Stock futures higher, dollar resumes climb; Retail sales data in focus amid gas price decline; Disney edges higher as CEO Chapek touts ESPN potential; Shell names renewables boss as new CEO and Ether slips lower after successful Ethereum ‘merge’.
Here are five things you must know for Thursday, September 15:
1. — Stock Futures Higher, Dollar Resumes Climb
U.S. equity futures nudged higher Thursday, while the dollar collected gains against its global peers, as investors continue to closely-track interest rate markets heading into next week’s Fed meeting.
Stocks are still deeply in the red when compared to Monday’s closing levels, however, following the biggest sell-off in two years on Tuesday, triggered by a faster-than-expected reading for August inflation and a corresponding surge in rate hike expectations from the Federal Reserve.
The odds of an unprecedented 100 basis point move, which would be the biggest since 1984, are holding firm at around 26%, based on data reflected in the CME Group’s FedWatch, with bets on follow-on hikes likely to lift the Fed Funds rate to between 4.25% and 4.5% by the end of February.
Bond markets, in the meantime, continue to flash concerned recession warnings, with the difference between 2-year note yields — which are trading at the highest levels since 2007 — now some 38 basis points higher than the yield on 10-year notes.
The dollar index, meanwhile, was marked 0..03% higher in the overnight session at 109.662, while the euro held below parity to 0.9995.
The currency and bond market moves have set a backdrop that has stocks struggling to find traction in a market where good economic news only increases the chances of deeper rate hikes, while inflation data itself isn’t slowing fast enough to allow for bets on a pause in the Fed’s tightening cycle.
Still, Europe stocks were marked 0.22% higher in early Frankfurt trading, following on from a 0.2% bump for the Nikkei 225 in Tokyo and a 0.16% dip the region-wide MSCI ex-Japan index.
On Wall Street, futures contracts tied to the S&P 500 are indicating a modest 2 point opening bell gain ahead of August retail sales data and weekly jobless claims prior to the start of trading. Contract linked to the Dow Jones Industrial Average are priced for a 40 point advance while those tied the tech-focused Nasdaq are indicating a 2 point move to the upside.
2. — Retail Sales Data In Focus Amid Gas Price Decline
Consumer demand will take center stage on Wall Street Thursday with the publication of August retail sales data prior to the start to trading.
Following Tuesday surprisingly quick inflation reading, which showed a big jump in core consumer prices and a faster-than-expected headline rate of 8.3%, investors will be focused on whether there is a corresponding increase in demand. Surging inflation, without a demand component will be far more worrying.
Analysts expect overall retail sales to decline by around 0.1% from their July levels, but that will be based on total value and represent the significant month-on-month decline in gas prices. If sales show gains on a volume basis, however, investors will find comfort in the fact that consumers are using the cash saved from lower pump prices to spend across different sectors of the economy.
The Commerce Department will publish the figures at 8:30 am Eastern time.
3. — Disney Edges Higher As CEO Chapek Touts ESPN Potential
Walt Disney (DIS) – Get The Walt Disney Company Report shares edged higher in pre-market trading following an upbeat address from CEO Bob Chapek at a tech and media sector conference late Wednesday in San Francisco.
During a question-and-answer session at the Goldman Sachs Communacopia + Technology conference, Chapek said he sees “strong” consumer demand for the group’s parks business in the coming year, with a rebound in visitors to international parks already underway after two years of pandemic restrictions.
He also reiterated the media group’s view that the ESPN sports network is best-placed within the broader Disney company, following a brief few weeks of pressure from activists investor Dan Loeb to consider spinning it off. He also noted the potential for sports betting on the revenue and earnings potential for ESPN in the coming years.
Disney shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $112.95 each.
4. — Shell Names Renewables Boss as New CEO
Shell plc (SHEL) – Get Royal Dutch Shell PLC American Depositary Shares (each representing two (2)) Report shares edged higher Thursday after Europe’s biggest energy company said CEO Ben van Beurden would step down later this year.
Van Beurden, a longtime Shell executive who has lead the group since 2014, will be replaced by Wael Sawan, who current runs the energy giant’s gas and renewables division on January 1, shortly before the shift of its global headquarters from The Hague to London.
“It’s been a privilege to work alongside Ben and I’m honored to take over the leadership of this great company from him,” Sawan said. “We will be disciplined and value focused, as we work with our customers and partners to deliver the reliable, affordable and cleaner energy the world needs.”
Shell’s U.S.-listed shares were marked 0.22% higher in pre-market trading to indicate an opening bell price of $54.33 each.
5. — Ether Slips Lower After Successful Ethereum ‘Merge’
An historic ‘merge’ of two blockchain networks, one of which underpins the world’s second-largest cryptocurrency, was completed last night, creating what could be a significant challenge to bitcoin’s dominance in the digital token market.
The Ethereum blockchain, upon which the Ether token is built, completed a highly-technical overlap with a newly-developed system that will dramatically reduce the amount of energy required to both validate individual transactions and create new tokens.
By removing “proof of work” to validate transactions (which requires massive amounts of electricity to power the computers) with “proof of stake” (a method where validators can put up their own either tokens as collateral to perform essentially the same task) the new Ethereum 2.0 blockchain should become both more efficient and environmentally-sustainable at the same time.
The merge itself, while many years in the making thanks to the work of dedicated crypto developers, was completed — and steamed live on YouTube — in only around 12 minutes.
Ether tokens were last seen 1.8% lower on the session and changing hands at $1,601.16 each.