MARKET WRAPS
Watch For:
EU business & consumer surveys; Germany provisional CPI;
Italy PPI; UK money and credit data; Bank of England governor
appears before Lords Committee; trading updates from Schneider
Electric, Exor, Infineon, Siemens Healthineers, AXA, easyJet,
Yandex, Autoliv
Opening Call:
Shares may inch higher at Tuesday's open, after sentiment
improved in Asia as traders digested more news out of China. Asian
stock benchmarks were mostly higher as China and Hong Kong stocks
rebounded; Treasury yields rose; the dollar weakened; while oil and
gold gained.
Equities:
European stocks could open slightly higher after Chinese stocks
led a rebound in Asia, as Chinese authorities tightened controls in
reaction to protests against the country's zero-tolerance approach
to Covid.
"I just don't think [authorities] will want to look as though
they are backing down in response to protests," said Hargreaves
Lansdown. "If you keep having rolling lockdowns, consumer demand
will be dented, there will be an ongoing effect on supply
chains...and there could be a drop in demand for key
commodities."
Hawkish comments from Federal Reserve officials about the path
of interest-rate increases could also damp market sentiment. New
York Fed President John Williams on Monday said "there is still
more work to do" to bring down prices. St. Louis Fed President
James Bullard also discussed elevated rates moving forward.
Investors are awaiting the Labor Department's November jobs data
to be released Friday, which will likely factor heavily into the
Fed's December interest-rate decision.
Forex:
The dollar slipped on increasing risk-off sentiment, as tighter
security in China aided in restraining large-scale protests from
materializing.
"The absence of any clear escalation in protests could aid to
bring some calm to markets," IG said.
However, risks point both ways as rising Covid case numbers in
China and consequent supply disruptions speak to persistent
inflation, while oil prices have come off a long way, ANZ said.
"All of this speaks to ongoing volatility in the lead up to the
December Fed meeting, and as we navigate a host of US data releases
later this week," ANZ added.
Meanwhile, the risks for sterling are "skewed to the downside"
as the U.K. is struggling with a "toxic mix" of double-digit
inflation and close to zero growth, UBS said.
Despite the Bank of England's efforts to control inflation with
higher interest rates, investors are unlikely to be drawn in
further by sterling, UBS said. "A sustained recovery in sterling is
only likely when inflation pressures ease."
Bonds:
Treasury yields rose, as China's Covid-19 unrest raised concerns
about global economic growth, but appeared to do little to inspire
substantial and lasting moves in U.S. Treasurys.
Investors in government debt are weighing the next move from the
Fed.
Likely offsetting some of the decline in yields was news that
the U.S. festive shopping season had gotten off to a strong start,
suggesting there was little evidence to date that consumers are
reining in spending despite the Fed's attempts to cool the
economy.
Markets were pricing in a 75% probability that the Fed will
raise interest rates by another 50 basis points to a range of 4.25%
to 4.5% on Dec. 14, according to the CME FedWatch tool. The central
bank is mostly expected to take its fed-funds rate target to at
least 4.75% to 5% by March.
Later in the week, however, investors will focus on economic
reports, including home prices data and a consumer confidence index
on Tuesday; the ADP employment report, the revision to third
quarter GDP and the Fed's Beige Book on Wednesday.
Energy:
Oil prices gained in Asia, reversing earlier decline as traders
digested more news out of China and the prospect of OPEC+ supply
cuts.
"China markets are perking up to new housing support, a
potential rate cut, and speculation that protests may expedite a
shift from Covid-zero policies," SPI Asset Management said.
Meanwhile, Russia's meeting with members of the Opec+ group to
discuss production policy early next month will also be in
focus.
This sets up "a crucial week for the oil market as headline risk
is bound to keep traders hopping," said SPI Asset Management.
Metals:
Gold prices edged higher early Tuesday ahead of this week's U.S.
economic data, which would offer clues on the Fed's next move on
interest rates.
"Interest rate speculation in the U.S. may play a bigger role on
the metals market this week than most other fundamental currents,"
said DailyFX.
Oanda sees support for the precious metal at $1,730 and
resistance at $1,780.
If mass tensions in China continue to escalate, Insignia
Consultants expects to see gold "rise and rise," as people in China
"hoard" the precious metal.
---
Copper rebounded after steep declines in the previous session
amid Covid-19-related protests in China.
The protests have created some uncertainty over how China will
reopen to the outside world, which will affect demand for the
metal, ANZ said.
Investors are likely to focus on signs that protests are
escalating, or if the situation will be brought under control.
---
Chinese iron-ore futures rose on reports that authorities have
stepped in to curb the protests in several Chinese cities.
Sentiment was also buoyed by recent government measures to
support the country's beleaguered real-estate sector, ANZ said.
Historically low inventory levels of the raw material and
restocking needs heading into winter may also offer support to
iron-ore prices, Donghai Futures said.
TODAY'S TOP HEADLINES
Fed's Williams Says Inflation Fight Could Last Into 2024
A senior Federal Reserve official said he expects inflation
pressures to recede over the next year but cautioned the central
bank will continue to have its work cut out because prices may
decelerate to levels still above the Fed's 2% target.
New York Fed President John Williams also said the risks of a
recession were elevated because the central bank has had to raise
rates rapidly to combat high inflation.
European Differences Over a Russian Oil Price Cap Persist
European Union officials once again failed to agree to the terms
of a price cap on Russian oil sales, with negotiations over the
details of the unprecedented sanctions program continuing with a
week left to implement it.
The European Commission, the EU's executive arm, proposed
setting the price cap at $65 per barrel during talks on Monday,
according to diplomats, three of whom said EU officials suggested
the figure could be cut to $62 per barrel.
Biden Calls on Congress to Pass Legislation to Avert Rail
Shutdown
WASHINGTON-President Biden called on Congress to pass
legislation that would avert a rail shutdown by imposing a proposed
contract that members at four railroad unions had rejected.
The move would cut short a long-running labor dispute between
the country's biggest freight railroads and more than 115,000
workers that threatens to hurt the economy and disrupt the flow of
goods as soon as next week.
China Clamps Down on Protesters Against Zero-Covid Policies
Chinese authorities tightened controls in reaction to rare
nationwide protests against the country's zero-tolerance approach
to Covid, dispatching phalanxes of police to prevent fresh
gatherings as state media reiterated support for leader Xi
Jinping's stringent pandemic strategy.
Fighting Rages in Eastern Ukraine as Zelensky Warns of More
Russian Missile Attacks
KYIV, Ukraine-Fierce fighting rumbled on in east Ukraine, as
Moscow denied Kyiv's claims that Russia was preparing to abandon a
nuclear-power plant in the country's south that it has occupied
since March.
In the eastern Donetsk region, Russia is struggling to seize the
city of Bakhmut and achieve a symbolic victory after being on the
back foot for months. Recent successful Ukrainian offensives have
returned most of the northeastern Kharkiv region and the key
southern regional capital of Kherson to Kyiv's control.
Bridgepoint Weighs Acquisition of Energy Capital Partners
Bridgepoint Group PLC in London said it is evaluating a possible
bid for Energy Capital Partners LLC, commenting after a report that
the private-equity firm was negotiating a $1 billion purchase with
the energy-transition investor.
In a statement citing media speculation on potential mergers and
acquisitions, Bridgepoint confirmed that it is evaluating a number
of possible strategic opportunities. The discussions, including
those with Energy Capital Partners, remain at an early stage and
may not result in a deal, Bridgepoint said.
Shell to Buy Biogas Producer in $2 Billion Deal
Shell PLC has agreed to buy a European producer of biogas for
nearly $2 billion, the latest move by a major oil and gas company
to push into renewable fuels.
The London-based company said Monday it would buy Denmark's
Nature Energy Biogas A/S, which produces a renewable fuel called
biomethane that can replace conventional natural gas in heavy road
and marine transport, industry and heating. Nature Energy is
Europe's biggest producer of biomethane from organic waste.
Iran Arrests Supreme Leader's Niece Amid Crackdown on
Critics
Iran arrested a human-rights activist who is also the niece of
Supreme Leader Ayatollah Ali Khamenei, according to her family,
part of a growing effort by the country's regime to crack down on
those who are critical of its response to a two-month-old protest
movement.
Iranian authorities arrested human-rights advocate Farideh
Moradkhani on Wednesday after she went to a prosecutor's office
following a summons, her brother said over the weekend.
Google, iHeartMedia Pay $9 Million to Settle Deceptive
Endorsement Claims
WASHINGTON-Google and iHeartMedia Inc. agreed Monday to pay $9.4
million to settle allegations by state and federal authorities that
the companies used deceptive endorsements by radio personalities to
promote Google's Pixel 4 phones.
The settlement with the Federal Trade Commission and seven state
attorneys general also bars radio broadcaster iHeartMedia and
Google, a unit of Alphabet Inc., from making similar
misrepresentations.
Apple Has No Easy Road Out of China
Apple Inc.'s short-term problems depend on the patience of its
most lucrative iPhone buyers. Its long-term problems will require
the patience of a much larger constituency.
Growing unrest in China has affected production of Apple's
devices there. The company warned on Nov. 6 that Covid restrictions
at an assembly plant in Zhengzhou were resulting in significantly
reduced capacity for producing its iPhone 14 Pro and Pro Max
models. The situation has only grown worse since, as the lockdowns
have helped spark more protests across the country to a level
unseen in decades.
Elon Musk Claims Apple Is Threatening to Remove Twitter From App
Store
Elon Musk said Apple Inc. is threatening to remove Twitter Inc.
from its App Store and criticized the tech giant for what he called
censorship. He also said the iPhone maker has withdrawn most of its
advertising spending from the social-media company.
In a series of tweets Monday, Mr. Musk asked if Apple supports
free speech and posted a poll asking users whether Apple should
publish all censorship actions it has taken that affect its
customers. Mr. Musk also asked Apple Chief Executive Tim Cook in a
tweet, "What's going on."
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Expected Major Events for Tuesday
05:30/NED: Nov Producer confidence survey
07:00/SWE: Oct Retail sales
07:00/SWE: Oct Foreign trade
07:00/DEN: Nov Business tendency survey
07:00/SWE: 3Q GDP
07:00/TUR: Oct Foreign Trade
07:00/NOR: 3Q Credit Indicator C3
08:00/SWE: Nov Consumer Tendency Survey
08:00/SWE: Nov Monthly Business Tendency Survey
08:00/SWI: 3Q GDP
08:00/SVK: Nov Business tendency survey
08:00/SVK: Nov Economic sentiment indicator
08:00/SPN: Nov Flash Estimate CPI
09:00/ITA: Sep Industrial turnover & orders
09:00/ICE: Oct PPI
09:00/ICE: Nov CPI
09:00/GER: Nov Bavaria CPI
09:00/GER: Nov Hesse CPI
09:00/GER: Nov Baden-Wuerttemberg CPI
09:00/GER: Nov Brandenburg CPI
09:30/GER: Nov North Rhine Westphalia CPI
09:30/UK: Oct Money and Credit - Lending to Individuals, Lending
to Businesses, Broad Money and Credit
09:30/UK: Oct Monetary & Financial Statistics
09:30/UK: Oct Bank of England effective interest rates
10:00/ITA: Oct PPI
10:00/CYP: Sep Industrial Production Index
10:00/EU: Nov Business & Consumer Surveys - Business Climate
Indicator & Economic Sentiment Indicator
10:00/MLT: 3Q GDP
10:00/GER: Nov Saxony CPI
10:30/BEL: Nov CPI
13:00/GER: Nov Provisional CPI
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(END) Dow Jones Newswires
November 29, 2022 00:42 ET (05:42 GMT)
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