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HomeAll NewsMost read newsBusiness Leaders Biography
Age : 37
Public asset : 4,369,081,774 USD
Linked companies : Shift4 Payments, Inc.
Biography : Founder of Shift4 Payments, Inc., Lighthouse Network LLC, Shift4 Payments LLC and Draken Internation

North American Morning Briefing: Stock Futures Tick Up After Market Pullback

09/15/2021 | 06:09am EDT


Watch For:

U.S. Import Prices for August; U.S. Industrial Production & Capacity Utilization for August; EIA Weekly Petroleum Status Report; Canada CPI for August; Cisco Systems Investor Day webcast.

Opening Call:

Stock futures ticked up Wednesday, signaling a tepid rebound for major indexes that have come under renewed pressure on concerns that the pace of the economic recovery is slowing.

Stocks have slipped in September amid worries that markets are ripe for a pullback after marching higher for much of the year. Just as concerns about high valuations are on the rise, investors say the economic rebound likely won't be as fast as they previously expected. The spread of the Delta variant of coronavirus, an economic slowdown in China and supply-chain difficulties have all dampened sentiment.

"We've shifted from worrying about premature tightening [by the Federal Reserve] killing off the recovery in equities to concerns about the strength of the recovery weighing on equities," said Sebastian Mackay, multiasset fund manager at Invesco. Mr. Mackay remains upbeat about the outlook for stocks, but said he has taken out insurance against volatility by buying put options.

Investors will parse data on U.S. industrial production at 9:15 a.m. for clues about the state of the economic recovery. Economists forecast that output rose in August.

Overseas markets were mixed. The Stoxx Europe 600 edged down, led lower by shares of retail, travel and leisure companies. H & M Hennes & Mauritz fell over 3% after the Swedish clothes retailer said sales in its third quarter fell short of analysts' expectations.

Stock indexes in mainland China and Hong Kong fell after data showed growth across a range of Chinese economic indicators pulling back in August. An outbreak of Covid-19 and tighter property regulations hit consumer spending and the housing sector.

The data made the case for China to ease monetary and fiscal policy, said Vincent Chan, a China strategist at Aletheia Capital. The moves could include cutting banks' reserve-requirement ratios, Mr. Chan said, a tweak that would allow banks to step up their lending.

Casino companies Sands China and Galaxy Entertainment dropped 31% and 20%, respectively, following steep falls in some U.S.-listed peers. On Tuesday, the Macau government set expectations for the future of the gambling industry, including increased regulatory scrutiny over casino operations.

Shares in embattled property developer China Evergrande Group shed another 5.1%, a day after it said it had hired financial advisers.


Tuesday's slightly weaker (although still-elevated) U.S. inflation figures had little impact on the dollar, which has kept to a tight range, MUFG said.

The figures keep the Federal Reserve on track to announce plans to taper asset purchases later this year, but this is now more likely in November than September. Next week's meeting is unlikely to "fuel any renewed FX volatility" as "any lingering expectations of something meaningful happening" are now gone, said Derek Halpenny, MUFG's head of research for global markets EMEA.

EUR/USD, last up 0.1% at 1.1817, should stay in a narrow range, with the euro supported by solid economic fundamentals but hampered by divergence between Fed policy and that of the European Central Bank, he said.

Federal elections in Germany could create shifts in terms of fiscal policy and monetary policy that "err on the side of probably more accommodation and expansion" and potentially cause the euro to fall, said Michael Hasenstab, chief investment officer for global macro at Franklin Templeton.

"I think that will have implications for the euro," he said. This doesn't only apply to the euro against the dollar and falls may be more pronounced against Scandinavian currencies, Hasenstab said.

He pointed to strong current accounts in Sweden and Norway, as well as good growth and probably tighter policy--the latter has already been signaled in Norway. "So, it's not just about euro-[US] dollar, but really euro-Scandinavia and euro to some of the other currencies that we think is equally interesting," he said.


In the bond market, the yield on 10-year Treasury notes ticked up to 1.280% from 1.276% Tuesday.

Commerzbank is upbeat about the strong performance of eurozone peripheral government bonds, saying it sees promising dynamics as yield spreads continue tightening regardless of market direction.

This has taken the 10-year Italian BTP-German Bund yield spread below the key 100-basis-point level, rates strategists at the German bank say.

The 10-year BTP-Bund spread is trading at 99.4 basis points in early trade, with 10-year Spanish-German spreads at around 64 basis points and 10-year Portuguese-German spreads slightly below 55 basis points, according to Tradeweb.


Oil prices rose, with Hurricane Nicholas adding to disruption for U.S. Gulf of Mexico producers, who hadn't even fully ramped back up following Hurricane Ida. Those hurricanes are among the factors pushing oil higher Wednesday according to OANDA's Jeffrey Halley.

Elsewhere, jumping natural gas prices in Europe may add indirect support for oil, he adds. Those factors come after OPEC raised its demand forecast for 2022 and the IEA on Tuesday slashed its supply forecast for this year--both of which suggest a tightening market.

Gold prices edged lower, but hold on to most of the gains made on Wednesday after U.S. inflation data were weaker than expected. The weaker-than-expected CPI reading offered support to the Federal Reserve's view that inflation will be fleeting, leading investors to bet that the central bank's tapering and rate hikes won't happen imminently.

"The influence of the special effects caused by the pandemic [on inflation] appears to be gradually dwindling," Commerzbank said. The Fed "will not be in any great rush to scale back its bond purchases," the bank said.

Copper prices edged higher, halting two days of declines, driven by concerns about fresh Covid-19 outbreaks in China. Three-month copper on the LME is up 0.6% at $9,492 a metric ton. Prices rallied to a roughly six-week high on Monday but have slumped since.

"Investors are growing concerned about the spreading Delta variant, especially in China, which now seems to have more than its usual share of outbreaks," said Ed Meir, a metals consultant at ED&F Man.

Beijing has locked down the city of Xiamen, a manufacturing hub, Meir said.

Aluminum meanwhile rises 1.4% to $2,873.50 a ton. Data released Wednesday shows China's aluminum output fell for a fourth straight month, amid production restrictions.


High Steel Prices Have Manufacturers Scrounging for Supplies

Manufacturers are facing the highest steel and aluminum prices in years, another hurdle for U.S. companies already struggling to make enough cars, cans and other products.

Rapidly increasing metal costs are pushing manufacturers to take what steel they can get and hire more people to seek out available supplies, company executives said. The rising costs are flowing through to some producers of consumer goods: Campbell Soup Co. is paying more to get the cans it fills with tomato soup; Peloton Interactive Inc. is seeing prices rise for parts that go into its stationary bikes; and Steelcase Inc. is paying more to make metal desks and filing cabinets. Car makers like Ford Motor Co. and General Motors Co. are also dealing with rising metal prices.


SpaceX, Jared Isaacman Face Test During Private Flight to Orbit

Elon Musk's SpaceX has demonstrated its ability to accomplish missions for the U.S. government. This week, the company has a new customer from the private sector to satisfy: a 38-year-old billionaire who wants to be an astronaut.

Jared Isaacman, founder and chief executive of payments-processing company Shift4 Payments Inc., purchased the Inspiration4 mission for an undisclosed sum from Space Exploration Technologies Corp., the formal name for Mr. Musk's company. Mr. Isaacman will lead the first orbital mission made up entirely of civilians. Other non-astronauts have made it that deep into space in the past, but only aboard government spacecraft.


Apple iPhone 13's Price Wins Favor in China

Apple Inc.'s latest smartphone lineup won favorable reviews from Chinese consumers thanks to its competitive pricing, although supply constraints and competition from local brands remain challenges in one of Apple's most important markets.

The Cupertino, Calif., company showed four iPhone 13 models Tuesday at its annual September product introduction. They adhered closely to previous designs but included improvements in camera functions, processing power and battery life.


Senators Seek Answers From Facebook After WSJ Report on Instagram's Impact on Young Users

Sens. Richard Blumenthal and Marsha Blackburn said they would launch a probe into Facebook Inc.'s internal research on the way its Instagram photo- and video-sharing service affects young users, prompted by a Wall Street Journal investigation that showed the company knew the app was harmful to some in that group.

The Democratic chairman and ranking Republican on the Consumer Protection, Product Safety, and Data Security Subcommittee on Tuesday also said that they were in touch with someone they identified as "a Facebook whistleblower" and "will use every resource at our disposal to investigate what Facebook knew and when they knew it-including seeking further documents and pursuing witness testimony." In the statement, the senators said, "The Wall Street Journal's blockbuster reporting may only be the tip of the iceberg."


Fintech Startup Pagaya Nears $9 Billion SPAC Deal

Pagaya Technologies Ltd. is close to an agreement to go public through a merger with a special-purpose acquisition company that would value the financial-technology startup at about $9 billion, said people familiar with the matter.

(MORE TO FOLLOW) Dow Jones Newswires

09-15-21 0608ET