Market Wraps
Watch For:
Housing Starts for August; Canada Consumer Price Index for August; Instacart IPO
Today’s Top Headlines/Must Reads:
– American Business Confidence in China Slumps to Lowest in Decades
– UAW Strike Collides With Biden’s Manufacturing Agenda
– Auto Loans Pass Student Loans in Consumer Debt Load, Fed Data Shows
Opening Call:
Stock futures were a fraction firmer on Tuesday with traders wary ahead of the Federal Reserve rate decision and comments due midweek.
Recent stronger-than-forecast economic news alongside a 10-month high in oil prices may encourage the Fed to deliver a “hawkish pause,” Swissquote Bank said.
The central bank will likely revise its growth expectations significantly higher on the back of resilient consumer spending and solid growth, and therefore “will certainly sound cautious and reasonably hawkish this week,” Swissquote added.
“The so called dot plot will certainly point at another rate hike before the year end, and a higher median rate throughout next year.”
Also, investors will be keen to see whether Instacart can follow Arm’s example and get a positive reception after pricing its IPO towards the top of the mooted range.
Premarket Movers
Block fell 1% following the news that the CEO of its subsidiary Square was stepping down. Jack Dorsey, the CEO of parent company Block, is taking over the role.
Ford and General Motors slipped, while Stellantis rose premarket, after the United Auto Workers union threatened to widen its strikes.
Moderna rose 0.8% following a decline of more than 9% in the previous session after Pfizer’s CFO predicted weaker demand for Covid shots this year.
U.S.-listed shares of NIO were down 4.2% after the company said it plans to raise $1 billion by issuing convertible senior notes.
Rackspace Technology was up 8.8% after shares were upgraded to Outperform from Market Perform at Raymond James with a price target of $3.50.
U.S. Steel issued fiscal third-quarter guidance that was better than expected. Shares fell slightly in premarket trading. It said the guidance reflects the anticipated impact of the strike by the United Auto Workers.
Monday’s Post-Close Movers
60 Degrees Pharmaceuticals has withdrawn its investigational new drug application for the use of tafenoquine to treat Covid-19. The company said comments from the FDA about its study design prompted it to withdraw the IND application. Shares fell 21%.
Elutia is selling its orthobiologics business to Berkeley Biologics, a subsidiary of GNI Group. The company will receive $15 million in cash upfront, with potential earnout payments of up to $20 million over five years. Shares rose 50%.
Equinox Gold will sell $150 million of 4.75% convertible senior notes. The notes, which have an initial conversion price of about $6.30 a share, represented a premium of 20% on Monday’s closing price and will be sold to BMO Capital Markets. Shares fell 16%.
Forex:
Economic resilience and the prospect of high interest rates for an extended period could support the dollar to rise further, CPT Markets said.
“The week is packed with central bank meetings as decisions on interest rates and monetary policy direction are eagerly anticipated by forex traders.”
The Fed’s interest-rate decision, with a focus on its stance on inflation, will impact the dollar’s direction, CPT said.
Energy:
Brent futures briefly rose above $95 a barrel after Saudi Arabia’s energy minister said the “jury is still out” on Chinese oil demand.
While seemingly a bearish comment on demand, it has been interpreted as an indication that the Gulf kingdom anticipates leaving its 1 million barrel-a-day supply cut in place into next year, ANZ said.
Metals:
Gold prices were steady as investors await the conclusion of the Fed’s meeting Wednesday.
While few are expecting an interest rate rise, the post-meeting policy statement, dot plots and Jerome Powell’s press conference will be scrutinized for any forward-looking clues.
“The Fed may indicate that one more hike is likely before the year is out,” City Index said.
“This would further discourage bearish bets on the dollar, keeping the pressure on…gold in the short-term outlook.”
Today’s Top Headlines
Latest UAW Threat: Strikes at More Ford, GM Plants If No ‘Serious Progress’ by Friday.
The United Auto Workers will strike at more plants if Ford, General Motors, and Stellantis fail to make “serious progress” toward an agreement by Friday, the union’s leader warned late Monday.
The UAW strike, entering its fifth day, began in the early hours of Friday morning with the union striking at three facilities, one at each auto maker. Workers are currently on strike at GM’s (ticker: GM) Wentzville Assembly in Missouri, Stellantis’ (STLA) Jeep assembly complex in Toledo, Ohio, and select departments in Ford’s (F) assembly plant near Detroit.
Talks Resume in Detroit as UAW Threatens to Widen Strike
The United Auto Workers union threatened Monday to widen strikes against Detroit’s carmakers, while Wall Street analysts tallied potential hits to the companies’ bottom line from wage increases that now seem certain.
Tensions remained high four days after UAW workers went on strike at three U.S. factories. The union and Jeep-maker Stellantis have been trading barbs over a company proposal to possibly close 18 U.S. facilities as part of a potential labor agreement.
Companies Stall Climate Action Despite Earlier Promises
Climate progress at big companies is hitting a wall.
The world’s largest companies have committed to slashing their emissions to address climate change. Many of them have overpromised and underdelivered because of higher costs, slow advances in technology and political pressure.
OECD sees ‘a loss of momentum in second half’ as it tweaks forecasts
The Organization of Economic Cooperation and Development on Tuesday lifted its forecast for global growth in 2023, but cut its outlook for economic activity next year.
The OECD forecast world growth of 3% this year, which represents a slowing from last year’s 3.3% but an improvement from the group’s previous estimate of 2.7% growth. The OECD however is now forecasting 2.7% growth in 2024, down from 2.9%.
RBA Considered Further Interest-Rate Hike at September Meeting
SYDNEY-The Reserve Bank of Australia continues to warn that further interest-rate increases might be needed if inflation remains stickier than expected, adding that it considered tightening policy settings further at a meeting earlier this month.
Still, in minutes of its Sept. 5 board meeting published Tuesday, the RBA said it is confident that the Australian economy remains on a “narrow path” by which inflation returns to the desired 2% to 3% inflation target over time, while employment growth continues.
Trudeau Says ‘Credible’ Allegations Link India to Killing of Canadian Sikh Leader
OTTAWA-Canadian Prime Minister Justin Trudeau told lawmakers Monday that authorities are investigating “credible allegations” of Indian government involvement in the killing of a Sikh independence leader shot in June in a temple parking lot.
Trudeau said he raised his concerns directly with Indian Prime Minister Narendra Modi at this month’s Group of 20 summit in New Delhi. Canada also said Monday it expelled a senior Indian diplomat in charge of intelligence gathering. Trudeau has spoken with President Biden and British Prime Minister Rishi Sunak about the allegations, said Canadian Foreign Minister Mélanie Joly.
China’s Ex-Foreign Minister Ousted After Alleged Affair, Senior Officials Told
NEW YORK-Senior Chinese officials were told that an internal Communist Party investigation found ex-Foreign Minister Qin Gang to have engaged in an extramarital affair that lasted throughout his tenure as Beijing’s top envoy to Washington, according to people familiar with the matter.
Qin, once considered a trusted aide to leader Xi Jinping, was stripped of his foreign minister title in July-without explanation-after he disappeared from public view a month earlier. At one point leading up to his ouster, the Foreign Ministry said the absence of 57-year-old Qin was due to health reasons.
Source: Dow Jones Newswires