Germany June industrial production index; France June foreign
trade, June balance of payments; June industrial production index,
2Q flash estimate of job creation; Italy June industrial
production; UK July Halifax house price index, Bank of England
market participants survey results; updates from Deutsche Post,
Allianz, London Stock Exchange, WPP, AngloGold Ashanti, Capita,
Hargreaves Lansdown, Sberbank, Naturgy Energy Group
European equities may push a tad higher ahead of the U.S. jobs
report later today. In Asia, stock benchmarks rose; the dollar
edged higher; Treasury yields fell; oil and gold rose amid choppy
European stocks appear poised to make slight gains at the open
on Friday after U.S. closed mixed Thursday as investors weighed a
fresh batch of corporate earnings reports as they looked ahead to
Friday's U.S. jobs report.
"We are getting some updated outlook from a lot of the
management of these companies, it wasn't as pessimistic as some had
feared," said Shawn Cruz, head trading strategist at TD Ameritrade.
"I think the worst-case scenario has been pulled off the table and
that's bringing some buyers back into the market."
But some investors say volatility is likely to return,
especially if the slowing economy begins to take a toll on the
outlook for corporate earnings later in the year.
Some money managers also say markets have been overly eager in
predicting that the Fed will stop raising interest rates and then
cut them next year.
"We could be in a bit of a bear-market rally," said Desmond
Lawrence, senior investment strategist at State Street Global
Investors appear to be reasoning that slowing economic growth
will pull the Fed back from raising interest rates, which would
boost the price of stocks and bonds, Lawrence said. "That might be
a little bit premature," he said, adding that expectations of
corporate earnings "are pretty elevated for what seems to be
turning into a slowdown."
Saira Malik, chief investment officer at Nuveen, said market
expectations of Fed rate cuts in early 2023 are "optimistic."
"We think the Fed will have to continue to increase rates for
the foreseeable future until inflation gets to a much lower level,"
Malik said. "And it could take a recession in order for us to get
Employment gains in July are expected to drop to 258,000 from
372,000 in the prior month, a poll of economists by The Wall Street
Journal estimated. If so, it would mark the smallest increase since
"We should anticipate a drop from recent levels, but perhaps not
too big a drop, as demand remains strong. The 250,000 expectations
look reasonable, and perhaps even a bit conservative," said Brad
McMillan, chief investment officer at Commonwealth Financial
Network. "If we get anything in the 200,000-300,000 range, that
would be in line with the data so far this year and support
However, worse results would signal that the U.S. economy has
"suddenly gotten much worse, and a recession is going to happen
sooner rather than later--and that would spook markets," according
The dollar edged higher in Asia amid mixed signals.
USD should track Treasurys, so market participants should watch
two-and five-year yields as they'll guide USD moves, said Chris
Weston, Pepperstone's head of research.
The Fed has made itself data dependent; thus bad data should be
bad for USD and good data should boost USD, Weston added.
Capital Economics thinks the dollar still has further to run,
Senior Markets Economist Jonas Goltermann said.
"We think the dollar will appreciate further through at least
the end of the year as the global economy continues to falter and
'safe-haven' demand remains strong."
"Although we see limited scope for a further widening of
expected interest rate differentials in favor of the greenback, we
expect an environment in which the Fed and other major central
banks continue to tighten monetary policy, even as economic growth
slows, to support further dollar strength," he said.
Yields fell in Asia as the Treasurys selloff stopped overnight
ahead of key U.S. employment data due today.
Investors are worrying about a possible recession and U.S.
jobless claims data overnight sparked projections of labor markets
loosening up, which could lead to a less hawkish interest rate move
The Bank of England on Thursday was the latest central bank to
deliver an outsize rate increase, as it warned that inflationary
pressures continued to build and said a recession was likely to
begin later this year.
The BOE decision comes as there "now seems to be a view among
investors that, across DM (developed markets), any acceleration in
monetary tightening will only lead to a weaker economy, and hence
less rate hikes further ahead and/or earlier rate cuts," said
Franziska Palmas, markets economist at Capital Economics.
"Indeed, sovereign bond yields have also fallen in the wake of
recent chunky hikes by other DM central banks," including the Fed,
the European Central Bank, the Bank of Canada and the Reserve Bank
of Australia, she wrote.
Oil futures rose in Asia amid somewhat choppy trading.
Liquidity in the crude oil markets has evaporated, leading to a
choppy trading environment, spurring financial players to rapidly
shift positions and focus more on intraday trading, Citi said.
Aggregate open interest across the ICE Brent and Nymex WTI crude
oil futures curves stood below 3.5 million contracts, a multiyear
low, Citi noted.
Oil had tumbled overnight after the U.S. EIA said crude and
gasoline supplies rose.
The price action shows that "demand concerns are now the
dominant influence on the global energy market and even though
supply worries will persist with the Russia-Ukraine war, we will
need to see evidence of demand stabilizing for the oil market to
begin to find a near-term bottom," Sevens Report Research said.
Gold edged higher in early Asia trade, buoyed by safe-haven
demand driven by global recession risks.
Central banks worldwide are acknowledging recession risks, said
Oanda senior market analyst Edward Moya.
The Bank of England had a rather gloomy outlook and the Czech
central bank surprised markets by halting its rate-increase cycle,
Zinc rose in Asia as rising energy costs threaten to curtail
more supply, ANZ said.
Commodities giant Glencore, which has already suspended one of
its zinc smelters in Europe, warned that Europe's energy crisis
poses a substantial threat to supply.
"These concerns also helped reverse an earlier decline in
copper, as investors weighed up threats to growth amid a hawkish
Fed," ANZ added.
Chinese iron-ore futures moved slightly higher.
Sentiment may be weighed in the near term by worries that
conditions in China's property sector will worsen, CBA said.
Property construction in China accounts for around 30% of the
country's steel demand and 20%-30% of its copper, aluminum and zinc
consumption, CBA noted.
"Over 300 property projects under construction are facing a
mortgage boycott as homeowners lose faith property developers will
complete the projects as promised," CBA added.
TODAY'S TOP HEADLINES
Fed's Mester backs higher interest rates until inflation begins
The president of the Cleveland Federal Reserve said Thursday
that the central bank needs to keep raising interest rates until
high U.S. inflation has begun to subside, joining a coterie of
senior Fed officials who've backed more aggressive measures.
"We're committed to getting inflation down," Loretta Mester said
at an event at the Economic Club of Pittsburgh. She needs to see
several months of easing price pressures, she said, before she
could be sure the Fed was making progress.
Sen. Kyrsten Sinema Wins Tax Changes to Democrats' Climate
WASHINGTON-Democrats revised their climate and healthcare
package, striking a deal with centrist Sen. Kyrsten Sinema (D.,
Ariz.) to scale back some tax provisions in the plan and add in a
new tax on stock buybacks to try to win her support.
In a brief statement Thursday night, Ms. Sinema said she would
move forward with the legislation after a review of its provisions
by the Senate's nonpartisan parliamentarian. While Ms. Sinema
didn't outright back the plan, Senate Majority Leader Chuck Schumer
(D., N.Y.) said in his own statement that he believed the changes
would keep the bill on track in the 50-50 Senate, in the face of
united Republican opposition.
Ukraine Sees Path to Surging Grain Exports After First
KYIV, Ukraine-Ukraine said its first grain shipment since the
start of Russia's invasion had been a success and could lead to a
surge in exports to prewar levels within two months, but industry
players warned that sizable hurdles remain.
Oleksandr Kubrakov, Ukraine's infrastructure minister, said 17
vessels loaded with grain were ready to depart the three Ukrainian
Black Sea ports operating under a deal agreed upon last month. He
said two or three ships will soon begin leaving daily, with a view
to traffic ultimately reaching 100 outgoing vessels each month.
China Launches Live-Fire Drills, Missiles Around Taiwan After
China encircled Taiwan with rocket and ballistic-missile fire
while testing the democratic self-governing island's defenses with
navy ships and war planes, as Beijing protested a visit by U.S.
House Speaker Nancy Pelosi.
"The exercises have begun," China's navy said on its official
social-media account shortly after noon local time Thursday.
Ukraine Fires on Bridges, Rail Lines in Bid to Loosen Russia's
Grip on Kherson
Ukrainian forces struck a railway bridge in the southern Kherson
region on Thursday, the Ukrainian military said, as it seeks to cut
Moscow's supply lines in preparation for a looming
Ukrainian forces have concentrated fire on crossings over the
Dnipro River, last month destroying a large road bridge 3 1/2 miles
to the east as well as striking the railway bridge.
France's Macron Wins Passage of Measures to Fight Inflation
French President Emmanuel Macron secured passage of a package of
measures to help bolster household finances, a boost for the French
leader as the country copes with rampant inflation stemming in part
from Russia's war of attrition in Ukraine.
French lawmakers on Thursday gave final approval for the second
of two bills that include more than EUR20 billion, equivalent to
about $20.4 billion, in new measures aimed at helping French people
cope with fast-rising prices-including an increase in pensions,
rebates at the gasoline pump and an elimination of France's yearly
Elon Musk Alleges Twitter Fraud in Countersuit Filed in
Elon Musk accused Twitter Inc. of fraud, saying the company
misrepresented the condition of its business and key metrics about
the users on its platform before he agreed in April to acquire the
company for $44 billion.
Mr. Musk said in a countersuit made public Thursday that he
decided to terminate the merger agreement after learning of what he
described as troubling facts, including a restatement of Twitter's
monetizable daily average users days after the pact was signed and
that Twitter was allegedly miscounting the number of false and spam
Elon Musk Suggests Big Tesla Factory Expansion Plans
Tesla Inc. Chief Executive Elon Musk said Thursday that the
electric-vehicle maker is likely to need roughly a dozen factories
to reach its goal of selling 20 million vehicles annually by
An announcement about Tesla's next factory location could come
later this year, he said at the auto makers's annual shareholder
meeting, held at its Austin, Texas-area factory. Tesla currently
has four car plants.
Warner Bros. Discovery Weighs Free Ad-Supported Streaming
Warner Bros. Discovery Inc. is exploring launching a free,
ad-supported streaming service, its chief executive said, the
latest effort by a streaming giant to reach a broader audience as
the competition for users intensifies.
The new company, the result of Discovery's merger with AT&T
Inc.'s WarnerMedia earlier this year, will first focus on a
previously announced plan to combine its two main streaming
services, HBO Max and Discovery+, executives said during a call
with investors. The combined subscription platform will be rolled
out starting in the U.S. next summer, said JB Perrette, the
company's CEO of global streaming.
China Evergrande Group to Give Up Land Use Rights of Soccer
Stadium for Over $800 Million
China Evergrande Group will give up its land use rights of a
football stadium in China for 5.52 billion yuan ($817.89 million),
as the embattled property developer looks for ways to pare
The real estate conglomerate will return the land to its owner,
China's Guangzhou Municipal Planning and Natural Resources Bureau,
China Evergrande said late Thursday.
Penguin Random House CEO Defends Publishing Merger at Antitrust
WASHINGTON-Penguin Random House's chief executive testified
Thursday that the publishing giant's planned acquisition of
competitor Simon & Schuster would benefit consumers and
authors, pushing back against antitrust claims from the Justice
Markus Dohle, who has run Penguin Random House since its
creation in a 2013 merger, said the company was "the best home" for
Simon & Schuster's imprints.
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Expected Major Events for Friday
00:01/UK: Jul KPMG and REC UK Report on Jobs
06:00/GER: Jun Industrial Production Index
06:00/FIN: Jun Foreign trade
06:00/UK: Jul Halifax House Price Index
06:45/FRA: Jun Industrial production index
06:45/FRA: Jun Foreign trade
06:45/FRA: Jun Balance of payments
06:45/FRA: 2Q Flash estimate of job creation
07:00/CZE: Jun Retail trade
07:00/HUN: Jun Preliminary Industrial Production
07:00/SWI: Jul SNB foreign currency reserves
07:00/AUT: Jul Wholesale Price Index
07:00/SPN: Jun Industrial Production
07:30/EU: Jul EuroCOIN indicator of euro area economic
08:00/ITA: Jun Industrial Production
09:00/GRE: Jun External Trade (provisional data)
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August 05, 2022 06:45 ET (10:45 GMT)
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