MARKET WRAPS
Watch For:
Manufacturing PMI Data for EU, U.K. Italy, France, Germany; 4th anniversary of Ursula von der Leyen taking over as EU chief; U.K. nationwide House Price Index; Italy GDP; France OECD/UNDP Tax Inspectors Without Borders annual report; trading updates from SAS, Currys, Sasol, Remy Cointreau, ABB
Opening Call:
European stock futures were higher ahead of regional PMI data and Fed Powell's speech. Asian stock benchmarks traded mixed after China Caixin PMI data showed expansion, contrasting with the official PMI data which signaled contraction. The dollar weakened; Treasury yields steadied; oil futures fell while gold advanced.
Equities:
Stock futures in Europe rose early Friday on investor optimism over easing inflation on both sides of the Atlantic and potential Fed rate cuts next year.
Data Thursday showed annual eurozone inflation fell to 2.4% in November, the lowest in more than two years.
But Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management cautioned that the market is getting it wrong.
Instead of the Fed orchestrating a soft economic landing as many investors now envision, Schutte expects rates to stay high until a mild recession unfolds.
"Eventually, the Fed rate hikes are going to bite, but I don't think they will remove them until they see them bite, meaning slower economic growth and job losses."
Investors will be watching for Fed Chair Powell's speech later today for more clues.
Forex:
The dollar weakened early Friday.
USD could retreat further as U.S. bond yields head lower, benefiting Asian currencies, said Jeff Ng, head of Asia Macro Strategy at SMBC.
Market participants will likely monitor Fed Chair Powell's speech due later today for any potential pivot on the Fed's stance toward monetary easing, Ng added.
Bonds:
Treasury yields were steady on signs of easing inflation and renewed hopes for one or more rate cuts by the Federal Reserve in 2024.
New York Fed President John Williams on Thursday said he thinks interest rates are at or near their peak.
"Fed officials have already acknowledged that inflation is easing, and that can happen in the face of a strong economy and low unemployment, essentially laying the groundwork for rate cuts," said Sonu Varghese, global macro strategist at Carson Group.
Energy:
Oil futures fell early Friday on skepticism from traders over OPEC+'s additional voluntary production cuts.
"Investors remain concerned about OPEC compliance and global demand growth as we head deeper into the seasonally soft winter demand period," said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management Group.
Outside of Saudi Arabia, "OPEC members historically struggle in compliance with planned cuts, leading to some market skepticism about the actual magnitude of cuts that will be implemented."
Metals:
Gold rose on growing prospects that the Fed's tightening cycle may be over, as indicated by the overnight U.S. economic data that showed inflation continued to cool in October.
With seasonality on its side in December, the precious metal could make another move higher to break record highs, said Matt Simpson, market analyst at City Index and FOREX.com.
For December, gold has averaged a positive return of 1.15% over the past 45 years, Simpson added.
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Copper prices rose amid a stronger-than-expected China Caixin manufacturing PMI and a shorter worker strike at Peru's Las Bambas copper mine.
The end of the strike eased investor concerns over tighter copper production, Nanhua Futures analysts said.
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Iron ore futures were higher after the Chinese steel sector PMI rose to 48.2 in November, beating expectations.
Steel demand has been subdued in China amid its property-market weakness, but recently announced support measures boost expectations of a rebound in demand, ANZ analysts said.
Meanwhile, iron ore prices will likely be supported by tight supply, as there are signs that supply disruptions are emerging, the analysts said.
TODAY'S TOP HEADLINES
China's Manufacturing Activity Expanded in November, Caixin PMI Shows
A private gauge of China's factory activity unexpectedly swung to expansion in November, contrasting with the official index that signaled a contraction.
The Caixin manufacturing purchasing managers index rose to 50.7 in November from 49.5 in October, according to data released Friday by Caixin Media Co. and S&P Global.
Powell won't endorse market expectations for quick rate cuts
Don't expect Federal Reserve Chair Jerome Powell to say anything to bolster the market's rising expectations for interest-rate cuts as soon as next March, economists said Thursday.
Powell is likely to "lean against against the notion that there are cuts imminent," said Jonathan Millar, senior U.S. economist at Barclays in New York.
OPEC+ Agrees to Significant Oil-Production Cut
OPEC+ agreed to a significant production cut of an additional million barrels a day, delegates said, in a move that will likely keep prices elevated amid the continuing conflict in the Middle East.
As part of the deal reached Thursday, Saudi Arabia also agreed to extend its cut of 1 million barrels a day that it announced in June.
Fed's Williams says interest rates are 'at, or near' peak
The Federal Reserve's benchmark interest rate may have already hit its peak level, as it is now putting more downward pressure on the economy than at any time in the last 25 years, New York Fed President John Williams said Thursday.
Earlier this month, the Fed kept its benchmark rate unchanged at a level of 5.25%-5.5%.
Airbnb Is Conquering Italy. One City Is Fighting Back.
FLORENCE, Italy-The city of Botticelli's "Venus" and Michelangelo's "David" is now the city of Airbnb.
The spread of short-term rentals has pushed up rents and priced out residents. Shops that once served locals have become rarities. Lockboxes for keys sit next to the doorbells at many buildings' entrances.
Israel, Hamas Agree to Extend Truce for Another Day
TEL AVIV-Israel and Hamas agreed to extend a temporary truce in Gaza for an eighth day, Egyptian officials said Thursday, in a deal that is expected to involve the release of another 10 hostages, mostly women and children.
Secretary of State Antony Blinken is visiting the region, where he urged Israelis to extend the pause and reduce civilian casualties if the fighting resumes. Blinken called for a civilian "protection plan" that halts displacing Palestinians and designates safe spaces including hospitals and other critical infrastructure.
Meta's Threads to Launch in Europe in App's Biggest Expansion Since Debut
Facebook parent Meta Platforms plans to launch Threads in Europe in December, according to people familiar with the matter.
The launch represents Threads' largest market expansion since its debut in July and signals the social-media company's commitment to the microblogging service, which rivals that of Elon Musk's X, formerly known as Twitter.
U.S. Leans on Turkey to Stop Supporting Hamas and Russia
ISTANBUL-The Biden administration's sanctions chief warned Turkish officials that the country is fueling violence across two continents by serving as a financing haven for Hamas and a trade hub for Russia's war machine.
Despite U.S. sanctions targeting Hamas financiers over the past decade, Turkey has allowed the group's investment firms, holding companies, real-estate brokerages and a host of other businesses to operate out of Istanbul, U.S. officials say.
Montana Judge Says TikTok Ban Likely Violates First Amendment
TikTok won a reprieve in Montana after a judge ruled a state law banning the app can't go into effect in January, saying it "likely violates the First Amendment."
A federal judge on Thursday granted a preliminary injunction blocking the law, which was passed by the Montana legislature earlier this year, pending the outcome of a lawsuit filed by the social-media company. The legality of the ban itself will be decided later in a bench trial that has yet to be scheduled.
Nelson Peltz Launches Fresh Proxy Fight Against Disney
Activist investor Nelson Peltz announced a new proxy fight against Disney after the company rebuffed his request to be added to the board, starting the latest phase in the battle for the entertainment giant's future.
Peltz's Trian Fund Management said Disney shareholders have lost about $70 billion in value since the activist ended its first campaign in February. Disney Chief Executive Bob Iger has stressed in recent weeks that he is transitioning from a period of fixing to one of building and that he has a plan to turn Disney into a modern media company.
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Expected Major Events for Friday
00:01/UK: Nov BRC-Sensormatic IQ Footfall Monitor
01:01/IRL: Nov Ireland Manufacturing PMI
06:00/NED: Nov Netherlands Manufacturing PMI
07:00/TUR: Nov Turkey Manufacturing PMI
07:00/UK: Nov Nationwide House Price Index
07:30/HUN: 3Q GDP
08:00/SWI: 3Q GDP
08:00/POL: Nov Poland Manufacturing PMI
08:00/CZE: 3Q GDP
08:00/AUT: 3Q GDP
08:15/SPN: Nov Spain Manufacturing PMI
08:30/CZE: Nov Czech Republic Manufacturing PMI
08:30/SWI: Nov procure.ch Purchasing Managers' Index
08:30/EU: Nov EuroCOIN indicator of euro area economic activity
08:45/ITA: Nov Italy Manufacturing PMI
08:50/FRA: Nov France Manufacturing PMI
08:55/GER: Nov Germany Manufacturing PMI
09:00/ITA: 3Q GDP
09:00/GRE: Nov Greece Manufacturing PMI
09:00/EU: Nov Eurozone Manufacturing PMI
09:30/UK: Nov S&P Global / CIPS UK Manufacturing PMI
09:30/UK: 3Q Bank of England external business stats
10:00/CYP: Oct Retail trade
10:00/CYP: 3Q GDP
11:00/IRL: 3Q GDP
11:00/IRL: 3Q Balance of Payments
16:59/AUT: Nov Unemployment figures
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12-01-23 0015ET
