recent symposium with property developers and builders, Ni Hong, the head of China’s Ministry of Housing and Urban-Rural Development said home buyers who had paid off prior mortgages should be treated as first-time purchasers, a suggestion that would significantly reduce down-payment ratios for the targeted group.
Taiwan Amps Up Chinese-Invasion Drills to Deliver a Message: War Could Happen
TAINAN, Taiwan-Balls of flame exploded in front of two residential buildings, one leaning precariously against the other, on the outskirts of this city overlooking the Taiwan Strait. Columns of firefighters rushed to the smoldering wreckage to extinguish the fire and start a frantic search for survivors.
A female voice rang out through nearby loudspeakers to narrate the scene for a crowd of assembled onlookers.
Senate Passes Defense Bill, Setting Up Fight Over Abortion, Transgender Care
WASHINGTON-The Democratic-led Senate passed its version of the annual defense-policy bill with broad bipartisan support, putting the legislation on a collision course with the Republican-controlled House, which narrowly voted earlier this month to add contentious provisions that would restrict abortion access and transgender healthcare for troops.
The vote was 86-11.
New Trump Indictment Says He Ordered Mar-a-Lago Camera Footage Deleted
WASHINGTON-Donald Trump and his aides sought to have surveillance footage from his Mar-a-Lago club deleted so it couldn’t be turned over to a grand jury, special counsel Jack Smith alleged Thursday in new charges related to the former president’s retention of classified documents after he left the White House.
The new indictment also charges Carlos de Oliveira, a maintenance worker at Trump’s South Florida resort, making him the third defendant in the case.
Source: Dow Jones Newswires