Market Wraps
Watch For:
PPI for September; FOMC Meeting Minutes; Canada Building Permits for August
Today’s Top Headlines/Must Reads:
– Profits Are Making a Comeback
– Muni Funds That Use Borrowed Money Take a Big Hit
– Israeli Cyber Companies Rally as Digital, Physical Assaults Continue
Opening Call:
Bond yields fell further on Wednesday, but gains for stock-index futures were muted as more tentative trading set in ahead of some important economic data and corporate reports in the next few days.
“The surge of optimism, fueled by hopes the Fed will go easier with its interest rate policies…appears to have plateaued,” Hargreaves Lansdown said.
“A little more caution is returning, as investors look ahead to tomorrow’s snapshot of inflation in the U.S.”
Hargreaves Lansdown added that “investors are highly sensitive to data and if inflation shows any signs of tripping up in its downwards path, it is set to be unsettling and could upset expectations of a more dovish stance from the Fed.”
In Europe, luxury stocks largely sold off after LVMH reported a slowdown in sales. Asian indexes broadly rose.
Premarket Movers
Birkenstock is set to start trading on the NYSE today, in another test for the shaky market for public listings.
HP said it was increasing its annual dividend by 5% and forecast fiscal 2024 free cash flow of between $3.1 billion and $3.6 billion. The stock was up 1.4%.
Silk Road Medical was falling 39% in premarket trading after the company estimated full-year revenue at $170 million to $174 million, below previous guidance of $180 million to $184 million. Analysts had expected full-year revenue of nearly $182 million.
Walgreens Boots Alliance named Tim Wentworth as its new chief executive. Wentworth is the former CEO of pharmacy-benefit manager Express Scripts. Shares rose 1.3%.
U.S.-listed shares of Fresenius Medical Care declined 19% in premarket trading after a trial of Novo Nordisk’s Ozempic to treat renal impairment in diabetes patients was stopped early because of its efficacy. U.S.-listed shares of Novo Nordisk rose 2.9%.
ADRs of Polestar Automotive were down 6.9% after the company filed for a mixed shelf of up to $1 billion.
Tuesday’s Post-Close Movers
E2open Parents Holdings posted a wider-than-expected loss and lower revenue in the second quarter. The software as a service company also reduced its fiscal 2024 revenue forecast as it named a new interim chief executive. Shares fell 13%.
Real Good Foods’ preliminary third-quarter sales were lower than its earlier forecasts as it dealt with higher-than-expected consumption in the quarter that it could not keep up with. The company lowered its outlook for next quarter’s sales as well. Shares fell 15%.
Forex:
The dollar has sagged after recent comments from Fed officials suggesting that rates are unlikely to rise further, but it might get a lift when Fed minutes are released, as well as inflation data on Thursday, XS.com said.
The minutes will likely provide a logical basis for keeping interest rates high for longer than expected, it said.
This “strengthens the dollar and negatively impacts the pound and dollar-denominated assets and currencies.”
Higher-than-expected inflation data would also lift the dollar, XS.com added.
Energy:
Oil prices ticked higher in Europe, putting prices broadly where they were from the rally at the start of the week, as worries that the situation in Israel could spill over into other countries supported markets.
“If the conflict is contained to Israel and Hamas we would expect the current risk premium to slowly erode,” ING said.
“However, there is still a risk that this escalates, particularly if there is any Iranian involvement. Under this scenario, stronger enforcement of U.S. sanctions on Iranian oil would tighten up the oil market through 2024.”
Metals:
Base metals and gold prices were higher in early London trading, with a falling dollar helping support commodities backed by the greenback.
Talk at this week’s London Metals Week has been mixed, with the acknowledgement that weak demand in China has kept prices capped, but also that underlying data shows metal consumption to actually be quite strong.
“China with the exception of real estate is doing fine, and that includes metals demand,” BMO said.
BMO pointed to strong demand from wind and solar, as well as high property completion rates in China this year.
Today’s Top Headlines
Pharmacy Giant Walgreens Names Tim Wentworth as New CEO
Walgreens Boots Alliance named Tim Wentworth as its new chief executive, picking a healthcare veteran to steer the pharmacy chain as it faces a profit squeeze and labor pressures.
The company made the announcement late Tuesday, after The Wall Street Journal reported the selection. The company’s earnings are due Thursday.
Amazon Wants You to ‘Buy Again’
Amazon.com has tested a new feature on its app meant to coax users into more repeat purchases, one of several steps the tech giant is taking to squeeze more revenue out of its existing customers.
The company has tested a “Buy Again” feed and featured it in a tab on the most prized real estate on the home page of its app. The tab uses a customer’s order history to make recommendations, including in categories such as groceries or electronics.
Samsung Shares Rise as On-Quarter Improvements Spark Recovery Hopes – Update
South Korean tech giant Samsung Electronics reported sequential improvements in third-quarter sales and operating profit, sending shares higher on hopes that the worst of a severe chip industry downturn may be over.
The world’s largest maker of memory chips, smartphones and televisions said Wednesday in a preliminary earnings forecast that its operating profit for the latest quarter came in at 2.4 trillion won ($1.79 billion). That’s down from KRW10.852 trillion a year ago but roughly triple the amounts booked in each of the first and second quarters this year.
Novo Nordisk’s Ozempic Drug Shows Success in Kidney Trial, Boosting Shares
Shares in Ozempic maker Novo Nordisk topped the Stoxx Europe 600 index after the company said its weight-loss drug also showed success in a trial for kidney failure in diabetes patients.
The Danish pharmaceutical giant said it will stop the trial called FLOW, which was started in 2019 to study the progression of kidney impairment and risk of renal and cardiovascular mortality in people with type 2 diabetes and chronic kidney disease, thanks to the interim results. It has seen over 3,500 people enrolled across 28 countries, it said late Tuesday.
What’s Changed for Crypto After FTX? Not Much.
The collapse of crypto exchange FTX wiped out millions of its customers’ crypto holdings and turned its billionaire founder into a pariah now facing criminal fraud charges in New York.
But the fall of Sam Bankman-Fried and his Bahamas-based exchange, which at its peak held more than $10 billion in customer deposits, hasn’t fundamentally changed how crypto works or is regulated. The sector is still the Wild West of finance.
Biden Walks Fine Line in Israel Conflict
WASHINGTON-President Biden, whose support for Israel dates back a half-century, faces a foreign-policy conundrum following Hamas’s devastating attacks: how to support the closest U.S. ally in the Middle East without pulling America into a dangerous regional conflict.
The Israeli war presents Biden with a series of thorny foreign-policy challenges as U.S. officials work to deter regional powers such as Lebanon-based Hezbollah from opening up a northern front in the war while weighing what to do regarding more than 100 hostages taken by the Hamas militant group.
China Releases Australian Journalist Detained on Suspicion of Disclosing State Secrets
China released an Australian journalist whom it had detained for more than three years on suspicion of disclosing state secrets, removing a key irritant in a tense relationship between a close U.S. ally and Beijing.
Cheng Lei, who was an anchor for the Chinese government’s English-language television news channel, arrived in Melbourne by plane where she was reunited with her two children, Australian Prime Minister Anthony Albanese said Wednesday. Her release comes as Albanese prepares to visit China in a landmark trip later this year.
Former Trump Finance Chief in Testimony Says Penthouse, Assets Were Overvalued
The Trump Organization’s longtime finance chief Allen Weisselberg took the witness stand Tuesday and said under questioning that the real-estate empire’s financial statements inflated the value and size of some assets, including Donald Trump’s penthouse in Trump Tower.
Weisselberg was called as a witness in the civil case brought by the New York attorney general’s office alleging Trump and his business engaged in a decadelong fraud that falsified asset values for financial gain. Weisselberg, who has left the company and served time this year in the Rikers Island jail complex on a tax-fraud conviction, is also a defendant in the case.
Source: Dow Jones Newswires