Market Wraps
Watch For:
Earnings from Suncor Energy, Getty Images, Rumble
Today’s Top Headlines/Must Reads:
– China’s Deepening Housing Problems Spook Investors
– The Economic Losers in the New World Order
– U.S. Steel Rejects Offer From Cleveland-Cliffs
– China’s Worsening Economy Is Hurting Corporate America
Opening Call:
Stock futures were higher on Monday, despite China’s latest property crisis threatening to spill over into the broader economy, worrying investors and causing a broad market selloff in Asia.
Shares of Chinese property developers fell sharply Monday, weighed by negative news, including property giant Country Garden’s suspension of bond trading, deteriorating credit data and profit alerts.
With no notable economic data due today, investors will be looking ahead to macro updates later in the week, including retail sales, the minutes of the previous FOMC meeting, and the leading economic indicators report.
Markets are pricing in an 89% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on September 20, according to the CME FedWatch tool.
The central bank is not expected to take its Fed funds rate target back down to around 5% until May 2024, according to 30-day Fed Funds futures.
Pre-Market Movers
AMC Entertainment shares fell 27% in premarket trading after it won approval to move ahead with a planned conversion of AMC Preferred Equity, or APE, units into common shares.
Nikola was falling 14% after announcing it would be recalling about 209 of its Class 8 Tre battery-electric vehicles after a third-party investigator found that a defective battery part likely caused a fire in one of the trucks at the company’s headquarters in Phoenix.
Okta was rising 4.2% after shares of the identity-management software provider were upgraded to Buy from Sell at Goldman Sachs and the price target was raised to $91 from $77, the Fly reported.
Tesla was falling 1.5% after cutting prices in China on two versions of its Model Y sedan.
U.S. Steel’s share price rose more than 20%, after it rejected an unsolicited offer from rival Cleveland-Cliffs, whose shares fell more than 5%.
Forex:
Although the eurozone economy’s growth in the second quarter was slightly better than expected, the underlying trend remains weak and a likely recession in Germany has become a burden on the euro, DZ Bank said.
“While the eurozone will probably only narrowly escape a downturn in 2023 as a whole, Germany, the former economic engine, will hardly be able to avoid it.”
“This development has currently become a burden on the euro,” DZ Bank said, adding that the euro has depreciated 3% against the dollar since mid-July.
The Russian ruble weakened beyond 100 per dollar, extending a slide that threatens to stoke inflation in an economy that has been kneecapped by Western sanctions.
Bonds:
Government bonds remain attractive, but the equity outlook has improved, Columbia Threadneedle Investments said.
“Government bonds appear attractive, given the high risk-free yields available,” it said, expecting yields to come down as inflation trends lower, toward central bank targets, triggering interest-rate cuts.
Columbia Threadneedle is “much more constructive” on the outlook for equities and has a preference for the U.K. equity market, “which is cheap and out of favor, compared to the US equity market, which is expensive and where a lot of potential benefits from AI have been discounted.”
Energy:
Oil prices weakened, along with other risk assets on the Country Garden news.
Investors are eyeing a batch of important Chinese economic data later this week, including industrial output on Tuesday, for clues on the nation’s economy.
Metals:
Base metals were mixed and gold slightly weaker, with worries over demand, especially in China, hitting sentiment.
“Concerns over liquidity of…Country Garden brought back into focus the troubled property sector. Any failure to pay its debt would hurt already fragile sentiment,” ANZ said.
Today’s Top Headlines
iPhone Maker Foxconn Beats Expectations. Apple Stock Edges Higher.
Foxconn, which makes Apple iPhones, reported a decline in profits in the second quarter, but still managed to beat expectations.
Foxconn (ticker: 2317.Taiwan), formally known as Hon Hai Precision Industry, said profit fell 1% in the three months through June from the same period a year earlier. Revenue declined 14% and margins narrowed, the company said. The shares still rose because the results exceeded expectations.
Big Banks Are Supposed to Fail Without Causing Panics. Is That Even Possible?
WASHINGTON-Global regulators spent more than a decade trying to ensure that a large bank could fail without any government support.
Despite this year’s bank failures, they are still working on it.
A Crypto Mystery: Who Controls This Fast-Growing Stablecoin?
A $3 billion mystery is gripping the crypto market.
TrueUSD is one of the fastest-growing stablecoins-cryptocurrencies pegged to real-world money such as the U.S. dollar that investors use to trade in and out of the digital-currency market. Its market value has more than doubled to about $3 billion since March, making it the fifth-largest stablecoin, according to CoinGecko data. Its share of stablecoin volume on centralized crypto exchanges has climbed to 20% from less than 1% at the start of the year, according to the data provider Kaiko.
Argentine Presidential Primary Voters Propel Far-Right Outsider to Surprise Win
Javier Milei, a far-right outsider in Argentina who has pledged to close ministries and slash spending if elected president, rocked the political establishment Sunday by beating out conservatives and the ruling Peronist coalition in a primary vote ahead of October’s elections.
With more than 80% of ballots counted, Milei, a congressman who says he would dollarize Argentina’s economy and dissolve the central bank, had 31% of the vote as he capitalized on anger against the political class. The country of 46 million people is living through its worst economic crisis in a generation, hobbled by inflation at 116%. Four of every 10 Argentines live in poverty, struggling to survive with a currency that is increasingly worthless.
Hunter Biden Says Prosecutors Reneged on Plea Deal
Hunter Biden’s legal team said late Sunday the Justice Department had decided to “renege on the previously agreed-upon plea agreement,” escalating a dispute that is threatening to become a factor in the 2024 presidential race as President Biden seeks re-election.
On Friday, prosecutors disclosed that plea talks with the president’s son had broken down and Attorney General Merrick Garland named Delaware U.S. Attorney David Weiss as a special counsel to continue the investigation and prosecution related to Hunter Biden’s tax and business dealings.
Biden’s First Camp David Summit Looks to Align Allies Facing China Threat
They have done the diplomatic courtship. Now the U.S., Japan and South Korea are trying to make their three-way relationship more permanent-in particular on military matters with annual joint exercises.
Two years ago Tokyo and Seoul were barely on speaking terms. How much has changed will become clear on Friday when President Biden is set to host South Korea’s president, Yoon Suk Yeol, and Japanese Prime Minister Fumio Kishida at Camp David.
Source: Dow Jones Newswires