MARKET WRAPS

Watch For:

Bank of Canada Rate Decision; EIA Weekly Petroleum Status Report

Opening Call:

Stocks were poised for modest gains at the opening bell, potentially pushing the S&P 500 toward record territory, on optimism that the economic impact of Omicron will be less drastic than first feared.

"The markets generally-if you look back in 2021-they have looked through any of the episodes of even partial lockdowns or that kind of risk," said Willem Sels, chief investment officer for private banking and wealth at HSBC. "They assume vaccines would be effective or partially effective."

Mr. Sels expects more volatility. "I think we're going to get a lot of flip-flopping," he said, pointing to an uncertain outlook for inflation and the potential for mixed economic data next year.

Global markets got another boost this week from Beijing's moves to stimulate the slowing Chinese economy. Investors remain on edge, however, about the Federal Reserve's plans to tighten monetary policy to tap the brakes on inflation in 2022.

One reason why some investors expect inflation to persist is the tight labor market. More evidence of hiring difficulties is expected to emerge with the U.S. job openings and labor-turnover survey, due at 10 a.m. ET. Economists forecast that the data will show employers had more than 10 million unfilled positions in October.

Stocks to Watch:

As prices for battery metals surge, Fitch expects auto makers world-wide will look to cushion the blow for consumers. It thinks global EV sales will climb 40% in 2022 as demand continues to be fueled by decarbonization efforts. However, EV adoption could stumble in countries that don't give consumers incentives, such as tax credits, to make the switch to electric. That makes them vulnerable to further increases in already higher purchase costs of EVs relative to traditional vehicles.

Fitch reckons auto makers could try to offset that by rolling out mild and plug-in hybrid models for lower-income markets. It expects Asia, Europe and North America to remain the dominant EV markets over 2021-30, while developing countries keep lagging behind.

Forex:

The dollar dipped in Europe, but UniCredit said positive sentiment, as reflected in strong global stock market gains hasn't weakened the buck as much as it has in the past, as the currency becomes less appealing as a safe haven.

"This represents an important change, which is mostly caused by the increased importance of higher interest rates in the U.S. and widening interest rate differentials with respect to the rest of the world in driving the FX market."

Fitch said global interest rates may rise sooner than expected as inflation risk looms. "The scale and longevity of the global inflation shock has taken most forecasters and central banks by surprise and is bringing forward the start of global monetary policy normalization."

It now expects the Fed to raise interest rates in September 2022 and the Bank of England to do so later this month. It also thinks China's central bank will cut interest rates in 2022, but reckons the European Central Bank will hold rates steady through 2023.

Goldman Sachs said China could cut its reserve requirement ratio again in the first quarter of 2022. This would imply a total of three RRR cuts including the July and December reductions, which is on the lower end of historical precedents. It noted the 2015-2016 downturn saw five rounds of RRR cuts in total.

"Policymakers appear to be in the 'do just enough' mentality in managing the balance between cyclical growth and structural reforms," said Goldman Sachs. It said a first-quarter timing seems likely because large numbers of USD bonds are due in January and March, so there could be greater financial risks then.

Bitcoin was down 2.1%, but Swissquote Bank analyst Ipek Ozkardeskaya said the recent improvement in market sentiment isn't fully reflected in risk-sensitive cryptocurrencies.

"I believe that's because the latest 20% dive has wiped out a good amount of leveraged positions and it will take a bit more time to restore the risk appetite. But Bitcoin is consolidating above the $50K mark, and the downside risks have reduced after a large amount of leverage positions have been cleared."

Bonds:

Treasury yields edged down after Tuesday's gains, with investors looking ahead to next week's Fed meeting.

Returns on government debt still remain relatively low, though, considering the Fed is likely to announce a plan next week for faster tapering of its monthly bond purchases to combat surging inflation. The Fed's next policy gathering is set for Dec. 14-15 and policy makers are in a media blackout period until then.

"We continue to look for higher yields ahead of the Fed taper between now and in early 2022," wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Holdings, in a daily note.

Commodities:

Oil prices nudged higher after strong early week gains. "Around two thirds of the previous price slide has been corrected, a downswing that had been brought about by demand concerns sparked by the new Omicron variant," said Commerzbank.

And while concerns over the newly-discovered strain appear to be overstated and investors wait for a more solid assessment on potential risks, the market also focuses on growing fears of a Russian invasion of Ukraine.

European natural-gas prices rose after news reports that Nord Stream 2 could be shut down if Russia invades Ukraine. The controversial pipeline linking Russia and Germany had been expected to start operations in 2022, helping to ease Europe's gas shortage.

Gold edged higher, helped by a slightly weaker dollar. According to Commerzbank, the precious metal is currently benefiting from escalating Russia, Ukraine tensions. Analysts at the bank expect prices to move moderately until Friday, when the inflation data for November is released.

TODAY'S TOP HEADLINES

Instagram Head Faces Senate Hearing on Potential Dangers for Young People

WASHINGTON-Instagram's top executive is set to appear Wednesday before a Senate panel investigating possible harm to young people using the photo-sharing app and what its parent company knew.

Instagram head Adam Mosseri is expected to face questioning from the Senate Commerce Committee's consumer-protection panel on internal company research showing the app can worsen body-image issues for some girls. Disclosure of the research in The Wall Street Journal's Facebook Files series prompted several previous legislative hearings.

China Evergrande Heads Toward Default as It Misses Payment Deadline

China Evergrande Group didn't make payments due on some U.S. dollar bonds before a final deadline expired on Monday, people familiar with the matter said, potentially setting the stage for a massive default and one of the country's largest-ever debt restructurings.

The giant property developer had been teetering on the brink of failure for months after amassing more than $300 billion in liabilities. Last Friday, Evergrande sought help from the government of its home province of Guangdong, which agreed to send a working group to assess and help sort out the company's issues. The development was regarded by analysts as the start of a managed restructuring of Evergrande, and a prelude to a default by the 25-year-old conglomerate.

Chinese Social-Media Giant Weibo Drops in Hong Kong Market Debut

Shares in Weibo Corp. began trading in Hong Kong on Wednesday, demonstrating the pull of the Asia financial hub as an alternative venue for Chinese companies whose stocks are already trading in the U.S.

Weibo, which operates a Twitter-like microblogging platform in China, has been listed on the Nasdaq Stock Market since 2014. It raised the equivalent of $385 million from its Hong Kong share sale ahead of the secondary listing.

Trafigura Scores $3 Billion Profit on Commodities Rebound

Trading house Trafigura Group Pte. Ltd. rode rising commodity prices to post record profit, making it a big winner from the pandemic economic rebound.

Trafigura reported $3.1 billion in net profit on $231.3 billion in revenue in the 12 months through September. Wednesday's results made the 2021 financial year the most profitable for the company since it was founded in 1993.

Supply-Chain Problems Will Last Through 2023, Intel Chief Says

The supply-chain problems rippling across the U.S. economy are improving for some companies, but long-term fixes might take much longer, the heads of Intel Corp., Wayfair Inc. and Accenture PLC said at The Wall Street Journal CEO Council Summit on Tuesday.

"The bottom was this past summer, but it's recovering slowly," said Niraj Shah, chief executive officer and co-founder of online retailer Wayfair.

Facebook Parent to Allow Employees to Delay Return to Offices

The parent company of Facebook said Tuesday it will fully reopen its U.S. offices at the end of January, but will give workers a chance to delay their scheduled return as late as June.

Meta Platforms Inc.'s new "office deferral program" is designed to give employees flexibility in coming back to offices and determining how they work, a spokesman said. The company previously offered most of its employees the option to work remotely full-time.

BlackRock to Pull $2 Trillion in Assets From State Street

BlackRock Inc. is pulling some $2 trillion of assets out of State Street Corp.'s safekeeping, a move that will reduce the investing firm's reliance on a small number of parties and lower the fees it pays for back-office work.

For more than a decade, State Street served as the sole custodian to BlackRock's U.S. exchange-traded funds-low-cost investment vehicles that have exploded in popularity in recent years. State Street services all of the roughly $2.3 trillion across those BlackRock funds.

Weibo Shares Fall in Hong Kong Trading Debut

Shares of Chinese social-media company Weibo Corp. fell in their trading debut in Hong Kong on Wednesday morning amid a challenging environment for Chinese technology stocks.

Shares of the Beijing-based company dropped as much as 7.2% compared with its offering price of HK$272.80. They were last down 6.2% at HK$256.00.

Wynn Names Gambling-Industry Executive as CFO

Wynn Resorts Ltd. appointed a gambling-industry veteran to oversee the casino operator's finances just weeks after the company announced it would elevate its finance chief to the role of chief executive.

Las Vegas-based Wynn on Tuesday said Julie Cameron-Doe would join in the second quarter of next year. Ms. Cameron-Doe has served as chief financial officer of Aristocrat Leisure Ltd., a Sydney, Australia-based gambling-machine maker, since 2018.

Facebook's Head of Messenger to Leave Company Next Year

The person overseeing Facebook's Messenger said he would leave the company next year, the latest executive to disclose departure plans from the social-media platform.

Stan Chudnovsky, who has been running Messenger since 2018, said he'll step down in the second quarter of next year. The 51-year old said he has no plans to retire, but that he'll take a break after "working nonstop" since he was 16.

Giant Gap Persists Between Job Openings and Available Workers

U.S. job openings continue to far outpace the number of available workers, with nearly five million more open positions than people seeking work.

There are around 11 million job openings in the U.S., according to estimates from job-search site ZipRecruiter, based on their analysis of online job postings and government data sources. That compares with 6.9 million people who are unemployed but say they want to work.

Crypto CEOs to Testify Before Lawmakers Weighing Greater Regulation

WASHINGTON-The chief executive officers of half a dozen cryptocurrency firms are set to appear before Congress on Wednesday, as lawmakers and regulators wrestle with how to bring the more than $2 trillion market under government oversight.

The House Financial Services Committee, led by Rep. Maxine Waters (D., Calif.), called the hearing in hopes of improving lawmakers' understanding of crypto assets and how the sector fits into existing regulations.

Turkey's Woes Haven't Spread to Broader Emerging Markets

The world's biggest emerging markets have dodged contagion from Turkey's currency implosion, but there are other threats looming on the horizon.

Emerging markets such as Russia, Mexico and Brazil are notoriously volatile and prone to getting hit when one of them wobbles. So far, however, Turkey's problems have been contained. An unorthodox series of rate increases has plunged its economy into a spiral without causing much damage elsewhere.

Japan's Economy Shrank More Than Estimated in Third Quarter

Japan's economy shrank more than initially estimated in the July-September quarter due to weaker spending by consumers and the government, revised data showed Wednesday.

The world's third-largest economy after the U.S. and China contracted 3.6% on an annualized basis, which reflects what would happen if the third-quarter pace continued for a full year.

House Votes to Approve Bill Setting Up Process for Lifting Debt Limit

WASHINGTON-Top Republicans and Democrats struck a deal for a process to raise the debt ceiling in the Senate, with the House passing a bill late Tuesday that paves the way for Congress to prevent a calamitous default.

The bill, which also prevents cuts to Medicare and other programs that threatened to kick in at the end of the year, is the product of weeks of talks between Senate Majority Leader Chuck Schumer (D., N.Y.) and Senate Minority Leader Mitch McConnell (R., Ky.). It doesn't itself raise the debt ceiling. Instead, it sets up a procedure for an additional vote on the issue that would require a simple majority in the Senate rather than the 60 votes needed for most legislation.

Blinken Calls China, Russia Efforts to Disrupt Global Order Serious Mistakes

Attempts by China or Russia to expand their territory by invasions of Taiwan or Ukraine, respectively, would be serious mistakes with severe consequences, Secretary of State Antony Blinken said Tuesday at The Wall Street Journal's CEO Council Summit.

President Biden's warning to Russian President Vladimir Putin on a secure video call Tuesday about the consequences of a potential invasion of Ukraine should "affect President Putin's calculus going forward," Mr. Blinken said.

Sen. Joe Manchin Holds Back Support for Social-Spending Bill

WASHINGTON-Sen. Joe Manchin declined to commit to voting for Democrats' roughly $2 trillion social-policy and climate package, citing concerns about inflation and the length of programs, weeks before the Christmas deadline party leaders are racing to meet.

Mr. Manchin, a West Virginia Democrat, made the remarks during The Wall Street Journal's CEO Council Summit at a pivotal moment for Democrats in Washington-and one where he has been a key figure. Because Senate Democrats are using a special budget maneuver to pass their education, healthcare and climate package without any GOP support, they can't lose a single senator from their own party.

Commission Approves Report on Supreme Court Amid Partisan Differences

WASHINGTON-A bipartisan commission appointed by President Biden unanimously adopted a report detailing controversies over the Supreme Court and assessing proposals to address them, but few expected the 294-page document to resolve political divisions concerning the judiciary that have intensified in recent years.

At Tuesday's meeting, members of the commission universally praised the report-writing process for its civil dialogue and regard for all views. However, the final report was neither designed to nor did it produce consensus or any recommendations.

China Aims to 'Revise the Global Rule Set,' Top U.S. General Says

WASHINGTON-China is expanding its military in a bid to "revise the global rule set" and undo the post-World War II national security framework, the highest ranking military officer said Tuesday.

Army Gen. Mark Milley, the Chairman of the Joint Chiefs of Staff, said China's investment in its navy, hypersonic missiles, cyber and other technologies are designed to ensure that it, along with Russia and the U.S., are world-leading nations. Such a rise would end a post-World War II era in which Russia and the U.S. were the only superpowers.

Germany's Scholz Takes Power After Merkel's 16-Year Rule

BERLIN-Germany's parliament elected a new chancellor on Wednesday, ending Angela Merkel's 16-year rule. The country's new center-left leader inherits longstanding challenges from his predecessor and faces a cluster of short-term crises that could complicate his plans to modernize the German state and its economy.

Olaf Scholz, 63, and his Green and free-market coalition partners have agreed on a four-year program to overhaul Germany's economy, fight climate change, digitize public services and reverse its demographic decline.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

D2L 3Q

Dollarama 3Q

Evertz Tech 2Q

North West Company 3Q

Economic Indicators (ET):

1000 Bank of Canada interest rate announcement

Stocks to Watch:

Centamin Sees Gold Production Growing to 450,000-500,000 Ounces by 2024

Centamin said Wednesday that its Sukari gold mine in Egypt will increase production over the next three years and reach between 450,000 and 500,000 ounces in 2024.

The FTSE 250 gold miner guided for production of 430,000-460,000 ounces in 2022 and 450,000-475,000 ounces in 2023. Capital expenditure is expected to total $555 million in that three-year period.

The prospects of the mine have been enhanced by a 23% increase in proven and probable mineral reserves, including a threefold increase for underground reserves, Centamin said.

An expansion study on the development of Sukari's underground pit is underway for completion in the second half of 2022.

Centamin said the new geological model for Sukari underpins a mine schedule of at least 12 years, and that it has identified a clear roadmap to constantly produce more than 500,000 ounces a year over the next decade.

However, Chief Executive Martin Horgan said that the company can increase production even further.

"That [production of 500,000 ounces per year] is what we can demonstrate that we can--with a high level of confidence--consistently deliver. But I think there is a chance to beat that," Mr. Horgan told Dow Jones Newswires.

Centamin also said it plans to deliver an additional 2 million ounces of mineral reserve growth by 2024 through a combination of exploration at both Sukari underground and the Doropo project in Ivory Coast.

RBC Capital Markets said in a note Wednesday that 2022 cost guidance was disappointing. Centamin forecast all-in sustaining costs of $1,275-$1,425 an ounce for next year.

"We're not alone in Centamin. It's a sector-wide and global issue around short-term cost inflation pressures. Fuel clearly is an obvious one," Mr. Horgan said.

Shares in London were flat at 92.12 pence.

Centamin Delivers on Sukari Potential, But Cost Guidance Disappoints

Centamin has announced a review for its flagship Sukari gold mine in Egypt. Gold reserves have been increased by 1.1 million ounces, enabling a mine schedule of at least 12 years which will enable the company to reach annual production of 500,000 ounces.

The update has delivered on Sukari's potential and suggests more upside to come as exploration and underground expansion accrue over time, RBC Capital Markets says. Also, with $256 million on the balance sheet, the group might look to return some cash to shareholders, RBC says.

On the downside, forward guidance, especially for 2022 costs, is disappointing, the bank says. The new cost guidance midpoint of $1,350 an ounce is ahead of $1,038 previously.

Expected Major Events for Wednesday

04:30/JPN: Nov Corporate Insolvencies

05:00/JPN: Nov Economy Watchers Survey

06:30/FRA: 3Q Job creation

11:00/FRA: Oct OECD Harmonised Unemployment Rates

12:00/US: 12/03 MBA Weekly Mortgage Applications Survey

15:00/CAN: Bank of Canada interest rate announcement

15:00/US: Nov Online Help Wanted Index

15:00/US: Oct Job Openings & Labor Turnover Survey

15:30/US: 12/03 EIA Weekly Petroleum Status Report

23:50/JPN: Nov Money Stock, Broadly-defined Liquidity

23:50/JPN: 4Q Business Outlook Survey

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

Expected Earnings for Wednesday

ADF Group (DRX.T) is expected to report for 3Q.

Argan Inc (AGX) is expected to report $0.46 for 3Q.

AstroNova Inc (ALOT) is expected to report for 3Q.

Brown-Forman Corp - B Share (BFA,BFB) is expected to report $0.53 for 2Q.

CSP Inc (CSPI) is expected to report for 4Q.

Campbell Soup (CPB) is expected to report $0.79 for 1Q.

Dollarama (DLMAF,DOL.T) is expected to report $0.57 for 3Q.

Duckhorn Portfolio Inc (NAPA) is expected to report for 1Q.

Evertz Technologies (ET.T,EVTZF) is expected to report $0.21 for 2Q.

Fluence Energy Inc (FLNC) is expected to report for 4Q.

GameStop Corp (GME,GMEB) is expected to report $-0.40 for 3Q.

Gatos Silver Inc (GATO) is expected to report for 3Q.

Greif Inc - A Share (GEF,GEFB) is expected to report $1.45 for 4Q.

Innovative Solutions & Support Inc (ISSC) is expected to report for 4Q.

Kewaunee Scientific (KEQU) is expected to report for 2Q.

Korn Ferry (KFY) is expected to report $1.36 for 2Q.

Kronos Bio Inc (KRON) is expected to report for 3Q.

Lovesac Co (LOVE) is expected to report $-0.41 for 3Q.

MGIC Investment (MTG) is expected to report.

MIND Technology Inc (MIND) is expected to report for 3Q.

Mullen Group (MLLGF,MTL.T) is expected to report.

North West Co Inc (NWC.T) is expected to report $0.72 for 3Q.

Oxford Industries (OXM) is expected to report $1.33 for 3Q.

Photronics (PLAB) is expected to report $0.25 for 4Q.

Phreesia Inc (PHR) is expected to report for 3Q.

RH (RH) is expected to report $6.59 for 3Q.

Solo Brands Inc (DTC) is expected to report for 3Q.

Sportsman's Warehouse Holdings Inc (SPWH) is expected to report $0.50 for 3Q.

Star Group LP (SGU) is expected to report for 4Q.

Streamline Health (STRM) is expected to report $-0.05 for 3Q.

Thor Industries (THO) is expected to report $3.19 for 1Q.

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

Udemy Inc (UDMY) is expected to report for 3Q.

UiPath Inc (PATH) is expected to report for 3Q.

United Natural Foods Inc (UNFI) is expected to report $0.40 for 1Q.

Vera Bradley Inc (VRA) is expected to report $0.24 for 3Q.

Weber Inc (WEBR) is expected to report for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Air Products & Chemicals Cut to In-Line From Outperform by Evercore ISI Group

Bumble Raised to Overweight From Neutral by JP Morgan

CarMax Raised to Overweight From Neutral by JP Morgan

Cerence Raised to Outperform From Market Perform by Raymond James

CNX Resources Cut to Neutral From Overweight by JP Morgan

CommScope Holding Raised to Buy From Hold by Jefferies

CVR Energy Raised to Neutral From Underperform by Credit Suisse

Del Taco Restaurants Cut to Hold From Buy by Benchmark

Del Taco Restaurants Cut to Hold From Buy by Jefferies

Del Taco Restaurants Cut to Neutral From Outperform by Wedbush

Digital Turbine Raised to Outperform From Neutral by Macquarie

First Wave BioPharma Cut to Hold From Buy by Maxim Group

Global Blood Therapeutics Raised to Outperform From Market Perform by William Blair

HealthEquity Cut to Outperform From Strong Buy by Raymond James

Helmerich & Payne Cut to Underweight From Equal-Weight by Morgan Stanley

Jack In The Box Raised to Buy From Hold by Deutsche Bank

Jackson Financial Cut to Equal-Weight From Overweight by Morgan Stanley

Juniper Networks Raised to Buy From Hold by Jefferies

Magnolia Oil & Gas Cut to Neutral From Overweight by JP Morgan

Merck Cut to Neutral From Buy by Guggenheim

Murphy Oil Raised to Overweight From Neutral by JP Morgan

OGE Energy Cut to Neutral From Buy by Mizuho

Patterson-UTI Raised to Overweight From Equal-Weight by Morgan Stanley

PLx Pharma Raised to Outperform From Market Perform by Raymond James

PPG Industries Raised to Outperform From In-Line by Evercore ISI Group

RPM International Raised to Outperform From In-Line by Evercore ISI Group

Shift Technologies Cut to Neutral From Overweight by JP Morgan

Starbucks Raised to Buy From Neutral by MKM Partners

Vroom Cut to Neutral From Overweight by JP Morgan

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

(END) Dow Jones Newswires

December 08, 2021 06:04 ET (11:04 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.