North American Morning Briefing: S&P 500 Futures Point to Further Gains

view original post


Watch For:

Canada Retail Trade for September; Canada New Housing Price Index for October; Federal Reserve Board Governor Christopher Waller speaks at Center for Financial Stability event

Opening Call:

Stock futures rose Friday, pointing to an extension of the gains that have sent major indexes to fresh records.

Stocks have traded choppily this week, buffeted by continued concerns about inflation. Strong earnings reports, and retail sales data that showed consumers are still spending, has boosted market sentiment, investors say. The S&P 500 is on track to close up for the week.

Earnings season is ongoing, with retailers Foot Locker and Buckle set to report Friday ahead of the opening bell. Shares of fashion e-commerce company Farfetch sank more than 20% in out-of-hours trading after it reported revenue that missed Wall Street’s estimates. Financial software firm Intuit climbed 9% after it raised its full-year guidance.

“Earnings have been very well supported. There are no real signs of stress on the margin or cost side. Some of the bottlenecks, supply-chain issues are easing,” said Georgina Taylor, a multiasset fund manager at Invesco.

Covid-19 cases are picking up in the U.S. and Europe going into winter, and some European countries have retightened social-distancing restrictions. Investors said they are expecting lighter measures than earlier in the pandemic, which won’t limit demand or commerce to the same extent.

“It feels like wholesale shutdowns, lockdowns are the last course of action, that maybe we don’t have to think about the world closing again, ” Ms. Taylor said. “There will be certain measures, but that doesn’t change the whole outlook for the corporate sector.”

Overseas, the pan-continental Stoxx Europe 600 index rose 0.4%, while major benchmarks in Asia were mixed.

Stocks to Watch:

Comcast’s NBCUniversal said it renewed its deal with the English Premier League to continue airing games in the U.S. for six more years.

NBC has been airing English Premier League soccer matches on its broadcast and cable TV networks since 2013, and recently started showing matches on its streaming service, Peacock. NBC paid between $2.5 billion and $2.7 billion to hold onto the rights, and faced bidders such as Walt Disney’s ESPN and, according to people familiar with the matter.

NBC Sports said it’s been averaging 609,000 viewers across its English and Spanish language platforms this season, up 14% from last year, and the highest audience average through this point in the season since the 2015-2016 season.

Real-estate company Redfin said its Homebuyer Demand Index hit an all-time high since at least 2017 during the four-week period ended Nov. 14.

The company also said an increasing share of homes are selling within two weeks and “demand is accelerating as the number of homes listed for sale is decreasing at a slightly slower rate than in 2019 and 2020.” The asking prices of newly listed homes were up 13% from the year-ago period to a median of $354,725, Redfin said.

“The economy is recovering strongly and mortgage rates are still near all-time lows. Those two forces combined have caused homebuying demand to hit a record high,” according to Redfin.

Read: Tesla Price Target Raised to $1,400 as EV Maker Expected to Own Big Chunk of ‘EV Revolution’


The dollar was steady in European trading after its recent rise to 16-month highs, but it could still be set for big swings ahead of next week’s Thanksgiving holiday and it might yet vault to new peaks, UniCredit said.

“Most recent price action appears to hint that seesawing–even with large intraday swings–is likely to continue in the coming days ahead of Thanksgiving and the expected decision on the Fed chair. It’s still too early to imagine that the USD rally has definitively peaked and that the other currencies have definitively bottomed out.”

CBA said currency markets are likely to trade in a narrow range Friday with a lack of any policy-relevant economic data.

Although there’s a risk that broad and rising underlying inflation in the U.S. could spur the FOMC to quicken the pace of its tapering, a faster taper seems to be a low probability at this stage, CBA added.

UBS said the dollar could benefit from the Fed’s declining asset purchases, the scaling back of fiscal stimulus and slowing global growth in 2022. It expects currencies exposed to tightening monetary policies to appreciate, compared with those bound to looser policies.

In an inflationary environment, currency diversification can lower the risk of longer-term wealth erosion, said UBS. “Very high rates of inflation have historically tended to be local phenomena.”

Bitcoin extended its fall into a fifth day. The cryptocurrency traded at around $56,300, 2.2% down from its level at 5 p.m. ET on Thursday and more than 18% below the record high hit on Nov. 10.


In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 1.598% Friday from 1.586% Thursday, as traders continued to focus on the impact that persistent inflation may take on the U.S. economy.

Analysts said this week’s drop in yields appeared to be driven largely by technical factors, with Treasury prices due for a bounce after becoming significantly oversold in the wake of last week’s hotter-than-expected October Consumer Price Index reading.

UBS said investors seeking to boost their income will need to look for unconventional yield sources next year, as central banks are likely scaling back monetary accommodation.

Those yield sources include U.S. senior loans, private credit, synthetic credit and dividend-paying stocks, UBS said. High-yield bonds from China, which have been underperformers during the country’s policy tightening on the property sector, are another source, as recent measures have been more supportive, UBS added.


Oil edged higher in Europe as investors shrugged off concerns about a coordinated effort from governments to release oil stockpiles.

Reports Thursday said that Japan, South Korea, and India had also been involved in discussions with the U.S. and China over releasing stockpiled crude in an effort to tame the energy market. Analysts were skeptical, however, about whether such a move could have a meaningful impact on the oil market.

“We think that a co-ordinated release of oil reserves will only have a temporary impact on oil prices and that the recent fall in oil prices has already largely factored in such a move,” said Vivek Dhar at CBA.

Aluminum prices climbed more than 2% after China’s Shanghai Metals Market said an aluminum smelter in Yunnan province had shut down after an explosion there on Thursday. The plant has an annual capacity of 330,000 tons, according to Marex, and the report helped send aluminum prices higher, the brokerage said.

Aluminum had already been driven sharply higher by concerns about tight supply. It has been one of the most affected metals during the global energy crunch due to power-rationing efforts in China, which have targeted aluminum smelters due to their highly energy-intensive production methods.




Semiconductor Stocks Soar as Chip Shortage Persists

The global chip shortage has been bad news for people trying to buy cars and companies looking to manufacture appliances. But it has been great news lately for investors in semiconductor stocks, some of which have been performing at the top of the S&P 500 over the past month.

Shares of Qualcomm Inc. and Nvidia Corp. have gained 43% over the past month, while shares of Advanced Micro Devices Inc. have added 33%. The S&P 500, by comparison, has risen 4.9% over that time.


Microsoft Pressures Activision Blizzard

Microsoft Corp.’s videogame boss said the company is evaluating its relationship with Activision Blizzard Inc. in the wake of a Wall Street Journal article about its chief executive’s handling of sexual-misconduct issues at the videogame company.

Xbox maker Microsoft made the remarks in a letter to employees Thursday, a day after the head of Sony Group Inc.’s PlayStation business said in a letter to that company’s employees that Sony has asked Activision how it plans to address the Journal’s reporting.


Chinese Developer Yango Agrees to a Bond Swap With Investors

A Chinese property developer on the brink of default has received approval for a debt swap, allowing it to delay payments.

Yango Group Co. had asked international investors earlier this month to exchange $747 million of dollar debt for new bonds, blaming a shutdown of its usual financing channels for its cash problems. It had said a successful exchange would help it avoid imminent payment defaults and, potentially, a broader restructuring of its business and its debts.


Crown Resorts Gets Sweetened Takeover Offer From Blackstone

Crown Resorts Ltd. said U.S. private-equity firm Blackstone Group Inc. sweetened its takeover offer for the Australian casino operator.

Crown on Friday said Blackstone has offered a price of 12.50 Australian dollars (US$9.10) a share, minus any dividends to be paid by Crown, to buy the business. Blackstone most recently offered A$12.35 per share for Crown in May, increasing an earlier offer of A$11.85 per share.


Political Calculus Confronts Biden on Fed Pick of Powell vs. Brainard

Looming in the background of President Biden’s choice for Federal Reserve chair is a political question: How much of a fight would Chairman Jerome Powell or governor Lael Brainard face to garner 50 votes in the U.S. Senate.

Mr. Biden hinted Tuesday that he could reveal his choice around the end of the week, though a White House official suggested the decision could slip into early next week. Advisers are making sure they have enough support for either candidate, according to people familiar with the matter.


Fed Programs Have Kept Finance Flowing to Fossil Fuels

(MORE TO FOLLOW) Dow Jones Newswires

November 19, 2021 05:56 ET (10:56 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.