OPENING CALL
Stock futures were rising Wednesday after Tuesday's rally in response to a tame inflation report- but not the one that counts.
The PPI isn't normally as big of a focus for investors as the consumer-price index due today at 8:30 a.m. ET, which acts as the main benchmark for inflation.
Still, if July's CPI reading comes in unexpectedly hot, the market could reverse all of Tuesday's gains and then some.
Premarket Movers
Alphabet shares lost more than 1%, falling more than most big tech stocks, following a Bloomberg report suggesting the Justice Department was considering a potential breakup of Google.
Kellanova : Mars is expected to unveil a nearly $30 billion deal for the the foodmaker on Wednesday. Shares jumped.
Postmarket Movers
Flutter Entertainment raised its outlook for the year after revenue surged. Shares rose 8.7%.
Ouster expects third-quarter revenue to miss analysts' expectations. Shares fell 17%.
Watch For:
CPI for July; Cisco Systems earnings after close.
Today's Headlines/Must Reads
- Kamala Harris's Economic Team and Agenda Start to Take Shape
- So Much About Real-Estate Commissions Just Changed. Here's What to Know.
- Six Notable CEOs Who Left Their Jobs Within Months
MARKET WRAPS
Forex:
The dollar could rise as inflation remains elevated and this should prevent the Fed from cutting interest rates aggressively, Commerzbank said, adding that the current 3% annual inflation rate is still too high.
If the figure is higher than expected, the Fed probably won't cut rates by 50 basis points in September as the market expects, it said.
However, ING said the DXY dollar index could break below recent lows around 102.2 in the coming days.
Sterling fell after U.K. inflation data came in lower than expected.
"Though overall price pressures remain higher than the [Bank of England's] comfort level, the general direction of travel is still trending downwards, an encouraging sign for the Bank's rate-setters," Raymond James Investment Services said.
ING said it could weaken further, and "A return above 0.8600 in EUR/GBP looks warranted."
There is a chance the BOE won't put great emphasis on the inflation decline given it was driven by a correction in volatile hotel prices, it said.
However, until policymakers comment on this and tame any enthusiasm for larger monetary policy easing, markets may price in more rate cuts, also given external pressure from the rise in Fed rate-cut expectations, it added.
Energy:
Oil prices rebounded amid reports that crude stocks fell for the seventh consecutive week and weaker-than-expected producer-price index data boosted hopes of a September rate cut.
According to reports ahead of official inventory data, crude stocks fell by 5.2 million barrels last week.
Prices also continue to be supported by a higher geopolitical risk premium, but further gains are capped by persistent concerns over softening demand in China.
Metals:
Gold futures rose, nearing the record $2,537.7 a troy ounce reached in July.
If the CPI figures confirm a slowdown in inflation, a more pronounced response from gold traders is likely given it will raise expectations for a 50 basis point interest-rate cut in September, ActivTrades said.
This momentum could even propel gold to a historic high, with additional safe-haven support coming from escalating Middle East geopolitical tensions.
Copper
Copper prices rose, recovering some ground after Tuesday's losses.
Chinese smelters continue to deliver the metal to the London Metal Exchange, but the pace is expected to slow before the end of August, BNP Paribas said.
Wage negotiations at the Escondida copper mine run by BHP Group in Chile ended without agreement, triggering a walkout on Tuesday at an operation that accounts for roughly 5% of global mined copper supply.
TODAY'S TOP HEADLINES
Google's New Phones Aren't Really About the Phones
Google has been in the smartphone business for a long while now-with seemingly little to show for it. But even the company that powers 91% of the world's internet searches needs a little extra help sometimes.
At an event Tuesday afternoon, Google unveiled the ninth generation of its Pixel smartphone line. These are the phones that Google designs fully in-house, which typically draw high praise from reviewers but generate little in the way of actual sales. Google's Pixel phones accounted for just under 1% of global smartphone shipments last year and the first half of this year, according to data from Counterpoint Research.
UBS Profit Beats Expectations as Credit Suisse Savings Accelerate
UBS Group reported a second-quarter net profit that beat analysts' estimates and said cost savings from its integration of former rival Credit Suisse would come faster than expected.
The Zurich-based banking group said Wednesday that it made steady progress on trimming costs and offloading noncore assets, while its key wealth-management arm continued to attract funds from wealthy clients and its investment bank benefited from stronger activity.
Tencent's Second-Quarter Profit Surges, Driven by Advertising, Gaming Segments
Chinese technology giant Tencent Holdings reported a surge in second-quarter profit on sustained momentum in its advertising business and a turnaround in the key domestic gaming division after two quarters of declining revenues.
The videogame and social-media company said Wednesday that its net profit jumped 82% from a year earlier to 47.63 billion yuan, equivalent to $6.66 billion. The result was higher than the 41.47 billion yuan expected in a FactSet poll of analysts.
Foxconn Posts Higher Profit, Record Revenue on AI Server Demand
Foxconn Technology Group reported higher quarterly net profit as its revenue rose to a record on robust demand for artificial-intelligence servers.
The world's largest contract electronics maker, known for assembling Apple's iPhones, said Wednesday that its second-quarter net profit was 35.045 billion New Taiwan dollars, equivalent to US$1.08 billion, up from NT$33.00 billion a year earlier. That beat the estimate of NT$33.73 billion in a poll of analysts by FactSet.
Eurozone Industrial Activity Contracts Again
Eurozone industrial output fell for a third-straight month in June, a signifier of how difficult the downturn in the sector will be to shake off.
Industrial activity in the currency union ticked down 0.1% in June, compared with a 0.9% decline in May, the European Union's data agency Eurostat said Wednesday.
U.K. Services Inflation Eases, Keeping Door Open for More Rate Cuts
Inflation rebounded in the U.K. last month but a slowdown in services prices makes it likely that the Bank of England will move to lower its key interest rate again over the coming months.
Consumer prices were 2.2% higher than a year earlier in July, rising a little from June. But prices in the services sector eased to 5.2%; the services inflation rate was last lower in May 2022. The BOE and many economists expect services prices, a key focus, to continue to slow, helping return inflation to the central bank's target toward the end of next year, and likely allowing the bank to continue with rate cuts.
Japanese Leader Fumio Kishida to Step Down
TOKYO-Japan is set to get a new leader this fall after Prime Minister Fumio Kishida said Wednesday he wouldn't seek to stay in office.
Kishida, 67, has bolstered relations with the U.S. and South Korea during his three years in office, and under his leadership Japan is nearly doubling its military spending to counter the growing threat from China. But at home, his popularity was hit by a political-funds scandal involving ruling-party heavyweights and relatively high inflation.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
Alithya Group 1Q
Aya Gold & Silver 2Q
Boralex 2Q
Chemtrade Logistics Income Fund 2Q
Chorus Aviation 2Q
Enthusiast Gaming 2Q
Hamilton Thorne 2Q
Hydro One Limited 2Q
Metro 3Q
Northland Power 2Q
Quipt Home Medical 3Q
Sagicor Financial 2Q
TerraVest Industries 3Q
Tidewater Midstream & Infrastructure 2Q
WELL Health Technologies 2Q
Wesdome Gold Mines 2Q
Economic Indicators (ET):
Nothing major scheduled
Stocks to Watch:
Algoma Steel 1Q Loss/Shr C$0.07;1Q Rev C$650.5M; Completed Plate Mill Upgrade, Ramping Production Toward Expected Annual Run Rate Capacity of Over 650,000 Net Tonnage
Bank of Nova Scoita. S&PGRBulletin: Bank of Nova Scotia To Acquire Stake In KeyCorp
Bitfarms. Riot Platforms Reports Beneficial Ownership of 18.9% in Bitfarms Ltd.
Bonterra Energy 2Q Rev C$72.5M; 2Q EPS C$0.20
Franco-Nevada Announces Acquisition Of A 1.8% NSR On Newmont's Yanacocha Operations; Consideration for Royalty Consists of $210M Paid in Cash on Closing, Plus a Contingent Payment of $15M in Stock, Payable Upon Conditions; 2Q EPS 41c; 2Q Rev $260.1M
Lithium Americas (Argentina) 2Q EPS 1c; Production Guidance of 20,000-25,000 MT of Lithium Carbonate in 2024 Remains Unchanged
Minto Apartment REIT 2Q FFO C$0.25/Unit; 2Q Rev C$38.9M
Parkland Responds to Application Initiated by Simpson Oil Over January 2019 Governance Agreement; Simpson Oil Believes Standstill and Voting Restrictions Under the Governance Agreement Are No Longer in Effect, Says 'Material Adverse Change' Has Taken Place and There Has Been 'Substantial Churn of Parkland Senior Management While Performance of the Company Has Suffered'
Peyto Exploration 2Q EPS C$0.26; Weaker Spot Natural-Gas Prices Will Continue to Prevail During Summer Across N America as Storage Inventories Remain Elevated and Supply and Demand Remain Imbalanced
PHX Energy Services Gets TSX Approval to Renew Normal Course Issuer Bid; Might Buy Up to 3.36M Shrs
Pieridae Energy 2Q Loss/Shr C$0.12
Strathcona Resources Declares Inaugural Base Qtrly Div of C$0.25 to Be Paid Sept. 27; 2Q Oil and Natural Gas Sales C$1.47B
Superior Plus 2Q Rev $422.9M; 2Q Loss/Shr 20c
(MORE TO FOLLOW) Dow Jones Newswires
08-14-24 0634ET
