MARKET WRAPS
Stocks:
European stocks dipped into negative territory on Friday as
investors awaited another key piece of U.S. inflation data.
The Federal Reserve's preferred inflation gauge, the core
personal-consumption expenditures price index, is set to show that
year over year price growth slowed to 3.4% in November. That
progress has raised expectations the Fed will lower interest rates,
perhaps as soon as March.
"Today's inflation print is the Fed puzzle's last crucial piece.
If the PCE print comes in as soft as expected, or ideally
softer-than-expected, we shall see the rally in bonds--and perhaps
in stocks--extend the Santa rally," Swissquote Bank said.
Stocks on the Move
Adidas and Puma were the biggest fallers on the Stoxx Europe 600
index in early trading, after Nike lowered its revenue expectations
for its fiscal 2024.
The lowered revenue guidance reflects a worse-than-expected
consumer demand environment across markets, which will likely be a
negative read-across for peers and retailers, RBC Capital Markets
said.
Prosus and Ubisoft Entertainment shares fell sharply after China
released draft regulations for the online-game industry that
included restrictions on incentives to play or spend more
online.
The European companies' stock falls follow a selloff in Chinese
game stocks in Asian trading.
If implemented, the rule would lead to a reduction in player
monetization, hitting revenue and profit margins for companies such
as Tencent and Netease, Equita SIM said.
U.S. Markets:
Stock futures drifted lower, with Nike shares down more than 10%
premarket.
Benchmark Treasury yields also edged lower. The 10-year yield
had settled at just over 3.89% on Thursday.
Bonds:
Reacceleration of inflation and elections in a number of
countries, including the U.S., are among the risks that
fixed-income markets could face next year, J.P. Morgan Asset
Management said.
It added that market pricing interest-rate cuts for March looks
premature, nonetheless, investors should consider phases of
weakness as a buying opportunity.
Energy:
Oil prices rose, supported by growing fears over trade
disruptions due to the situation in the Red Sea and despite a
buildup in U.S. oil inventories and rising output.
Metals:
Metals were higher on concerns over supply constraints and a
broadly improved market sentiment.
Sucden Financial said seasonal activity is expected to pick up
in the new year for copper and support prices above the $8,600 a
metric ton level.
Meantime, gold made solid gains on a weaker dollar, weighed by
the prospect of Fed interest-rate cuts early next year.
EMEA HEADLINES
Global Gaming Shares Fall After Draft China Rules Released
Global gaming stocks sank after Beijing released draft
regulations for the online game industry that included restrictions
on incentives to play or spend more online.
Shares of Netease, one of China's major online gaming companies,
fell some 25%. Tencent, the Chinese tech juggernaut that is also a
domestic gaming giant, ended the day down 12%-wiping out $46
billion in market value and representing its largest one-day share
loss since October 2022.
U.K. Economy Shrank in 3Q, as Recession Signals Loom
The U.K.'s economy contracted in the third quarter with a
downward revision to the previous quarter indicating that the
country could be stuck in a period of subdued economic
performance.
U.K. gross domestic product declined 0.1% on quarter in the
July-to-September period, according to data from the Office for
National Statistics released Friday, lower than the prior figure of
flat growth in preliminary data published in November.
Israel Signals It Could Agree to Palestinian Authority Governing
Gaza After the War
Israeli Prime Minister Benjamin Netanyahu's national security
adviser indicated that Israel could accept a U.S. plan for a
revamped Palestinian Authority to govern the Gaza Strip after the
war, a sign that the Israeli leader is easing his opposition to the
idea.
"Israel is aware of the desire of the international community
and the countries of the region to integrate the Palestinian
Authority the day after Hamas, and we make it clear that the matter
will require a fundamental reform of the Palestinian Authority,"
Tzachi Hanegbi, who heads Israel's National Security Council, wrote
in an opinion piece published Thursday on the Arabic-language news
site Elaph.
GLOBAL NEWS
What to Watch in Friday's Spending Report: Inflation Closing In
on Fed's Target
Inflation retreated further in November and consumers picked up
their spending as moods improved, forecasters said, adding to signs
that price pressures can be contained without a recession.
Emerging Markets Struggled in 2023. Here's Why Next Year May Be
Better.
Emerging markets will get a much-needed catalyst for improvement
in 2024: central banks around the world pivoting to lower interest
rates.
For this year, the MSCI Emerging Markets index is on pace for
another trouncing by the S&P 500 index-returning 5% to date,
compared with a 26% gain for the S&P. China's sputtering
economic recovery and investor apprehension about the country's
prospects were a major drag.
Biden Administration Explores Raising Tariffs on Chinese EVs
WASHINGTON-The Biden administration is discussing raising
tariffs on some Chinese goods, including electric vehicles, in an
attempt to bolster the U.S. clean-energy industry against cheaper
Chinese exports, people familiar with the matter said.
Biden administration officials, long divided over trade policy,
have left in place Trump-era tariffs on roughly $300 billion of
Chinese goods. But officials at the White House and other agencies
are debating the levies again, the people said, with an eye on
wrapping up a long-running review of the tariffs early next
year.
Write to paul.larkins@dowjones.com
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(END) Dow Jones Newswires
December 22, 2023 05:34 ET (10:34 GMT)
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