Germany Foreign Trade, Labour Cost Index; UK Business Finance
Review, Office for Budget Responsibility Forecast Evaluation
Report; OECD Composite Leading Indicators; updates from Vonovia, DS
Smith, FirstGroup, Frasers, HelloFresh, Ferguson, Rolls-Royce,
Shares in Europe may struggle early on, after the U.K. tightened
rules to combat the spread of Omicron. In Asia, most stock markets
tracked Wall Street higher; Treasury yields and oil extended their
gains; while dollar and gold were little changed.
European shares are seen near-flat on Thursday as new
Covid-related restrictions heighten fears again that economic
growth will be stifled.
Late Wednesday, British Prime Minister Boris Johnson announced
tighter restrictions to stem the spread of the Omicron variant,
urging people in England to work from home and mandating Covid-19
passes for entrance into nightclubs and large events.
Johnson said it was time to impose stricter measures to prevent
a spike of hospitalizations and deaths as the new coronavirus
variant spreads rapidly in the community.
"I expect gains [in Europe] to be limited, as Eurozone and U.K.
markets are crimped by the spectre of tighter Covid-19
restrictions, Omicron or not," wrote Jeffrey Halley, Senior Market
Analyst, Asia Pacific, OANDA.
Market Outlook: JPMorgan said in its "2022 Year Ahead Outlook"
that it expects the Covid pandemic to end next year, which will
allow the global economy to go back to normal pre-Covid
"In 2021, economies around the globe made great progress towards
recovery and re-opening. Our view is that 2022 will be the year of
a full global recovery, an end of the global pandemic, and a return
to normal conditions we had prior to the Covid-19 outbreak. In our
view, this is warranted by achieving broad population immunity and
with the help of human ingenuity, such as new therapeutics expected
to be broadly available in 2022."
The dollar was little changed in Asia with the USD Index
remaining below 96.00, as investors await economic data to assess
the strength of the U.S. economy, ahead of next week's Fed policy
Weekly jobless claims are due later, followed by the
consumer-price index figures on Friday. Strong prints could boost
expectations for a faster shift to Fed policy tightening, though
uncertainty remains over the outlook, due partly to the emerging
Capital Economics said price pressures in China are generally
easing, especially in heavy industry, and won't hold back the PBOC
from further loosening measures, including policy rate cuts.
Economist, Julian Evans-Pritchard, expects PPI will continue to
drop over the coming months, as base effects start to ease on the
headline PPI rate around the turn of the year, while cooling
property construction will add downside pressure to industrial
China's CPI may drop back below 2% before long, with vegetable
prices already reversing some of their gains during the past couple
of weeks and the economic slowdown likely making core inflation
subdued, Evans-Pritchard said.
Bank of America said foreign exchange options are an effective
hedge against potential declines in the stock market and investors
could consider out-of-the-money digital put options that bet
against the Australian or Canadian dollars to protect themselves
against any losses in the case of a near-term equity shock.
"AUD and CAD, the so-called high-beta currencies in G10, often
depreciate versus the so-called safe-haven currencies when an
equity shock occurs. AUD/JPY and EUR/CAD puts tend to be the best
hedges for stock market falls."
Long-dated yields for U.S. government debt edged higher still in
Asia, after they posted their biggest three-day rise in weeks
following the Pfizer/BioNTech Omicron report. Meanwhile, the 2-year
yield, which is most closely associated with the near-term path of
Fed policy, declined on Wednesday.
Bank of America said the yield curve will keep flattening: "The
hawkish Fed pivot suggests risks of further curve flattening and
further pull forward of rate hikes."
Higher U.S. front-end rates "are a clear reflection of the
recent shift in Fed policy due to elevated inflation concerns,"
while fears of policy errors help drive the long-end trend, as
tightening begins when the economy still struggles, said BofA.
"We recommend clients not fight the Fed or curve. The path of
least resistance is for the curve to keep flattening regardless of
the Fed policy-error signals it might send."
Fitch said sovereign credit conditions will improve next year,
with fiscal balances forecast to strengthen for nearly 90% of rated
sovereigns. It sees economic recoveries remaining subject to
Covid-19 setbacks, but expects them to become more entrenched. This
will allow for policy tightening as some support measures are
Fitch forecasts global government debt to reach $91 trillion by
end-2022, equivalent to around 92% of global GDP and a record high.
"The overall impact on debt trajectories depends on the comparative
strength of nominal GDP growth as well as primary balance
Oil prices extended their gains in Asia as Omicron fears
continued to ease.
"Traders are starting to realize that Omicron, though it may
cause some slight demand destruction, is not going to be as deadly
as feared," Phil Flynn, senior market analyst at The Price Futures
Group, told MarketWatch.
"Oil prices did dip after the U.K. suggested there might be
limited restrictions put in place," but after the Pfizer/BioNTech
announcement, "that seemed to bring the oil market back," he
Oil closed moderately higher on Wednesday, with U.S. prices
marking their highest settlement in two weeks.
Gold futures were little changed, with investors focusing on
Friday's U.S. inflation data.
Commerzbank said geopolitical tensions between the U.S. and
Russia may help support demand for safe haven assets like gold in
the near term but some analysts were more skeptical.
There's "no real safe haven demand" at the moment, given that
President Biden and Vladimir Putin discussed the Ukraine crisis,
but "nothing changed," Jeff Wright, chief investment officer at
Wolfpack Capital, told MarketWatch.
"The recent risk appetite in equity markets have stifled
momentum for gold in near term," he said. Gold has had "multiple
chances" to break through and hold $1,800, but failed once
Copper was around 0.3% lower after data Wednesday showed that
China's car sales declined for the sixth straight month in
November. Demand for the base metal is often driven by car sales as
it is used in many components. However, China's electric vehicle
sales, which rose 18% on month in November, could help to support
prices, said ANZ.
Iron ore has become Morgan Stanley's top mined-commodities pick
on a six-month horizon, citing an expected recovery in Chinese
steel output following the Beijing Winter Olympics in February.
A recent slip in aluminum prices should give investors a good
entry point to buy into that commodity as well in the coming
months, supported by constrained Chinese supply, said Morgan
"We also highlight nickel's strong demand story, supported by
both stainless steel output and EVs, and supply risks in
Indonesia." Coal and zinc are toward the bottom of its list of
picks, given Beijing has intervened to boost coal supply and zinc
is facing risks to demand.
Meantime, Citi expects a U-shaped swing in iron-ore prices in
2022 as an easing in Chinese credit will likely prompt a recovery
in property starts and sales in the second half of 2022, following
major declines in the first half. Citi said China already has
plenty of iron ore sitting in stockpiles at its ports to meet
upticks in demand.
"Steel mills' weak appetite for purchasing iron ore, owing to
lower output and rising use of steel scrap, has resulted in
30-million-ton inventory builds at Chinese ports since July
TODAY'S TOP HEADLINES
Rise in China Factory-Gate Prices Moderated in November
BEIJING-China's factory-gate prices moderated in November,
thanks to government interventions to dent price increases in coal,
metals and other raw materials, official data showed Thursday.
The producer-price index rose 12.9% from a year earlier in
November, down from a 13.5% increase in October, which was the
fastest pace in 26 years, according to the National Bureau of
Biden Commits U.S. Government to Net-Zero Emissions by 2050
WASHINGTON-President Biden on Wednesday committed the federal
government to net-zero emissions by 2050, including directing
federal agencies to make all of their vehicle purchases
zero-emission units by 2035.
Mr. Biden signed a wide-ranging executive order steering the
business of the U.S. federal government, which spends $650 billion
a year on goods and services, toward sustainable products and
U.K. Imposes New Covid-19 Restrictions as Omicron Cases Double
Every Few Days
LONDON-The British government warned that Covid-19 infections
caused by the Omicron variant are doubling every two or three days,
as it imposed new restrictions in England, including a work from
home order and a requirement for proof of vaccination for indoor
venues such as nightclubs.
The news is a sign of increasing concern over the trajectory of
the Omicron variant, which British authorities say could crowd out
the currently dominant Delta variant within weeks and result in
over a million total Covid-19 infections by the end of the month.
Britain has recorded 10.6 million cases over the course of the
Crypto Executives Defend Industry as Congress Considers
WASHINGTON-Cryptocurrency industry executives appeared before
Congress on Wednesday to argue that their technologies hold promise
for the future, as lawmakers and regulators wrestle with how to
bring the more than $2 trillion market under government
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. While millions of Americans have
invested in crypto assets, many experts say the asset class needs
clearer rules of the road, which Congress could provide.
AstraZeneca Covid-19 Antibody Authorized by FDA as Novel Tool to
Prevent Symptomatic Disease
The U.S. Food and Drug Administration authorized a preventive
antibody combination from AstraZeneca PLC that has shown strong
efficacy in reducing risk of symptomatic Covid-19, offering a
first-of-its-kind alternative for a minority of people for whom
vaccines are considered less effective.
The antibody cocktail, called Evusheld, is aimed primarily for
use in a minority of adolescents and adults age 12 and older with
moderate to severely compromised immune systems. That may be
because they have cancer or another illness or take medications or
undergo treatments such as chemotherapy that inhibit an immune
response to Covid-19 vaccines, the FDA said in a statement.
Justice Department Told Deutsche Bank Lender May Have Violated
The Justice Department has informed Deutsche Bank AG that the
German lender may have violated a criminal settlement when it
failed to tell prosecutors about an internal complaint in its
asset-management arm's sustainable investing business, according to
people familiar with the matter.
The complaint alleged that the asset manager, DWS Group,
overstated how much it used environmental, social and governance
criteria, known by the industry acronym ESG, to manage its assets.
U.S. authorities learned of the issue in an August Wall Street
Journal article, rather than from the bank, which had ongoing
disclosure and compliance obligations under the earlier criminal
settlement, according to people familiar with the matter.
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Expected Major Events for Thursday
00:01/UK: Nov RICS Residential Market Survey
01:01/UK: Nov KPMG and REC UK Report on Jobs
07:00/GER: 3Q Labour cost index
07:00/GER: Oct Foreign Trade
07:00/DEN: Oct Balance of payments (provisional figures)
07:00/DEN: Oct External trade (provisional figures)
07:00/NOR: Oct Monthly GDP
08:00/HUN: Oct Preliminary External Trade
08:00/SVK: Oct Foreign trade
09:30/UK: 3Q Business Finance Review
10:00/CRO: Oct Foreign Trade
10:00/MLT: Oct Industrial Production Index
11:00/IRL: Oct Industrial Production and Turnover
11:00/FRA: Oct OECD Composite Leading Indicators
11:00/IRL: Nov CPI
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(END) Dow Jones Newswires
December 09, 2021 00:38 ET (05:38 GMT)
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