MARKET WRAPS
Watch For:
Import Prices for September; University of Michigan Preliminary Consumer Survey for October; Earnings from BlackRock, Citigroup, JPMorgan, UnitedHealth, Wells Fargo
Today's Top Headlines/Must Reads:
- The Fed Is Putting Too Much Faith in Markets
- China's Economy Remains Shaky After Challenging Summer
- Hydrogen Subsidy Spree Kicks Off With $7 Billion in Federal Grants
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Opening Call:
Stock futures pointed to a slightly lower open on Friday, as investors awaited earnings from some of Wall Street's biggest banks.
Investors will be closely watching what JPMorgan CEO Jamie Dimon has to say about the economy and consumers.
Global stock indexes fell, with Hong Kong's Hang Seng losing about 2.5% and the Shanghai Composite also falling after data showed that China's exports fell again in September. Japan's Nikkei 225 slipped, as did the European Stoxx 600.
Premarket Movers
Cassava Sciences dropped 24% after publication Science reported that an investigation by the City University of New York has accused neuroscientist Hoau-Yan Wang, a faculty member and longtime Cassava collaborator, of scientific misconduct involving 20 research papers.
Exxon Mobil and Chevron rose in line with crude prices ahead of the opening bell.
LendingClub will be reducing its workforce by around 14%, or 172 employees, taking the measures as the company continues to "navigate the persistent and ongoing macroeconomic headwinds and the resulting pressure in our marketplace, primarily driven by higher interest rates." Shares were up 0.2%.
Smart Global Holdings said fiscal fourth-quarter sales declined 12.6% to $316.7 million, missing analysts' forecast of $375 million. Shares were down 27%.
Thursday's Post-Close Movers
Dollar General on Thursday reappointed former CEO Todd Vasos months after he retired from the company. Shares rose 7.8%.
Outset Medical reported preliminary third-quarter revenue below expectations and reduced its full-year sales guidance. The company said it saw a large effect in the quarter from a recent FDA warning letter and expects headwinds from more cautious capital spending. Shares fell 34%.
Forex:
The dollar edged lower after the inflation data on Thursday failed to give a lasting boost.
The rise in long-term yields helped the dollar too and investors recalibrated expectations for a final interest-rate increase by the Fed this year, UniCredit Research said.
"However, the likelihood remains below 50% and this might pose an obstacle to a further strong USD rally that might lift the DXY back to the YTD peak of 107.34 that it hit early this month."
Bonds:
Bond-market volatility is expected to remain in the coming weeks as investors digest the latest economic data and try to gauge monetary-policy direction, Generali Insurance Asset Management said.
"[The] Fed and the ECB are signaling that they might be at the end of their hiking cycles," it said.
"But policy makers still need to assess the exact landing point of the monetary tightening amid conflicting headlines and still ambiguous macro landscapes."
In the short term, bond markets are likely to be driven by the "headlines," while in the medium term, bond yields are expected to trend lower, Generali said.
Energy:
Oil futures rose close to 2% in Europe, as worries mount that the conflict in Israel and Gaza could spill over into the wider region.
If Iran becomes involved with the conflict up to 20 million barrels of oil a day could be affected by either direct disruption or through obscured logistics, ANZ said.
It added that if tensions do rise, Saudi Arabia may look to end its voluntary production cut early.
"However, we expect they will remain in place for what is left of this year, which would push the market into a deficit of 2mb/d in the final quarter."
Metals:
Base metals were mixed, with gold higher in early London trading, and as Metals Week draws to a close, analysts said the market outlook remained uncertain.
"A weak macroeconomic environment, geopolitical risks and a growing sense of uncertainty have dominated discussions this year," ING said.
"China's economic slowdown, fears of a higher-for-longer interest rates environment, weak global manufacturing and looming supply surpluses amid rising LME inventories remain the key risks ahead."
Read Gold Prices Will Continue to Ease on Tight Monetary Policies
TODAY'S TOP HEADLINES
Microsoft's Activision Deal Gets Green Light From U.K. Regulator
Microsoft's acquisition of videogame company Activision Blizzard won approval from U.K. competition authorities, clearing a path for the companies to close the $75 billion deal after a lengthy struggle with regulators.
The U.K.'s Competition and Markets Authority said Friday that the proposed deal no longer poses a major threat to competition in cloud gaming. The shift comes after Microsoft offered to restructure the deal by forfeiting cloud-streaming rights for "Call of Duty" and other popular Activision franchises in much of the world.
Ligado Sues U.S. Seeking $39 Billion in Spectrum Fight
Long-struggling satellite company Ligado Networks sued the U.S. over spectrum rights it has been unable to use, alleging that the Defense Department and Commerce Department blocked its business plans through a "highly orchestrated public disinformation campaign."
The lawsuit, filed Thursday in the U.S. Court of Federal Claims, seeks to recover as much as $39 billion as compensation for property that Ligado says was wrongly denied. The complaint comes as the company stares down about $4 billion of November bond payments.
Party City Completes Restructuring, Exits From Chapter 11
Party City Holdco completed its restructuring and exited from Chapter 11 bankruptcy.
The celebrations and party goods retailer said it eliminated nearly $1 billion in debt, enhanced its liquidity and optimized its store portfolio after negotiations resulted in improved lease terms. The company also exited from less productive stores. It plans to move forward with about 800 locations nationwide.
The Latest Tool to Refinance Short-Term Debt: Double-Dip Financing
Some companies facing a cash crunch are turning to so-called double-dip loans to refinance short-term debts and improve liquidity amid rising interest rates.
Many companies with floating-rate debt are burning more cash than roughly 18 months ago, when interest rates were much lower, to cover the rising cost of debt, creating a need for more financing. But raising new debt or refinancing through traditional means has grown increasingly challenging.
Israel Tells 1.1 Million Civilians to Evacuate Northern Gaza
TEL AVIV-Israel's military asked civilians in Gaza to move to the southern part of the enclave, signaling a widening offensive and prompting the United Nations to warn of devastating humanitarian consequences.
Israel's military, just before midnight local time, told the U.N. that its staff and approximately 1.1 million civilians should leave the northern part of the Gaza Strip in the next 24 hours, according to spokesmen for the U.N. and Israel's military. The U.N. called for Israel to rescind the order, saying it could transform an already tragic situation into a catastrophe.
Hamas Attack on Israel Defies Efforts to Neutralize Iran
The assassination of Iranian military commander Qassem Soleimani nearly four years ago was a gamble by the Trump administration aimed at weakening the power that Tehran wields across the Middle East through a network of armed groups.
Instead, the shock invasion last weekend of southern Israel by Hamas, which the U.S. designates as a terrorist group, has revealed Tehran's resurgent regional influence.
Steve Scalise Quits House Speaker Race
WASHINGTON-Rep. Steve Scalise withdrew from contention for House speaker late Thursday, after clinching the Republican Party's nomination but failing to win over a stubborn bloc of critics who stood between him and the gavel, the latest dramatic turn in the party's leadership fight.
The party has been trying to move quickly to fill the absence created by the ouster of Kevin McCarthy (R., Calif.) that was engineered by Republican rebels, but the intraparty divisions on display last week have only grown deeper.
Write to ina.kreutz@wsj.com TODAY IN CANADA
Earnings:
None scheduled
Economic Calendar:
Nothing scheduled
Other News:
Canada's news publishers commended Google on Thursday for recommending "good faith" changes to the country's law compelling digital platforms to compensate media outlets.
"Google's submission is a welcome, clear, constructive, good faith articulation of legitimate concerns," said News Media Canada, a lobby group that has advocated for the Liberal government measures aimed at providing financial support to the struggling media sector. "We are in agreement with many of the issues they have raised."
Read Canadian Publishers Ready to Work with Google on Proposed Changes to Online News Law
Expected Major Events for Friday
06:45/FRA: Sep CPI
12:30/US: Sep Import & Export Price Indexes
12:30/US: U.S. Weekly Export Sales
14:00/US: Oct University of Michigan Survey of Consumers - preliminary
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
Ayala Pharmaceuticals Inc (ADXS) is expected to report for 3Q.
BlackRock Inc $(BLK)$ is expected to report $8.23 for 3Q.
Citigroup Inc (C) is expected to report $1.23 for 3Q.
Enzo Biochem $(ENZ)$ is expected to report for 4Q.
First Republic Bank $(FRCB)$ is expected to report for 3Q.
JPMorgan Chase & Co $(JPM)$ is expected to report $3.95 for 3Q.
MGT Capital Investments (MGTI) is expected to report for 2Q.
Micron Solutions Inc (MICR) is expected to report for 2Q.
PNC Financial Services Group $(PNC)$ is expected to report $3.10 for 3Q.
Progressive Corp $(PGR)$ is expected to report.
(MORE TO FOLLOW) Dow Jones Newswires
October 13, 2023 05:56 ET (09:56 GMT)
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