Here are five things you should know for Thursday, September 15:
1. – Stock futures fall on recession fears
US stock futures fell on Friday, while the dollar resumed its rally in foreign exchange markets and Treasury yields tested new highs, as investors navigate an increasingly narrow path between slowing global growth and hawkish central bank signals.
Strong data from China on Friday, which posted better-than-expected gains in retail sales and industrial production during the month of August, failed to offset global recession fears voiced yesterday by the World Bank, which it said is experiencing the biggest slowdown since the early 1970s. Adding that “a moderate blow to the global economy over the next year may push it into recession.”
The IMF wasn’t quite so gloomy, noting that it was too early to make a call about a 2023 recession, but it nonetheless trimmed its growth forecasts for this year and next ahead of a more detailed fall report due next month.
Meanwhile, near-term warnings about extended supply chain disruptions from General Electric, as well as a poor near-term outlook from FedEx, only reflect concerns that support the recession outlook.
Meanwhile, interest rate hikes from the Federal Reserve, the Bank of England and the European Central Bank have investors worried that weak fundamentals will be made worse by higher borrowing costs, pushing them into safer assets like the US dollar.
The dollar index, which measures the greenback against a basket of six world currencies, rose 0.33% in the evening session to 110,098, pushing the pound to its lowest level since March 1985.
The odds of a move 100 basis points from the Fed next week, which will be the largest since 1984, are steady at around 24%, based on data reflected in CME Group’s FedWatch, with the potential to increase bets on subsequent increases. The federal funds rate is set to be between 4.25% and 4.5% by the end of February.
Bond markets are warning of a recession as well, with 2-year bond yields rising to 3.903% in overnight trading, consolidating the difference on 10-year notes at 43.4 basis points.
On Wall Street, futures linked to the S&P 500 are priced down 39 points at the opening bell while those linked to the Dow Jones Industrial Average are priced down 260 points. Technology-focused Nasdaq-related futures are indicating a downward movement of 150 points.
However, European shares posted a 0.22% gain in early trading in Frankfurt, following a 0.2% rise for the Nikkei 225 in Tokyo and the ex-MSCI Japan index slipping 0.16% regionally.
2. – Consumer confidence data under the microscope amid viscous inflation
The University of Michigan will publish its closely-tracked index of US consumer sentiment on Friday, with investors once again focused on the demand side of domestic growth and any signs of easing inflation expectations.
With gas prices lower and stock prices continuing north of their lows in early June, economists expect to see a strong jump in the main body of the survey, which was pegged at 58.2 last month but was measured to 70.6 before the Russian invasion of Ukraine earlier this year.
The survey’s view of inflation expectations is also important, given the headwinds seen in US retail sales – despite lower gas prices – and surprisingly fast rates for the headline and core readings for August.
Data will be released at 10:00 AM ET.
3. – FedEx stock falls after earnings forecast
FedEx (FDX) Shares fell in pre-market trading after the world’s largest package delivery group withdrew its full-year earnings guidance after a surprising quarterly update after trading closed Thursday.
FedEx said it expects fiscal first-quarter earnings for the region at $3.44 per share, with steady revenue of $23.2 billion. However, citing weak parcel volumes that accelerated during the summer months, the group withdrew its earnings forecast for June that saw earnings ranging between $22.45 and $24.45 per share, although it will continue to honor its $1.5 billion share buyback pledge.
CEO Raj Subramaniam said: “Global volumes have declined as macroeconomic trends deteriorate significantly later in the quarter, both internationally and in the US. We are quickly dealing with these headwinds, but given the speed with which conditions are changing, the First-quarter results are below our expectations.
“While this performance is disappointing, we are aggressively accelerating cost-cutting efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-cutting initiatives,” he added.
FedEx shares were marked down 19.5% in premarket trading to indicate an opening bell price of $165.00 per share.
4. – GE Supply Chain Slowdown, Cash Flow Warning
General Electric (GE) Shares were lower in pre-market trading after the industry group warned that ongoing disruptions in the supply chain could reduce its cash flow forecast.
GE’s chief financial officer, Carolina Dibek Happy, said supply chain disruptions extended into the back half of the year, making it difficult to deliver products to customers, with some pushing into the fourth quarter, squeezing cash flow for the current quarter.
Speaking at the Morgan Stanley Laguna conference on Thursday, Dybeck Happe nonetheless said third-quarter cash flows are likely to be in line, or slightly better, than Q2 levels, adding that the group expects strong organic growth in both the aviation and healthcare divisions during the final . Three months a year.
General Electric shares are down 4% in pre-market trading to indicate an opening bell price of $66.19 per share.
5. – Uber slips after confirming a cyber security breach
Uber technologies (Uber) Shares tumbled in premarket trading after a New York Times report confirmed a cybersecurity breach of ride-sharing group’s internal IT systems.
The Times reported late Thursday that a hacker gained control of some of Uber’s internal communications systems after pretending to be the company’s IT expert and using an employee’s workplace Slack account to send company-wide messages claiming they had. Network hacked.
The Times reported that the Slack channel was shut down shortly thereafter, while Uber said it was “in contact with law enforcement and will post additional updates here as they become available.”
Uber shares were down 6.1% in premarket trading to indicate an opening bell price of $31.11 per share.