MARKET WRAPS

Watch For:

U.S. Retail Sales for August; U.S. Weekly Jobless Claims; Canada Housing Starts for August.

Opening Call:

Stock futures shrugged off another day of losses in China and Hong Kong Thursday, where indexes were hit by gathering fears around an economic slowdown and debt problems with giant property developer China Evergrande Group.

Hong Kong's Hang Seng and China's Shanghai Composite both contracted. Growth across a range of Chinese economic indicators pulled back sharply in August, as a new outbreak of the Covid-19 Delta variant and tighter government regulations on the property market hit consumer spending and the housing sector.

Investors were also worried that problems at Evergrande, one of China's largest residential developers, could upend the country's real-estate sector, which makes up a large part of economic spending and household wealth.

"Evergrande has brought forward that there are so many vulnerabilities in the China system and it's hard to know where the Chinese government steps in," said Seema Shah, chief strategist at Principal Global Investors. "There is that just weighing on confidence."

Retail sales, due at 8:30 a.m. ET, are expected to fall in August. Supply-chain issues are hindering auto production and crimping sales, while resurgent Covid-19 is denting consumer confidence and possibly purchases at stores, restaurants and online.

Investors will also get fresh figures on the number of Americans who applied for first-time unemployment benefits in the week ended Sept. 11. Filings for jobless benefits reached a pandemic low at the start of September, but economists surveyed by The Wall Street Journal expect claims could tick higher in the most recent data.

"Markets, particularly in the U.S., are cherry-picking news headlines and tier-two data to fit the narrative of flip-flopping daily sentiment, " said Jeffrey Halley, an analyst at broker Oanda.

Halley said he expects to see Wall Street's Wednesday surge reversed if U.S. retail sales print lower than -0.8%, but investors could equally ignore those data and focus on the Philadelphia Fed manufacturing survey or initial jobless claims.

"Hopefully, next week's cast of ...central bank policy decisions, starting with the Federal Reserve, delivers more thematic clarity," Halley added.

Forex:

U.S. retail sales for August are expected to be weak, with the consensus in a WSJ poll calling for a 0.8% on-month decline, which could cause the dollar to fall, UniCredit said. The impact will likely be limited, however, as major currencies remain stuck in tight ranges.

UniCredit expects a 1.0% monthly fall in retail sales which it says in theory could "prove sharply USD negative" but in practice the dollar might not fall too far.

Aggressive EUR/USD buying is unlikely given the euro has failed to rise above $1.1850 in recent days, while the DXY dollar index is "flipping around 92.50," it said.

Bonds:

In bond markets, the yield on the 10-year Treasury note ticked up to 1.309% Thursday from 1.302% Wednesday.

U.S. Treasurys could gain if retail sales data show another drop in spending, said UniCredit.

After a move higher in global inflation expectations drove Treasury yields higher and bond prices lower Wednesday, another fall in retail sales driven partly by the spread of the Delta variant could trigger some risk-off sentiment and lift Treasury bond prices, analysts at the bank said.

Gains could be even higher if the data undershoots expectations.

Pictet Asset Management said it remains neutral on U.S. Treasurys, saying that 10-year U.S. yields appear too low at current levels of around 1.30%.

The current market levels are a good 40 basis points below what Pictet AM's own models suggest as a long-term fair value. That said, the asset manager said it doesn't foresee a disruptive rise in yields.

Commodities:

Oil prices held steady a day after rallying to their highest level since mid-July on a larger-than-expected drawdown in U.S. crude oil stocks. U.S. crude inventories fell by 6.4 million barrels last week to 417.4 million barrels.

Stockpiles are being drawn down while refiners in the Gulf of Mexico continue to recover from Hurricane Ida. "Hurricane Ida is limiting any material increase in supply from the U.S.," said Helge Andre Martinsen at DNB Markets.

"Demand is reviving in China, while easing restrictions in other countries are keeping oil demand prospects strong," he said.

Gold was slightly lower as investors weigh the rise in Treasury yields, which is sapping appetite for the precious metal, ANZ said.

"Subdued inflation expectations have been a headwind, with our gold valuation model still suggesting it is undervalued, driven by expectations that the spike in inflation will transitory," it said.

Oanda thinks support for gold remains at $1,780.00. If it breaches that level then Oanda expects deeper losses to $1,750.00.

Base metals prices slipped after China says it has new plans to release metals from state reserves. Three-month copper on the LME fell 1.7% to $9,442 a metric ton while aluminum dropped 0.8% to $2,867 a ton and nickel slumped 2.7% to $19,400 a ton.

Unhappy about high prices for the metals on which its economy depends, China has auctioned off some of its metals stockpiles in an attempt to cool the market.

China's National Development and Reform Commission said Thursday that it planned to continue releasing stocks of copper, aluminum, and zinc in order to bring prices down. "Currently, copper, aluminum, and zinc prices are still high," a Chinese official said, according to Reuters.

TODAY'S TOP HEADLINES

Microsoft Plans $60 Billion Share-Buyback Program, Raises Dividend

Microsoft Corp.'s board approved a plan to buy back as much as $60 billion of its stock, extending the tech giant's extensive repurchase program at a time when Congressional Democrats have proposed taxing companies that do buybacks.

Microsoft didn't provide a timetable for the repurchases. It said Tuesday the program doesn't have an expiration date and could be terminated any time.

Read More ->

Evergrande's Woes Fuel Selloff in Chinese Property Shares

A selloff in Chinese property stocks intensified Thursday, as concern mounted about the effects of an official campaign to rein in the sector that has already sparked turmoil at China Evergrande Group.

The Lippo Select HK & Mainland Property Index dropped 4.9%, closing at its lowest level in more than four years, FactSet data showed. The drawdown in property shares helped pull Hong Kong's flagship Hang Seng Index down about 1.5% to 24667.85, the benchmark's lowest closing value of 2021.

Read More ->

Prenetics, a Covid-19 Testing Startup, to Go Public in SPAC Merger

Hong Kong-based Prenetics Group Ltd. is going public on the Nasdaq Stock Market via a special-purpose acquisition company, in a deal that values the medical diagnostic startup at $1.25 billion.

Prenetics, whose revenue has surged during the coronavirus pandemic, will merge with Artisan Acquisition Corp., a blank-check company founded by Adrian Cheng, grandson of the late Hong Kong real estate and jewelry magnateCheng Yu-tung. The younger Mr. Cheng invested in Prenetics last year and held a 0.8% stake in the startup before the latest deal.

Read More ->

Elon Musk's SpaceX Launches First All-Civilian Flight to Orbit

Elon Musk's SpaceX on Wednesday evening launched four civilians toward the deepest orbit Americans have traveled to in more than a decade, in another milestone flight for private space travel.

A Falcon 9 rocket with a Crew Dragon space capsule on top lifted off with a fiery plume from a pad at Kennedy Space Center in Florida just after 8 p.m. Eastern Daylight Time, according to a live stream of the takeoff.

Read More ->

Amazon Is Doing It. So Is Walmart. Why Retail Loves 'Buy Now, Pay Later.'

Alexis Luedtke got her first "buy now, pay later" plan in 2019 after she was rejected for a credit card. She has used at least five more since to buy face cream, T-shirts and birthday gifts.

Installment plans are back in style. PayPal Holdings Inc. last week said it was buying Japanese installment payment startup Paidy Inc., following Square Inc.'s $29 billion deal for Afterpay Ltd. Macy's Inc. and Bed Bath & Beyond Inc. have added the option at checkout over the past year. Even Amazon.com Inc. is doing it.

Read More ->

Taiwan Battery-Swapping Pioneer Gogoro to Go Public in SPAC Merger

Taiwan's Gogoro Inc. will go public in the U.S. via a SPAC merger with Poema Global Holdings Corp. that values the battery-swapping pioneer at $2.35 billion.

The Taipei-based company said Thursday it plans to list on the Nasdaq Stock Market through a merger with special-purpose acquisition vehicle Poema, giving it fresh funds as it moves to expand into China and India.

Read More ->

Investment Firm Lexington Partners Explores Sale

Investment firm Lexington Partners LP is exploring a sale of its business, part of an increasingly popular niche of the red-hot private-equity industry, according to people familiar with the matter.

Closely held Lexington, which specializes in buying secondhand stakes in private-equity funds, has hired Goldman Sachs Group Inc. to advise on a potential sale, which could value the firm at a few billion dollars, some of the people said.

Read More ->

U.S. Retail Sales Likely Took a Hit From Delta Variant

Product shortages and the Delta variant are preventing many Americans from spending at retailers, restraining the economic recovery.

U.S. retail sales likely fell for the second straight month in August, according to economists surveyed by The Wall Street Journal. The Commerce Department will release official figures at 8:30 a.m. ET Thursday.

Read More ->

Rising Shipping Costs Are Companies' Latest Inflation Riddle

Transportation costs-typically a fraction of a finished product's price-are emerging as another supply-chain hurdle, overwhelming some companies already paying more for raw materials and labor.

The fabric and crafts retailer Jo-Ann Stores LLC said it has spent 10 times more than its historical cost in some cases to move products from one point to another.

Read More ->

Jobless Claims Likely Remained Near Pandemic Low Last Week

Jobless claims likely held near a pandemic low last week, as layoffs ease despite a rise in coronavirus cases tied to the Delta variant.

Economists expect a Labor Department report on Thursday to show initial unemployment claims rose slightly to 320,000 last week from a pandemic low of 310,000 a week earlier. Delayed filings following Hurricane Ida, which hit Louisiana at the end of August, could have contributed to a small increase last week, some economists say.

Read More ->

Elizabeth Warren Calls On Fed Banks to Bar Leaders From Stock Trading

Sen. Elizabeth Warren (D., Mass.) is calling on regional Federal Reserve Banks to set rules that would prevent their leaders from trading individual stocks, following recent disclosures that the chiefs of the Boston and Dallas banks actively traded stocks and other investments last year.

"The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest," Ms. Warren wrote in letters addressed to the leaders of the 12 regional Fed banks.

Read More ->

FTC Moves Toward Stricter Antitrust Scrutiny of Vertical Mergers

WASHINGTON-A divided Federal Trade Commission on Wednesday withdrew guidelines adopted just last year on how the government reviews so-called vertical mergers of companies that don't directly compete with one another, the latest signal the agency is looking to escalate antitrust scrutiny of deal making.

FTC Chairwoman Lina Khan, during a virtual public meeting, said she was concerned that the recent Trump-era guidelines gave too much credit to business efficiencies and other potential upsides of vertical mergers while not fully recognizing the harms that some of those deals could create in the marketplace.

Read More ->

Covid-19 Pandemic Aid Kept Millions of Americans Out of Poverty in 2020

The sweeping financial assistance Congress provided to Americans earlier in the Covid-19 pandemic kept millions from sliding into poverty during the worst economic fallout from the crisis, new census figures show.

The U.S. poverty rate rose in 2020 after five years of annual declines, according to data released by the Census Bureau this week. But the broader Supplemental Poverty Measure, which factors in some expenses and accounts for a wider range of income-including hundreds of billions of dollars in pandemic aid-dropped to a record low 9.1%, marking the first time that yardstick has fallen below the official poverty rate.

Read More ->

Eurozone Exports Rose on Month in July

Eurozone exports rose in July after six consecutive falls, signaling that international goods trading was on a weak footing despite the easing of most coronavirus-related restrictions.

The European Union's statistics agency said Thursday that the currency area's exports rose by 1.0% in July from June, while imports increased 0.3%, both adjusted for seasonal variations. The seasonally adjusted trade surplus was 13.4 billion euros ($15.8 billion) compared with EUR11.9 billion in June.

Read More ->

Japan's Exports Rose for Sixth Straight Month in August

Japan's exports climbed by double digits for the sixth straight month in August, driven by strong demand for steel, semiconductor-related products and auto parts in key overseas markets, Ministry of Finance data showed Thursday.

Exports increased 26.2% compared with the same period a year earlier, easing from July's 37% increase. The result was weaker than the 32.2% increase tipped by a FactSet survey of economists.

Read More ->

U.S. to Share Nuclear Submarine Technology With Australia in New Pact

WASHINGTON-The U.S., the United Kingdom and Australia are creating a new security partnership in the Indo-Pacific, building on the longstanding alliance between the three to share intelligence, deepen cooperation and help Australia to build nuclear-powered submarine capabilities as China's influence grows.

The new agreement, announced Wednesday by leaders of the three countries, was described by administration officials as a way to line up common interests in the Asia Pacific.

Read More ->

Parents Seek Out Covid-19 Vaccine Trials for Their Children Ahead of Official Authorization

Rachael DiFransico's 14-month-old daughter Sybil chewed on a plastic toy at a doctor's office in the Cleveland suburbs while waiting one recent day to enroll in a study testing whether a Covid-19 vaccine works safely in children.

"This trial is our best shot at getting the vaccine as quickly as possible," said Ms. DiFransico, who said she wanted Sybil to be able to spend more time with other children and extended family. "We want some semblance of normalcy for her."

Read More ->

Drug-Prices Measure Splinters House Democrats

WASHINGTON-Democratic divisions spilled into the open Wednesday over how to lower prescription drug prices as part of a broader $3.5 trillion budget package, signaling the challenge Democratic leaders face ironing out internal disagreements over a marquee component of the legislation.

Democratic Reps. Scott Peters of California, Kurt Schrader of Oregon and Kathleen Rice of New York voted against a measure enabling Medicare to negotiate for lower prescription drug costs in a House Energy and Commerce Committee vote Wednesday, preventing it from advancing when the panel deadlocked in a 29-29 tie.

Read More ->

Afghan Refugees on U.S. Military Bases Wait to Begin Their New Lives in America

RAMSTEIN AIR BASE, Germany-In between the threat of Taliban violence and the promise of American freedom lies this large military installation, which has become a conduit between two worlds for thousands of Afghans.

Many of the Afghans arriving here say they were both hopeful and shellshocked from split-second decisions to leave home, probably forever, and head to the U.S. They are being met by U.S. military personnel, whose missions were transformed overnight from fighting on the front lines to embracing evacuees fleeing the end of nearly 20 years of war.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators (ET):

0815 Aug Housing Starts

0830 Jul International transactions in securities

0830 Jul Wholesale trade

Stocks to Watch:

Canadian Pacific Reaches $27 Billion Deal to Buy Kansas City Southern

Canadian Pacific Railway Ltd. clinched a deal to take over Kansas City Southern, as a rival dropped its pursuit of the highly coveted railroad after a monthslong battle.

The $27 billion agreement, if completed, would be the first major merger in the industry in the U.S. in about two decades and would create the first freight rail network linking Canada, the U.S. and Mexico.

Canadian Pacific and Kansas City Southern had reached a $25 billion deal in March before the rival, Canadian National Railway Co., submitted a roughly $30 billion topping bid. That prompted Kansas City Southern to switch partners, before a regulatory panel that must bless railroad mergers denied Canadian National's plans to use a temporary voting trust, a key element of its proposal.

In the wake of that decision, Kansas City Southern on Sunday said it favored a sweetened cash-and-stock offer from Canadian Pacific, which had already received the go-ahead for a similar trust. Canadian National then had five business days to improve its offer or walk away.

In a statement on its decision not to continue pursuing the deal, Canadian National said the U.S. regulatory landscape has become more challenging for major railroad mergers since its bid was launched. It referred to an executive order from President Biden in July that focused on maintaining and increasing competition in key sectors, including the largest railroads, and suggested the shift could pose an issue for Canadian Pacific.

Uranium Heats Up, and Hedge Funds Score

Uranium prices are rising, enriching a handful of hedge funds that have been betting a market laid low by a nuclear disaster a decade ago would rebound.

The price of uranium hit an eight-year high of $44 a pound this week, according to the price tracker UxC LLC. The surge follows the recent launch of an exchange-traded trust by Sprott Asset Management LP, which has bought large stockpiles of uranium after raising money from shareholders and emerged as a favored trading vehicle in its own right, traders said.

The turnaround in the nuclear fuel, whose price declined sharply after the 2011 nuclear meltdowns at Fukushima, Japan, has bolstered shares of miners including Cameco Corp. and Denison Mines Corp. of Canada, and Texas-based Uranium Energy Corp. That boost has benefited hedge funds including Segra Capital Management and Sachem Cove Partners, which have been betting that uranium would bounce back.

Traders say the surge in uranium, an element that when enriched is manufactured into rods that fuel nuclear power plants, in some respects echoes the 2021 rise in shares of GameStop Corp. and AMC Entertainment Holdings Inc. Hedge funds and family offices are among those to have invested in the newly listed trust. Traders say interest from individual investors is also helping to drive prices in a market that largely comprises private agreements between buyers and sellers, rather than the open price discovery of larger markets such as oil and gold.

Other News:

No items published

Market Talk:

CP/KSU Deal Good for All Parties, Railway Sector

Canadian Pacific's deal to acquire Kansas City Southern will benefit all parties, including Canadian National, according to Scotiabank. "Overall, we are encouraged to see that KSU takeover battle between the two Canadian railroads is over (unlikely to restart), putting an end to five months of uncertainty," the investment bank says. Scotiabank adds that a Canadian National/Kansas City Southern outcome may have increased investor nervousness in the next 1-2 years "for all three railroads and as well as perhaps for the sector," because of greater potential regulatory risks. Scotiabank says "CN can now focus on improving profitability while growing organically and potentially executing some more tuck-ins, and CP moves closer to significantly enhancing its competitive position."

Expected Major Events for Thursday

08:00/ITA: Jul Foreign Trade EU

08:30/UK: Jun Card Spending statistics

08:59/JPN: Sep Monthly Economic Report

12:15/CAN: Aug Housing Starts

12:30/US: Aug Advance Monthly Sales for Retail & Food Services

12:30/CAN: Jul International transactions in securities

12:30/US: Sep Philadelphia Fed Business Outlook Survey

12:30/US: 09/11 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/US: U.S. Weekly Export Sales

12:30/CAN: Jul Wholesale trade

13:00/RUS: Weekly International Reserves

13:45/US: Bloomberg Consumer Comfort Index

14:00/US: Jul Manufacturing & Trade: Inventories & Sales

14:30/US: 09/10 EIA Weekly Natural Gas Storage Report

20:00/US: Jul Treasury International Capital Data

20:30/US: Foreign Central Bank Holdings

20:30/US: Federal Discount Window Borrowings

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

BMTC Group Inc (GBT.T) is expected to report for 2Q.

CCUR Holdings Inc (CCUR) is expected to report for 3Q.

Crossroads Systems (CRSS) is expected to report for 3Q.

Global-E Online Ltd (GLBE) is expected to report for 2Q.

National Beverage Corp (FIZZ) is expected to report $0.50 for 1Q.

US Global Investors (GROW) is expected to report for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Alcoa Raised to Buy From Hold by Argus Research

Bio-Techne Raised to Overweight From Sector Weight by Keybanc

Chevron Cut to Neutral From Overweight by JP Morgan

Gulfport Energy Raised to Neutral From Underweight by JP Morgan

Integra LifeSciences Cut to Neutral From Buy by BTIG

Range Resources Raised to Neutral From Underweight by JP Morgan

Sarepta Therapeutics Raised to Buy From Neutral by Guggenheim

Schneider National Raised to Outperform From Market Perform by Cowen & Co.

SW Energy Cut to Underweight From Neutral by JP Morgan

Werner Enterprises Raised to Outperform From Market Perform by Cowen & Co.

Yum China Holdings Cut to Underperform From Neutral by Macquarie

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

September 16, 2021 06:10 ET (10:10 GMT)

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