MARKET WRAPS
Watch For:
EU GDP, employment; Germany industrial production index; France foreign trade, balance of payments; Italy industrial production, retail sales; UK Halifax House Price Index; trading updates from DS Smith, Frasers Group, Currys, Darktrace, SAS, Harbour Energy, Darktrace
Opening Call:
European stock futures retreated after declines for U.S. and Asian equities. The dollar was steady; Treasury yields advanced; oil futures rebounded and gold fell.
Equities:
Stock futures fell early Thursday, tracking declines in Asia and overnight on Wall Street, as the market awaits a slate of upcoming economic data, including revised third-quarter eurozone GDP and U.S. jobless claims today and the U.S. jobs report on Friday.
A fresh batch of Chinese trade data may be weighing on sentiment. The country's exports snapped a monthslong decline in November, but imports unexpectedly fell, pointing to weakness in domestic demand.
Meanwhile, data on Wednesday showed that U.S. private-sector hiring unexpectedly slowed in November. It is the latest piece of data showing that the U.S. economy is cooling, leading some traders to ramp up bets that the Federal Reserve is done raising interest rates and will cut them soon.
"We're expecting a lower-growth and a lower-inflation environment," said Jack Ablin, chief investment officer at Cresset Capital.
Forex:
Lombard Odier expects the U.S. dollar to recover heading into 2024, benefiting from a likely better performance of the U.S. economy compared with others, the asset manager said in an outlook for next year.
"A U.S. soft landing amid sluggish growth elsewhere should see the U.S. dollar maintain both yield and growth advantages versus peers," Lombard Odier said.
However, a harder U.S. landing would likely trigger safe-haven demand, at least until the Federal Reserve responds with significant policy easing. The dollar is likely to start to weaken once there is an improvement in global growth, likely led by China, although this is unlikely before the second half of 2024, it says.
Bonds:
Treasury yields rose early Thursday, rebounding from declines overnight.
A widening gap between short- and long-term Treasury yields is an indication that recession fears are increasing again, Spartan's Peter Cardillo said. He said indications that U.S. labor costs are falling have triggered the widening.
"This is actually the opposite that's been recently happening," as the inverted spread had been shrinking. Weekly jobless claims Thursday and payrolls Friday are likely to impact yields.
Energy:
Oil futures rebounded in Asia after settling lower overnight. From a technical perspective, oil prices look extremely oversold, said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Hence, a bounce shouldn't be a major surprise now. However, this doesn't necessarily mean oil prices will bottom out, he said, adding that a confirmed reversal signal is needed.
Metals:
Gold edged lower early Thursday. It would seem that gold traders are waiting for main events over the coming days, said Oanda. These events include the U.S. employment report due out this Friday, the U.S. inflation report due out next Tuesday and the FOMC decision due next Wednesday.
-
Copper prices rose slightly as investors weigh the implications of weaker-than-expected U.S. employment data. The employment report could be viewed as supporting the case for the Fed to start cutting rates next year, ANZ said. Copper prices could benefit if the Fed lowers rates as this could encourage more construction activity.
However, demand concerns persist amid China's continued property crisis. Lower demand for the construction material from China, a top consumer, could weigh on copper. Market sentiment is also being weighed by major producer Chile saying it hopes to boost copper output by 20% by 2026.
TODAY'S TOP HEADLINES
China's Exports Snap Monthslong Decline in November
China's exports beat expectations in November, ending a six-month decline stemming from weaker global appetite for the country's goods.
Exports rose 0.5% from a year earlier in November, according to data released by the General Administration of Customs on Thursday.
Investors Should Think Beyond Tech to Access AI Investment Momentum
SYDNEY-Investors looking to buy into momentum around artificial intelligence should consider stocks outside of the technology sector.
That is the view of Ron Temple, chief market strategist at financial advisory and asset-management firm Lazard. Temple thinks that the most attractive opportunity over the next two to three years is in U.S. large-cap stocks that profit from AI by improving the quality of their services, rather than developers of the technology itself.
Coming EU Rules on AI May Shape Companies' Use of Automated Systems
BRUSSELS-The European Union passed a strict privacy law in 2018 that influenced the way companies handled personal data. Coming rules on AI might have a similar effect in shaping corporate use of AI systems, said the head of privacy at tax software maker Intuit.
The company, which offers financial software including TurboTax and CreditKarma and the newsletter distribution service Mailchimp, already engineers products that can be used in different jurisdictions to avoid adjusting them to changing local data and privacy rules that have cropped up in many countries, said Elise Houlik.
Fight for Gaza's Khan Younis Puts Israel, U.S. on Collision Course
TEL AVIV-The southern Gaza Strip city of Khan Younis is a critical target for Israel's military-strategically and symbolically. The centuries-old market town is the suspected hiding place of Hamas leader Yahya Sinwar and the militant group's most significant remaining military stronghold.
But the fight to capture it risks putting Israel on a collision course with the Biden administration, which has called on Israel to minimize civilian casualties and ease humanitarian deprivation in Gaza, and to hew to a more limited war aim of expelling Hamas from power.
Containership Hits Bridge in the Suez Canal
A containership collided with a floating bridge in the eastern lane of the Suez Canal on Wednesday but the flow of ships across the waterway won't be interrupted, the Suez Canal Authority said.
Tugboats were working to pull the ship One Orpheus, which had a fault with its rudder while transiting the canal on its way to the Netherlands from Singapore, the SCA said in a statement.
Vladimir Putin Meets With Saudi, U.A.E. Rulers in Bid to Refresh Alliances
Russian President Vladimir Putin met with Saudi Arabia's de facto ruler Crown Prince Mohammed bin Salman and other top regional leaders Wednesday in a visit Russian diplomats portrayed as a decisive rebuttal of the U.S.'s attempts to isolate the Russian leader over his war in Ukraine.
Putin's plane was flanked by four Sukhoi Su-35 Russian jet fighters as it flew to the United Arab Emirates capital of Abu Dhabi, where white, blue and red vapor trails representing the colors of the Russian flag streamed behind U.A.E. military jets in a flyby in his honor.
Meta Starts Fully Encrypting Messages on Facebook and Messenger App
Meta Platforms said it has started fully encrypting messages on Facebook by default, moving ahead with a privacy measure that government officials and others have warned could hide illegal activity by child predators and other criminals.
The social-media giant starting this week is automatically shifting Facebook users to so-called end-to-end encryption for their messages on that platform and its connected Messenger app, it said in a blog post Wednesday.
BHP CFO Steps Down Amid Executive Reshuffle
BHP Group, the world's largest miner by market value, said its chief financial officer will step down amid a reshuffle of the company's executive ranks.
The mining giant has revamped its business in recent years to bet on commodities linked to decarbonization and electrification. It has shifted away from fossil fuels and invested in industrial metals copper and nickel, and fertilizer ingredient potash.
Write to singaporeeditors@dowjones.com
Expected Major Events for Thursday
05:30/NED: Oct Consumer Spending
06:45/SWI: Nov Unemployment
07:00/GER: Oct Industrial Production Index
07:00/NOR: Oct Industrial Production Index
07:00/UK: Nov Halifax House Price Index
07:00/FIN: Oct Foreign trade
07:45/FRA: Oct Foreign trade
07:45/FRA: Oct Balance of Payments
08:00/SWI: Nov SNB foreign currency reserves
08:00/CZE: Oct Industry, Construction
08:00/CZE: Oct External trade
08:00/AUT: Sep Foreign Trade
08:00/AUT: Oct Production Index
08:40/ROM: 3Q GDP
09:00/BUL: 3Q GDP - preliminary data
09:00/ICE: Nov External trade, preliminary figures
09:00/ITA: Oct Industrial Production
10:00/CYP: Nov CPI
10:00/ITA: Oct Retail Sales
10:00/EU: 3Q GDP and Main Aggregates Estimate
10:00/EU: 3Q Employment
10:00/CRO: Nov PPI
10:00/LUX: 3Q GDP
10:00/MLT: Oct Industrial Production Index
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
12-07-23 0016ET
