MARKET WRAPS
Watch For:
Consumer Price Index for September; Weekly Jobless Claims; EIA Weekly Petroleum Status Report; BlackRock earnings
Opening Call:
Stock futures made cautious gains on Thursday ahead of the week's big event, the release of inflation data.
Consumer price data is set for release at 8:30 a.m. Eastern, with expectations of a 0.3% monthly rise that will reduce the year-over-year inflation rate to 8.1% from 8.3%. Core CPI is seen posting a 0.4% monthly gain.
"This promises to be quite a momentous occasion, as these numbers may hold the key for the performance of the dollar and also provide direction for the wider financial markets," said Ricardo Evangelista, senior analyst at ActivTrades.
Six of the eight CPI readings this year have topped expectations, noted Michael Brown, senior market analyst at Caxton.
Heading into the data, fed funds were pricing in an 83% probability of a 75 basis point rate hike at the next FOMC meeting, according to the CME FedWatch tool.
Other Market Headlines:
-OPEC+ Supply Cut Could Tip Global Economy Into Recession, IEA Says
-China Property Woes Cause Another Default
-Japan's Bond Market Awakes From Weeklong Slumber
Read more here.
Stocks to Watch:
Kohl's: An activist investor that has long targeted Kohl's is ratcheting up the pressure, calling on the department-store chain to make changes to its board or face another proxy fight. Its shares added 2.2% premarket.
Duck Creek Technologies: The insurance-industry services provider reported a 14% jump in revenue and a narrower loss for the recent quarter. Its shares climbed 8.6% off hours.
Ahead: BlackRock, Delta Air Lines, Walgreens Boots Alliance, Domino's Pizza and Fastenal are among the companies reporting earnings later Thursday.
Forex:
The dollar was little changed in early European trading but could rise as data later Thursday are likely to show core inflation accelerated in September, supporting the case for the Fed to continue raising interest rates decisively, Unicredit Research said.
"Hence, EUR/USD might have difficulty holding the line at around 0.97, while GBP/USD might also backpedal further below 1.11, also being penalized by uncertainty surrounding the U.K.'s new medium-term fiscal plan and the Bank of England's next policy decisions," Unicredit said.
It expects core inflation rose to an annual rate of 6.6% in September from 6.3% in August.
UBS Global Wealth Management said the dollar has scope to rise further in the near-term as it should continue to benefit from the Fed's fight against inflation and the currency's safe-haven appeal.
"The Fed will need to see at least three months in which core personal consumption expenditure inflation comes in at or below 0.2% month-over-month before backing away from its hawkish stance," UBS said.
The dollar should also remain supported by elevated global uncertainty over the economic and geopolitical outlook driving investors towards safe havens, UBS added.
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Sterling is unlikely to recover on a sustainable basis without the U.K. government backpedalling on its large debt-funded fiscal stimulus, Commerzbank said.
Business secretary Jacob Rees-Mogg blaming sterling's recent collapse on the Bank of England being too slow to raise interest rates doesn't "provide much reason for optimism in this respect," Commerzbank said.
The same applies to remarks by Treasury chief Kwasi Kwarteng who sees it as the BOE's responsibility to address potential market turmoil after its emergency bond-buying program ends on Friday.
That "doesn't bode well for sterling," Commerzbank said.
Energy:
Oil prices nudged higher, as sentiment traded off the balance between caution ahead of U.S. consumer-inflation data and OPEC's cuts in physical guidance.
Covid restrictions in China remain in focus ahead of the Communist Party congress this weekend, raising further concerns over demand.
"Rollouts of restrictions are again adding to worries about China's recovery, dashing hopes of a consumer-led rebound, with fresh problems piling up for the manufacturing sector," Hargreaves Lansdown said.
Other News:
An oil supply cut from OPEC threatens to deepen a global energy crisis by sending prices higher at a time of already elevated inflation and weak economic growth, the IEA said.
Read more here.
Metals:
Gold and base metals were lower in Europe with Peak Trading Research describing the U.S. CPI print as a "big deal [that] will move our markets via the dollar and overall risk vibe."
Other Insight:
The lead market is expected to record a deficit this year but return to persistent annual surpluses from 2023, as declining demand growth for the metal in auto batteries is swamped by a predicted recovery in smelter output, Macquarie said.
It estimates a 71,000-metric-ton market deficit in 2022 and said mine supply is likely to increase by just 0.7% annually between 2021-2026, mostly because of Galena Mining's Abra project in Australia.
"Unlike other base metals though, there is little need to motivate new lead mine supply as demand softens and secondary output grows," Macquarie said.
TODAY'S TOP HEADLINES
Activist Investor Urges Kohl's to Replace Board Members
An activist investor that has long targeted Kohl's Corp. is ratcheting up the pressure, calling on the department-store chain to make changes to its board or face another proxy fight.
Macellum Advisors GP LLC, which has a roughly 5% stake in Kohl's, is urging the company to replace three or more long-tenured directors, including its chairman, after sale talks collapsed earlier this year and as the share price sags, people familiar with the matter said.
Steelworkers Union Approves Contract With Cleveland-Cliffs
The United Steelworkers union has ratified a four-year contract with steelmaker Cleveland-Cliffs Inc., while it remains divided with United States Steel Corp. over wages and other major issues, the union said.
United Steelworkers, which represents more than 20,000 hourly workers at the two companies, said the contract with Ohio-based Cleveland-Cliffs delivers improved wages, insurance and pension benefits, issues that workers are also pushing for in talks with U.S. Steel at a time when profits for steelmakers have boomed.
Elizabeth Holmes's Ex-Colleague Disputes Account in Her Bid for New Trial
Lawyers for Adam Rosendorff, the former Theranos Inc. lab director who testified against founder Elizabeth Holmes in her criminal-fraud trial, asked a judge Wednesday to reject a subpoena from Ms. Holmes as she seeks a new trial.
Dr. Rosendorff emerged as a central witness for the prosecution in a monthslong trial of Ms. Holmes, who was convicted in January on four counts of wire fraud and conspiracy for misleading investors about the blood-testing startup's technology.
Samsung Gets One-Year Exemption From New U.S. Chip Restrictions on China
SEOUL-Samsung Electronics Co. has been granted a one-year exemption from new U.S. restrictions that block exports of advanced chips and related equipment to China, according to people familiar with the matter, joining a list of American-allied semiconductor giants that have received dispensation.
The U.S. Department of Commerce granted Samsung authorization to continue receiving chip-making equipment and other items needed to maintain its memory-chip production in China, the people said. The South Korean firm operates chip facilities in two Chinese cities.
TSMC Reports Record Profit, Gains Exemption From U.S. Chip Curbs on China
Taiwan Semiconductor Manufacturing Co. said that its third-quarter net profit rose 80% to a new record, and that it had been granted a one-year exemption from new U.S. restrictions on China's chip sector, allowing it to keep expanding its facilities in the country.
The world's largest contract chip maker's strong performance in the quarter was due to strong sales of its cutting-edge chips used in smartphones and other devices, as well as higher margins.
Sony Honda Mobility to Deliver EVs in North America in 2026
Sony Group Corp. and Honda Motor Co.'s joint electric-vehicle venture will begin deliveries of its first model in North America in the first half of 2026, the company said Thursday.
Sony Honda Mobility will begin deliveries of its EV in Japan in the second half of 2026, Chief Executive Yasuhide Mizuno said at a briefing, adding that the company is considering whether or not to sell in Europe as well.
OPEC+ Supply Cut Threatens to Tip Global Economy Into Recession, IEA Warns
An oil supply cut from the Organization of the Petroleum Exporting Countries threatens to deepen a global energy crisis by sending oil prices higher at a time of already elevated inflation and weak economic growth, the International Energy Agency said.
Last week's two million barrel-a-day reduction in the group's output targets, which incurred sharp criticism from the U.S. and its partners, will tighten the oil market further at a moment of extreme vulnerability with few additional sources of supply available to compensate, the Paris-based agency said Thursday.
Inflation May Have Slowed in September. It Won't Be Enough For The Fed.
Consumer price growth is expected to have slowed in September from a year ago, notching the third straight month of declines in the annual pace of inflation as cheaper gas prices have provided some relief to American households.
At the same time, prices are expected to have risen slightly faster in September than in August, according to consensus expectations from economists polled by The Wall Street Journal. The result could be a slight uptick in the monthly pace of inflation that nonetheless marks a deceleration from a year ago-showing some progress on overheating prices, but not enough to steer the Federal Reserve off its monetary policy tightening path.
Japan Stands Ready to Take Action Against Sharp Yen Weakness
(MORE TO FOLLOW) Dow Jones Newswires
10-13-22 0553ET
