North American Morning Briefing: Stock Futures Inch Up Ahead of Jobless Claims, Trade Data

MARKET WRAPS

Watch For:

U.S. Trade for July; U.S. Weekly Jobless Claims; U.S. 2Q revised Productivity & Costs; Canada Trade for July.

Opening Call:

Stock futures edged higher Thursday ahead of fresh data on the labor market and the trade balance that could provide insights into the pace of the economic recovery.

Stocks have ground higher this week as investors weighed strong corporate earnings and low interest rates against indicators that growth may be slowing in some parts of the world.

Money managers say they are awaiting the jobs report for August, due Friday, for more cues on when and how the Federal Reserve may taper its bond purchases. The central bank has signaled that the labor market's recovery is a factor in its monetary policy decisions.

"The confluence of a strong recovery at the same time as very low interest rates and maybe the peak of policy accommodation: if you put those all together, it is a very powerful mix for risky assets," said Bill Papadakis, macro economist at Lombard Odier. "If you consider the alternatives in which investors could put their money today-with interest rates where they are-equities are often the one option for somewhat better returns."

The latest data on jobless claims, a proxy for layoffs, is due at 8:30 a.m. ET. Economists estimated first-time filings for unemployment insurance held near pandemic lows in late August. The U.S. trade balance for July will also be released at 8:30 a.m., and likely narrowed as American consumers shifted spending toward in-person services and away from goods.

"We're in an environment where bad news is sort of good news," said Olivier Marciot, investment manager at Unigestion. "Every time the situation deteriorates on the macro front, it is making investors hopeful that central bank accommodation will be here for longer."

Semiconductor and software developer Broadcom and information technology company Hewlett Packard Enterprise are scheduled to post earnings Thursday after markets close.

Forex:

The dollar's drop after ADP's U.S. private payrolls report missed forecasts illustrates the currency's fragility to labor market data and means big moves could happen following Friday's official jobs figures, Commerzbank said.

The dollar is sensitive to jobs data as a significant recovery in the labor market is a necessary condition for raising interest rates, Commerzbank currency analyst Ulrich Leuchtmann said.

"And without that the dollar should struggle to appreciate," he said.

Investors who hold active dollar positions should "fasten their seatbelts" when the Labor Department's U.S. nonfarm payrolls report is released Friday, he said.

The price of bitcoin rose above $50,000, adding 3.5% from its level at 5 p.m. ET Wednesday.

The euro could extend its rise against the dollar, supported by recent remarks from European Central Bank officials about reducing stimulus and the risk of a weak U.S. nonfarm payrolls report on Friday, ING said.

"With USD that may stay broadly offered into tomorrow's NFP, EUR/USD may approach the late July 1.1890 highs today," ING analysts said.

"If payrolls eventually come on the soft side, a break above 1.1900 may well be on the cards."

ECB member Robert Holzmann said it was time to start debating the tapering of pandemic bond purchases and ECB member Klaas Knot said he expects the bank to start reducing purchases at the September 9 meeting.

Bonds:

The yield on the benchmark 10-year Treasury note ticked down to 1.299% from 1.301% on Wednesday.

Comments by ECB officials pointing to a possible reduction in monetary stimulus "could partly trigger unwelcome reactions on the capital market, " said NordLB's analysts Norman Rudschuck and Frederik Kunze.

A bond market selloff in the eurozone earlier this week--also driven by higher-than-expected eurozone inflation-- followed comments by ECB Governing Council member Robert Holzmann which contributed to debate around whether to reduce purchases in the Pandemic Emergency Purchase Programme, they said.

"We continue to believe that this discussion is necessary and that a reduction in purchases is likely before the end of 2021," NordLB's analysts said.

However, the likelihood that the ECB Bank will keep its pledge for an--albeit unspecific--increased pace of purchases at next week's meeting "will remain high," they said.

Commodities:

Oil prices wavered around flat after OPEC+ surprised nobody by sticking with its plans to raise production by 400,000 barrels a day in the coming months.

In the months ahead, the market will be watching Covid infection rates and U.S.-Iran negotiations in the event that a nuclear deal leads to sanctions being lifted on Iranian oil, ING's Warren Patterson said.

"Overall, the outcome of the meeting was neutral for the market," he said.

Elsewhere, EIA data revealed a larger-than-expected drop in U.S. crude inventories.

TODAY'S TOP HEADLINES

Apple to Allow Media Apps to Link to Own Websites for Payment Options

Apple Inc. said it would allow media apps to create in-app links to sign-up pages on those companies' websites, allowing the likes of Spotify Technology SA and Netflix Inc. to bypass the iPhone maker's cut of subscriptions.

Spotify and other technology companies for years have said Apple's restrictions were unfair and anticompetitive. The Cupertino, Calif., company previously prohibited Spotify and others from directing their users to sign-up options outside the App Store.

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Richard Branson's Virgin Galactic Flight Path Examined by FAA

Aviation regulators are investigating how Virgin Galactic Holdings Inc.'s spacecraft returned to the ground after taking billionaire entrepreneur Richard Branson to the edge of space, a spokesman for the Federal Aviation Administration said.

Virgin Galactic's Unity space vessel deviated from the flight path it agreed to follow as it came back to the Spaceport America facility in New Mexico on July 11, according to the FAA spokesman. Five other crew members were on board with Mr. Branson, Virgin Galactic's founder. The mission, called Unity 22, drew widespread attention.

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Moderna Says Vaccine Contaminant in Japan Was Stainless Steel, Sees No Safety Issue

TOKYO-The foreign substance detected in some vials of Moderna Inc.'s vaccine in Japan was stainless steel and it isn't believed to affect the vaccine's safety or efficacy, Moderna and its Japanese partner said.

Moderna and Takeda Pharmaceutical Co. were reporting the initial results of their investigation after Japan last week recalled three lots of the Moderna vaccine containing a total of 1.63 million doses, citing unspecified contamination.

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Intelsat Approved to Put $15 Billion Debt Restructuring to a Vote

The judge presiding over Intelsat SA's bankruptcy case on Wednesday signed off on allowing the satellite communications company to solicit votes for a restructuring that would cut its $15 billion debt load by more than half.

Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., overruled objections from a number of parties, including a group of junior convertible bondholders, and approved the disclosure statement describing Intelsat's debt plan for its creditors.

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Purdue Pharma Bankruptcy Plan Approved, Freeing Sacklers From Lawsuits

OxyContin maker Purdue Pharma LP won court approval of a $4.5 billion bankruptcy settlement that shields its owners, members of the Sackler family, from lawsuits accusing them of contributing to the nation's opioid epidemic in exchange for providing funding to combat the crisis.

Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said Wednesday he will confirm a restructuring plan that will transform Purdue into a public benefit company and settle civil lawsuits filed by governments and opioid victims against the drugmaker and its owners.

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Amazon Seeks to Hire 55,000 for Corporate, Tech Roles

Amazon.com Inc. said it is seeking to hire about 55,000 people globally among its corporate and technology ranks during a recruiting event set for Sept. 15, as the e-commerce giant continues a hiring spree begun at start of the Covid-19 pandemic.

The Seattle-based company is aiming to fill roles in cloud-computing unit Amazon Web Services, as well as in divisions such as Amazon Studios, advertising and its broadband satellite Project Kuiper. The open positions include more than 40,000 roles in the U.S. across 220 locations, including in New York City; Bellevue, Wash.; and Arlington, Va., where the company is opening a large corporate office.

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Chinese Regulators Tell Ride-Hailing Companies to Fix Compliance Issues by Year-End

Chinese regulators have requested ride-hailing company Didi Global Inc. and 10 other car platforms to strengthen efforts to address compliance issues by the end of the year.

At a meeting Wednesday, authorities led by the Ministry of Transportation criticized corporate attendees, which also included AutoNavi--owned by Alibaba Group Holding Ltd.--and food-delivery leader Meituan, for disrupting market order by using false promotions and making use of unqualified drivers and cars, according to a notice posted on the transport ministry's social media account Thursday.

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Unemployment Claims Trending at Pandemic Lows

New applications for unemployment benefits are likely to hold near pandemic lows, showing the labor market is progressing despite uncertainty caused by the Delta variant of Covid-19.

Economists surveyed by The Wall Street Journal estimate that initial jobless claims, a proxy for layoffs, declined by 8,000 to a seasonally adjusted 345,000 in the week ended Aug. 28. That number would be the lowest level since the pandemic took hold in the U.S. in March 2020.

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Why Bitcoin's Price Got Stuck at $50,000

The late summer lull that overtakes Wall Street is even making bitcoin drowsy.

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OPEC Alliance Keeps Gradual Production Increases, Despite U.S. Request

The Organization of the Petroleum Exporting Countries and a group of Russia-led producers said they agreed to continue increasing oil production in measured steps, resisting for now recent U.S. pressure to open the group's spigots wider.

In July, the OPEC-Russian alliance agreed to gradually bring back millions of barrels a day of production that they had bottled up at the start of the Covid-19 pandemic.

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Fed's Bostic Warns Eviction Surge Could Weigh on Recovery

Federal Reserve Bank of Atlanta President Raphael Bostic said Wednesday that ending protections against evictions and a slow rollout of aid for renters owing money to landlords could create problems for the economic recovery.

"The eviction moratorium has been very helpful to date in preventing people from being moved out of their homes in the middle of a pandemic," Mr. Bostic said in a virtual appearance, referring to a recently ended eviction ban that shielded financially distressed renters.

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China Increases Relending Quota by CNY300 Bln to Stabilize Growth

China's State Council said it would increase the central bank's relending quota by 300 billion yuan ($46.4 billion) this year to support struggling small businesses and keep economic growth within a reasonable range.

The cabinet at its weekly meeting on Wednesday said it would step up policy support for small companies which have been squeezed by rising commodity prices. Increasing the relending quota means the central bank can lend more money to Chinese banks which can subsequently be lent to businesses.

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American Factories Will Keep Humming

Even if Covid-19's resurgence cuts into Americans' penchant for spending, factories will probably keep on humming. That assumes, of course, that they can get the parts and labor.

The Institute for Supply Management on Wednesday said that its index of manufacturing activity came in at 59.9 in August, up a bit from July's 59.5, keeping at what is historically a high level. Anything over 50 indicates expansion.

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China Report Links State-Secrets Allegations Against Two Canadians

Two Canadians imprisoned in China on espionage charges are linked by photos of unspecified military equipment one took and shared with the other, according to a government-run newspaper in China that appeared to make public new information about prosecutions that have rattled relations with Ottawa.

The December 2018 arrest of the two Canadians in China and subsequent charges that the two violated China's state- secrets laws are widely believed to have been retaliation for the arrest in Canada of a top Huawei Technologies Co. executive, Meng Wanzhou.

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Supreme Court Declines to Block Restrictive Texas Abortion Law

WASHINGTON-A divided Supreme Court late on Wednesday allowed the nation's toughest restrictions on abortions to take effect, declining to block a new Texas law that bars the procedure after about six weeks of pregnancy.

The court's nighttime order, which rejected an emergency request by clinics and abortion-rights advocates, marks a turning point in the legal battle over abortion rights and comes the day the Texas ban went into force. While not a final ruling on the measure's constitutionality, the court's action validates, at least temporarily, a novel attempt by Texas lawmakers to insulate antiabortion legislation from court challenge.

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Trump Organization Employees to Testify Before Manhattan Grand Jury

Two Trump Organization employees are expected to testify before a grand jury this week as Manhattan prosecutors seek to advance their criminal investigation into former President Donald Trump's business affairs, according to people familiar with the matter.

Matthew Calamari Jr., the Trump Organization's corporate director of security and the son of the company's chief operating officer, was served a subpoena for his testimony this week, the people said. Prosecutors have examined an apartment Mr. Calamari received from the Trump Organization and how he reported that apartment on his taxes, the people said.

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McConnell Urges GOP Voters to Focus on Midterms, Not Biden Impeachment

Senate Minority Leader Mitch McConnell (R., Ky.) said Republican calls for removing President Biden from office over the Afghanistan withdrawal were impractical, urging GOP voters to focus instead on winning back the House and Senate in next year's midterm elections.

"Look, there isn't going to be an impeachment, but I think we have a good chance of winning that election next year," Mr. McConnell said in remarks in his home state on Wednesday, in which he noted that Democrats could block any push to remove the president.

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Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

ABC Tech Hldgs. (ABCT.T) 4Q

BRP Inc. (DOO.T) 2Q

Economic Indicators (ET):

0830 Jul Building permits

0830 Jul International merchandise trade

Stocks to Watch:

No items published

Other News:

No items published

Market Talk:

No items published

Expected Major Events for Thursday

08:30/UK: Aug Narrow money (Notes & Coin) and reserve balances

08:30/UK: 2Q Household Finance Review

10:00/FRA: Jul OECD CPI

11:30/US: Aug Challenger Job-Cut Report

12:30/CAN: Jul Building permits

12:30/CAN: Jul International merchandise trade

12:30/US: Jul U.S. International Trade in Goods & Services

12:30/US: 08/28 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/US: 2Q Revised Productivity & Costs

12:30/US: U.S. Weekly Export Sales

13:00/RUS: Weekly International Reserves

13:45/US: Bloomberg Consumer Comfort Index

14:00/US: Jul Manufacturers' Shipments, Inventories & Orders (M3)

14:30/US: 08/27 EIA Weekly Natural Gas Storage Report

16:00/US: Aug Monthly U.S. Retail Chain Store Sales Index

20:30/US: Federal Discount Window Borrowings

20:30/US: Foreign Central Bank Holdings

23:01/UK: Aug BRC-Sensormatic IQ Footfall Monitor

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

American Eagle Outfitters (AEO) is expected to report $0.54 for 2Q.

Barnes & Noble Education Inc (BNED) is expected to report $-0.90 for 1Q.

BeyondSpring Inc (BYSI) is expected to report $-0.49 for 2Q.

Brady Corp (BRC) is expected to report $0.69 for 4Q.

Broadcom Inc (AVGO) is expected to report $3.41 for 3Q.

Brp Inc (DOO.T,DOOO) is expected to report $1.34 for 2Q.

Buckle Inc (BKE) is expected to report.

CCUR Holdings Inc (CCUR) is expected to report for 3Q.

Charles & Colvard Ltd (CTHR) is expected to report $0.02 for 4Q.

Ciena Corp (CIEN) is expected to report $0.70 for 3Q.

Cooper Companies Inc (COO) is expected to report $2.79 for 3Q.

Crossroads Systems (CRSS) is expected to report for 3Q.

DocuSign Inc (DOCU) is expected to report $-0.09 for 2Q.

Donaldson Co (DCI) is expected to report $0.65 for 4Q.

Duluth Holdings Inc (DLTH) is expected to report $-0.03 for 2Q.

Eco (Atlantic) Oil & Gas Ltd (EOG.V) is expected to report for 1Q.

G-III Apparel (GIII) is expected to report $0.09 for 2Q.

GMS Inc (GMS) is expected to report $1.01 for 1Q.

Genesco (GCO) is expected to report for 2Q.

Guidewire Software Inc (GWRE) is expected to report $-0.11 for 4Q.

Hewlett Packard Enterprise Co (HPE) is expected to report $0.12 for 3Q.

Hormel Foods Corporation (HRL) is expected to report $0.38 for 3Q.

John Wiley & Sons Inc (JWA,JWB) is expected to report $0.40 for 1Q.

Kirkland's Inc (KIRK) is expected to report $-0.13 for 2Q.

Lands' End Inc (LE) is expected to report for 2Q.

MasterCraft Boat Holdings Inc (MCFT) is expected to report $0.73 for 4Q.

Medallia Inc (MDLA) is expected to report for 2Q.

Methode Electronics (MEI) is expected to report $0.74 for 1Q.

Misonix (MSON) is expected to report $-0.22 for 4Q.

MongoDB Inc (MDB) is expected to report $-1.26 for 2Q.

Ooma Inc (OOMA) is expected to report $-0.06 for 2Q.

Oxford Industries (OXM) is expected to report $1.33 for 2Q.

Patterson Companies (PDCO) is expected to report $0.31 for 1Q.

Quanex Building Products Corp (NX) is expected to report $0.46 for 3Q.

Science Applications International Corp (SAIC) is expected to report $1.11 for 2Q.

SecureWorks Corp (SCWX) is expected to report $-0.12 for 2Q.

Tilly's (TLYS) is expected to report $0.54 for 2Q.

Toro Co (TTC) is expected to report $0.77 for 3Q.

Waterloo Brewing Ltd (WBR.T) is expected to report for 2Q.

Yext Inc (YEXT) is expected to report $-0.19 for 2Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

AMC Entertainment Cut to Underperform From Neutral by Macquarie

American Water Works Cut to Hold From Buy by HSBC

Apple Hospitality REIT Raised to Overweight From Equal-Weight by Barclays

Apple Raised to Peer Perform From Underperform by Wolfe Research

Chatham Lodging Trust Raised to Overweight From Equal-Weight by Barclays

DTE Energy Cut to Equal-Weight From Overweight by Wells Fargo

Facebook Cut to Neutral From Buy by Rosenblatt

Farmer Bros Raised to Buy From Neutral by Roth Capital

Kansas City Southern Cut to Hold From Buy by Loop Capital

Landmark Infrastructure Cut to Underperform From Market Perform by Raymond James

Northern Oil Is Maintained at Strong Buy by Raymond James

PPL Corp Raised to Overweight From Equal-Weight by Wells Fargo

Reading International Cut to Neutral From Outperform by Macquarie

Schrodinger Raised to Overweight From Equal-Weight by Morgan Stanley

This article is a text version of a Wall Street Journal newsletter published earlier today.


  (END) Dow Jones Newswires
  09-02-21 0550ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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