Here are five things you must know for Thursday, September 29:
1. — Stock Futures Slide As Dollar Resumes Market Grip
U.S. equity futures were firmly in retreat Thursday, while the dollar rebounded from its worst day in two and a half years, as investors continue to navigate extreme volatility on bond and currency markets heading to the final trading days of a difficult quarter for global stocks.
With the impact of yesterday’s extraordinary intervention from the Bank of England fading, and investors still focused on safety over risk amid the broader market upheaval, the U.S. dollar index bounced more than a full percent higher in overnight trading, pegging it at 113.60 against its global currency peers.
U.S. Treasury bond yields were also on the rise, with benchmark 10-year notes adding around 8 basis points from yesterday’s close — which saw the biggest one day decline since 2011 — to change hands at 3.83% during European hours.
The whipsaw in bond and currency markets reflects not only concern over the near-term pace of inflation in the world’s biggest economies, but also the impact on growth that is expected from central bank efforts to tame it.
The European Central Bank, in fact, is signaling a 75 basis point rate hike for its next policy meeting in October, while the Bank of England is likely to follow-suit as the pound’s historic slump adds to energy and food import costs and stokes inflation in the world’s fifth largest economy.
In the U.S., the odds of a fourth consecutive jumbo rate hike from the Fed are still compelling, even as the Atlanta Fed’s GDPNow forecasting tool suggests growth has slowed to just 0.3% over the current quarter.
The sluggish pace, coupled with a pullback in discretionary spending and a slide in consumer confidence, is likely to clip earnings growth when the third quarter reporting season kicks off early next month with updates from the banking sector.
In the meantime, stocks in Europe were back in the red Thursday, with the region-wide Stoxx 600 falling 1.25% in early Frankfurt trading ahead of a key reading for German inflation later in the session. Britain’s FTSE 100 down another 1.1% while the pound was holding steady at 1.0874 against the U.S. dollar.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 25 point opening bell decline, while linked to the Dow Jones Industrial Average are priced for a 165 point slump. Futures tied to the tech-focused Nasdaq are indicating a 97 point move to the downside.
2. — Amazon Unveils Wage Hikes Ahead of Holiday Season
Amazon (AMZN) shares moved lower in pre-market trading, alongside declines for many other big-tech names, after the world’s largest online retailer unveiled pay increases for warehouse and transportation workers.
Amazon said employees would earn between $16 and $26 per hour, with average starting salaries rising by $1, to $19 per hour, as it gears-up for the peak of the holiday retail season. Earlier this week, the group said it will add another ‘mini Prime day’ event to capture demand from value-focused consumers and focus on members of its Prime program.
Amazon, one of the biggest private employers in the United States, said the pay increases would cost around $1 billion over the next year.
Amazon shares were marked 1.4% lower in pre-market trading to indicate an opening bell price of $116.32 each..
3. — Porsche Shares Leap On Frankfurt IPO Debut
Porsche AG shares jumped firmly higher on their trading debut in Frankfurt following a hugely successful IPO that valued the luxury carmaker at around €75 billion.
Volkswagen raised around €19.5 billion from the complicated listing, which was comprised of of 911 shares — a figure that Volkswagen said would represent the group’s famous roadster — divided into common and preferred portions. A further 113.875 million shares, with no voting rights, were also be offered.
The IPO, the biggest since the privatization of Deutsche Telekom in 1996, puts the value of Porsche near-level with that of Volkswagen, the world’s second-largest carmaker behind Toyota.
The new Porsche shares were marked 4.3% higher in early Frankfurt trading to change hands at €86.10 each, after being priced at €82.50 each prior to their debut.
4. — Nike Earnings In Focus As Inventory, Dollar Pressure Margins
Nike (NKE) shares bumped lower in pre-market trading ahead of the sports apparel giant’s first quarter earnings after the closing bell.
Analysts expect the group to keep overall revenues largely flat to last year, at $12.27 billion, but report a near 21% drop in diluted earnings, to 92 cents per share, as surging labor, input and transportation costs pressure overall profit margins.
Headwinds from the U.S. dollar, which cracked a fresh 20-year high against its global peers earlier this week, as well as an overhang of inventory linked to supply chain disruptions, will also likely add downward pressure on margins and complicate the group’s near-term outlook.
Nike shares were marked 1.22% lower in pre-market trading to indicate an opening bell price of $97.50 each.
5. — Hurricane Ian Slows, Leaves Billions In Devastation In Wake
The National Hurricane Center said Thursday that Hurricane Ian has weakened to a tropical storm as it slowly makes it way across northwards to the Atlantic coast, but not before leaving behind billions of dollars in damages from devastating wind and water surges along the Gulf coast of Florida.
More than 2.4 million homes, and 1.8 million residents, are without power in the state following a direct hit from the category 4 hurricane last night, which lashed the city of Ft. Myers with 150 mile-per-hour winds and torrential rains. Storm surges, caused by the powerful winds pushing sea water over beaches and natural barriers, rushed to as high as 12 to 15 feet in low-lying area, submerging houses, cars and business in and around the region.
With potentially hundreds of thousands of homes damaged, estimates for the cost of Ian’s destruction — by some measures the fourth-worst hurricane in U.S. history — could approach $40 billion.
Florida Governor Ron DeSantis has requested a full allotment of funds from the Federal Emergency Management Agency (FEMA), a grant that can only be authorized by President Joe Biden.
“He (President Biden) said to ask for what ever you need, just ask us,” DeSantis told a news conference late Wednesday in Tallahassee . “So he was inviting us to request support.”