MARKET WRAPS

Watch For:

U.S. CPI for October; U.S. Weekly Jobless Claims (day early due to holiday); U.S. EIA Weekly Petroleum Report; Walt Disney Co. 4Q results.

Opening Call:

Stock futures paused as investors awaited data on consumer prices, amid building concerns over inflationary pressures in the global economy.

Tesla shares gained around 1% in premarket trading. The electric-vehicle maker's shares fell 12% Tuesday, extending Monday's declines after Chief Executive Elon Musk signaled he might sell a big chunk of his stock.

Coinbase Global tumbled over 10% premarket after the cryptocurrency exchange reported earnings late Tuesday that missed analysts' expectations.

Stocks have chartered a rapid course higher in recent weeks, lifted by a strong batch of earnings reports that have bolstered investors' faith in the recovery. Still, signs that inflationary pressures in the global economy are broadening remain investors' primary concern.

All eyes will be on inflation data due Wednesday, which investors will assess for clues on how it could affect Federal Reserve interest-rate decisions. Fed Chair Jerome Powell said last week that inflation-inducing bottlenecks in the global economy have been more persistent than expected.

Stock markets are showing "stubborn resilience" despite the inflation concerns and the prospect of tightening monetary policy, said Aoifinn Devitt, chief investment officer at Moneta Group. "Inflation is very much here and arguably not transitory but markets don't seem to be too concerned about that," she said.

While earnings season has helped lift indexes, investors are still demanding safe-haven assets, she said. "Even when markets are raging people are not giving up on bonds. There is a slight lack of conviction in terms of how long this can last," she said.

Earnings are due Wednesday from Wendy's ahead of the opening bell, while Walt Disney and Beyond Meat are scheduled to post results after markets close.

Investors are also looking to jobless claims data Wednesday, amid a labor shortage that has been another factor fueling inflation. The data is expected to show applications for unemployment benefits at a fresh pandemic low.

Chinese economic data released Wednesday added to inflation concerns. Factory-gate prices in China surged at the fastest pace in 26 years in October, due in part to surging energy costs. The nation's producer-price index rose by 13.5% from a year earlier.

Forex:

U.S. data later are likely to show inflation accelerated further in October and this could be positive for the dollar in terms of interest rate rise expectations, Unicredit said.

"However, the effective reaction of the greenback--and its ability to absorb the losses it has suffered since last Friday--is set to depend largely on the reaction of the bond market, as the further decline in the 10-year U.S. yield has so far prevented a further widening of the spread to German 10-year Bund more in favor of the USD," Unicredit analysts said.

A potential escalation of post-Brexit trade tensions over the Northern Ireland protocol could hit sterling, MUFG Bank said. The U.K. has threatened to suspend parts of the Brexit deal for Northern Ireland, which could prompt the EU to scrap the Trade and Cooperation Agreement, MUFG analyst Derek Halpenny said.

That would be a "disaster" for the U.K. and Ireland economies, he said. "This is hardly the backdrop for any further GBP rebound and could well be a catalyst for renewed speculative selling that sees GBP underperformance persist." Brexit commissioner Maros Sefcovic will brief EU ambassadors and members of European Parliament on Wednesday about negotiations with the U.K.

Bonds:

The yield on the benchmark 10-Year U.S. Treasury note rose to 1.479% Wednesday, from 1.431% Tuesday.

The lingering inflation scare remains the overarching theme in government bond markets, ING's rates strategists said.

In the eurozone, discussion around the European Central Bank's tapering gaining more traction has the potential to rattle sovereign spreads in particular, they added.

ING noted ECB member Klaas Knot's recent questioning of whether higher purchases under the Asset Purchase Programme would be needed after the Pandemic Emergency Purchase Programme ends in 2022.

Commodities:

Although a hawkish Fed would normally lead to a stronger USD and hence weaker commodity prices, Goldman Sachs said investors shouldn't worry about reduced commodity returns in the current environment.

This is because of the relative scarcity now evident in many commodity markets, including oil, which is likely to support and offset a stronger USD, the investment bank said.

Furthermore "against a stagflationary backdrop in Europe and Asia, the USD and oil could strengthen in parallel."

Oil prices hovered close to a two-week high, as expectations that the U.S. could release supplies from its strategic petroleum reserves ease.

President Joe Biden had reportedly been looking into using the U.S.'s petroleum stockpiles to help bring down gasoline prices. U.S. government data on Tuesday projected that the oil market will become oversupplied and prices would fall by early next year, easing concerns that Biden would release stockpiles.

"President Biden has backed away from an immediate release of SPR inventories, and the market realizes that the president's tool box to lower oil prices is lacking tools," said Helge Andre Martinsen, senior oil analyst at DNB Markets.

European benchmark gas prices were down after slipping around 10% during Tuesday's trading session. There are a number of factors at play, said ING's Warren Patterson, including "an announcement from Gazprom that they have approved and started a plan for gas injections into 5 storage facilities in Europe for November."

He added "there are also signs of increased Russian gas flows into Europe, which is helping to ease some concerns over the tightness in the European market.

Still, while supply from Poland into Germany and Ukraine into Slovenia have increased, flow into Slovakia's Velke Kapusany facility was "sharply down" on Tuesday, DNB Markets's Helge Andre Martinsen said, although he adds that that may rebound today.

Precious metals prices wavered ahead of U.S. inflation data that will be key for influencing the Fed's interest rate outlook. Comex gold futures edged down but remain close to their highest level in two months. Silver futures inched down 0.1%.

TODAY'S TOP HEADLINES

Blackstone Turns Sluggish Credit Business Into a Winner

Blackstone Inc. towers over most of its private-equity peers with $731 billion in assets, but the firm has had a soft underbelly for years: its sluggish lending business. Now, credit has become one of the firm's fastest-growing segments, part of a broad shift under the leadership of President Jonathan Gray.

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Google Loses EU Shopping-Ads Case Appeal

A European Union court largely upheld a $2.8 billion antitrust decision against Google, adding new momentum to the bloc's assault on big tech companies.

The EU's General Court in Luxembourg on Wednesday gave its endorsement to a 2017 antitrust finding by EU competition regulators that the Alphabet Inc. search engine had broken antitrust laws by directing users toward its own comparison-shopping ads at the expense of rival shopping services.

China Evergrande's EV Unit Taps Investors Ahead of First Car Sales

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The Hong Kong-listed business, China Evergrande New Energy Vehicle Group Ltd., on Wednesday said it plans to raise the equivalent of around $63 million from stock sales to improve its financial position and fund production as well as research and development.

Judge Rejects Apple's Request to Delay App Store Order

U.S. District Judge Yvonne Gonzalez Rogers rejected Apple Inc.'s attempt to delay her September injunction that would loosen some of the App Store rules for software developers.

During a hearing Tuesday, Apple sought to stay her order that would force the company to allow developers to communicate with users inside their apps about alternative payment methods outside of the App Store.

Restaurant-Tech Startup Presto Nearing $1 Billion SPAC Merger to Go Public

Presto is close to an agreement to combine with a special-purpose acquisition company and go public in a merger that would value the restaurant-technology startup at about $1 billion, people familiar with the matter said.

Founded in 2008 at the Massachusetts Institute of Technology, Presto offers several different technologies that it says automate restaurants and improve the dining experience. It is known for its kiosks and tablets that let guests order and pay directly at tables and uses speech recognition so customers can order by talking to a device at drive-throughs and other settings. It also uses computer vision and analytics to help eateries optimize operations.

GE Digital to Play Scaled Back Role in Split

General Electric Co.'s plan to break itself into three separate companies reserves a scaled back role for GE Digital, a technology venture that was once at the forefront of the company's strategy to reinvent itself as a software powerhouse, industry analysts say.

Rather than driving a company-wide transformation, an ambitious goal set roughly six years ago by former Chief Executive Jeffrey Immelt, GE Digital will instead be tucked into a combined power and energy business, the company said Tuesday. GE also announced plans to spin off two separate healthcare and jet-engine manufacturing companies.

Jobless Claims Likely Continued Downward Trend

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11-10-21 0607ET