MARKET WRAPS
Watch For:
Flash Manufacturing PMI for December; Flash Services PMI for December; Canada Wholesale Trade for October
Today's Headlines/Must Reads:
- Chinese Property Bonds Are Suddenly a Huge Winner
- TikTok's Efforts to Cut Ties With Chinese Parent Stumble Over Talent
- Americans Pessimistic About Prospects for the Economy in 2023
- Eurozone PMI Improves But Remains in Contraction Territory
- Avaya Veers Toward Bankruptcy Filing
- Twitter Suspends Accounts of Several Journalists
Follow WSJ markets coverage here
Stock futures pointed to sharp losses at the start of trading for Wall Street on Friday, amid investor expectations that central banks will continue to raise interest rates aggressively despite stiff economic headwinds.
Stocks are set for losses of around 1% for the week, with the Nasdaq looking at a drop of nearly 1.8%, as of Thursday's close.
Moreover, traders brace for "quadruple witching," when a flurry of equity options and futures contracts expire.
Read more here
Stocks to Watch
Adobe rose rose 3.8% in premarket trading after it posted better-than-expected fiscal fourth-quarter earnings and its fiscal 2023 forecast matched the outlook the company issued in October.
Agrify said it launched an underwritten public offering of shares. The cannabis company didn't disclose how many shares it would offer or at what price. Shares dropped 33% in after-hours trading.
American Airlines is making it more expensive for travelers to qualify for frequent-flier status in its loyalty program next year, the latest airline to tighten requirements. Its shares slipped 0.8% premarket.
Avaya is nearing a chapter 11 bankruptcy filing as it looks to move past accounting problems, people familiar with the matter said. Its shares plunged 22% premarket.
Good Times Restaurants reported higher revenue for fiscal 2022 compared with the prior year. Its shares edged up 0.4% premarket.
Guardant Health called study results on its blood test for colon cancer a success but investors disagreed, sending the stock down more than 33% in premarket trading.
Faraday Future Intelligent Electric declined 22.9% in premarket trading, expecting to start production of an electric SUV by the end of March, but said that was subject to receiving additional funding of $150 million to $170 million.
Walt Disney's Avatar is expected to debut this weekend with box office sales of between $150 million to $175 million. The stock fell 0.5% in premarket trading.
Accenture, Darden Restaurants, and Winnebago are companies scheduled to report earnings before the stock market opens Friday.
Forex:
The dollar could extend its recent downside correction in the run up to Christmas on potential mounting recession fears after weaker data, Swissquote Bank said.
Thursday's U.S. data were "not brilliant," hinting at "slowing economic growth in the U.S., which should normally boost recession fears and keep the Fed at bay," Swissquote Bank added.
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The euro pared gains against the dollar but rose further versus sterling after data showed manufacturing and service activity improved but continued to contract in December.
The S&P eurozone composite PMI rose to 48.8 in December which "signals a strong possibility of recession" but also hints that any downturn will be milder than previously thought, S&P said.
Read Euro Vs Dollar Seen Little Moved by Rate Differentials
Bonds:
Brandywine Global said a number of factors signal that bonds will perform well in 2023, "the big rate hikes are behind us; the Fed will switch to 25 bps rate hikes next year to give them more flexibility."
In reality, the Fed will be much less important than economic data, which points toward further slowing from the lagged impact of tightening, Brandywine added, also expecting inflation to decline.
"We already have goods deflation, and housing service inflation will be the next area to see a drop," adding that labor weakness is the missing element to bring sticky service inflation lower. "All these trends point toward bonds doing well in 2023."
Energy:
Oil prices were down in Europe but on course for their biggest weekly gain since October.
Anticipation of renewed Chinese demand as Beijing eases its Covid-19 lockdown measures has helped drive oil prices higher this week, while the closure of the Keystone pipeline because of a leak has added supply concerns to the mix.
Metals:
Copper prices were unchanged as risk appetite faded after a week of hawkish statements from major central banks.
"The market sentiment was weak," Marex said, pointing to "the hawkish speech from ECB and BOE, and the recession worries triggered by poor U.S. retail sales data."
Gold
Tighter monetary policy and high inflation are likely to lead to slower global economic growth in 2023, which is good news for gold demand, ANZ said.
Any depreciation in the U.S. dollar could also boost the demand for the precious metal, they added.
TODAY'S TOP HEADLINES
TikTok's Efforts to Cut Ties With Chinese Parent Stumble Over Talent
SINGAPORE-TikTok has accelerated efforts to move workers away from China in an attempt to distance itself from its Chinese parent, but the short-video app still counts on local talent to handle some key functions and continues to recruit there.
TikTok and its parent ByteDance Ltd. have moved key executives to Singapore and the U.S., ramped up hiring of staff and engineers outside of China, and reorganized teams internally from the rest of the Chinese company's suite of apps, part of efforts to separate the companies under scrutiny from Washington.
Twitter Under Elon Musk Suspends Accounts of Several Journalists
Twitter Inc. suspended the accounts of several journalists Thursday without publicly specifying why, the latest instance of the platform making content or user decisions under Elon Musk without much transparency.
The accounts belonged to journalists from publications including CNN, the Washington Post, the New York Times and Mashable. Representatives for the outlets said they didn't receive any explanation of why the accounts were suspended.
China Property Stocks Rally on Support From Vice Premier
Chinese property stocks were higher Friday after China's vice premier said Beijing is considering new measures to support the real-estate sector, characterizing it as a "pillar industry" for the country's economy.
Among the top gainers are Guangzhou R&F Properties Co. and Longfor Group, which were up 5.2% and 3.8%, respectively, at the midday break in Hong Kong. In the mainland market, both Gree Real Estate and CCCG Real Estate rose by their 10% daily limit. The Hang Seng Mainland Properties Index gained 2.6%.
Twitter Under Elon Musk Suspends Accounts of Several Journalists
Twitter Inc. suspended the accounts of several journalists Thursday without publicly specifying why, the latest instance of the platform making content or user decisions under Elon Musk without much transparency.
The accounts belonged to journalists from publications including CNN, the Washington Post, the New York Times and Mashable. Representatives for the outlets said they didn't receive any explanation of why the accounts were suspended.
Stocks could face another explosion of volatility Friday as $4 trillion of options expire in 'quadruple witching'
Stocks have been on a wild ride this week, and conditions could still get weirder as traders brace for "quadruple witching" on Friday, when a flurry of equity options and futures contracts expire.
In particular, options contracts tied to $4 trillion in stocks, stock-index futures and exchange-traded funds are set to expire, making Friday potentially the busiest day for options traders this year, according to data compiled by Rocky Fishman, the head of index volatility research at Goldman Sachs.
Why Returns on Digital Real Estate Don't Compute
The internet never forgets.
Well, at least it has a very long memory, so that silly selfie from five years ago, your old bank statements and the flight reservations for next summer's big vacation all have to live somewhere. Odds are they live in northern Virginia.
Chinese Property Bonds Are Suddenly a Huge Winner
After being mired in distress and defaults for more than a year, Asia's U.S. dollar junk-bond market has staged one of its biggest-ever rallies following an about-face by authorities in China on Covid-19 and housing policies.
The jury is still out on when-and whether-the market can recover to a point where most junk-rated companies can raise money again.
Eurozone Economic Contraction Softened in December, PMIs Suggest
The eurozone economy extended its contraction into December but activity showed further signs of holding up better than expected at year-end, according to data from a purchasing managers survey released Friday.
The S&P Global Flash Eurozone PMI Composite Output Index, which gauges activity in the manufacturing and services sectors, rose to 48.8 in December from 47.8 in November, a four-month high. Economists polled by The Wall Street Journal expected a reading of 48.0.
UK Retail Sales Fell in November, Missing Expectations of an Increase
U.K. retail sales decreased in November, adding to evidence of weak consumer spending midway through the fourth quarter as high inflation and rising interest rates hit households' incomes.
Retail sales volumes declined 0.4% in November on month after increasing 0.9% in October, the Office for National Statistics said Friday. Economists polled by The Wall Street Journal expected sales to increase 0.4%.
Russia Targets Infrastructure Across Ukraine in Latest Barrage
Russia fired a barrage of missiles at Kyiv and other Ukrainian cities on Friday, in the latest attack targeting the country's critical infrastructure.
The mayor of Kyiv, Vitali Klitschko, said explosions hit three districts of the capital, urging residents to remain in shelters.
(MORE TO FOLLOW) Dow Jones Newswires
12-16-22 0638ET
