Fed and ECB rate statement, company and economy reviews, technical analysis day

Market reviews

• European traders who went to bed thinking a quarter-point Fed rate cut next Wednesday was already on the cards may have woken up with a severe hangover this Friday the 13th, as the odds of a bigger half-point cut again approached 50%. It all started with separate reports in the Financial Times and the Wall Street Journal that the September 18 decision remained “on the edge”. Then former New York Fed President Bill Dudley, who remains highly influential, said at an event in Singapore that there was a “strong case” for a 50 basis point cut.

• That left the dollar at a disadvantage, as it neared its lowest level this year against the yen and lost further ground against the euro. Two-year Treasury yields were back below 3.6% in Asian hours. Gold hit a new record of $2,570.

• The reaction in stock markets was mixed. Hong Kong's Hansing Index rose more than 1%, while Australian shares also advanced. However, the Nikkei was expected to fall as the yen gained significantly. South Korea also lost weight, while mainland Chinese shares struggled. It is worth noting that all three markets are heading into a long holiday weekend, with South Korean traders not expected to return to work until next Thursday. The very early outlook for Europe's STOXX 50 index futures was positive, up 0.3%.

• There is little data to distract from the Fed speculation on Friday in Europe, which has increased the odds of a 50 basis point cut to 43% from 28% early in Asia. Consumer price index data continue to trickle in, including from France and Greece, while euro zone industrial production data is also due.

• There are no central bank speeches on the calendar as the Fed and the Bank of England - which will announce policy next Thursday - are in a quiet period.

• The European Central Bank (ECB) cut interest rates for the second time this year as inflation and economic growth slowed, but gave little indication of the next step. Investors are expecting sustained easing in the months ahead. The ECB cut its deposit rate by 25 basis points (bps) to 3.50%, as expected, following a similar cut in June. Inflation is now close to the 2% target and the domestic economy is on the brink of recession. At the same time, the refinancing rate was cut by a deeper 60 bps to 3.65% in a long-awaited technical adjustment. The euro area banks index (.SX7E) rose 1.8%. Money markets have priced in around 40 bps of further easing by year-end and around a 42% chance of a quarter-point cut in October.

• U.S. wholesale prices rose 0.2% month-on-month, slightly above economists' expectations. On an annual basis, the industrial producer price index rose 1.7%, in line with expectations, while July's figure was revised down.

• Initial jobless claims rose more than expected to 230,000, up 2,000 from the previous period. The U.S. budget deficit for the 11 months of fiscal 2024 widened 24% from a year earlier to $1.9 trillion. More than half of the deficit is due to interest payments on the government debt.

• For the first time in 20 years, China has ceased to be the main driver of global oil demand. China’s oil consumption is projected to increase by no more than 300,000 barrels a day in 2025, 25% below expectations from the International Energy Agency and OPEC. Bloomberg reports that global oil demand overall is growing at its slowest pace since the pandemic. The International Energy Agency expects an oil surplus in 2025, even if OPEC+ continues to cut supply.

• China has advised its automakers not to invest in Russia, Reuters reports. China's Commerce Ministry has "strongly advised" against investing in India, Russia and Turkey. Beijing's tone was softer on Europe and Thailand, but businessmen were asked to limit themselves to car assembly plants.

• The European Union will approve stablecoin standards by the end of the year. New rules regulating the cryptocurrency market will approve requirements for authorization, stress testing and transaction assessment for stablecoin issuers. Investments in fintech worldwide fell by 17%, amounting to $51.9 billion, according to KPMG. Venture investments decreased in all key regions: in the Americas by 5% to $36.7 billion, in the Asia-Pacific region (ASPAC) by 20% to $3.7 billion, in the Europe, Middle East and Africa (EMEA) region by 40% to $11.4 billion.

• Palantir Technologies received high marks for its AI platform AIP in a report from Forrester Research, ranking it among 14 vendors analyzed, including products from Alphabet and Microsoft. General Motors and Hyundai are considering a collaboration to explore ways to work together to develop vehicles, improve supply chains, and advance clean energy technologies.

• Automakers said Thursday they are seeking to cut costs and offer customers a wider range of vehicles.

• Irish regulator probes Google's compliance with EU privacy laws in developing its AI model Chanel owners and L'Oreal heiress invest in Olsen sisters' The Row, Bloomberg reports

• Moderna (MRNA) is cutting its research budget by 20% over the next three years as vaccine sales disappoint. The company is struggling to find a path to profitability after disappointing vaccine sales. MRNA shares fell 17% on the news.

• Trump's plan to raise tariffs will lead to a sharp increase in shipping costs, as happened in 2018, shipping and retail experts say.

• U.S. companies in China are posting record low profits amid geopolitical tensions and slow growth, according to an AP report.

• The price of gold reached a historical record, rising above $2,570 per troy ounce.

• Analysts said the producer price index rose faster than expected and jobless claims also rose, supporting expectations for a Fed rate cut next week.

• IBM announced an expected $2.7 billion charge in the third quarter of 2024 related to the transfer of a portion of its pension obligations to Prudential Financial.

• McDonald's (MCD) is continuing its $5 price promotion through December at most U.S. restaurants, a move that will likely be replicated by rivals. McDonald's introduced the offer in June after a disappointing first quarter that saw lower U.S. traffic and lower spending per order, especially from customers.

• Berkshire Hathaway's Jain Sold More Than Half of His Class A Shares. Is He Getting Ready to Leave the Company?

• General Motors is in talks to buy electric vehicle batteries based on technology from China's CATL. They will be assembled at a new plant to be built in the US. The EU has rejected minimum price offers from Chinese electric vehicle exporters.

• Nokia is looking for candidates to replace its CEO, the FT reports.

• The FDA has cleared the first out-of-hospital hearing aid software for use in AirPods Pro earphones. Earlier this week, Apple announced that AirPods Pro 2 can now be “turned” into a personalized hearing aid thanks to a future software update that will amplify certain sounds in real time.

• ADBE shares fall 9% in premarket trading after the report.

• Oracle (ORCL) shares are up 7% in premarket trading after the company issued an optimistic long-term growth forecast based on expectations of continued strong demand for cloud technology.

• RH shares are up 19% in premarket trading as the retailer reported healthy demand for its furniture and home goods and better-than-expected quarterly profit. Demand accelerated in the third quarter, rising 12% in August, and RH posted positive margins despite operating in the toughest housing market in three decades.

• US officials to meet with top tech executives on artificial intelligence development - CNN

• Stellantis suspends production of electric Fiat 500 due to low demand.

• Mastercard to buy threat intelligence company Recorded Future for $2.65 billion

• China warns automakers of risks in building factories abroad, sources say.

• Boeing strike threat looms over workers as they vote on contract.

• Sources say Evergrande Chairman Hui is being held in a special detention centre in Shenzhen.

• US gasoline prices to fall below $3 per gallon as election approaches.

• Prime Minister Harris said Apple's tax debts offer Ireland new opportunities to develop infrastructure.

• The FAA believes that an adequate safety record must be achieved before Boeing 737 MAX production can ramp up.

• UK rival banks get a boost from updated capital rules.

• Standard Chartered begins providing digital asset custody services in the UAE.

• Commerzbank and UniCredit shares continue to rise after Orcel outlines plans

• Baloise considering board changes, chairman says

• Standard Chartered creates new banking team as bid for major cross-border deals

• South African lender FirstRand's profit rises despite UK car loan charges

• PGIM opens office in Abu Dhabi, joining the rush of wealth managers to invest in the UAE capital.

• Swiss insurer Baloise expects higher shareholder returns after Cevian deal.

• Brussels is studying Draghi's option to extend the EU debt to $385 billion, the FT reports.

 • Verizon to take layoff costs of up to $1.9 billion in third quarter.

• eToro to shut down nearly all cryptocurrency trading as part of agreement with US SEC.

• Ericsson partners with several telecommunications operators to sell network software.

• Microsoft says its productivity software suite is recovering from a crash.

• Visa aims to grow digital payments usage tenfold in Pakistan.

 • Crypto stocks fall as odds on Harris win rise after debate, Swift backs

• China's Ant Group refinances $6.5 billion credit line.

• Top tech and U.S. officials to discuss energizing AI, White House says

• SpaceX billionaire employee leads first private spacewalk on Polaris mission.

• Australia's NEXTDC to raise $1.9 billion in debt to exploit AI opportunities in Asia Pacific

Key events that could impact markets on Friday:
- Consumer price indices in France, Greece, Poland and Slovakia (August).
- Industrial production in the eurozone (July).

International news.

• Republicans are disappointed with Trump's debate performance, The Hill reports. "What was that?" "She was well prepared and didn't have to keep repeating the same thing," one Republican senator said. The senator noted that Trump was sidelined with other topics, such as the unsubstantiated claim that Haitian immigrants eat dogs and cats, instead of discussing the two main issues of the race: the economy and inflation.

• The European Commissioner said that the EU is ready to completely abandon Russian gas. The share of Russian gas in EU imports has decreased from 45% in 2021 to 18% by June 2024.

• A festival in Canada will not cancel the screening of the film "Russians at War." On the website of the TIFF film festival, they said that they understand the feelings of Ukrainians and public outrage, but are guided by the "democratic values ​​of freedom of conscience, thought, expression and peaceful assembly," which are protected in Canada.

• Spain has rejected a Hungarian company's bid to buy a Spanish train maker, the FT reports. The ban comes amid Orban's close ties with Russia. The European Central Bank has cut three key interest rates in the eurozone. Specifically, the EU's base interest rate will fall by 0.6% to 3.65% per annum, while the deposit rate will fall by 0.25% to 3.5%.

• Microsoft said it is cutting 650 jobs in its Xbox unit, the third such cut this year as part of the company's efforts to cut costs and integrate its $69 billion acquisition of Activision Blizzard.