MARKET WRAPS
Watch For:
Weekly Jobless Claims; Existing Home Sales for July; EIA Weekly
Natural Gas Storage Report; Federal Reserve Bank of Kansas City
President Esther George speaks at the Fairfax Industrial
Association 100th Anniversary Luncheon; Federal Reserve Bank of
Minneapolis President Neel Kashkari participates in a Q&A
session at Young Presidents Organization Gold Twin Cities Chapter
luncheon; Canada Employment Insurance for June; Canada Industrial
product & raw materials price indexes for July.
Opening Call:
Stock futures declined Thursday after Federal Reserve officials
agreed they need to keep raising interest rates to cool inflation,
but indicated the pace of those hikes could slow if economic data
supported such a move.
Stocks fell for the first time in four sessions on Wednesday
following the release of the minutes from the Fed's July 26-27
meeting, at which the central bank boosted the fed-funds rate
target by three-quarters of a percentage point for the second
straight month.
The minutes also revealed the Fed was worried that if rates were
tightened too much it would hurt the economy. But for now, with
central bankers concerned inflation could become entrenched and
with a "very tight" labor market, rates will have to be moved
beyond neutral and into "restrictive" territory.
"Some participants indicated that, once the policy rate had
reached a sufficiently restrictive level, it likely would be
appropriate to maintain that level for some time to ensure that
inflation was firmly on a path back to 2%," according to the
minutes, which were released Wednesday.
"It's a no-brainer to expect rate hikes to continue near-term,"
said Bill Adams, chief economist at Comerica Bank.
Comerica forecasts the Fed will raise rates by half a percentage
point at its next meeting in September, but "it's a close call
between that and another hike of three quarters of a percent,"
Adams said.
CME FedWatch indicates that 59.5% of investors anticipate the
Fed will boost rates by 50 basis points in September and 40.5%
expect a hike of 75 basis points.
Data on weekly jobless claims and existing-homes sales for July
will be released Thursday, with earnings reports from Estee Lauder
and Kohl's scheduled for before the opening bell, and Applied
Materials after markets close.
Overseas, stocks in Europe were flat while markets in Asia were
firmly in the red.
Forex:
The DXY dollar index wavered in early trading. Fed minutes from
Wednesday showed policy makers look content with the dollar's
strength as they felt this helped suppress import prices and would
therefore help bring down inflation, ING analyst Chris Turner said
in a note.
"The Fed seems to welcome dollar strength and there were no
linkages of dollar strength depressing any sectors in the U.S.
economy," he said.
The Fed attributed the dollar's recent rise, especially against
the euro, to interest-rate differentials and ING expects those
differentials to widen further into year-end, keeping EUR/USD at
levels between 1.00 and 1.02.
Energy:
Oil prices were up, with declining inventories in the U.S.
helping to improve sentiment.
"U.S. petroleum inventories including SPR declined 12.6 million
barrels and crude exports surged to all-time-high levels," Helge
André Martinsen, senior oil analyst at DNB Markets, said in a
note--helping to improve sentiment on tight supply.
"Amid oil demand worries we highlight that implied U.S. oil
demand increased sharply, up by 1.75 million barrels a day week on
week to 21.22 million barrels a day, the highest level since
February," Martinsen added.
Metals:
Metals prices fell in early trading, with central-bank
hawkishness--particularly from the Fed--damping the sentiment that
peak inflation is over.
Rising inflation rates in the U.K. and hawkish notes from the
Fed among others "poured cold water on the prospect that central
banks were about to let up on hiking rates," Deutsche Bank analyst
Henry Allen said in a note.
This sentiment is pushing investors away from "risk assets" once
again, he said.
TODAY'S TOP HEADLINES
Oil Giants Must Face Climate-Liability Suits in States, Appeals
Court Rules
A federal appeals court ruled that lawsuits by Delaware and
Hoboken, N.J., seeking compensation from oil companies for the
impacts of climate change should be decided in state, not federal
courts.
The decision Wednesday is the latest procedural victory by state
and municipal governments, which have sought to bring
climate-liability cases against companies such as Exxon Mobil
Corp., Chevron Corp. and Shell PLC under state laws, after similar
earlier efforts under federal laws proved unsuccessful.
Amazon Seeks Top Film Executive Amid Expansion of Entertainment
Arm
Amazon.com Inc. is searching for a senior movie-studio executive
to help lead its growing entertainment division, turning to rivals
for a chance to poach an experienced Hollywood player.
Amazon Studios has held conversations with several Hollywood
leaders about the role, including Netflix Inc.'s film head, Scott
Stuber, one of the streamer's most powerful and visible executives,
according to people familiar with the matter.
Country Garden Holdings' Shares Fall After Warning of First-Half
Profit Slump
Shares of Country Garden Holdings Co. fell Thursday morning in
Hong Kong after the Chinese property developer warned of a big drop
in first-half net profit.
Shares declined 4.4% to HK$2.41, taking year-to-date losses to
65%.
Geely Automobile First-Half Profit Falls on Higher Costs
Geely Automobile Holdings Ltd. posted a 35% decline in
first-half net profit, as higher raw material and operating costs
ate into its profit margins.
The Chinese car maker on Thursday said its net profit for the
period ended June was 1.55 billion yuan ($228.6 million) versus
CNY2.38 billion net profit a year earlier. Revenue rose 29% to
CNY58.18 billion, as better product pricing and product mix offset
a decline in sales volume, it said.
A Top Gas Producer Considers Cutting Exports. Its Timing
Couldn't Be Worse.
SYDNEY-Australia is shipping so much natural gas overseas that
authorities could block some exports to plug shortages at home.
Such a move would put global energy supply under further strain
as Europe faces the prospect of severe fuel shortages this winter
and Asian economies including Japan and China store more gas ahead
of seasonal peaks in demand. The Ukraine war cut gas supplies at a
time when much of Europe experienced a severe heat wave that drove
demand higher.
Norway Central Bank Lifts Rate to 1.75%, Sees Next Hike in
September
Norway's central bank raised its key policy rate to 1.75% from
1.25% on Thursday, and said it expects to raise the rate further in
September.
Analysts polled by The Wall Street Journal had expected the
central bank to raise its key rate to 1.75%, despite guidance from
the central bank at its last meeting in June suggesting it would
increase to 1.50%.
Philippines Central Bank Raises Policy Rate to Help Curb
Inflation
The Philippine central bank decided to raise its benchmark
interest rate in an attempt to help control rising inflation.
The Bangko Sentral ng Pilipinas said Thursday that it would
increase its benchmark overnight borrowing rate by 50 basis points
to 3.75%, effective Friday, and its corresponding lending rate by
the same amount to 4.25%.
U.S., Taiwan to Begin Formal Talks for Trade, Investment Pact
This Fall
WASHINGTON-The U.S. announced Wednesday that it and Taiwan will
start negotiations for a bilateral trade and investment initiative
this fall to deepen ties on a range of issues including technology
and agriculture.
The new pact will also address ways to respond to "distortive
practices of state-owned enterprises and nonmarket policies and
practices," the U.S. Trade Representative's office said, in a clear
reference to China's policies without naming the country.
Write to nihad.ahmed@wsj.com TODAY IN CANADA
Earnings:
None scheduled.
---
Economic Indicators (ET):
0830 Jun Employment Insurance
0830 Jul Industrial product & raw materials price
indexes
Expected Major Events for Thursday
12:30/US: Aug Philadelphia Fed Business Outlook Survey
12:30/CAN: Jun Employment Insurance
12:30/US: 08/13 Unemployment Insurance Weekly Claims Report -
Initial Claims
12:30/US: U.S. Weekly Export Sales
12:30/CAN: Jul Industrial product & raw materials price
indexes
13:00/RUS: Weekly International Reserves
14:00/US: Jul Leading Indicators
14:00/US: Jul Existing Home Sales
14:30/US: 08/12 EIA Weekly Natural Gas Storage Report
20:30/US: Federal Discount Window Borrowings
20:30/US: Foreign Central Bank Holdings
23:01/UK: Aug UK Consumer Confidence Survey
23:30/JPN: Jul CPI (Nation), CPI ex-food (Nation)
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Thursday
AltiGen Communications (ATGN) is expected to report for 3Q.
Applied Materials Inc (AMAT) is expected to report $1.76 for
3Q.
BJ's Wholesale Club Holding Inc (BJ) is expected to report $0.77
for 2Q.
Bill.com Holdings Inc (BILL) is expected to report for 4Q.
Canadian Solar (CSIQ) is expected to report $0.48 for 2Q.
Cato Corp (CATO) is expected to report for 2Q.
Cenntro Electric Group Ltd (CENN) is expected to report for
1Q.
Clearday Inc (CLRD) is expected to report for 2Q.
EQ Inc (EQ.V) is expected to report for 2Q.
Estee Lauder (EL) is expected to report $0.40 for 4Q.
ICPEI Holdings Inc (ICPH.V) is expected to report for 2Q.
Kohl's Corp (KSS) is expected to report $1.42 for 2Q.
Koss Corp (KOSS) is expected to report for 4Q.
LSI Industries (LYTS) is expected to report $0.12 for 4Q.
Latch Inc (LTCH) is expected to report for 2Q.
Liquid Media Group Ltd (YVR) is expected to report for 2Q.
Madison Square Garden Sports Corp (MSGS) is expected to report
$-0.42 for 4Q.
Melco Resorts & Entertainment Ltd (MLCO) is expected to
report $-0.41 for 2Q.
NetEase Inc - ADR (K3MD.SG,NTES) is expected to report $1.40 for
2Q.
OSI Systems (OSIS) is expected to report $1.76 for 4Q.
Piedmont Lithium Inc (PLL,PLL.AU) is expected to report for
2Q.
Polymet Mining Corp (PLM,POM.T) is expected to report for
2Q.
Portage Biotech Inc (PBT.U-L,PRTG) is expected to report for
2Q.
Ross Stores Inc (ROST) is expected to report $1.03 for 2Q.
Satellogic Inc (SATL) is expected to report for 1Q.
SpartanNash Co (SPTN) is expected to report $0.44 for 2Q.
Tapestry Inc (TPR) is expected to report $0.77 for 4Q.
Taylor Devices (TAYD) is expected to report for 4Q.
Three Valley Copper Corp (TVC.V) is expected to report for
2Q.
Universal Security Instruments Inc (UUU) is expected to report
for 1Q.
WVS Financial Corp (WVFC) is expected to report for 4Q.
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ANALYST RATINGS ACTIONS
ADial Pharmaceuticals Cut to Hold From Buy by Maxim Group
CH Robinson Worldwide Cut to Sell From Hold by Vertical
Research
Dick's Sporting Goods Raised to Positive From Mixed by OTR
Global
DraftKings Raised to Buy From Neutral by Roth Capital
fuboTV Cut to Neutral From Outperform by Wedbush
Marten Transport Cut to Hold From Buy by Vertical Research
Old Dominion Freight Cut to Sell From Hold by Vertical
Research
Paccar Cut to Hold From Buy by Vertical Research
Yum Brands Cut to Hold From Buy by Argus Research
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
August 18, 2022 05:41 ET (09:41 GMT)
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