European Central Bank rate decision, market and company reviews

Market reviews

Asian and European stock markets are rising as investors have renewed interest in tech stocks, particularly Nvidia, while looking for a near-certain rate cut from the ECB and possible hints of more to come. A weaker yen has lifted the Nikkei nearly 3%, overshadowing hawkish comments from a top Bank of Japan official that rates should eventually reach 1%.

Europe is set for solid gains ahead of its big event of the day: the European Central Bank's policy decision. EUROSTOXX 50 futures jumped 1.2%, while FTSE futures rose 1%. A quarter-point cut is priced in, but the question remains whether the central bank will cut rates in October and December. Inflation hawks are still in the majority, with markets pricing in a move next month of only around 40%. The most likely scenario is that ECB President Christine Lagarde sticks to her recent line in her post-meeting briefing that decisions are taken at each meeting based on incoming data.

Next up, attention will shift back to the U.S., where weekly jobless claims and producer prices are due. Unemployment benefits have taken on special significance given the Fed's keen attention to the labor market. A bleak number — above the 230,000 forecast — could revive prospects for a 50 basis point cut.

Economists expect the producer price index to have risen 0.1% last month. Some of the data will help analysts refine their forecasts for the consumer spending price index, the Fed's preferred measure of inflation, due out Sept. 27.

• The consumer price index for August came in at 0.2%, compared with a forecast of 0.3%, the Labor Department reported Wednesday. That gave the Federal Reserve momentum to cut interest rates at its September meeting, though only by 25 basis points. The Fed is expected to cut rates five or six times over the next year. After the inflation data, the odds of a 25-basis-point rate cut next week rose to 85% from 71% on CME's FedWatch gauge, lowering the odds of a 50-basis-point cut to 15% from 29%.

• U.S. crude oil inventories rose for the first time in four weeks, and gasoline and distillate stockpiles also rose amid weaker demand, according to data released Wednesday by the Energy Information Administration. Commercial crude inventories excluding the Strategic Petroleum Reserve rose 833,000 barrels to 419.1 million barrels in a week, beating expectations for a 700,000-barrel increase, the EIA said.

• Markets are bracing for a period of greater volatility ahead of the US presidential election in November, writes Vasu Menon, managing director of investment strategy at OCBC.

• Trump Media shares fell sharply Wednesday after Republican nominee Donald Trump debated his rival, Vice President Kamala Harris. Taylor Swift also endorsed Democratic nominee Harris. Shares of parent company Truth Social, which trades under the ticker DJT, fell more than 15% to $15.78, their lowest price since the merger with shell company Digital World Acquisition Corp. Investors could be in for more trouble soon, as Trump will soon be allowed to sell shares of the company, potentially sending them even lower. A lock-up period that began with the Digital World Acquisition Corp. deal expires Sept. 20. Trump Media is majority owned by former President Trump. Trump Media shares did not trade according to traditional valuation metrics like price-to-earnings ratios and future cash flows. Instead, investors viewed the stock as an indicator of the market’s bets on a second Trump administration. Harris was widely seen as the better performer in the debate.

• Shares in Commerzbank (XE:CBK) jumped after Italy's UniCredit raised its stake to 9%, sparking speculation a full merger could be in the works. UniCredit said it acquired the 9% stake by buying the 4.5% of Commerzbank shares held by the German government and the rest through market activity. The German government said it sold its shares at EUR13.20, above Tuesday's closing price of EUR12.60. Reports from Germany suggested it was surprised by UniCredit's aggressive share buying. Germany still has a 12% stake in Commerzbank left over from the 2008 financial crisis.

• Warren Buffett's Berkshire Hathaway (BRKa.N) sold $228.7 million in Bank of America (BAC.N) shares as the conglomerate continues to trim its stake in the bank. Berkshire said late Tuesday that it sold about 5.8 million BofA shares between Sept. 6 and Sept. 10. Berkshire remains BofA's largest shareholder and must regularly report sales until its stake falls below 10%. It currently holds 11.1%.

• Xencor (XNCR) shares jumped after the company said its underwritten public offering is valued at $175 million. The stock price rose 10%. The clinical-stage biopharmaceutical company said before the market opened that it would offer more than 6.6 million shares at $18 each, as well as pre-funded orders to buy an additional 3 million shares at $17.99 a share. The offering is expected to close on Thursday.

• Dollarama (DOL) shares rose 5%. Dollarama expects sales to likely decline slightly in the second half of the year. In the first quarter, same-store sales increased 5.6% year over year, and in the second quarter, same-store sales increased 4.7%. For the full year, same-store sales are expected to be in the range of 3.5% to 4.5%.

• Mullen Automotive (MULN) shares rose more than 23% in late trading Wednesday after its Bollinger Motors unit said it had named Affinity Truck Center as its authorized dealer.

• China's copper imports fell 12.3% as weak economy weighed on demand. Imports of unwrought copper and copper products fell for the third month in a row, further evidence of China's sluggish economy, particularly in sectors such as real estate and manufacturing.

• Samsung plans to cut up to 30% of its foreign employees. Samsung Electronics has already instructed its subsidiaries around the world to reduce their sales and marketing staff by about 15% and their administrative staff by up to 30%, according to Reuters.

• India has ranked first in cryptocurrency adoption for the second year in a row, according to a report. The report, which tracks cryptocurrency adoption across four subcategories in 151 countries, found that India performs well in the adoption of centralized exchanges and decentralized financial assets from June 2023 to July 2024.

• Cyberattacks on U.S. utilities have increased 70% this year, according to Check Point, highlighting the growing threat to critical infrastructure.

• USPS to End Discounts for Shipping Consolidators Using Its Wide Delivery Network. The U.S. Postal Service said Wednesday it will stop offering discounts to shipping consolidators such as UPS and DHL that deliver packages to people's homes. The move should help slow the postal service's financial losses but could result in higher costs for consumers.

• Morgan Stanley's Mike Wilson thinks the AI ​​topic is "overcooked." The AI ​​boom that drove the S&P 500 to record highs earlier this year is fading, and the stock market needs a new catalyst.

• IBM nears record as investors seek stable tech leaders. One of history's first big tech companies is enjoying a quiet renaissance that has pushed its shares to their first record in more than a decade.

• JPMorgan sees Swiss corporate business growing thanks to blockchain. The bank hopes to use blockchain services to attract clients, a JPMorgan executive said. “We are ambitious and want to gain market share.”
Adobe will introduce a new AI-powered video creation and editing tool in a limited release later this year, as it seeks to expand its suite of apps for creative professionals.
UniCredit CEO asks Commerzbank to consider merger, source says. Andrea Orcel has approached German bank Commerzbank to explore a possible merger, a person familiar with the matter told Reuters.

• OpenAI's valuation has increased from $86 billion to $150 billion since the start of the year. The company is in talks to raise $6.5 billion at the new valuation and is in discussions with banks to open a $5 billion line of credit.

• JPMorgan sees Swiss corporate business grow and blockchain expand

• The U.S. CFPB ordered TD Bank to pay $28 million over consumer credit reporting.

• Canada's Sun Life newspaper has named Jessica Tan president of domestic business.

• Short sellers bet against airlines and banks, Hazeltree report says

• UBS promises to maintain lending volumes in Switzerland at more than $400 billion.

• HSBC is considering a possible sale of its Malta business.

• Goldman Sachs appoints three co-heads of Asia M&A to strengthen regional presence

• UniCredit CEO approaches Commerzbank with merger offer after shares surge, source says

• Visa aims to increase digital payments usage in Pakistan by 10x.

• Titanic shipbuilder Harland & Wolff's CFO resigns.

• Prices for zero-emission trucks must fall by 50% to compete with diesel, study says

• Samsung Electronics plans to cut jobs by up to 30% in some units worldwide.

• China will take major measures to improve the insurance sector and prevent risks.

• Dollarama beats quarterly profit forecast on lower costs and stable demand.

• Amazon to invest $10bn in UK data centres

• Adobe to release generative AI-powered video creation tool this year.

• SentinelOne names former Workday executive Barbara Larson as CFO.

• Meme stock GameStop plummets on earnings drop, fans doubt success

• NXP Semiconductors to invest over $1 billion in India to boost R&D efforts

• Crypto stocks fall as bets on Harris victory rise after debate, Swift's endorsement

• Infineon targets bigger GaN chip market share after breakthrough

Key events likely to impact markets on Thursday:
- The ECB's policy meeting, followed by a briefing by President Christine Lagarde.
- US weekly jobless claims.
- US producer price index.

International Reviews

• The US accuses China of "significantly" helping Russia wage war. US Deputy Secretary of State Kurt Campbell said China is directly supporting the Russian war machine by helping it in its war against Ukraine.

• Serbia "threatens" the EU with BRICS membership because of Brussels' "selective" policy towards Belgrade. "Let EU officials continue their threats and blackmail, and Serbia's European path will end with its full membership in BRICS."

• The U.S. consumer price index (CPI) rose 2.5% in August from a year earlier. "Core" prices, which exclude more volatile food and gas prices, rose 0.3% from the previous month, more than the 0.2% expected. That has reduced the chances of a big Fed rate cut next week.

• Doing business in China has become less attractive for EU companies. The risks for European companies in China are growing, while the benefits are becoming fewer, according to a study by the EU Chamber of Commerce in Beijing. Investors are most concerned about China's economic weakness and the increasing politicization of the country's business climate.