MARKET WRAPS
Watch For:
Flash Manufacturing PMI for September; Flash Services PMI for September
Today's Top Headlines/Must Reads:
- When Rates Drop, They Usually Plunge. The Fed Thinks Different.
- Yields Are Near Their Peak. Don't Wait to Buy Bonds.
- Auto Industry Finance Chiefs Watch for Ripple Effects From UAW Strike
Follow WSJ market coverage here
Opening Call:
Stock futures ticked higher on Friday for the first time since the Federal Reserve hiked its interest-rate forecast for next year.
Gains ahead of the opening bell were limited, however, as caution continued to grip markets after investors focused on the Fed prediction that rates will come down less than previously expected.
"They seem to think they can just coast down slowly," J.P. Morgan Asset Management said. "It never happens that way."
The Bank of Japan kept its interest-rate targets unchanged Friday and maintained its hard cap on the yield of 10-year Japanese government bonds. The yen fell against the dollar after the announcement.
Read Dollar Should Sail Higher Against Yen Near Term, Tides to Turn Later
Read Bank of Japan Holds Off on Rate Increase as Inflation Stays Above Target
Premarket Movers
ADRs of Alibaba, https://urldefense.com/v3/__http://JD.com__;!!F0Stn7g!D5GJxTN7-t4nYbXk2M_JZhl8Yow3bV1dEEeo8kQkq7LQQfpHi0taRJ7-IZKHtSoKQSs3jkR3hUHjIbDqaZYs4SCcSl3BAZ5umntuKMVouSo$ , and PDD jumped ahead of the opening bell, echoing a rally in Hong Kong-listed shares. A Bloomberg report that China was considering relaxing limits on foreign ownership of domestically listed companies helped lift investor sentiment.
ADRs of AstraZeneca gained nearly 2% after the company reported positive results for the drug Dato-DXd in treating breast cancer.
Arm and Klaviyo advanced premarket. The gains put Klaviyo on course to rise for its third straight day as a public company. Arm, meanwhile, was poised to snap a series of losses following its strong debut late last week.
Ford rose 0.2%, General Motors gained 0.4%, and Stellantis dipped 0.4% with the UAW union threatening to expand its strike against the Big Three automakers on Friday if substantial progress isn't made in negotiations. Read more .
Microsoft's $75 billion acquisition of Activision Blizzard drew closer to being cleared after the U.K.'s antitrust authority said a new restructured deal substantially addresses its concerns over cloud gaming. Microsoft shares rose 0.4%, while Activision jumped 1.8%. Read more .
Oracle reiterated Thursday that it will reach $65 billion in revenue by fiscal 2026. Shares were up 0.2%.
Scholastic posted lower first-quarter revenue as demand remained soft in the retail market for books. Shares fell 16%.
United States Steel rose 1.5% after a report from Bloomberg said Stelco Holdings, Canada's biggest steelmaker, was pursuing a bid for the American steel producer.
VinFast Auto reported a second-quarter loss of $526.7 million, which was 8% narrower than the year-earlier period. The stock rose 1.5%.
Thursday's Post-Close Movers
Faraday Future Intelligent Electric said that multiple high-level executives, including its incoming CEO and founder, had entered into a salary deduction and stock-purchase agreement. Shares rose 5.2%.
Puma Biotechnology said it had received orphan drug designation from the FDA for its alisertib, a treatment for small cell lung cancer. Shares rose 4.5%.
Forex:
The dollar will likely benefit from weak eurozone and U.K. provisional purchasing managers' surveys on Friday, ING said.
"Another bleak run of PMIs in Europe may well keep European currencies soft and the dollar bid."
A rise in Treasury yields after the Fed signalled that interest rates would remain higher for longer supports the dollar, while Thursday's jobless claims data "suggested there are very few signs of a robust labor market turning," ING added.
Read Eurozone Activity Contracted Again in September, PMIs Suggest
Bonds:
The 10-year Treasury yield is highly likely to rise further over the next two months, based on technical charts, UOB said.
The 10-year Treasury yield broke above August's peak of 4.366% two sessions earlier and briefly rose above 4.500% today, which suggests the yield's uptrend is intact, it said.
However, the 4.70% and the psychological 5.00% levels may prove to be formidable resistance in the short term, UOB added.
Energy:
Oil prices edged higher, with Brent rising 0.4%, after Russia said it would ban export of diesel.
Despite the gains, Brent is set for its first weekly loss following three weeks of consecutive increases.
Fed officials' view that rates would likely stay higher for longer capped the rally, but Russia's temporary ban on diesel and gasoline exports has refocused concerns on market tightness.
Russia ships around 1 million barrels a day of diesel and the ban will likely raise already elevated diesel prices, ING said.
"How severe of an impact the loss of Russian diesel has on the global market will really depend on how long the export ban is in place."
Metals:
Base metals and gold prices rebounded in early London trading, after slumping following the Federal Reserve's hawkish message on interest rates.
Despite the gains, copper was still on course for a 1.7% loss this week, while aluminum was set for a 1.8% gain. Gold was on course to end the week flat.
TODAY'S TOP HEADLINES
Cisco's Splunk Deal Shows Allure of AI in Cybersecurity
The $28 billion acquisition of Splunk by network-equipment giant Cisco Systems could create a titan among cybersecurity providers, and analysts expect it to herald increased consolidation in the sector. But such deals can be a mixed blessing for cyber chiefs, experts say.
The market for the cybersecurity services Splunk provides, known as security information and event management, has grown substantially just as other areas of cybersecurity services face financial pressure, with Microsoft and Google investing in the area.
Chevron, Workers Back Brokered Deal to End LNG Strikes - 2nd Update
U.S. energy giant Chevron and workers at two of its large natural-gas operations have agreed on a deal recommended by Australia's workplace arbiter to end strikes affecting plants that account for roughly 7% of global liquefied natural gas supply.
The labor dispute at the Gorgon and Wheatstone liquefied-natural-gas facilities in Australia rattled global gas markets in recent weeks, at times jolting prices sharply higher, as representatives of Chevron and local unions struggled to find common ground. Australia rivals Qatar as the world's largest exporter of LNG.
Amazon's New Challenge: Bargain Retailers That Are Playing a Different Game
The soaring popularity of shopping platforms Temu and Shein among U.S. consumers startled https://urldefense.com/v3/__http://Amazon.com__;!!F0Stn7g!D5GJxTN7-t4nYbXk2M_JZhl8Yow3bV1dEEeo8kQkq7LQQfpHi0taRJ7-IZKHtSoKQSs3jkR3hUHjIbDqaZYs4SCcSl3BAZ5umntu3Ffhxfk$ . The e-commerce juggernaut is figuring out how to respond.
While Amazon has for years contended with challenges from rivals such as Walmart and Target, Temu and Shein, both of which have Chinese roots, are tapping into demand for low-price items that aren't delivered quickly.
Higher Rates Are Supercharging Japan's Banks
Stodgy Japanese banks have morphed into some of the globe's best investments in 2023, and a shifting monetary regime will keep them raking in the cash.
Over the past year, the share prices of the country's three megabanks have gained an average of 73%, driven mainly by hope that the central bank will finally exit its ultralow-interest-rate policy. Since December the Bank of Japan has made a couple of important tweaks to its yield-curve-control policy-effectively allowing long-term bond yields to rise-and an end to the negative-rate policy implemented in 2016 could be on the horizon. That is, BOJ governor Kazuo Ueda said month, if inflation sustainably hits the BOJ's 2% target.
China's Economic Worries Spur a Different Kind of Shopping Spree
China's economy is struggling, but one line of business is booming: selling insurance in Hong Kong to travelers from mainland China.
In recent months, mainland tourists have packed the offices of Hong Kong insurance agents and formed long lines at banks. Sales of investment-focused insurance policies have roared back to life after Beijing ended strict pandemic controls and the border with Hong Kong reopened.
Top New York State Crypto Regulator to Depart
The head of the virtual currency unit at the New York State Department of Financial Services is leaving the agency.
Peter Marton, who joined the New York financial regulator in late 2021 as the deputy superintendent of virtual currency, will depart at the end of the month. Marton will move to the private sector to work at an entity not regulated by the NYDFS, according to a spokeswoman for the agency.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Calendar (ET):
0830 Jul Retail trade
Stocks to Watch:
Alimentation Couche-Tard Prices C$800M of 5.592% Senior Unsecured Notes Due 2030 in a Private Offering; Offering Is Expected to Close Around Sept. 25; Proceeds to Be Used for Debt Repayment, General Corporate Purposes
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Genesis Land Development Announces 460-Acre Land Acquisition in Calgary; Land Acquisition for C$25.8 Million
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Neptune Wellness Solutions Prices Public Offering of 1.8M Shares, Accompanying Warrants to Buy 1.8M Shares at $2.50 Per Share and Warrant; Wellness Solutions Gross Proceeds Expected to be Approx $4.5M; Have Exercise Price of $2.50 Per Share, Immediately Exercisable Upon Issuance; Warrants Expire Five Years From Issuance
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Northland Power Signs Credit Agreement for C$5.0B Project Financing at Taiwan Offshore Wind Project
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(MORE TO FOLLOW) Dow Jones Newswires
09-22-23 0625ET
