MARKET WRAPS
Stocks:
European stocks struggled for direction on Wednesday, as investors waited cautiously for the latest Federal Reserve rate decision, with the focus on what Jerome Powell says about whether the central bank might slow down the rises at its next policy meeting in December.
"They have to think about calibration at this meeting. You're trying to cool down an economy, not throw it into a deep freeze," KPMG said.
Some analysts say it will be difficult for the Fed to dial back the pace of rate increases in December because they expect inflation to continue to run hotter than other analysts forecast.
Analysts at Deutsche Bank, UBS, Credit Suisse and Nomura Securities expect the Fed to follow this week's 0.75-point rate rise with an increase of the same size in December.
Meanwhile, analysts at Bank of America, Goldman Sachs, Morgan Stanley, and Evercore ISI see the Fed dialing back the pace of rate rises in December with a 0.5-point increase.
U.S. Markets:
Stock futures were little changed as investors expected another 0.75-percentage-point Fed rate rise.
Read: Fed Is Likely to Slow Pace of Interest-Rate Rises in December
U.S. government bond yields edged lower. The yield on the benchmark 10-year Treasury note fell to 4.048%, from 4.052% Tuesday. The two-year yield, which is more sensitive to near-term interest-rate expectations, fell to 4.512%, from 4.538%.
Later Wednesday, investors will parse ADP payroll data that measures the health of the labor market in the private sector.
Investors will also evaluate earnings from companies including CVS Health, mobile-phone chip supplier Qualcomm, Apollo Global Management and Robinhood Markets.
Forex:
Sterling could fall if the Bank of England delivers another 50 basis-point interest-rate rise on Thursday, given expectations for a larger 75bp move, Ebury said.
The BOE has a track record of being more cautious than expected and market participants may be disappointed again, Ebury said.
"We think that even in the event of a 75bp rate hike this week, sterling could sell off should the bank signal a more gradual pace of tightening ahead."
Market participants would also likely perceive a vote of 5-4 or 6-3 on a potential 75bps rise as bearish for sterling, Ebury said.
Read: UK Still Requires Considerable Rate Increases, BofA Says
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The Fed is expected to raise interest rates by 75 basis points later Wednesday, but the dollar may edge lower if policymakers signal plans to reduce the pace of rate rises in future, UniCredit Research said.
Dollar falls would be limited, however, as this signal wouldn't be a surprise given some board members have suggested this in recent weeks.
"The dollar might give back yesterday's gains, but such news would not catch investors off guard and would be unlikely to drag the DXY much below 110."
Bonds:
Gross eurozone government-bond supply looks set to revisit the Covid-era highs of EUR1.2 trillion in 2023 amid record high QE-adjusted net issuance and a notable increase in risk-equivalent supply, Commerzbank said. "The risk to our bond supply targets are to the upside."
Joint issuance by the EU could cushion some of the impact of energy measures on the issuance. Even so, high volumes of national issuance make higher new issue concession likely in the seasonal syndication spree in January-February, Commerzbank said.
Read: Duration Shortening Likely to Continue in Eurozone Government Bond Issuance
Energy:
Oil futures were flat, giving back Asian gains, as investors reassessed Tuesday's rumor driven rally. "Any nod from China that an earlier-than-expected China reopening is on the cards," could see oil power higher, SPI Asset Management said.
Metals:
Base metals and gold were higher ahead of an expected Fed rate rise. Commodity Research Group said if the central bank "shuts the door" on talk of a rate peak, it would "deflate some of the recent commodity rallies we have seen."
DOW JONES NEWSPLUS
EMEA HEADLINES
Maersk 3Q Earnings Beat Expectations but Demand Seen Slowing This Year
A.P. Moeller-Maersk AS on Wednesday cut its demand forecast for this year as the global economic slowdown takes hold, despite posting third-quarter earnings that beat expectations as it continued to benefit from higher freight rates.
"The extraordinary earnings have peaked as freight rates started to decline during the quarter due to weakening customer demand, coupled with markets beginning to normalize with less supply-chain disruptions and progressive release of congestion," the company said.
GSK Raises 2022 Guidance as 3Q Sales Beat Expectations
GSK PLC on Wednesday raised its guidance for the full year and posted rising sales for the third quarter that beat expectations.
The British pharmaceutical major posted sales of 7.83 billion pounds ($8.99 billion) for the third quarter, up from GBP6.63 billion the year prior, and beating a company-provided consensus of GBP7.32 billion.
Novo Nordisk Lifts Guidance After Reporting 3Q Net Profit Beat
Danish pharmaceutical company Novo Nordisk AS on Wednesday raised full-year guidance and reported a third-quarter net profit that beat expectations amid strong demand for its diabetes care and obesity treatments.
Net profit rose to 14.41 billion Danish kroner ($1.91 billion) from DKK12.12 billion in the same period last year, beating the DKK13.95 billion forecast by analysts in a FactSet poll.
Vestas Earnings Hit by Supply Chain Instability, Costs and Lower Deliveries
Vestas Wind Systems AS on Wednesday posted a bigger-than-expected third-quarter net loss as supply chain instability and cost inflation continued to weigh while delays to project deliveries resulted in higher costs.
The Danish wind-turbine maker swung to a third-quarter net loss of 147 million euros ($145.1 million), from a profit of EUR115 million a year earlier, as revenue fell 29% to EUR3.91 billion.
Aston Martin Lagonda Global 3Q Loss Doubled; Lowers 2022 Guidance
Aston Martin Lagonda Global Holdings PLC said Wednesday that its loss for the third quarter more than doubled amid supply-chain challenges and foreign exchange revaluations and it lowered its guidance for the full year.
The U.K. luxury-car maker said its pretax loss for the three months was 225.9 million pounds ($259.4 million) compared with a loss of GBP97.9 million a year prior. During the nine months to date, the company has booked a GBP245 million negative non-cash foreign exchange revaluation of U.S. dollar-denominated debt as the pound weakened against the dollar, it said. It added that it was also dealing with supply chain and logistics disruption as well as inflationary pressures
German Labor Market Remained Resilient in October Despite Weakening Outlook
Jobless claims in Germany rose in October, but much less than expected, showing the resilience of the labor market amid the energy crisis and weakening consumption.
Claims increased by 8,000 compared with the previous month, a slowdown from the revised 13,000 rise registered in September, according to data from the Federal Employment Agency released Wednesday. Economists polled by The Wall Street Journal had forecast that the number of people out of work would climb by 15,000.
Before OPEC+ Production Cut, Saudis Heard Objections From a Top Ally, the U.A.E.
ABU DHABI-The United Arab Emirates sent its national security adviser to Riyadh in September on a secret mission to dissuade Saudi Arabia's crown prince from pushing an oil-production cut that would anger the U.S. and risk painting oil producers as Russian allies, people familiar with the trip said.
The Emirati official, Sheikh Tahnoun bin Zayed Al Nahyan, a brother of the U.A.E.'s president, met with Saudi Crown Prince Mohammad bin Salman and echoed Washington's view that reducing output wasn't economically necessary and warned of geopolitical fallout, the people said.
Israel Election Puts Benjamin Netanyahu on Brink of Comeback
TEL AVIV-Former Israeli Prime Minister Benjamin Netanyahu is on the cusp of a comeback that could usher in one of the country's most right-wing and religious governments, after Israelis delivered him and his political allies a clear edge in Tuesday's election.
Mr. Netanyahu's Likud party is projected to win 31 seats, with 84% of the vote counted, according to Israeli public broadcaster Kan, while Prime Minister Yair Lapid's centrist Yesh Atid party is projected to win 24 seats. A government led by Mr. Netanyahu is projected to win between 62 and 65 seats in the 120-seat parliament, or Knesset, according to calculations by Kan.
Denmark Prime Minister Poised for Re-Election Amid Surging Inflation, War in Ukraine
COPENHAGEN-Danish Prime Minister Mette Frederiksen looked poised to win re-election by a razor-thin margin Tuesday in an election dominated by a cost-of-living crunch and a disruption in gas supplies from Russia, which had added pressure on her government already under fire for its order to cull millions of mink during the Covid-19 pandemic.
Ms. Frederiksen's Social Democrats won 27.5% of the vote, making it by far the largest of the 14 parties on the ballot. The center-left coalition backing her had gained 87 of the 90 mandates needed to win a majority after all the votes had been counted in metropolitan Denmark.
Saudi Arabia, U.S. on High Alert After Warning of Imminent Iranian Attack
Saudi Arabia has shared intelligence with the U.S. warning of an imminent attack from Iran on targets in the kingdom, putting the American military and others in the Middle East on an elevated alert level, said Saudi and U.S. officials
In response to the warning, Saudi Arabia, the U.S. and several other neighboring states have raised the level of alert for their military forces, the officials said. They didn't provide more details on the Saudi intelligence.
HSBC CFO Ewen Stevenson Sought Top Job Before Surprise Resignation
(MORE TO FOLLOW) Dow Jones Newswires
11-02-22 0620ET
