MARKET WRAPS

Watch For:

Personal Income & Outlays for November; Durable Goods for November; Weekly Jobless Claims; University of Michigan Final Consumer Survey for December; New Home Sales for November

Opening Call:

Stock futures traded mostly higher Thursday as studies on the Omicron variant revealed infected people were at less risk of being hospitalized.

A study from the University of Edinburgh and another from the Imperial College London found that while the Omicron variant of Covid-19 was more infectious, it was less severe. Also, researchers at South Africa's National Institute for Communicable Diseases found people were 70% to 80% less likely to be hospitalized if infected with Omicron.

Meanwhile, the Food and Drug Administration on Wednesday authorized the Covid-19 antiviral pill from Pfizer, adding a new weapon against the pandemic.

Stock markets will be closed Friday because the Christmas Day holiday falls on a Saturday. Investors, however, will have plenty of data to wade through Thursday ahead of the three-day Christmas break.

Durable-goods orders, new-home sales, jobless claims and the Fed's preferred inflation gauge, the personal consumption expenditures price index, will be issued before and soon after the trading day begins.

Strong inflation data earlier in December helped prompt the Federal Reserve to accelerate a winding down of its pandemic-era stimulus. Brisk demand for goods, disrupted supply chains, temporary shortages and a rebound in travel have pushed inflation higher. Investors and central bankers are worried that the Omicron variant could add additional pressure to inflation.

"Inflation is center stage for a lot of people," said Andrew Cole, head of multiasset in London at Pictet Asset Management. "Inflation is widely expected to peak, if not in the first quarter, the first half of next year. You might have to wait until the second half of next year for central banks to relax."

Oversease, stocks in Asia finished Thursday's session with gains while European equities were rising in early trading.

Economic Insight:

Despite inflation, central banks will exercise extreme caution before taking their foot off the accelerator, said J.P.Morgan Asset Management, referring to central banks' exit from asset purchases.

"Monetary policy tightening will be gradual, announced well in advance and only in response to strong economic activity," said chief EMEA market strategist Karen Ward and global market strategist Tilmann Galler. "In other words, there will be strong 'management' of interest rates in all parts of the government bond yield curve."

Forex:

The DXY Dollar Index has fallen to the bottom of its recent trading range between 96.00 and 97.00 as growing evidence that Omicron isn't as dangerous as previous variants lifts equities and weighs on safe-haven assets, said MUFG.

"The recent improvement in risk sentiment on the back of reduced omicron fears is currently weighing on the dollar," said currency analyst Lee Hardman. Omicron now looks less likely to significantly disrupt the global-growth outlook next year, he added.

Prospects of U.S. interest rates rising next year should limit any losses for the dollar, however, Hardman said.

He also said the recent jump in natural gas prices could hurt the euro relative to the dollar.

"Recent price action has reinforced our view that the energy price shock will hit the European economies harder than the U.S. and further boosts the relative appeal of the dollar heading into early next year."

He said the price of natural gas in the Netherlands has increased by a further 80% this month, with similar price action evident in the U.K. By contrast, U.S. natural gas prices are around 40% below peak levels in early October.

Bonds:

The 10-year Treasury yield edged higher in Europe after it had its biggest drop in almost a week on Wednesday, as markets continued to focus on the economic impact of Omicron. Bond markets will close an hour early Thursday and will remain closed in observance of Christmas on Friday.

"We suspect Thursday's most tradable new information will be the recommended early close as trading volumes thin and investors head for the exit ahead of the long weekend," BMO's Jeffery and Ian Lyngen wrote in a note. In a period of thin liquidity in the Treasury market, "the technicals may play a greater role in dictating the immediate price action."

Commodities:

If major new restrictions are reintroduced in response to the spread of Omicron, oil prices are likely to fall sharply, causing headline inflation in most economies to decline, said Capital Economics' group chief economist Neil Shearing.

"This hit to energy prices means that the initial effect of a major Omicron wave is likely to be disinflationary rather than inflationary," said Shearing. However, it's possible it could also exacerbate underlying price pressures, and thus medium-term inflation, if the hit to supply outweighs the hit to demand, the economist said.

Supply is already failing to keep pace with demand in many countries, and would presumably be curtailed by further new restrictions, he said.

TODAY'S TOP HEADLINES

Citigroup Continues Consumer-Banking Pullback With Philippine Sale

Citigroup Inc. agreed to sell its consumer-banking business in the Philippines to a local lender, pressing ahead with its strategy to exit most of its retail operations in Asia and switch gears to grow in wealth management.

On Thursday, the New York-based bank said it would divest its consumer franchise in the Southeast Asian country to Union Bank of the Philippines. The buyer will pay a premium equivalent to $908 million, plus a cash consideration for the net assets transferred.

Elon Musk's Share-Selling Spree Tops $15 Billion

Elon Musk on Wednesday unloaded more Tesla Inc. stock, bringing the total value of his share sales to more than $15 billion since the billionaire last month began a string of such transactions.

The sales came as Mr. Musk exercised more than 2.1 million Tesla stock options, according to regulatory filings late Wednesday. He sold more than 934,000 of the shares in the company he runs, valued at around $928.6 million, to cover tax withholdings, the disclosures state.

Griddle Maker Blackstone Products to Go Public in $780 Million SPAC Deal

Blackstone Products is merging with a special-purpose acquisition company to go public in a combination that values the griddle maker at roughly $780 million, the companies said.

The deal adds to a wave of investment activity for makers of outdoor cooking equipment, with more consumers preparing food at home during the coronavirus pandemic. Well-known grill makers Weber Inc. and Traeger Inc. went public through traditional initial public offerings earlier this year, as did Solo Brands Inc., owner of the popular Solo Stove outdoor fire-pit brand.

Tencent Slashes JD.com Stake With $16 Billion Dividend to Shareholders

HONG KONG-Chinese social-media giant Tencent Holdings Ltd. is shedding most of its stake in JD.com Inc., saying that the e-commerce company has grown to the point where it no longer requires Tencent's financial backing.

Tencent on Thursday said it would distribute about 457 million shares of JD.com, worth roughly $16.4 billion, in the form of a special dividend to Tencent shareholders. The distribution leaves Tencent with a 2.3% stake in JD.com from 17% before, when it was JD's largest shareholder.

FAA Seeks Engine Fixes to Get Grounded Boeing 777s Back in Service

The Federal Aviation Administration on Wednesday proposed fixes to prevent engine coverings from breaking apart on certain Boeing Co. 777 aircraft, as they did in a series of incidents including on a United Airlines jet over Colorado earlier this year.

The proposed changes, which would allow the aircraft to return to service, are aimed at strengthening engine covers to prevent plane parts from detaching midair and striking aircraft or falling to the ground.

Some Fresh Express Salads Recalled Over Listeria Concerns

Fresh Express is recalling some prepackaged salads that the company and federal officials said could be contaminated with harmful bacteria.

The Food and Drug Administration said this week that a Fresh Express salad sample produced at a facility in Streamwood, Ill., had tested positive for a strain of listeria monocytogenes linked to a multistate outbreak.

Novavax Says Early Data Shows Covid-19 Vaccine Protects Against Omicron

Novavax Inc. said its two-dose Covid-19 vaccine demonstrated "strong immune responses" against the Omicron variant and other variants of the coronavirus, citing initial data.

Still, the company said neutralization against the Omicron variant was "4-fold lower" than it was against the original strain of the virus, suggesting that a booster shot or a new Omicron-specific vaccine would be beneficial.

Gilead's Remdesivir Covid-19 Therapy Cuts Risk of Hospitalization in Study

Gilead Sciences Inc.'s drug remdesivir significantly reduced hospitalizations in a study of people recently diagnosed with Covid-19 and at high-risk of developing severe illness.

Vista Equity Backs Salesloft at $2.3 Billion Valuation

Vista Equity Partners is taking a majority stake in sales engagement software company Salesloft Inc., the latest big transaction in a record year for private-equity tech investments.

The deal gives the Atlanta-based company a valuation of $2.3 billion, according to Chief Executive Kyle Porter.

Judge Trims Hertz Bondholders' Bankruptcy Claims

The judge who oversaw Hertz Global Holdings Inc.'s chapter 11 restructuring trimmed bondholders' requests for early repayment premiums and interest payments, saying that some claims aren't payable under U.S. bankruptcy law or the company's debt contracts.

Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del., said Hertz's unsecured bondholders weren't entitled to collect interest payments at the contractual rate following the rental-car company's bankruptcy filing last year. The judge also absolved Hertz of any obligation to make premium payments on bonds that were scheduled to come due in 2022 and 2024 to compensate for the early retirement of those debts.

Covid-19 Marches Toward Endemic Status in U.S. as Omicron Spreads

The Omicron variant's aggressive advance is the latest twist in the course of a disease that public-health experts say is on a path toward becoming endemic in the U.S.

In other words, the Covid-19 pandemic won't have an end date. Rather, a crisis that engulfed the world within months of the coronavirus's discovery in China will dissipate in fits and starts into something that feels more like normal over the course of years, infectious-disease experts say.

Consumer Spending Likely Slowed in November

Consumer-spending growth likely cooled in November, economists say, and risks are now mounting for the broader economy to slow amid the latest wave of Covid-19 cases.

Economists surveyed by The Wall Street Journal estimate that U.S. consumer spending rose by 0.6% in November from a month earlier, after climbing 1.3% in October.

Jobless Claims Trending Near Historic Lows Despite Omicron Concerns

New applications for unemployment benefits have been hovering near historically low levels in recent weeks, as businesses hold on to workers amid a tight labor market.

Economists surveyed by The Wall Street Journal estimate that initial jobless claims, a proxy for layoffs, held steady at a seasonally adjusted 206,000 in the week ended Dec. 18, a level unchanged from the prior week, and just above the lowest levels in a half-century. The Labor Department will release the latest data at 8:30 a.m. ET Thursday.

M&A Likely to Remain Strong in 2022 as Covid-19 Looms Over Business Plans

Companies are gearing up for another banner year for deal making.

Mergers and acquisitions hit a record in 2021, fueled by low interest rates, a surge in private-equity fundraising and companies' efforts to respond to broader shifts in their industries. The total value of global M&A transactions through Dec. 21 was $5.7 trillion, up 64% from the same period a year before, according to Refinitiv, a data provider. The total number of deals, meanwhile, rose 22% during that period, to 59,748, Refinitiv said.

Air Cargo Also Disrupts Supply Chain as Goods Spill Out of Warehouses

Cargo flights provided a solution this year for producers of consumer electronics, machine parts and toys that struggled to move goods along rails and through ports. Then the airports got clogged.

Labor shortages at air-cargo hubs like Chicago O'Hare International Airport during the fall have disrupted operations for the ground-handling companies that unload planes, and left goods piling up. Airlines, handlers and freight companies said they are working to speed up loading and security checks, tapping warehouse robots and trained sniffer dogs.

ETFs Claim More of Muni Market

Municipal bond investors are piling into exchange-traded funds, attracted by low costs and the ability to trade quickly.

Muni ETFs held $80 billion as of the end of the third quarter, up from less than $50 billion two years ago, Federal Reserve data shows. Citigroup projects they will hold $125 billion by December 2022.

Gas Price Surge Will Keep Eurozone Inflation Higher in 2022 -- Analysis

This year's surge in natural gas prices means that eurozone headline inflation will be higher in 2022 than previously expected, even if oil prices decline, economists say.

The jump in gas prices could push inflation in the single-currency bloc up to one percentage point higher next year than it would otherwise have been, Capital Economics says.

Supreme Court Sets Oral Arguments on Biden Covid-19 Vaccine Rules

WASHINGTON-The Supreme Court on Wednesday said it would hold a special sitting to hear oral arguments early next month on whether the Biden administration can enforce Covid-19 vaccine-or-testing rules for large private employers, as well as vaccine requirements for many healthcare workers.

The cases, set for fast-track arguments on Jan. 7, could go a long way to determining how much latitude the administration has to combat the coronavirus pandemic in the workplace.

Biden Says He Is More Likely to Run in 2024 if Trump Is His Opponent

WASHINGTON-President Biden said he is eager to run for reelection against Donald Trump in 2024 and expressed regret that he didn't act more quickly to purchase at-home Covid-19 tests to distribute to the public.

In an interview with ABC News that aired on Wednesday night, Mr. Biden, 79, said he planned to run for reelection if he remains healthy. "If I'm in the health I'm in now-if I'm in good health-then, in fact, I would run again," he said.

Rep. Mary Gay Scanlon Carjacked in Philadelphia

U.S. Rep. Mary Gay Scanlon was carjacked at gunpoint in Philadelphia on Wednesday as she walked to her car from a meeting, according to her office and law-enforcement officials.

The Pennsylvania Democrat wasn't physically harmed, her office said.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

None scheduled

Economic Indicators (ET):

0830 Oct Payroll employment, earnings & hours

0830 Oct GDP

Market Talk:

Dye & Durham's Link Bid Looks Like Favorable Outcome

Dye & Durham's plan to acquire 100% of Australian data services company Link at A$5.50 a share looks to be a favorable outcome for Link's shareholders, says Morgans.

It says that the bid is superior to Carlyle Group's recent indicative bid for Link of A$5.38 per share. Still, Morgans reckons there is potential for Carlyle Group to come back with a higher bid for Link after conducting due diligence.

"A$6.00 per share would always tempt the board, particularly given Link's recent struggles and likely on-going shareholder pressure," says Morgans. (alice.uribe@wsj.com)

Expected Major Events for Thursday

00:01/UK: Dec CBI Growth Indicator Survey

00:01/UK: Nov UK monthly automotive manufacturing figures

05:00/JPN: Oct Indexes of Business Conditions - Revision

05:30/JPN: Nov Tokyo area department store sales

05:30/JPN: Nov Nationwide department store sales

06:00/JPN: Nov Revised Machine Tool Orders

07:00/GER: Nov Foreign trade price indices

09:00/ITA: Dec Consumer Confidence Survey

09:00/ITA: Dec Business Confidence Survey

13:00/RUS: Weekly International Reserves

13:30/CAN: Oct Payroll employment, earnings & hours

13:30/US: Nov Personal Income & Outlays

13:30/CAN: Oct GDP

13:30/US: Nov Advance Report on Durable Goods

13:30/US: 12/18 Unemployment Insurance Weekly Claims Report - Initial Claims

13:30/US: U.S. Weekly Export Sales

14:45/US: Consumer Comfort Index

15:00/US: Dec University of Michigan Survey of Consumers - final

15:00/US: Nov New Residential Sales

15:00/US: 3Q GDP by State

15:30/US: 12/17 EIA Weekly Natural Gas Storage Report

21:30/US: Foreign Central Bank Holdings

21:30/US: Federal Discount Window Borrowings

23:30/JPN: Nov CPI (Nation), CPI ex-food (Nation)

23:50/JPN: Nov Services Producer Price Index

23:50/JPN: Dec Provisional Trade Statistics for 1st 10 days of Month

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

Bit Digital Inc (BTBT) is expected to report for 3Q.

Cronos Group Inc (CRON,CRON.T) is expected to report $-0.10 for 3Q.

Eargo Inc (EAR) is expected to report for 3Q.

Forward Industries (FORD) is expected to report for 4Q.

Li-Cycle Holdings Corp (LICY) is expected to report for 4Q.

SandRidge Mississippian Trust I (SDTTU) is expected to report for 3Q.

Sanderson Farms (SAFM) is expected to report $6.33 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Adagio Therapeutics Cut to Hold From Buy by Jefferies

Agco Corp Cut to Market Perform From Outperform by Bernstein

Allakos Cut to Market Perform From Outperform by SVB Leerink

Allakos Cut to Market Perform From Outperform by William Blair

ALX Oncology Cut to Hold From Buy by Jefferies

BigCommerce Holdings Raised to Outperform From Neutral by Wedbush

Caterpillar Raised to Outperform From Market Perform by Bernstein

Cerner Cut to Sector Weight From Overweight by Keybanc

Darden Restaurants Raised to Buy From Hold by Stifel

EVO Payments Raised to Buy From Neutral by Northcoast Research

Global Payments Raised to Buy From Neutral by Northcoast Research

Paccar Raised to Outperform From Market Perform by Bernstein

Scholar Rock Holding Corp. Tumbles on Analyst Downgrade

Scholar Rock Holding Cut to Hold From Buy by Jefferies

Williams-Sonoma Raised to Buy From Hold by Loop Capital

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

December 23, 2021 05:55 ET (10:55 GMT)

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