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Hello. I'm Amrith Ramkumar, updating you on global markets. U.S. stock futures are moving sideways following yesterday's trade-driven rally.
Adobe Systems and Cisco are slated to report earnings after the market
closes today with tech stocks trimming some recent declines so far this
As investors weigh the recent trade signals between the U.S. and China, our Ira Iosebashvili breaks down a rough year for commodity investors and what the materials price slump could mean for the global economy.
Markets in a Minute
European stocks wavered after a strong session in Asia, as easing
trade tensions and the British prime minister’s survival of a
no-confidence vote were offset by concerns about a creeping economic
Several key commodities are on track to notch declines this year,
underlining how fears of slowing growth and a persistently strong dollar
have hammered prices for raw materials.
The Bloomberg Commodity Index is down by nearly 7% this year, led
by a more-than-15% fall in oil prices. Other raw materials are also
headed lower: Copper is off 16% in 2018, while iron ore has lost about
6%. Coffee prices have declined nearly 23%, and lumber is down by
Those slumps have come as investors pulled just over $11 billion from commodity-focused funds over the last six months, according to fund tracker EPFR Global.
Driving the declines are fears
that trade tensions will hit global growth at a time when expansion
outside of the U.S. is already lackluster. Investors worry that slowing
growth would likely hit demand for commodities, which are used
extensively in manufacturing and construction.
Those concerns may not dissipate anytime soon. China, a top consumer of
many raw materials, may be limited in the range of economic stimulus
measures it can deliver after months of fighting to rid its economy of
excess leverage, analysts said.
The eurozone’s economy notched its weakest quarterly growth since early 2013 in the three months through September, and some investors are concerned that U.S. growth may have peaked.
“The strength that we saw in the last two years is not there anymore,”
said Michael Widmer, a commodities strategist at Bank of America Merrill
Lynch. “Large parts of the global economy are now in a challenging
A stronger dollar has also weighed on commodities,
which are denominated in the U.S. currency and become more expensive to
foreign investors when the dollar appreciates. The WSJ Dollar Index is
up more than 5% this year, boosted by higher interest rates and
expectations that the U.S. economy will suffer less than others from
Further declines in commodity prices would be an unwelcome development for emerging-market countries like iron ore exporter Australia, and Brazil, which produces oil and sugar.
Still, some investors believe an end to the drop may be in sight,
heartened by recent trade progress. Other analysts think the Federal
Reserve may signal a new wait-and-see approach to tightening monetary
policy after a widely-expected rate increase next week, potentially
causing a pullback in the dollar.
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The Dow industrials have swung at least 500 points intraday five times
this month, after posting an at least 500-point gap between their high
and low five times each in October and November, according to Dow Jones
Market Data. The index had no such swings between June and August and
logged seven in February, its high for the year.
The British pound rose 1.1% against the dollar Wednesday, its best day
since Nov. 1, though it remains down more than 6.5% for the year.
Wednesday's rise came as British Prime Minister Theresa May beat back a leadership challenge, quelling a rebellion within her party that left the route to Brexit unclear.
On this day in 1961, the longest bull market ever for the Dow
industrials ground to a halt. The index peaked at 734.91, up 0.89 point
for the day and 355% for the previous 12 1/2 years. Within six months,
the Dow would bottom at 535.76, a 27% plunge. The blue-chip index closed
at 24527.27 Wednesday.
U.S. jobless claims, out at 8:30 a.m. ET, are expected to slide to 225,000 from 231,000 a week earlier.
U.S. import prices for November, also scheduled for 8:30 a.m., are expected to fall 1.1% from the prior month.
European Union leaders meet Thursday and Friday to discuss Brexit, budget, migration and other issues.
U.S. natural-gas inventories are slated for 10:30 a.m.
Stockpiles are expected to have fallen by 85 billion cubic feet during
the week ended Dec. 7, per the average target of 14 analysts and traders
surveyed by the Journal.
China retail sales, industrial production and investment figures for November are out at 9 p.m.
Wednesday’s meeting with analysts and investors came at the end of a
three-year restructuring launched by CEO Tidjane Thiam. PHOTO: MIKE
Credit Suisse will buy back up to $3 billion in shares. The Swiss lender moved to shore up confidence among investors by launching a share buyback of up to 3 billion francs over the next two years, as it confronts a steep drop in its share price.
Banks are getting a kinder, gentler treatment under Trump. Regulators are asking examiners to adopt a less aggressive tone when flagging risky practices and pressing firms to change their behavior.
Many U.S. financial officers think a recession will hit next year. Almost half of U.S. chief financial officers believe a recession will strike the U.S. economy by the end of 2019, with the tight labor market and growing trade tensions driving economic jitters among corporate America.
U.S. soybean farmers are working to loosen China’s grip. As trade tensions cut deeply into exports, U.S. soybean farmers, industry groups and government officials are seeking a stronger foothold in international markets beyond China, including Europe and Southeast Asia.
Some investors fear Jeremy Corbyn more than Brexit. The possibility of a new Labour government in the U.K. run by an avowed socialist has some investors on edge.
Brexit or not, Britain’s oil-and-gas business is booming. Britain’s once-stagnant oil industry has proved itself resilient to Brexit risk as companies like BP, Total and Shell have announced plans to develop new projects in the U.K.
Coming Friday: How GE Burned Out
Illustration: Justin Metz
Its business was sputtering. Its stock was spiraling. Its big bet was
failing. But the men who led General Electric remained optimistic. GE
might bend, they thought, but never break. The company defined U.S.
industrial might and had helped shape the American Century. Why would
this time be different?
Confidence, it turns out, was no match for the reckoning that awaited.
Apple: Apple is planning a wave of new sites, including an Austin, Texas campus, and said it is on track to create 20,000 U.S. jobs by 2023.
Goldman Sachs: Shares
of the Wall Street firm gave up an early advance Wednesday, closing
down less than 0.1% to extend their losing streak to six sessions. The
stock is at its lowest level since November 2016.
Oxford Industries: The apparel company, which owns brands including Tommy Bahama, lowered its fourth-quarter profit targets.