EuroCOIN indicator of euro area economic activity; EU
Unemployment; EU PPI; ECB General Council meeting; Bank of England
Decision Maker Panel data; OECD CPI.
European stocks could open lower as investors brace for more
volatility. Stock markets in Asia are mixed, U.S. stock future are
pointing to a higher open for major indices. Dollar is steady. Oil
edges higher, while gold prices softened.
European stocks are set to open lower Thursday after a turbulent
day on Wall Street as traders tried to forecast the impact of the
coronavirus's omicron variant.
All three major U.S. indexes finished lower in a stark
turnaround from earlier in the day. Markets were sliding when the
White House announced the discovery of the first omicron case in
the United States. It is unclear whether omicron is more dangerous,
but governments have responded by tightening travel controls,
fueling unease about the outlook for a global economic
"Volatility in the short run should be expected. Ultimately,
we're dealing with a little more uncertainty than we have been,"
said Chris Zaccarelli, chief investment officer of Independent
Advisor Alliance. "There's enough cause for concern that people are
shooting first and asking questions later."
The latest data "painted an optimistic picture for economic
conditions, but that seems to be taking a backseat as the Omicron
variant can potentially shift the landscape," said Yeap Jun Rong of
IG in a report.
On Wednesday, the Institute for Supply Management reported U.S.
manufacturing growth activity accelerated faster than expected in
November. Payroll processor ADP said employers hired more people
than expected. That might raise expectations for Friday's U.S.
government jobs data.
Stocks to watch: Investors are too conservative over
Thyssenkrupp's valuation, Credit Suisse said.
At its fourth-quarter earnings, adjusted EBIT at EUR232 million
was 17% above consensus, but the bigger surprise came from the
industrial company's FY 2022 EBIT guidance of EUR1.5 billion-EUR1.8
billion, amid confidence in the recovery of the steel segment and
reducing losses in its multi-tracks division as it divests itself
of loss-making businesses, the bank said.
CS increases its own EBIT forecasts for 2022 and 2023 by 51% and
37%, respectively, to reflect stronger steel prices from annual
negotiations with the auto sector, more than doubling its EPS
expectations for those years.
The bank reiterates its outperform rating and raises its target
price to EUR16.60 from EUR15.70.
Thyssenkrupp will host a capital markets day on Thursday.
The dollar strengthened against the euro and weakens against the
yen. The chairman of Navellier & Associates notes that since
late June, the WSJ Dollar Index has appreciated almost 6% against
"The primary reason the US dollar is rallying is due to higher
government bond yields than Japan and Europe, plus a strong
economic outlook," Louis Navellier said.
"Eventually, a stronger U.S. dollar helps to lower the prices on
most imported goods as well as commodities (since they are priced
in U.S. dollars). So the Fed's argument that inflation is
'transitory' has some merit, since a strong US dollar will help to
push down the prices of imported goods and some commodities." The
strong dollar is also keeping Treasurys low, he said..
The euro could fall to $1.10 next year from $1.1337 currently
given the prospect of the Fed raising interest rates sooner,
While the dollar's gains could be limited by speculators
potentially trimming bets on the currency rising in the coming
month, it should still rise versus the euro next year given the
scope for more "hawkish" action by the Fed, Rabobank forex
strategist Jane Foley said.
Rabobank maintains its medium-term EUR/USD 1.12 target for now
due to the risk of further dollar pullbacks, she said. "That said,
the possibility of a break lower to 1.10 during the course of next
year has increased."
USD/JPY may fall below the recent support of a 112.50-112.60
band, as the spread of the Omicron variant leads to drops in stocks
and falls in U.S. Treasury yields, IG said.
Once that support is breached, the pair may test the next key
level of 112.00, it said. USD/JPY has been trending lower amid
concerns about the Omicron variant over the past few sessions and
is at 112.91, compared with 112.78 as of Wednesday 5 p.m. Eastern
Time. Investors are closely watching U.S. weekly jobless claims
figures due later in the day to gauge the strength of the current
U.S. labor market.
Barclays now believes the Fed will raise rates three times in
2022 and slow the pace of asset buying faster than is currently
planned. But the firm also notes that even as the Fed raises rates,
money markets remain flooded with cash, which could blunt the
impact of the policy shift.
"With reserves balances over $4 trillion and nearly $1.5
trillion in the [reverse repo facility,] we expect it will be
difficult for short-term interest rates to trade much above the
interest rate floor," said the bank.
Oil prices were higher in early Asian trade as market concerns
about the Omicron variant seem to have eased, ANZ said. In focus is
a meeting between OPEC+ members that will determine whether the
group will halt planned production increases, the bank said.
The current plan being discussed is whether OPEC+ should
increase production to 400,000 barrels a day in January.
Gold prices were slightly lower in early Asian trade. The
precious metal could trade sideways during the session, Oanda said:
While the dollar has eased in recent days and the uncertainty
surrounding the Omicron variant should give prices a boost, rising
Treasury yields could put pressure on gold.
Copper prices were slightly lower in Asia's early trade, as the
commodity extends a broad downturn in recent sessions due to rising
concerns over Omicron.
Huatai Futures pointed out that orders for some copper products
weakened substantially in November, signalling falling end demand
that will weigh on prices.
TODAY'S TOP HEADLINES
Supply Imbalances Continued to Hold Back U.S. Growth This Fall,
Fed's Beige Book Says
The U.S. economy grew at a "modest to moderate" pace this fall,
with supply-chain issues and labor shortages holding back growth
despite strong demand, the Federal Reserve said Wednesday.
The Fed report, a periodic collection of business anecdotes from
around the country known as the Beige Book, found that consumer
spending throughout the country was strong but held back by low
inventories. Strong demand allowed firms to raise prices with
"little pushback" from consumers, and increases were widespread
throughout the economy.
First U.S. Omicron Case Is California Patient
The first known case of the Omicron variant in the U.S. was
identified in a San Francisco resident who recently returned from
South Africa, the Centers for Disease Control and Prevention and
California health officials said.
The CDC said Wednesday that the fully vaccinated traveler, who
returned to California on Nov. 22, has mild Covid-19 symptoms that
are improving. The person has been self-quarantining since testing
positive on Nov. 29, and all known contacts have so far tested
negative for the variant, health officials said.
Biden Says Shelves Will Be Stocked for Holidays Despite
WASHINGTON-President Biden said that prices for everything from
groceries to gas remain high but sought to assure Americans that
his administration is tackling supply logjams.
"Those shelves are going to be stocked," Mr. Biden said in a
speech Wednesday. He cautioned that some holiday gifts are always
hard to come by, invoking hits from the past, including Cabbage
Government Shutdown Deadline Approaches as Deal Eludes
WASHINGTON-Lawmakers worked Wednesday to reach an agreement on a
short-term spending patch to avoid a potential partial government
shutdown this weekend, with Democrats and Republicans still
haggling over the details of the funding extension.
Party leaders had initially hoped to release an agreement
earlier this week. Democrats have eyed a spending patch that would
last until mid-or-late-January, while Republicans have pushed for a
Yellen Defends Spending Plans Amid Growing Angst Over Higher
Treasury Secretary Janet Yellen on Wednesday defended Democrats'
efforts to pass a roughly $2 trillion social-spending package, amid
Republicans' criticisms that fiscal policy implemented earlier this
year overstimulated the economy and fueled higher inflation.
"We had a very sizable fiscal stimulus," Ms. Yellen told the
House Financial Services Committee. "We addressed what was a very
substantial risk" of a prolonged economic downturn, she said.
Supply-Chain Snarls Hit Production of Trailers Needed to Haul
Shortages of parts and labor are crimping production at
truck-trailer factories, undercutting trucking companies' efforts
to expand their capacity in a tight freight transport market.
Russia Expels Some U.S. Diplomats in Latest Tit-for-Tat
Russia ordered U.S. Embassy staff who have been in Moscow for
more than three years to leave the country by Jan. 31, a move that
comes a day before diplomats hold talks to address the worsening
relationship between the two countries.
Foreign Ministry officials on Wednesday indicated that the
decision to remove the U.S. Embassy staff was in retaliation for
Washington's expulsion of more than 50 Russian diplomats by June
30, in line with previously imposed term limits.
Covid-19 Cases Nearly Double in South Africa as Omicron Reaches
Newly reported cases of Covid-19 almost doubled Wednesday in
South Africa, the country with the highest number of identified
cases of the new Omicron coronavirus variant, as the U.S. reported
its first case of the strain in someone who had returned from a
trip to the country.
South Africa's National Institute for Communicable Diseases said
the number of reported cases rose from 4,373 on Tuesday to 8,561 on
Wednesday. Scientists don't usually focus on daily variations in
numbers, but last Wednesday, 1,275 cases were reported.
Omicron Potentially a Stabilizing Force for OPEC+
With the weight of oil markets, member states' fiscal balance
sheets and geopolitical interests often pulling it in different
directions, OPEC+ can be one unwieldy ship for Saudi Arabia to
maneuver. Ironically, the Omicron variant of Covid-19 could prove
to be a stabilizing force.
WeWork to Restate Results Due to Classification Error With Its
WeWork Inc. said in a securities filing it would restate several
quarters of its results, including its latest one, and that
management has concluded there was a material weakness in its
The office-sharing company, which went public last month through
a combination with BowX Acquisition Corp., a special-purpose
acquisition company, said Wednesday the reinstatement relates to
accounting classification of common shares issued as part of BowX's
initial public offering.
Disney Elects Susan Arnold as Board Chairman, Replacing Robert
Walt Disney Co.'s board of directors has elected Susan Arnold
its new chairman, replacing Robert Iger, the longtime chief
executive who is set to depart from the company later this
Ms. Arnold, whose career in business has included positions at
the Carlyle Group Inc. and Procter & Gamble Co., has been a
Disney board member since 2007 and is to become chairman on Dec.
31. She most recently served as its lead independent director.
Square Changes Name to Block, Days After CEO Jack Dorsey Leaves
Square Inc., the financial-services company co-founded and led
by former Twitter Inc. chief Jack Dorsey, is changing its corporate
name to Block Inc.
The change will be effective later this month, the company said
Wednesday. Its ticker symbol will remain SQ.
Junket Operator Suncity's Group Chairman Resigns
Junket operator Suncity Group Holdings Ltd.'s Chairman Alvin
Chau has resigned pending legal proceedings that involve
allegations of illegal gambling and money laundering.
The resignation of Mr. Chau was effective from Dec. 1, Suncity
said late Wednesday.
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Expected Major Events for Thursday
07:00/ROM: Oct PPI
07:30/SWI: Oct Retail Sales
08:00/AUT: 3Q GDP
08:00/SPN: Nov Unemployment
08:30/EU: Nov EuroCOIN indicator of euro area economic
09:00/ITA: Oct Unemployment
10:00/EU: Oct Unemployment
10:00/EU: Oct PPI
10:00/CYP: Nov CPI
11:00/FRA: Oct OECD CPI
15:00/DEN: Nov Foreign Exchange & Liquidity
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(END) Dow Jones Newswires
December 02, 2021 00:27 ET (05:27 GMT)
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