MARKET WRAPS
Watch For:
EU unemployment, flash estimate euro area inflation; Germany retail trade, labor market statistics, Bavaria CPI; France GDP, CPI, PPI, consumer spending, housing starts; Italy unemployment, CPI, cities CPI; trading updates from Remy Cointreau, SAS, Currys, Sasol, ABB, EXOR
Opening Call:
European stock futures were higher ahead of inflation data. Asian stock benchmarks traded mixed after China PMI data indicating contraction in factory activity. The dollar and Treasurys steadied; oil futures were little changed; while gold edged lower.
Equities:
Stock futures rose early Thursday, ahead of eurozone inflation data due later today.
"European markets have lagged behind US counterparts of late, but [Wednesday's] German inflation slowdown has provided the boost the DAX and others were looking for," IG analyst Chris Beauchamp said.
"This means eurozone inflation data seems to be heading in the same direction as the U.S., giving the ECB some latitude in its monetary-policy approach. Once more it's the FTSE 100 left behind by its peers. The lack of any continued rebound this year speaks to ongoing disillusion among global investors regarding the U.K. economy's prospects."
Meanwhile, the U.S. October PCE inflation report is also due later Thursday. The core PCE price index is expected to show that price pressures continued to moderate.
The big question is whether the Federal Reserve has to raise interest rates again to further slow the economy and make sure inflation decelerates to its 2% goal.
The Fed's Beige Book survey on Wednesday said the economy has softened since the previous report at the end of summer. Price increases "largely moderated" across the country, the Beige Book found, and "most districts expect moderate price increases to continue into next year."
Forex:
The dollar steadied in Asia. Notable shifts in the Fed's message this week from a couple of hawks on the Board of Governors maintains the soft USD backdrop, Westpac said. Today's U.S. PCE price index should reinforce the message that encouraging disinflation trends are unfolding as well, Westpac said.
Bonds:
Treasury yields were steady early Thursday after dropping further overnight as traders increased bets that the Fed is likely to start cutting interest rates next year.
"The numbers over the past several weeks have suggested the economy is slowing. [Wednesday's] upward revision to an already strong Q3 GDP reading flies in the face of that cooling trend. While one data point is unlikely to push the Fed to raise rates again, it also won't push them any closer to declaring victory on inflation and cutting interest rates, " said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.
Energy:
Oil futures steadied in Asia after global benchmark Brent crude settled at its highest in more than three weeks on Wednesday. There are growing expectations that OPEC+ could make deeper production cuts at its meeting later today, which would be in addition to the rollover of voluntary reductions from Saudi Arabia and Russia, ING said.
However, this suggests downside risk for oil markets if OPEC+ disappoint, ING added.
Metals:
Gold edged lower early Thursday, but remains supported by prospects of Fed rate cuts next year. Treasury yields have stayed under pressure following Fed governor Waller's comments earlier this week that monetary policy is well-positioned to return inflation to a 2% target, ANZ said.
A JPMorgan Chase survey shows investors are increasingly positioning for a hard economic landing and aggressive Fed policy easing next year, ANZ said.
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Copper prices gained as mine closures bring supply risks into focus. The Panama government said it will shut the Cobre mine owned by Canadian company First Quantum, following the decision from Panama's top court that ruled the operation unconstitutional, ANZ said.
Risk of further supply disruptions eased after workers at MMG's Las Bambas copper mine in Peru said they will return to work Thursday. However, they vowed to continue pushing for a new profit-sharing agreement, which could put copper supply at risk again, ANZ added.
TODAY'S TOP HEADLINES
China's Manufacturing PMI Edged Lower, Signaling Continued Weakness
An official gauge of China's manufacturing activity indicated contraction for a second consecutive month in November, signaling continued weakness in the economy despite Beijing's recent efforts to juice up growth amid a protracted housing slump.
China's official manufacturing purchasing managers' index slipped to 49.4 in November from 49.5 in October, the National Bureau of Statistics said Thursday. A reading above 50 indicates an expansion in activity while a reading below it indicates contraction.
Fed's Beige Book finds economy has slowed - and so has inflation
The U.S. economy slowed in November while inflation also tapered off, according to a Federal Reserve survey, suggesting the central bank could be finished raising interest rates if those trends continue.
The survey, known as the Beige Book, said the economy has softened since the previous report at the end of summer. The latest survey covers the period of Oct. 6 to Nov. 17.
OPEC+ Mulls New Oil Production Cuts Amid Middle East Conflict
OPEC and its Russia-led allies are considering new oil production cuts of as much as 1 million barrels a day, delegates said Wednesday, despite tensions in oil markets amid the conflict in the Middle East.
The move, which would likely send oil prices higher, could be announced Thursday at a virtual meeting of the cartel. The meeting, originally scheduled for last week, was postponed over disagreements about production.
Why No One Wants to Pay for the Green Transition
In the past few years, Washington and Wall Street started fantasizing that the transition to net-zero carbon emissions could be an economic bonanza. "When I think climate change, I think jobs," President Biden said. When Wall Street heard green energy, it saw profits. As Ford Motor launched an electric Mustang and pickup truck, its market value topped $100 billion for the first time.
This year the fantasy ended. With electric vehicle demand falling short of expectations, manufacturers are dialing back production and buying back stock instead. Offshore wind developers have canceled projects. The S&P Global Clean Energy Index has fallen 30% this year. Ford's market cap is down to $42 billion.
Israel Considers How to Remove Threat of Hamas Fighters in Gaza
TEL AVIV-As Israeli forces prepare for a renewed offensive targeting Hamas's top leaders in the Gaza Strip, Israeli military and political leaders are confronting the challenge of what to do about the thousands of fighters that represent the group's power base.
To address that challenge, some Israeli and U.S. officials are discussing the idea of expelling thousands of lower-level militants from the Palestinian enclave as a way to shorten the war. The idea is reminiscent of the U.S.-brokered deal that allowed Palestinian leader Yasser Arafat and thousands of fighters to flee Beirut during Israel's 1982 siege of the Lebanese capital.
OpenAI's New Board Takes Over and Says Microsoft Will Have Observer Role
OpenAI's new board formally took over on Wednesday and said it would add an observer role for partner Microsoft, capping a dramatic chapter for the artificial-intelligence startup and launching a new phase of difficult decisions.
The new board's initial three members were decided as part of CEO Sam Altman's return last week after the previous board abruptly fired him. The replacement directors' priorities include creating an independent committee to review the events around Altman's ouster, said Bret Taylor, the board's chairman.
Elon Musk Uses 'F' Word for Advertisers Boycotting Platform
Elon Musk said advertisers pulling their ads from his social-media platform X can "go f-yourself."
Musk's platform in recent weeks has been grappling with the departure of several large advertisers in the wake of a post by the billionaire describing an antisemitic post as "the actual truth," which elicited a new round of criticism that he promotes antisemitic views.
Google, Canada Reach Settlement Over News Payments
TORONTO-Alphabet Inc.'s Google unit reached a settlement with Canada's government over a contentious law that would have forced the tech company to pay Canadian news organizations for links to the content.
Google has agreed to pay 100 million Canadian dollars, equivalent to $73.6 million, indexed to inflation, into a fund, said Canada's Heritage Minister Pascale St-Onge. Money from the fund will go toward supporting the news sector.
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Expected Major Events for Thursday
00:01/UK: Oct UK monthly automotive manufacturing figures
00:01/UK: Nov CBI Growth Indicator Survey
05:30/NED: Oct PPI
05:30/NED: Oct Retail turnover
05:30/NED: Nov Flash Estimate CPI
06:00/FIN: 3Q GDP
07:00/DEN: Oct Unemployment
07:00/DEN: 3Q Preliminary GDP
07:00/TUR: 3Q GDP
07:00/GER: Oct Retail Trade
07:30/HUN: Oct PPI
07:30/SWI: Oct Retail Sales
07:45/FRA: Oct Housing starts
07:45/FRA: Oct Household consumption expenditure in manufactured goods
07:45/FRA: Oct PPI
07:45/FRA: Nov Provisional CPI
07:45/FRA: 3Q GDP - detailed figures
08:00/SWI: Nov KOF economic barometer
08:55/GER: Nov Labour market statistics (incl unemployment)
09:00/GER: Nov Bavaria CPI
09:00/BUL: Oct PPI
09:00/POL: 3Q GDP
09:00/ICE: 3Q GDP
09:00/ITA: Oct Unemployment
10:00/MLT: Oct PPI
10:00/CRO: Oct Industrial Production Volume Index
10:00/CYP: Oct PPI
10:00/GRE: Oct PPI
10:00/GRE: Sep Turnover Index in Retail Trade
10:00/ITA: Nov Provisional CPI
10:00/ITA: Nov Cities CPI
10:00/BEL: 3Q Final GDP
10:00/LUX: Oct PPI
10:00/CRO: Oct Retail trade
10:00/EU: Nov Flash Estimate euro area inflation
10:00/EU: Oct Unemployment
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11-30-23 0017ET
