Germany Ifo Index; Bundesbank Monthly Report; updates from Galp
Energia, Hermes, HSBC, SSAB
Europe is set for a positive open despite a mixed Asian session
so far, as China restricts some travel following a Covid spike. The
dollar and Treasury yields were lower, while U.S. oil and gold made
European stocks are poised for modest gains early Monday,
despite a constrained Asian session as China tightened travel
controls in some areas in response to a spike in coronavirus
Chinese stocks were mixed as investors focused on a resurgence
of Covid-19 infections in China's 11 provinces. "One may expect
aggressive measures to control virus spreads, which may put a cap
on growth," said IG.
On Wall Street, the S&P 500 ended slightly lower on Friday
after a day of choppy trading, although the Dow rose to a record
and notched a third consecutive week of gains.
The dollar and the yen weakened against other G-10 currencies as
gains across most Asian equity markets supported an appetite for
However, investor sentiment could be on the defensive this week
following news about the latest Covid-19 outbreak in China, said
UOB. News reports have confirmed the spread of more than 100
locally transmitted cases across 11 provincial areas, UOB
Commonwealth Bank of Australia said dollar risks remain skewed
to the upside for now: U.S. inflation is building and is now
unlikely to return to the FOMC's target band; market-based and
consumer inflation expectations are consistent with rising
long-term U.S. inflation; importantly, FOMC members are slowly
conceding that inflation risks are increasing.
CBA said the upshot is that interest rate markets can continue
to price a more aggressive Fed Funds rate hike cycle which can
support the dollar. High inflation is not contained to the U.S. and
as a result, CBA still sees a risk that short term interest rates
start to price in a global monetary tightening cycle that is so
strong it causes equities to correct lower.
Christine Lagarde is likely to push back against market
expectations for an interest-rate rise in late 2022 at Thursday's
policy meeting, potentially weakening the euro, said TD
EUR/USD has "several negatives going for it" and could fall
below 1.16 in the coming weeks if Lagarde can succeed in
"converting a push into a shove" against the market's pricing for
future rates, said TD.
Lagarde could emphasize that the pandemic bond-buying program
and main asset-purchase program need to end before raising interest
rates, meaning the ECB will be an appreciable laggard in tightening
policy relative to the Federal Reserve, said TD.
Long-dated Treasury prices rose slightly in Asia, pushing down
yields again and contributing to a further flattening of the yield
curve, a pattern seen on Friday after Jerome Powell signaled the
Fed is prepared to begin tapering its monthly asset purchases. He
also warned that inflation is likely to remain elevated into
Powell's remarks were expected to be the final word from policy
makers until the next Fed meeting in two weeks. Investors have seen
yields on the 2-year rise to the highest level in over 18 months
and the 10-year touching heights not seen since early May this
"Powell & Co. are in the unenviable position of executing a
well-telegraphed tapering of QE at a moment when the market is far
more focused on the potential for the Fed to bring forward rate
hikes," said Ian Lyngen and Benjamin Jeffery, rates strategists at
BMO Capital Markets.
"It goes without saying that the higher-than-expected realized
inflation profile has added a meaningful degree of urgency to the
liftoff process and, as a result, the Fed needs to navigate the
policy error risk of overcorrecting toward high yields only to
prematurely counteract positive economic momentum."
Oil futures were mixed in Asia, with U.S. prices extending a
record streak, boosted by easing travel restrictions, a slow
recovery in U.S. crude production and expectations for higher
energy demand for the holidays.
UOB said that crude stockpiles at Cushing Oklahoma are quickly
approaching critically low levels and expects the decline to
accelerate. "The last time that happened, crude cost more than
$100/bbl," it said.
Data from Baker Hughes on Friday also suggested a potential
decline in oil production, with the number of active U.S. rigs
drilling for oil posting their first weekly decline in seven weeks,
down two at 443 this week.
Brent was a few cents lower, however, having settled more than
1% on Friday.
Gold edged higher, with the weaker dollar offering some support.
Oanda said the precious metal is likely to be supported by some
safe-haven demand, noting ongoing Covid-19-related concerns in
Europe and Asia. It has put support at $1769.50 and resistance at
Gold futures climbed Friday, but bullion ended below the day's
best levels after Powell's 'time to taper' remarks.
Copper prices were more than 1% higher as energy shortages in
China have led to lower output, said ANZ.
Power rationing in China's Jiangxi province should affect the
production of several metals, including copper, ANZ said. It added
that the amount of copper held on the London Metal Exchange has
fallen 36% since the beginning of September.
TODAY'S TOP HEADLINES
Energy-Stock Surge Leaves Climate-Focused Investors Behind
A surge in energy stocks is challenging climate-conscious money
managers who beat the market for years when the sector struggled
but are now missing out on Wall Street's hottest trade.
The S&P 500 energy sector has rebounded 54% this year,
outpacing the broad index's 21% climb and leading the second-best
performing group by about 16 percentage points. That would mark the
third-largest such gap between the top two sectors since 2000,
according to Dow Jones Market Data.
Powell Says Supply-Side Constraints Have Worsened, Creating More
Federal Reserve Chairman Jerome Powell indicated he is now
somewhat more concerned about higher inflation and said that the
central bank would watch carefully for signs that households and
businesses were expecting sustained price pressures to
"Supply-side constraints have gotten worse," Mr. Powell said
Friday at a virtual conference. "The risks are clearly now to
longer and more-persistent bottlenecks, and thus to higher
Xi's 'Common Prosperity' in Theory and Practice
Investors had, over the past 30 years, grown so accustomed to
ignoring rhetoric about communism from nominally-communist China
that a leader firmly putting equality at the heart of his economic
agenda has caused more than a little heartburn. The Oct. 15 release
of a fuller transcript of President Xi Jinping's mid-August remarks
on "common prosperity" therefore piqued considerable interest.
The publication in the party's theoretical journal, "Seeking
Truth," appears partly aimed at reassuring investors and
entrepreneurs spooked by novel language about "rationally
adjusting" excessive incomes in the original mid-August readout of
Mr. Xi's speech, which came at the height of Beijing's campaign to
rein in its internet giants.
Bitcoin ETF's Success Could Come at Fundholders' Expense
There are signs that the bitcoin futures market isn't big enough
for a planned wave of crypto exchange-traded funds.
Since launching Tuesday, the ProShares Bitcoin Strategy ETF has
amassed $1.2 billion in investor assets, the quickest
billion-dollar fundraising on record.
Shippers Find New Supply-Chain Hurdles at Alternate Ports
When Flexport Inc. learned in the past month that an ocean
carrier planned to shift cargo from the congested operations at the
Port of Los Angeles to little Port Hueneme some 80 miles up the
California coast, the freight forwarder found that trucking
companies weren't ready to go along with the changing direction of
China Plans Property-Tax Trials as It Targets Speculation
China said it would conduct five-year property-tax trials in
some regions of the country as Beijing looks for ways to rein in
real-estate speculation and distribute wealth more evenly.
The National People's Congress Standing Committee, the country's
top legislative body, passed the tax-pilot program on Saturday, the
official Xinhua News Agency reported. The State Council, China's
cabinet, is expected to disclose details in the next few months,
including which regions this initiative will cover and how the tax
rate will be set, people familiar with government deliberations
Talks Collapse Over Sale of Troubled Italian Bank Monte dei
Monthslong talks between the Italian government and bank
UniCredit SpA over the sale of nationalized lender Banca Monte dei
Paschi di Siena SpA have ended, UniCredit and the government said
The collapse of the negotiations is a blow to the government
headed by former European Central Bank President Mario Draghi,
which needs to reprivatize the bank by April under an agreement
struck with European authorities when Rome rescued the Tuscan bank
The U.K. Ditched Coal and Left Itself With a New Set of
BLYTH, England-Coal from mines around this northeastern English
port town made the U.K. an industrial and imperial superpower in
the 19th century. In the 21st, the country has all but ditched the
By kicking its coal habit, the U.K. has charted a route for the
U.S. and other nations seeking to reduce carbon emissions. British
governments made it prohibitively expensive to burn coal while
prodding investors to plow tens of billions of dollars into
renewables, energy executives and financiers say.
Endemic Covid-19 Has Arrived in Portugal. This Is What It Looks
LISBON-In this soccer-crazed capital of a soccer-obsessed
nation, the stadiums are full again. Portugal, a country ravaged
earlier in the year by the Delta variant of the coronavirus, now
has the highest Covid-19 vaccination rate in Europe and offers a
glimpse of a country trying to come to grips with what is
increasingly looking like an endemic virus.
Tens of thousands of screaming soccer fans crammed into the
Estadio da Luz here Wednesday to watch hometown favorites Benfica
take on Bayern Munich. They amassed on the subway to the stadium,
at the entrance as officials patted them down and, after the game,
at food trucks where they downed sandwiches and beer as they tried
to forget the drubbing their team had just received.
Turkey's Erdogan Threatens to Expel 10 Western Ambassadors,
Including U.S. Envoy
Turkey's President Recep Tayyip Erdogan threatened to expel the
U.S. ambassador and the top envoys of nine other Western countries
who called for the release of a jailed philanthropist, in a move
that could further strain ties between the two NATO allies.
"These 10 ambassadors must be declared personae non gratae at
once," Mr. Erdogan said at a rally on Saturday in the western
Turkish city of Eskisehir. "I gave the necessary order to our
foreign minister and said what must be done."
French Nationalist TV Host Éric Zemmour, Inspired by Trump,
Surges in Polls
PARIS-As a television talk-show host and pundit, Éric Zemmour
built a devoted following on France's far right with years of
barbed criticism of immigrants, Muslims and leftist
Now Mr. Zemmour, who says he has drawn inspiration from former
President Donald Trump, is harnessing his celebrity to explore a
run for president, an effort that is shaking up French politics.
Polls show he has inched ahead of the far right's longtime
standard-bearer, Marine Le Pen, to become the leading challenger to
President Emmanuel Macron in next year's election.
Sibanye-Stillwater Nears $1 Billion Deal to Acquire Brazil
Nickel and Copper Projects
Sibanye-Stillwater Ltd. is in advanced talks to buy two
Brazilian miners for about $1 billion including debt, people
familiar with the matter said, a bet on continued demand for metals
used in the production of electric-car batteries.
The South Africa-based miner would acquire Atlantic Nickel,
which operates the Santa Rita mine, one of the world's biggest
open-pit nickel sulfide mines, and Mineracao Vale Verde, which is
developing a copper-and-gold mine, the people said. The deal is
expected to be announced in the coming days, assuming it doesn't
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Expected Major Events for Monday
05:00/FIN: Sep PPI
07:00/CZE: Oct Business cycle survey (consumer/business
08:00/POL: Sep Unemployment
08:00/GER: Oct Ifo Business Climate Index
13:00/BEL: Oct Business Confidence Survey
23:01/UK: Sep Zoopla House Price Index
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(END) Dow Jones Newswires
October 25, 2021 00:46 ET (04:46 GMT)
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