U.S. inflation looms, Disney's TV plans - what's moving markets

August 10, 2023 5:59 AM EDT -- Investors are gearing up for the release of key U.S. inflation data that could factor into future policy decisions taken by the Federal Reserve. Disney shares move higher premarket after the entertainment giant announces price hikes on its streaming platform, but boss Bob Iger says the company is considering options for its flagging TV business. Elsewhere, China expresses "serious concern" over a U.S. ban on some investments in the country's tech sector, hinting at a potential retaliation.

1. U.S. inflation looms

The all-important U.S. consumer price index for July is due out on Thursday, giving investors a fresh chance to judge the trajectory of inflation in the world's largest economy and update their estimates for Federal Reserve policy decisions.

Economists predict that the headline measure climbed by 3.3% year-on-year, accelerating from 3.0% in June. However, an atypically soft corresponding figure in July 2022 suggests that markets may not place too much importance on the quickening pace.

On a monthly basis, the gauge is seen holding steady at 0.2%. Meanwhile, the core reading, which strips out volatile items like food and energy, is predicted to remain unchanged at an uptick of 4.8% annually and 0.2% month-on-month.

Along with loosening a tight labor market, cooling red-hot inflation has been the main objective of Fed policy during its more than year-long campaign of interest rate hikes. After peaking at 9.1% last summer, headline inflation has steadily decelerated closer to the central bank's 2% target, although the core number has been stubbornly elevated.

At its most recent gathering, the Fed chose to raise borrowing costs by a further 25 basis points and noted that its future policy decisions would be "data-dependent." The inflation print, set to be published at 08:30 ET (12:30 GMT), could be one of the most crucial numbers officials will have to consider.

2. Futures point higher

U.S. stock futures rose on Thursday, as investors looked ahead to the release of the inflation data and digested a fresh batch of corporate earnings.

By 05:21 ET (09:21 GMT), the Dow futures contract added 193 points or 0.55%, S&P 500 futures gained 27 points or 0.59%, and Nasdaq 100 futures jumped by 101 points or 0.67%.

Although the consumer price index will likely headline the economic calendar, weekly initial jobless claims and hourly earnings for July may factor into market sentiment during the trading day as well.

Elsewhere, company results from Alibaba (NYSE: BABA), Six Flags (NYSE: SIX) and Ralph Lauren (NYSE: RL) are on the docket, as a recent stream of quarterly returns continues to ebb. Traders are also parsing through earnings released after the bell on Wednesday from media giant Disney.

3. Disney's streaming plans

Shares in Walt Disney (NYSE: DIS) moved higher in premarket U.S. trading on Thursday after the sprawling entertainment group announced changes to its streaming service to help offset sputtering performance in its film and television divisions.

Disney said that it would increase the prices of its streaming service and crack down on password sharing, in the latest sign of Chief Executive Officer Bob Iger's push to make the business profitable by fall 2024.

The streaming unit, which includes options like Disney+ and Hulu, narrowed its losses by more than anticipated in its fiscal third quarter following a bump up in subscription prices and marketing cost cuts. But total subscribers fell to 146.1 million, weighed down by its Disney+ Hotstar brand in India, which lost digital rights to Indian Premier League cricket matches.

Meanwhile, Iger admitted that the recent box office reception of several movies from Disney's vaunted studios "has definitely been disappointing." TV operations, once a merger-fueling juggernaut for Disney, also saw revenue and profits slip due to cord-cutting viewers and weak advertising markets.

Iger, who has embarked on a restructuring drive since returning to the helm of the company in November, told investors that "a variety of strategic options" are now being considered for its TV networks. Tellingly, he noted that movies, theme parks, and streaming will underpin future growth at Disney - notably omitting the traditional, or linear, TV division.

4. China threatens retaliation to U.S. ban on some investments in country's tech firms

China's commerce ministry said Thursday that it has the right to respond to a new U.S. prohibition on some investments into Chinese tech companies, adding that the move deviates from "principles of fair competition and the market economy."

On Wednesday, U.S. President Joe Biden unveiled the long-awaited ban, citing concerns that Chinese firms specializing in sensitive technologies like artificial intelligence, semiconductors and quantum computing could pose "significant national security risks."

Some future investments in these technologies will be barred, while Americans who own stakes impacted by the order may be asked to disclose their holdings to the government, media reports say.

Biden's executive order, which is expected to come into effect next year, is widely seen as an attempt by Washington to limit growth in technologies that could boost the advancement of Beijing's military capabilities in areas like weapons development and code-breaking.

5. U.S. crude volatile ahead of U.S. inflation data

Oil prices oscillated around the flatline on Thursday, as traders awaited crucial U.S. inflation data later in the session.

U.S. inventories unexpectedly grew in the week to August 4, data from the Energy Information Administration showed Wednesday, but there was also a much bigger-than-expected draw in gasoline and distillate stockpiles.

This helped drive an uptick in crude prices despite continued worries over a sluggish economic recovery in China, the world’s largest oil importer.

By 05:22 ET, the U.S. crude futures contract traded 0.08% lower at $84.33 a barrel, while the Brent contract dipped by 0.02% to $87.53. Brent hit a six-month high on Wednesday, while WTI touched its strongest level since November 2022.

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