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Stocks rise, with focus on US inflation data: Markets wrap

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(Bloomberg) — US stock index futures rose on Thursday, ahead of key US inflation data that could determine how long the federal policy tightening cycle will continue.

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S&P 500 futures are up 0.5% as of 5:20 AM in New York, while Nasdaq 100 futures are up 0.3%. The benchmark index fell to its lowest level since November 2020 yesterday, as concerns mounted about the impact of the Fed’s hawkish policy, especially on interest rate sensitive sectors such as semiconductors. The European Stoxx 600 scale reversed a previous loss to rise 0.2, while the dollar slipped in currency markets.

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The upcoming monthly consumer price numbers may determine whether the Federal Reserve will introduce its fourth consecutive major rate hike. Thursday’s data is expected to show a slight slowdown to 8.1% annually, but all eyes are on the “core” reading that excludes food and energy. This is expected to rise 6.5% from the previous year, matching the rate recorded in March which was the highest since 1982.

Any sign that price pressures remain elevated could send markets into a sell-off, as on Wednesday, when producer price readings above expectations erased a temporary rally in stocks. It will also boost Treasury and dollar yields, which could add to its 15% year-to-date gains.

However, investors note that the Fed is already priced more or less to raise interest rates by about 75 basis points next month, and most markets have fallen sharply in recent weeks.

“Given negative bond and equities movements over the past month, the potential for all of these moves to reflect on weak CPI is significant,” Adam Cole, chief currency strategist at RBC Europe in London, wrote in a research note.

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Violent policy tightening and expectations for more to come has sent the link between the S&P 500 and the widely surprising Citigroup Inc index of the US economy into the most negative indicators since 2015.

Read more: Inflation data is calling the shots as a snowball of market correlations

Chip stocks came under pressure after chip maker Applied Materials cut its fourth-quarter earnings forecast, citing the Biden administration’s new chip export control rules, while the Taiwanese semiconductor maker lowered its 2022 capital spending target.

The dollar fell against most other currencies and US 10-year Treasury yields were at multi-year highs recently.

“It’s all about the core CPI. If that comes in below expectations, you can expect a very strong dollar sell-off as we can then start pricing at the peak in the Fed funds rate,” said Peter Kinsella, head of currency strategy at UBP Asset Management Company.

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In the UK markets, the pound rose and long-term bonds rose sharply with the recent sell-off attracting buyers. Investors are still focused on whether the Bank of England will extend the October 14 deadline to end the emergency bond buying program it launched to calm markets. It has so far refused to do so.

This week’s main events:

  • Earnings this week include: JPMorgan Chase & Co. , Citigroup Inc. , Morgan Stanley, BlackRock Inc. Delta Air Lines Inc. , UnitedHealth Group Inc. , US Bancorp, Wells Fargo & Co., Ltd.

  • US CPI, Initial Jobless Claims, Thursday

  • G20 finance ministers and central bank governors meet on Thursday

  • China CPI, PPI, Trade, Friday

  • US Retail Sales, Business Inventories, University of Michigan Consumer Confidence, Friday

  • The Bank of England’s emergency bond purchase is set to expire on Friday

Some of the main movements in the markets:

Stores

  • The Stoxx Europe 600 was down 0.4% as of 8:38 am London time

  • S&P 500 futures rose 0.1%.

  • Nasdaq 100 futures changed little

  • Futures on the Dow Jones Industrial Average rose 0.1%.

  • The MSCI Asia Pacific Index is down 0.9%.

  • The MSCI Emerging Markets Index is down 1%.

coins

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  • Bloomberg spot dollar index up 0.1%

  • The euro fell 0.1 percent to $0.9690

  • The Japanese yen was little changed at 146.82 per dollar

  • The external yuan fell 0.3 percent to 7.1979 per dollar

  • The British pound fell 0.2 percent to $1.1076

Cryptocurrency

  • Bitcoin fell 0.9% to $1,988.26

  • Ether fell 1.8 percent to $1,275.32

bonds

  • The 10-year Treasury yield advanced three basis points to 3.93%.

  • The 10-year bond yield in Germany was little changed at 2.32%.

  • The UK 10-year bond yield was little changed at 4.43%.

goods

  • Brent crude rose 0.6 percent to $93.03 a barrel

  • And spot gold fell 0.3 percent to $ 1668.27 an ounce

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.