MARKET WRAPS
Watch For:
Consumer Price Index for July; EIA Weekly Petroleum Status Report; Federal Reserve Bank of Chicago President Charles Evans speaks at Drake University and Greater Des Moines Partnership Economic Update event; Walt Disney earnings
Opening Call:
Stock futures fluctuated Wednesday as Wall Street geared up for the release of inflation data that could provide investors with a clearer idea on how aggressive the Federal Reserve will be in its efforts to curb rising prices.
"I don't think it's an exaggeration to say that today's inflation number could set the tone for the markets for the rest of the month," said Craig Erlam, senior market analyst at Oanda.
Erlam said a lower-than-expected inflation reading could be a "major tailwind for the markets" while anything around or above the June reading "could trigger a big risk reversal in the markets" and renew the debate on whether the Fed will boost rates another 0.75 percentage point or a full point.
Elsewhere, Elon Musk disclosed he sold $6.9 billion of stock in Tesla over the past three trading days. Musk said in a tweet that in "the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don't come through, it is important to avoid an emergency sale of Tesla stock."
Read more here.
Other Stocks to Watch:
Coinbase stock was down 6% in premarket trading following a 10.6% plunge during Tuesday's trading session, after the company reported a second-quarter loss of $4.98 a share, compared with the $2.47 loss expected by analysts.
The trading platform reported revenue of $808 million, below analysts' average estimate of $874 million.
---
Shares of Roblox fell 16% in premarket trading after the company reported a wider-than-expected second-quarter loss and said bookings declined 4% year over year. It is the latest videogame company to report disappointing sales in recent weeks.
The company scheduled a call to discuss the results for Wednesday at 8:30 a.m. Eastern.
Forex:
The dollar continued to weaken in cautious trading ahead of the CPI report.
MUFG Bank said the consensus is for a slight slowing in headline inflation but an acceleration in core inflation and under such a scenario, a 75bp rate increase by the Fed in September probably remains on the table.
Silicon Valley Bank said higher-than-expected CPI will fuel even higher rate expectations, which could further dampen the mood in equity markets and send the dollar up. But a weak CPI could signal to the market that a soft landing is possible, an encouraging sign for equities that should cause the dollar to sell off.
ING said the dollar should get support from the inflation report, as it is likely to show that core consumer prices edged higher in July.
"Stubbornly high core inflation should support the Fed's position that its work is far from done. It should also support pricing in the U.S. money market curve that sees the policy rate taken around 125 basis points higher in this cycle."
Energy:
Oil prices ticked lower in Europe after the latest API data showed crude stocks rose by 2.2 million barrels in the week through Friday, a second monthly build of that magnitude.
However, the focus Wednesday will be on the latest CPI data. A higher-than-expected print could send risk assets falling as investors expect the Fed to ease off interest-rate hikes and vice versa, said Mediolanum.
Metals:
Metals prices wavered in cautious European trading ahead of the U.S. CPI data, with economists expecting inflation to have peaked in June.
"Markets seem to be going into today's all important U.S. CPI a little on the apprehensive side," said Deutsche Bank.
TODAY'S TOP HEADLINES
Elon Musk Sells Nearly $7 Billion Worth of Tesla Stock Amid Twitter Uncertainty
Elon Musk sold nearly $7 billion worth of Tesla Inc. stock in recent days, regulatory disclosures show, amid uncertainty over the fate of his $44 billion deal to buy Twitter Inc.
Mr. Musk, Tesla's chief executive and largest shareholder, sold around 7.9 million shares between Friday and Tuesday, the disclosures show, leaving him with a 15% stake in the company.
Chip Makers Expect Demand Slowdown to Expand Beyond PCs, Smartphones
The chip industry that was bracing for a difficult period with laptop sales slumping is adjusting to a wider and sharper slowdown even as semiconductor companies prepare to spend billions of dollars on new factories.
"The market is worse than we thought it would be," Mark Murphy, chief financial officer at memory maker Micron Technology Inc., said Tuesday. On the same day, President Biden signed an investment plan that allocates more than $50 billion to finance future U.S. chip development and production.
Coinbase Posts Steep Second-Quarter Loss Amid Crypto Meltdown
Coinbase Global Inc. reported a surprisingly large second consecutive quarter of losses, driven by the crypto market's spring meltdown.
Coinbase lost $1.1 billion, or $4.98 a share, in the second quarter, the company said Tuesday, compared with a profit of $1.6 billion, or $6.42 a share, a year ago. Revenue fell to $808 million from $2.2 billion a year ago.
Walmart Explores Adding Streaming Video to Walmart+ Membership Program
Walmart Inc. is looking to add a large video streaming service to its Walmart+ membership program as the retailer amps up its competition with Amazon.com Inc., according to people familiar with the situation.
Walmart executives have held talks in recent weeks to discuss a streaming deal with executives at Walt Disney Co., Comcast Corp. and Paramount Global, according to some of these people.
BuzzFeed Expects Recession Fears to Pressure Advertising
BuzzFeed Inc. posted a wider quarterly loss amid rising costs and expenses, and said it expected recession concerns to keep putting pressure on the advertising market.
The digital media company, which beyond its namesake site houses the Tasty, Complex and HuffPost brands, said it lost $23.8 million in the second quarter, compared with a loss of $582,000 in the year-earlier period.
In China, Higher Consumer Inflation Masks Weak Demand
HONG KONG-China's headline consumer inflation rate surged to its fastest pace in two years in July, but a drop in core inflation points to a different problem: weak domestic demand.
After edging up just 0.9% in 2021 and staying largely within the government's comfort zone since the start of the pandemic, headline consumer prices in the world's second-largest economy rose by 2.7% in July from a year earlier, accelerating from June's 2.5% gain, as food prices soared, China's National Bureau of Statistics said Wednesday.
Thailand's Central Bank Raises Rate to Help Control Inflation
Thailand's central bank raised its policy rate for the first time in nearly four years in a bid to help control inflation.
The Bank of Thailand said Wednesday that its policy committee voted six to one to increase its one-day repurchase rate by 25 basis points to 0.75%, effective immediately. It was the first increase since December 2018. One member voted to raise the policy rate by 50 basis points, the central bank said.
Pelosi's Taiwan Visit Threatens China-Australia Reset
SYDNEY-China's ambassador to Australia said relations between the two countries are at a critical juncture and that the U.S. ally must approach the Taiwan issue cautiously, another example of how House Speaker Nancy Pelosi's visit to Taipei has raised tensions in the region.
The center-left government led by Australian Prime Minister Anthony Albanese, whose Labor Party came to power after an election in May, has sought a less-confrontational tone with China, a major trading partner that buys much of Australia's iron ore. Top-level contacts, suspended after Australia's previous right-leaning government took a hard line on China, recently resumed, including meetings between the defense ministers and foreign ministers of both countries.
Trump-Backed Candidate Wins Wisconsin Primary for Governor to Take on Evers
The businessman former President Donald Trump backed in Wisconsin's Republican primary for governor won the right to take on Democratic Gov. Tony Evers in November's election, a race that's expected to be one of the nation's most hotly contested.
Tim Michels, co-owner of the state's largest construction company, was declared the winner Tuesday evening by the Associated Press. He beat former Wisconsin Lt. Gov. Rebecca Kleefisch, a onetime television reporter and anchor.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings:
All 2Q unless otherwise stated
AcuityAds Hldgs
Ag Growth Intl
Argonaut Gold
ATS Automtn Tling Sys (1Q)
AutoCanada
Ballard Power Sys
BELLUS Health
Boat Rocker Media
Boyd Grp Svcs
CAE (1Q)
Calian (3Q)
CCL Indus
Centerra Gold
Chemtrde Logs
Copperleaf Tech
Dialogue Health Tech
Dream Impact Trust (3Q)
Element Fleet Mgmnt
Emera
Enerflex
Fortuna Silver Mines
Franco-Nevada
goeasy
Largo
Linamar
Magnet Forensics
Manulife Fincl
Metro 3Q
Pan American Silver
Pason Syss
Payfare
Peyto Explrtn & Dvlpmnt
Russel Metals
Savaria
Stantec
Stelco Hldgs
Stella-Jones
STEP Energy
SunOpta
VIQ Solutions
Wesdome Gold Mines
Economic Indicators:
None scheduled
Stocks to Watch:
Aegis Brands 2Q Loss/Shr C$0.12; 2Q Loss C$2.81M; 2Q Rev C$3.2M
---
I-80 Gold 2Q Rev $6.38M
---
Frontera 2Q EPS; 2Q Production Increased 1% to 41,586 Boe/Day; Net Sales Realized Price Increased 12% to $91.50/Boe
---
Magellan Aerospace 2Q Rev C$192.7M Vs. C$167.6M; EPS C$0.01 Vs. EPS C$0.02; 6-Mos Rev C$380.4M Vs. C$343.9M; 6-Mos Loss/Shr C$0.03 Vs. EPS C$0.07; Ukraine War, Pandemic Impact Weighed on Financial Results
---
Spartan Delta 2Q EPS C$1.05; Oil and Gas Sales C$437.7M
Expected Major Events for Wednesday
06:00/GER: Jul CPI
08:00/ITA: Jul CPI
(MORE TO FOLLOW) Dow Jones Newswires
08-10-22 0529ET
