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North American Morning Briefing: Stock Futures Point to Tepid Rise for Week


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U.S. Univ. of Michigan Preliminary Consumer Survey for September.

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Stock futures edged up ahead of fresh data on consumer sentiment, pointing to a subdued end to a choppy week in markets.

Stocks have seesawed this week as investors grappled with mixed economic data in the U.S. and China and the spread of the Covid-19 Delta variant. This week brought the first sign of inflation easing and an unexpected boost to retail sales, but also a slight rise in Americans applying for initial jobless claims, a proxy for layoffs.

"What this week tells us is that there's going to be this bumpy normalization for the foreseeable future. All this mixed data puts us a bit in limbo," said Ludovic Subran, chief economist at Allianz. "The return of volatility in an environment that is a bit of an in-between time is very probable."

Investors are awaiting a preliminary reading of the Michigan consumer sentiment index for September, which is set to go out at 10 a.m. ET.

Invesco jumped over 9% in after hours trading after The Wall Street Journal reported the company is in talks to merge with State Street's asset management business. State Street rose 0.5%.

Overseas, the pan-continental Stoxx Europe 600 advanced 0.8%. Travel stocks rallied on reports that the U.K. will ease restrictions. International Consolidated Airlines rose 3.5% and InterContinental Hotels added 3%.

In Asia, most major benchmarks rose. The Shanghai Composite Index edged up 0.1%, while Hong Kong's Hang Seng gained 0.3%. The mainland China benchmark is down more than 2% for the week after a range of Chinese economic indicators signaled a pullback in growth and giant property developer Evergrande's debt problems weighed on sentiment.

"This has been a stone in the shoe of markets and these events are coming to a head, but it's hard to see how this develops in a way that's too destructive," Mr. Jeffery said.


A rally which took the DXY dollar index to a three-week high of 92.9640 on Thursday pauses, leaving the DXY last down 0.1% at 92.8200, with investors lacking the impetus to push it higher, UniCredit said.

The dollar has been lifted by safe-haven demand due to concerns over slowing growth, rising inflation and "growing fears about a possible international financial shock, potentially coming from China," alongside better U.S. data such as retail sales, UniCredit said.

Yet the uncertain outlook leaves investors "reluctant to ride a more sustained USD recovery," it said.

The DXY index is therefore stuck below 93 for now while EUR/USD has support above 1.1760, it said.

Bitcoin climbed about 2% from the level at 5 p.m. Thursday, trading around $48,000, according to data from CoinDesk. The cryptocurrency fell below $44,000 earlier in the week before recovering some ground.

Data showing an unexpected 0.9% fall in U.K. retail sales in August, against the consensus forecast in a WSJ poll for a rise of 0.8%, "may take some of the momentum out of the rise in U.K. money market rates and also GBP," ING said.

The impact may be limited, however, as the weak figures are unlikely to prompt the Bank of England to "deliver a 'rate protest'" against market pricing of future interest-rate rises at next week's meeting, ING said.

This is likely to leave GBP/USD gravitating around 1.3800 and EUR/GBP near 0.8500, it said.


Benchmark 10-year U.S. Treasury yields declined to 1.334% from 1.335%

The Treasury yield curve has been flattening this week, signaling that investors are positioning ahead of the Federal Reserve monetary policy meeting that begins Tuesday, according to Chris Jeffery, head of rates and inflation strategy at Legal & General Investment Management.

"That's telling us the market is starting to worry more about the Fed," he said.

DWS expects the US Federal Reserve to "gently guide" markets at the upcoming September meeting toward more significant changes in the future, said Christian Scherrmann, U.S. economist at the German asset manager.

This could be expressed by an adjustment of the statement, most likely mirroring Chairman Jerome Powell's speech at Jackson Hole where he stated that "...if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year," Scherrmann said.

DWS remains of the view that the Fed will announce tapering at the November meeting and that the reduction in asset purchases will start in December at the earliest.


Oil prices were ticking lower as supply from U.S. refiners shuttered by storms makes a slow return. Some analysts are betting that oil prices could struggle to rise significantly above the $75 a barrel mark.

"The Delta variant is taking a toll on the pace of the demand recovery across Asia, where vaccine rollouts and the lifting of restrictions have been slower than in Europe and North America," analysts at Fitch Solutions said.

Supply increases from OPEC+ will bring the market back to a position of oversupply next year, they added.

Gold prices ticked higher but are on course for a weekly loss, as gold investors remain on the sidelines. The precious metal is 1.5% lower for the week.

Inflows into gold ETFs have remained lackluster, said TD Securities. That is despite lingering concerns about high inflation coupled with slowing growth.

Stagflation "is increasingly capturing the market's share of mind, but the theme has yet to translate into inflows for gold," TD said.

Gold ETFs tracked by FactSet have seen a net outflow of $947 million over the last month.

Nonetheless, TD expects prices are unlikely to rout as positioning data suggests most investors have already sold their gold holdings, the bank said.



Former Boeing Pilot Expected to Face Prosecution in 737 MAX Probe

Federal prosecutors plan to criminally charge a former Boeing Co. pilot they suspect of misleading aviation regulators about safety issues blamed for two fatal crashes of the 737 MAX, according to people familiar with the matter.

Mark Forkner, who was Boeing's 737 MAX chief technical pilot during the aircraft's development, is likely to face prosecution in the coming weeks, these people said. In his former role, Mr. Forkner served as the plane maker's lead contact with the Federal Aviation Administration for how airline pilots should be trained to fly the new jet.


Invesco in Talks to Merge With State Street's Asset-Management Business

Invesco Ltd. is in talks to merge with State Street Corp.'s asset-management business, people familiar with the matter said.

A deal isn't imminent, and the discussions might not result in an agreement, the people said. It isn't clear what the terms of a potential deal would look like, but it would likely be one of the industry's biggest in recent memory, given State Street's asset-management unit manages nearly $4 trillion in assets.


U.S. Steel Plans New U.S. Mill as Prices Surge

United States Steel Corp. said it plans to begin construction of a new steel mill in the U.S. next year, as the company chases rising demand from a rebounding manufacturing sector.

The Pittsburgh-based company said Thursday the new mill will have the capacity to produce three million tons of sheet steel annually, boosting its sheet-steel capacity by about 20% and helping to alleviate tight supplies of steel in the domestic market. The U.S. Steel mill would increase new production capacity under construction or planned in the U.S. to about 12 million tons annually, or almost 21% of sheet-steel consumption in 2019.


GM Plans to Idle Factories Longer Amid Chip Shortage

General Motors Co. is extending its plans to idle some of its North American factories, compounding the effects of the world-wide semiconductor shortage on the auto maker's production.

The company said Thursday it will add to scheduled downtime at seven plants in the U.S., Canada and Mexico. The move builds upon curtailments that have slammed GM and the broader auto industry throughout the year as supply constraints on computer chips continue to hold back car production.


Facebook Employees Flag Drug Cartels and Human Traffickers. The Company's Response Is Weak, Documents Show.

In January, a former cop turned Facebook Inc. investigator posted an all-staff memo on the company's internal message board. It began "Happy 2021 to everyone!!" and then proceeded to detail a new set of what he called "learnings." The biggest one: A Mexican drug cartel was using Facebook to recruit, train and pay hit men.

The behavior was shocking and in clear violation of Facebook's rules. But the company didn't stop the cartel from posting on Facebook or Instagram, the company's photo-sharing site.


SpaceX Inspiration4 Crew Wraps Up First Day in Space

The first all-civilian crew to orbit the Earth traveled nearly six times around the planet during the mission of Elon Musk's company, SpaceX.

The four-person crew aboard the Crew Dragon space capsule made history Wednesday evening when a Falcon 9 rocket lifted off from Kennedy Space Center in Florida.


CEO's Father Gets a $3.6 Billion Stock Windfall at Carvana

Aside from Jeff Bezos, Mark Zuckerberg and members of Walmart Inc.'s Walton family, no individual has earned more from selling stock in their company over the past year than a used-car magnate from Arizona.

Company filings show Ernie Garcia II, the father of Carvana Co.'s chief executive officer, has sold more than $3.6 billion of stock since October. The sales amount to 16% of his holdings in the company. He has benefited from an ownership structure that confers benefits on him and his family and allows them to maintain control of the business, according to company filings. Some of these benefits can come at the expense of other shareholders, according to the filings, a lawsuit, and corporate governance and tax analysts.


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September 17, 2021 06:03 ET (10:03 GMT)

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