Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 

North American Morning Briefing: Stock Futures Slip as Fed Minutes Eyed

08/18/2021 | 05:55am EST


Watch For:

Housing Starts for July; EIA Weekly Petroleum Status Report; Canada CPI for July; Federal Reserve July 27-28 Meeting Minutes; earnings from Target, Cisco Systems

Opening Call:

Stock futures ticked down Wednesday ahead of the release of minutes from the Federal Reserve's July policy meeting.

The notes, due at 2 p.m. ET, will offer more indications of when the central bank may begin scaling back easy-money policies that were adopted at the start of the pandemic. Fed officials are nearing consensus on beginning to taper bond purchases in about three months, The Wall Street Journal reported this week. The Fed's bond-buying program and lower interest rates have helped the stock market power higher, with major indexes notching records earlier this week.

"As long as policy remains reasonably supportive, growth continues and we keep increasing our vaccination, it is a strange environment where conditions are good for equities," said Fahad Kamal, chief investment officer at Kleinwort Hambros. "There is genuine economic strength."

Investors also don't have many alternatives to putting money into stocks, according to Mr. Kamal. Markets aren't sure what direction to go in, and the Fed minutes will offer some crucial insights into policy makers' futures steps, he said. "The Fed has shown they are really scared of upsetting the market," Mr. Kamal added.

Money managers say they expect that markets may waver as investors weigh increasing cases of Covid-19 and the Delta variant against positive factors such as a strong earnings season and stimulus measures.

"Markets are kind of stuck in this rangebound territory because they are dampened by recent economic data," said Charles Hepworth, an investment director at GAM Investments. "The stimulus that has pushed all risk assets higher is still there. There is still this support behind it, so I can't see that we're going to see a serious correction on the cards."

Ahead of the opening bell, giant retailers including Lowe's, Target and TJX are slated to report quarterly earnings. Cisco Systems and Nvidia are set to post earnings after markets close.

U.S. housing starts data, due at 8:30 a.m., are forecast to show that new-home construction cooled in July. Builders have ramped up activity in response to robust demand, but have run up against rising prices for materials, difficulty attracting enough workers and limited availability of buildable lots.

Overseas, the pan-continental Stoxx Europe 600 wavered between gains and losses. while major indexes in Asia ended the day with gains. China's Shanghai Composite rallied 1.1%, South Korea's Kospi added 0.5% and Japan's Nikkei 225 rose 0.6%.

Stocks to Watch:

Agilent expects momentum that helped deliver a stronger-than-expected performance in 3Q to carry into the 4Q, pointing to a strong order book based on early orders through August. Chief Executive Mike McMullen said during the company's earnings call that the company feels confident about its ability to meet and exceed its long-term goals.

Agilent's 4Q revenue core growth of 8.5%-10% includes an estimated one-point headwind from Covid-19-related revenue, company officials said, noting that last year's fourth quarter proved to be the high water mark. Overall, they said in the company's earnings call, Covid-related revenue is roughly flat year-on-year for the year. Core growth, excluding Covid, would be comparable to 9.5%-11%.

Agilent saw continued improvement in non-Covid diagnostics, ending the quarter with activity above pre-pandemic levels. Company officials said they are monitoring for a possible impact from the Delta variant but said that so far they haven't seen any meaningful negative impact on testing volumes.

The pandemic has shown the Agilent CrossLab Group to be the company's most durable business, growing each quarter during the pandemic, CEO McMullen said during the company's earnings call. Instrument placements and demand bode well for continued strong performance for the business, the CEO said. ACG's revenue was $560M in the latest period, up 21% from the year earlier or 15% on a core basis. ACG's operating margin was 29.3%.


AnaptysBio shares rose 10% after hours as a second approved indication for a GlaxoSmithKline drug will result in a $20 million milestone payment. The FDA approved GSK's Jemperli for the treatment of adult patients with mismatch repair deficient recurrent or advanced solid tumors.


Johnson & Johnson urged a federal court not to restrain the company from potentially placing its talc liabilities in bankruptcy, saying the U.S. economy depends on corporate boards being free to act in the best interests of stakeholders. J&J's court papers, filed under seal last week and made public Tuesday, came in response to a request by personal-injury claimants who allege its talc-based baby powder caused cancer. The injury claimants made their bid for a restraining order over J&J in the bankruptcy case of another company, Imerys Talc America, which supplied talc to J&J for decades.

J&J has told personal-injury lawyers it is considering bankruptcy for a subsidiary as a way to resolve lawsuits and future claims linking talc to ovarian cancer and mesothelioma, The Wall Street Journal has reported. J&J's Tuesday filing didn't indicate the company has decided to take any such step, only that it continues to defend the safety of talc against thousands of pending lawsuits. But J&J did say that if its corporate governance were "hijacked by a perceived hypothetical harm," then "any corporation may be similarly enjoined on the basis of mere speculation."


Philip Morris has acquired a 22.61% stake in the U.K.'s Vectura Group through market purchases and said it is seeking to buy more shares in the market. Inhaled-medicines company Vectura last week said that it planned to unanimously recommend to shareholders a takeover offer from Philip Morris. The U.S. tobacco company said it bought 135.5 million shares in Vectura at 165 pence each, in line with the price of its latest offer, and that it is seeking to make further market purchases at the same price.


Consumer-internet company Sea looks set to sustain strong growth momentum as it continues to develop its social gaming and digital services, said Citi. Sea is starting to develop social-platform features for its mobile game "Free Fire" in order to keep players engaged. The company has also partnered with local Southeast Asian governments to drive adoption of digital wallets. Taking these initiatives into account, Citi adjusts its 2021-2023 revenue estimates higher by 4.7%-5.9%. The bank raised its ADR target price to $335.00 from $320.00 and maintains a buy rating. Sea's ADRs last closed 6.1% higher at $308.27.


The dollar should rise if the minutes of the Federal Reserve's last policy meeting signal the central bank could start tapering asset purchases soon, said ING.

The focus of the minutes will be on any discussion about the timeline for unwinding quantitative easing, especially after some Fed members said they expected tapering to begin this autumn, said ING forex strategist Francesco Pesole.

"Any confirmation on this side should cement the view that the Fed will unveil more details of its tapering plan at the 26-28 August Jackson Hole symposium, and ultimately offer yet another supportive narrative for the dollar."

Danske Bank expects the dollar to strengthen over the coming quarters and any weakness to be transitory, forecasting that EUR/USD will reach 1.15 in both six months and 12 months.

"We expect to see lower PMIs, a further move towards tightening global liquidity conditions, peak inflation expectations and a strong U.S. jobs recovery and for these factors to support the dollar over coming quarters," said senior analyst Lars Merklin.

Fundamentally, higher U.S. interest-rate markets and U.S. equities "continue to appeal to foreign investors," he said, adding that risks to Danske's forecasts are tilted toward a stronger-than-expected dollar. Danske forecasts EUR/USD at 1.17 in one month and 1.16 in three months.

Ebury said the euro is likely to rise against the dollar in the near-term but only modestly as the eurozone's economic recovery catches up with the U.S.

"We think that the recent move lower in EUR/USD has perhaps been excessive, and think that the likely convergence in economic performance between the U.S. and Euro Area in the third quarter should support the euro in the near-term," said Ebury analyst Matthew Ryan.

However, inflationary pressures in the euro-area are lagging and the European Central Bank appears in no rush to scale back stimulus, he said. Ebury expects EUR/USD to rise to 1.19 by year-end.

Minneapolis Fed leader Neel Kashkari poured acid on the cryptocurrency market Tuesday as part of a long running series of comments in which the central banker dumps on things like Bitcoin and other private digital assets that purport to be money.

Cryptocurrencies so far are "95% fraud, hype, noise and confusion," Kashkari said, adding "I've not seen any use case outside of funding illicit activities like drugs and prostitution." He said those who argue these digital assets are needed as the U.S. slides down some path towards communism and a Venezuelean-style collapse are ridiculous and at odds with the facts about the value of the dollar on the world stage.


Treasury yields were a touch firmer in Asia after they ended mixed on Tuesday following the weak U.S. retail sales data and rise in industrial production for July.

"The market seems to be sitting at the threshold of a major bifurcation of scenarios with material implications for likely rates ranges both near-term and over the current cycle" strategist Bruno Braizinha said in a BofA Global Research note.

Pessimistic scenarios may imply a "sub-1% 10-year Treasury by year-end, while optimistic scenarios may see convergence to the 1.75-2% range."

(MORE TO FOLLOW) Dow Jones Newswires

08-18-21 0554ET

Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.91% 0.70229 Delayed Quote.-7.63%
BRITISH POUND / US DOLLAR (GBP/USD) -0.57% 1.32238 Delayed Quote.-2.90%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.22% 0.7813 Delayed Quote.-0.62%
CISCO SYSTEMS, INC. 0.63% 56.51 Delayed Quote.22.97%
EURO / US DOLLAR (EUR/USD) -0.23% 1.12798 Delayed Quote.-7.33%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.43% 0.013283 Delayed Quote.-2.61%
KOSPI COMPOSITE INDEX 1.08% 2969.42 Real-time Quote.1.06%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.73% 0.67606 Delayed Quote.-5.13%
Latest news "Markets"
09:16aFTSE Edges Higher, Wickes's Margin Outperformance Leads to Further Upgrades
06:47aFTSE Edges Higher, Service Sector Kept Growth Momentum in November
06:46aEUROPEAN MIDDAY BRIEFING - Stocks Flat as Oil -2-
06:46aEUROPEAN MIDDAY BRIEFING - Stocks Flat as Oil Rises
06:46aEUROPEAN MIDDAY BRIEFING - Stocks Flat as Oil -3-
06:13aNORTH AMERICAN MORNING BRIEFING : Oil Rises, Stock Futures Waver as Markets Cap Volatile Week
05:34aEUROPE : European shares set to end bumpy week with gains
05:09aUK's FTSE 100 eyes weekly gain as oil stocks rally outweigh Omicron fears
Latest news "Markets"