MARKET WRAPS

Watch For:

EU business and consumer surveys; France consumer spending, GDP, CPI; Germany provisional CPI, GDP, CPI data for Bavaria, Brandenburg, Hesse, Baden-Wuerttemberg, North Rhine Westphalia and Saxony; Italy provisional CPI; trading updates from Volkswagen, Caixabank, Airbus, Sanofi, Glencore, Holcim, Air France-KLM, Eni, Swiss Re, International Consolidated Airlines Group

Opening Call:

European shares may open lower Friday. Asian markets were lower; Treasury yields rose; the dollar weakened; oil fell and gold gained.

Equities:

Stock futures point to a lower open in Europe on Friday as the earnings season continues, with Volkswagen, Caixabank, Airbus, Sanofi, Glencore, Holcim among those reporting earnings.

U.S. stocks finished mostly lower Thursday as the Nasdaq Composite and its technology stocks were dogged by disappointing results.

Kevin Barry, chief investment officer at Summit Financial, thinks most of the decline in stock market throughout the summertime was attributable to higher rates driving down price earnings multiples, but as of yet earnings estimates hadn't really started to come down.

"Even though the prices have come down because rates have gone up, there's been a belief that the earnings would be unaffected," Barry said.

"(But) the way any real secular bear market works is the bear comes and gobbles up each sector."

"Realization has dawned that the might of big tech is not immune to the slowdown. Hopes that resilience would burn brightly through this U.S. earnings season have dimmed," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Forex:

The U.S. dollar weakened in Asia early Friday.

"The Dollar Index is fading back from the highs as markets begin to price in...possibly smaller-than-expected rate hikes," said Sevens Report's Tom Essaye.

The dollar index is down to just over 110, a touch below its 50-day moving average, according to Dow Jones Market Data.

That means investors have lost some confidence in the dollar's ability to gain from here.

Read more here.

Bonds:

Treasury yields were higher early Friday.

Tom Tzitzouris, head of fixed-income strategy at Strategas, said that longer-dated bonds had been oversold recently and were "prone to a reversal lower in yield."

George Pearkes, macro strategist at Bespoke, said the third-quarter GDP number wasn't as strong as it appeared to be, given that it came on the heels of two consecutive quarters of negative growth.

"For the bounce back quarter from that to be only 2.6% -- I would not describe that as strong GDP," he said, adding that the GDP data is a lagging indicator.

The market for 10-year debt is much more focused on what the Fed might do in terms of monetary policy over coming weeks, he said.

Read: Recent rally in Treasury bond yields could be overdone, says this chart watcher

Energy:

Crude-oil futures fell early Friday, reversing the previous day's gains.

Global benchmark crude prices on Thursday settled at their highest in almost three weeks, buoyed in part by third-quarter growth in the U.S. economy.

Gains for oil are capped as the key takeaway from Thursday's "swathe of economic readings is that an economic slowdown is here," Oanda said.

Metals:

Gold prices were slightly higher in Asia, supported by a pullback in the USD.

Although the precious metal has risen more than 0.3% since the start of the week, the recovery may be on shaky ground, DailyFX strategist Michael Boutros said.

"Gold prices continue to be dictated by competing economic forces as a myriad of risks surround the global economy, but we believe the bearing of these issues is now toward the downside," Fitch Solutions said.

Investors are "considering another important number buried within the Q3 GDP report: the latest estimate of annualized federal interest payments, " said Brien Lundin, editor of Gold Newsletter.

This rose to $736.5 billion, "by far a new record, and I believe it's going to hit $1 trillion very soon."

"With the federal debt at these levels (and headed higher), we simply can't tolerate interest rates at current levels or higher," he said.

"Today's debt burden precludes rates that are simply positive on a real basis. Negative real rates, which are necessary when debt is so high, are extremely positive for precious metals and other tangible assets."

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Chinese iron-ore futures fell, extending recent declines amid demand concerns.

Expectations about steel-output curbs are rising, Donghai Futures said.

Sluggish demand for steel, low profitability and high costs were making it likelier for steel mills to proactively lower production and undergo maintenance, it said.

In addition, iron-ore supply is showing an overall upward trend, Donghai added.

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Aluminum fell in Asia, weakening slightly from gains earlier this week, which were supported by hopes that the Fed might soon slow its pace of tightening, though dollar strength still weighs on base metals broadly.

The LME earlier this month floated the idea of a ban on Russian metal, which could deal a blow to the country's huge aluminum industry.

It remains to be seen if restrictions are imposed by an exchange or on a country level, and sanctions that don't affect global supply will only be a short-term hit on sentiment, Galaxy Futures said.


TODAY'S TOP HEADLINES

BOJ Raises Inflation Expectations, Maintains Ultralow Interest Rates

TOKYO-The Bank of Japan on Friday raised its inflation forecast by 0.6 percentage point amid increases in energy prices and a weak yen, but it left its ultralow interest rates unchanged and said it expects inflation to fall below its 2% target next fiscal year.

The BOJ's policy board expects core consumer prices excluding volatile fresh food prices to increase 2.9% in the current year ending March 2023, compared with the previous forecast for a 2.3% rise, the bank's quarterly outlook showed Friday.


EU Reaches Political Deal on Combustion-Engine Vehicle Ban as of 2035

BRUSSELS-European Union lawmakers reached a political agreement on Thursday for emissions rules that will effectively ban the sale of new cars with internal combustion engines beginning in 2035.

The planned law is set to require new cars and vans to have significantly lower carbon emissions by 2030 and to reach zero emissions by 2035, adding to pressure on auto makers and suppliers to accelerate the shift away from cars that run on gasoline and toward electric vehicles.


Unilever CFO Struggles With Forecasting Accuracy Amid High Inflation

Unilever PLC's finance chief is struggling to forecast the level of inflation the consumer-goods company will face, joining other executives grappling with this challenge as continuing cost increases, volatile energy prices and mounting economic uncertainty complicate their budgeting efforts for 2023.

The London-based maker of Dove soap and Ben & Jerry's ice cream in recent months has been operating with wider ranges in its financial forecasts than ever before amid rising costs from ingredients, energy and labor, Chief Financial Officer Graeme Pitkethly said. Unilever on Thursday said its expected net inflation from materials is EUR4.5 billion-equivalent to $4.5 billion-for 2022, up from EUR1.3 billion the previous year.


Iraqi Parliament Elects Iran-Aligned Mohammed al-Sudani as Prime Minister

BAGHDAD-Iraq's Parliament chose Mohammed al-Sudani as prime minister Thursday, aligning Baghdad more closely with Iran amid deep public unrest over rampant corruption and a lack of jobs.

Mr. Sudani and his cabinet were approved under tight security, breaking a yearlong impasse between a bloc of Iranian-backed factions that endorsed him and supporters of Moqtada al-Sadr, a Shia cleric whose followers delayed the formation of the government for months with violent protests and gunbattles outside the parliament building. Mr. Sadr's faction won the most votes in last October's election, but he and his bloc withdrew from the political process after he failed to form a coalition.


Israeli Business in Saudi Arabia Emerges From Shadows at Investment Conference

RIYADH, Saudi Arabia-Israeli businessmen addressed Saudi Arabia's flagship investment conference this week, in a clear but subtle sign of burgeoning commercial ties and Israel's growing acceptance in the kingdom despite the two countries still having no formal relations.

The Middle East's shifting dynamics were on display inside the marble halls of Riyadh's Ritz-Carlton Hotel, host of the Future Investment Initiative, where businessmen in kippahs, the brimless cap worn by religious Jews, could be seen shaking hands with Saudis in traditional white robes.


Elon Musk Twitter Deal Completed, CEO and CFO Immediately Fired

Elon Musk fired several Twitter Inc. executives after completing his takeover of the company, according to people familiar with the matter, capping an unusual corporate battle and setting up one of the world's most influential social-media platforms for potentially broad change.

Mr. Musk fired Chief Executive Parag Agrawal and Chief Financial Officer Ned Segal after the deal closed, the people said. Mr. Musk also fired Vijaya Gadde, Twitter's top legal and policy executive, and Sean Edgett, general counsel. Spokespeople for Twitter didn't comment.


Intel to Cut Jobs in Cost-Savings Drive as PC Slump Weighs on Earnings

Intel Corp. has embarked on an aggressive cost-cutting push and is considering divestitures as the chip maker tries to navigate a sharp plunge in demand for PCs that has weighed on the company's earnings.

Intel posted a 20% drop in third-quarter sales, issued a forecast for even weaker revenue in the current quarter and lowered its full-year outlook.


Amazon's Holiday Blues Come Early-and Hard

Even the One Ring seems to have its limits.

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10-28-22 0023ET