MARKET WRAPS
Watch For:
Weekly Jobless Claims
Today's Top Headlines/Must Reads:
- The Most Important Debate on Wall Street: Is Inflation Licked?
- A Hidden Risk in the Municipal Bond Market: Hackers
- Investors Should Think Beyond Tech to Access AI Investment Momentum
Opening Call:
Stock futures were little changed on Thursday as global bond yields rose and traders eyed two more jobs reports that may impact the chances of the Fed cutting interest rates next year.
Investors will wish to see confirmation from Thursday's weekly unemployment claims data, and Friday's nonfarm payrolls report, that the slower jobs market will help ease inflationary pressures.
"Get out the popcorn, it could be an entertaining 48 hours as traders jockey for position into and eventually out of the granddaddy of all economic releases, U.S. nonfarm payrolls," SPI Asset Management said.
However, SPI warned that investors should be careful wishing for weak jobs reports.
"Without stating the obvious, the labor market is showing signs of contracting much faster than expected. This is not necessarily a 'risk-on' panacea, especially if the downward momentum in the jobs markets picks up a good head of steam."
Overseas Markets
Stocks weakened, as Japan's Nikkei 225 lost 1.8% while Hong Kong's Hang Seng Index fell 0.7% after disappointing import data from China . Germany's Dax, which set a new record Wednesday, pulled back following weak industrial-production figures .
Speculation mounted that Japan's longstanding experiment with negative rates could soon come to an end, causing the yen to rally.
Premarket Movers
Chewy swung to a third-quarter loss and said active customers declined. Shares sank more than 10%.
GameStop reported a 9% sales drop for its most-recent quarter. Shares fell more than 6%.
Wednesday's Post-Close Movers
Braze's revenue surged 33% in the fiscal third quarter, topping analysts' estimates and helping the company's loss narrow. The company also increased its full-year guidance for revenue and said it expects a narrower loss than previously forecast. Shares rose 12%.
Cerevel Therapeutics will be acquired by AbbVie for about $8.7 billion . Shares rose 16%.
Nogin is entering Chapter 11 bankruptcy proceedings, with backing by B. Riley Financial. The company said there would be no interruptions to service as it financially restructures, which is meant to add stability and allow for future growth. Shares rose 12%.
Forex:
November was a very negative month for the dollar, with the DXY index falling by almost 4%, and the near-term outlook isn't much better due to evidence of a weakening economy, Natixis Research said.
"In an environment of soft landing for the economy and a potentially substantial cut in Fed Funds rates, the dollar will continue to perform poorly over the coming months."
Energy:
Oil prices regained some ground after falling to their lowest levels since July earlier this week.
Following OPEC+'s output cuts announcement, which left traders broadly disappointed, concerns around weakening demand and an oversupplied market remained.
Meanwhile, the latest EIA report showed U.S. crude oil inventories fell more than expected last week but gasoline and distillate inventories rose.
Metals:
Base metals prices moved higher, while gold remained firm, buoyed by a weaker dollar ahead of Friday's key employment data.
Investors are worried over worsening economic data and slowing growth going into 2024, Peak Trading Research said.
Investors expect 185,000 nonfarm jobs to be added to the economy Friday, with an unemployment rate of 3.9%, it added. A weaker jobs report would likely stress the dollar, a bullish sign for commodities, Peak said.
TODAY'S TOP HEADLINES
Woodside Energy, Santos in Merger Talks to Create Global Energy Giant
SYDNEY-Woodside Energy and Santos said they are discussing a merger that could result in a new global giant worth around $52 billion, illustrating how rising demand for natural gas in the wake of the Ukraine war is reshaping the energy sector.
Woodside and Santos said talks are at an early stage and there is no agreement over a deal that would rank as one of the largest in the energy sector this year. Santos said it was weighing the merger alongside other options to boost value for shareholders after its stock declined around 5% over the past 12 months.
OpenAI's Unusual Board: Should It Change Its Structure to Govern Effectively?
OpenAI has a new board, but its directors may still confront the same old problem.
The artificial-intelligence startup's unusual business structure that gave oversight of its for-profit business to a nonprofit board will be an unresolved issue for the new board to tackle.
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.
Congress Moves Forward on Roughly $900 Billion Defense Bill
WASHINGTON-House and Senate lawmakers agreed to scrap the most contentious pieces of a nearly $900 billion defense and national security policy bill, such as restrictions on abortion and transgender care for service members, clearing the way for its passage by the end of the year.
Lawmakers who serve on both chambers' Armed Services committees on Wednesday night released compromise text for the annual National Defense Authorization Act. This year's NDAA, which lays out top policy priorities for the Pentagon, calls for a 5.2% pay raise for service members and military training assistance to Taiwan to help the island defend itself against a possible invasion by China.
Atomic Power Is In Again-and China Has the Edge
SINGAPORE-China became the first country to put the latest evolution in civilian nuclear technology into use, placing it at the cutting edge of atomic power just as climate change is bringing nuclear plants back into vogue.
With soaring global temperatures and concerns about climate change casting a renewed spotlight on nuclear as a low-carbon power source, China said Wednesday that the first-ever fourth-generation nuclear power plant began commercial operation in the eastern province of Shandong following seven days of continuous operation.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
EQB 4Q
Laurentian Bank of Can 4Q
Major Drilling Group 2Q
Economic Calendar (ET):
0830 Oct Building permits
Expected Major Events for Thursday
05:00/JPN: Oct Indexes of Business Conditions - Preliminary Release
07:00/GER: Oct Industrial Production Index
07:00/UK: Nov Halifax House Price Index
07:45/FRA: Oct Foreign trade
07:45/FRA: Oct Balance of Payments
09:00/ITA: Oct Industrial Production
10:00/ITA: Oct Retail Sales
12:30/US: Nov Challenger Job-Cut Report
13:00/RUS: Weekly International Reserves
13:30/CAN: Oct Building permits
13:30/US: 12/02 Unemployment Insurance Weekly Claims Report - Initial Claims
13:30/US: U.S. Weekly Export Sales
15:00/US: Oct Monthly Wholesale Trade
15:30/US: 12/01 EIA Weekly Natural Gas Storage Report
20:00/US: Oct Consumer Credit
21:30/US: Federal Discount Window Borrowings
21:30/US: Foreign Central Bank Holdings
23:30/JPN: Oct Household Spending
23:50/JPN: Nov Bank Lending
23:50/JPN: 3Q 2nd Preliminary Quarterly GDP Estimates
23:50/JPN: Oct Balance of Payments
23:50/JPN: Nov International Transactions in Securities
23:50/JPN: 3Q Quarterly External Debt & International Investment Position
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Thursday
ADF Group is expected to report $0.13 for 3Q.
Avid Bioservices Inc (CDMO) is expected to report $-0.06 for 2Q.
Broadcom Inc (AVGO) is expected to report $8.41 for 4Q.
Ciena Corp (CIEN) is expected to report $0.34 for 4Q.
Comtech Telecommunications Corp (CMTL) is expected to report $0.12 for 1Q.
Cooper Companies Inc (COO) is expected to report $2.62 for 4Q.
Delta Apparel Inc (DLA) is expected to report $0.23 for 4Q.
DocuSign Inc (DOCU) is expected to report $0.00 for 3Q.
Dollar General (DG) is expected to report $1.26 for 3Q.
EQB is expected to report for 3Q.
GMS Inc (GMS) is expected to report $1.97 for 2Q.
Genasys Inc (GNSS) is expected to report for 4Q.
Guidewire Software Inc (GWRE) is expected to report $-0.56 for 1Q.
HashiCorp Inc (HCP) is expected to report for 3Q.
Hooker Furnishings Corp (HOFT) is expected to report $0.19 for 3Q.
IES Holdings Inc (IESC) is expected to report for 4Q.
KalVista Pharmaceuticals Inc (KALV) is expected to report $-0.61 for 2Q.
Laurentian Bank of Canada (LB.T,LRCDF) is expected to report $1.16 for 4Q.
Lee Enterprises Inc (LEE) is expected to report for 4Q.
Liquidity Services (LQDT) is expected to report $0.16 for 4Q.
Lululemon Athletica Inc (LULU) is expected to report $2.29 for 3Q.
Major Drilling Group International Inc (MDI.T,MJDLF) is expected to report for 2Q.
Methode Electronics (MEI) is expected to report $0.11 for 2Q.
Planet Labs PBC (PL) is expected to report for 3Q.
RH (RH) is expected to report $0.90 for 3Q.
RVL Pharmaceuticals PLC (RVLPQ) is expected to report for 3Q.
SecureWorks Corp (SCWX) is expected to report $-0.17 for 3Q.
Smartsheet Inc (SMAR) is expected to report $-0.32 for 3Q.
Smith & Wesson Brands Inc (SWBI) is expected to report for 2Q.
Spanish Broadcasting System Inc (SBSAA) is expected to report for 3Q.
(MORE TO FOLLOW) Dow Jones Newswires
12-07-23 0619ET
