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HomeAll NewsMost read newsBusiness Leaders Biography
Birthday : 06/28/1971
Place of birth : Pretoria - South Africa
Biography : Elon Reeve Musk is an entrepreneur and businessperson who founded 7 companies, including: Tesla, Inc

North American Morning Briefing: Stock Futures Waver Ahead of Retail Sales, Chinese Indexes Fall

09/16/2021 | 06:11am EDT

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

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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.

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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.

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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.

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Investment Firm Lexington Partners Explores Sale

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

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(MORE TO FOLLOW) Dow Jones Newswires

09-16-21 0610ET

Stocks mentioned in the article
ChangeLast1st jan.
AFTERPAY LIMITED 1.74% 122.78 End-of-day quote.4.05%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.02% 0.6396 Delayed Quote.1.53%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.10% 0.7421 Delayed Quote.-3.64%
BRITISH POUND / EURO (GBP/EUR) 0.47% 1.1848 Delayed Quote.5.39%
BRITISH POUND / US DOLLAR (GBP/USD) 0.59% 1.3749 Delayed Quote.-0.06%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.00% 0.697136 Delayed Quote.8.32%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.02% 0.8081 Delayed Quote.2.90%
CHERRY AG 0.13% 31.2 Delayed Quote.0.00%
CHINA EVERGRANDE GROUP -3.91% 2.95 End-of-day quote.-80.20%
DJ INDUSTRIAL 1.09% 35294.76 Delayed Quote.14.07%
DOW JONES FXCM DOLLAR INDEX -0.05% 12033.17 Delayed Quote.3.07%
EURO / US DOLLAR (EUR/USD) -0.08% 1.1591 Delayed Quote.-5.12%
HANG SENG 1.38% 25288.76 Real-time Quote.-7.13%
IN THE STYLE GROUP PLC 0.00% 126 Delayed Quote.0.00%
INDIAN RUPEE / EURO (INR/EUR) -0.11% 0.011484 Delayed Quote.2.62%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.06% 0.013331 Delayed Quote.-2.58%
LONDON BRENT OIL 0.72% 84.89 Delayed Quote.62.65%
MICROSOFT CORPORATION 0.48% 304.21 Delayed Quote.36.77%
MSCI TAIWAN (STRD) 3.32% 682.201 Real-time Quote.9.88%
NASDAQ COMP. 0.50% 14897.33971 Real-time Quote.15.01%
NEW WORLD DEVELOPMENT COMPANY LIMITED 0.60% 33.75 End-of-day quote.-6.51%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.53% 0.70722 Delayed Quote.-2.01%
PAYPAL HOLDINGS, INC. 0.71% 268.35 Delayed Quote.14.58%
S&P 500 0.75% 4471.37 Delayed Quote.18.16%
S&P GSCI ALUMINUM INDEX 0.52% 201.6785 Delayed Quote.59.77%
S&P GSCI CRUDE OIL INDEX 0.25% 447.9336 Delayed Quote.68.03%
S&P/CITIC 300 INDEX 0.03% 4464.36 Delayed Quote.-2.81%
S&P/CITIC 50 INDEX 0.03% 4251.81 Delayed Quote.-8.84%
SQUARE, INC. 0.64% 249 Delayed Quote.14.41%
THE GOLDMAN SACHS GROUP, INC. 3.80% 406.07 Delayed Quote.53.98%
US DOLLAR / EURO (USD/EUR) 0.08% 0.862738 Delayed Quote.5.39%
WALMART INC. 0.49% 140.55 Delayed Quote.-2.50%
WTI 1.09% 82.468 Delayed Quote.69.35%