U.S. PPI, FTC hits Activision deal, lululemon gloom - what's moving markets

December 9, 2022 7:17 AM EST

By Geoffrey Smith -- The U.S. releases producer price inflation data for November, into a market that needs to see further evidence of goods prices coming down to sustain its faith in a monetary policy pivot. Washington gets more aggressive against Big Tech, aiming to strike down Microsoft's deal for Activision. Stocks are set for their first weekly loss in three as lululemon's guidance underscores weaker consumer spending. The U.K. tries to take the pressure off its struggling financial centers, and oil ticks up but is on course for its lowest weekly close this year. Here's what you need to know in financial markets on Friday, 9th December.

1. U.S. PPI seen pointing to easing price pressures

The U.S. releases producer price data for November, which are expected to add to a picture of increasingly rapid disinflation for traded goods as some large base effects pass out of the year-on-year calculations.

The ‘core’ PPI is expected to fall below 6% for the first time since June 2021, amid increasing evidence of discounting to shift excess inventory, and a fading impulse from the rally in energy prices earlier this year. In month-on-month terms, however, prices are expected to pick up again having stagnated in September.

The PPI data at 08:30 ET (1:30 GMT) will be followed by revised data from the Michigan Consumer Sentiment survey for November at 10:00 ET (15:00 GMT).

2. Microsoft, Activision steady on news of FTC antitrust suit

Shares in Microsoft (NASDAQ: MSFT) and Activision (NASDAQ: ATVI) held up reasonably well after the Federal Trade Commission went ahead with an expected lawsuit to stop the Redmond-based software giant taking over the videogames publisher.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” the FTC said in a statement, adding that it intends to stop Microsoft from gaining control over one of the world’s biggest independent game studios and harming competition.

Microsoft’s promise earlier in the week to keep Activision’s biggest money-spinner, Call of Duty, on the Nintendo Switch platform appears to have cut no ice in a Washington that has become much more aggressive with antitrust actions against Big Tech.

3. Stocks set to open higher; apparel sector gets the jitters after lululemon guidance

U.S. stock markets are set to open a little higher later after an inflation undershot in China overnight bolstered hopes that the country may export a little disinflation to the world economy and remove the need for higher interest rates.

By 06:25 ET (11:25 GMT), Dow Jones futures were up 63 points, or 0.2%, while S&P 500 futures and Nasdaq 100 futures were both up by around 0.4%. The three main cash indices are still on course to register their first weekly drop in three weeks after a bout of jitters over Federal Reserve policy earlier in the week.

Stocks likely to be in focus later include chipmaker Broadcom (NASDAQ: AVGO), which raised its guidance after producing better-than-expected numbers for the last three months late on Thursday, and lululemon (NASDAQ: LULU), which is marked down 7% in premarket after its guidance on revenue and earnings for the key holiday quarter came out below analysts’ forecasts. Also of note may be Chinese EV maker Li Auto (NASDAQ: LI), which burned through cash in the third quarter as it ramped up output.

4. U.K. relaxes its financial regulations to help under-pressure City

The U.K. loosened some of the rules it had imposed on its financial sector in the wake of the 2008 financial crisis, hoping to shore up its status as Europe’s largest financial center.

As expected, the government will raise the threshold above which banks have to ringfence their retail banking assets with a separate capital pool, and will tweak the rules governing long-term investments in infrastructure and other illiquid assets by insurers.

The government is also abolishing a cap on bankers’ bonuses, which was a key part of the European Union’s response to the 2008 crisis. Any divergence from existing EU regulation will raise the likelihood of the EU further restricting U.K.-based banks’ ability to access the European market. The measure makes for interesting politics at a time when the government is struggling to keep a lid on public sector wage costs amid a cost-of-living crisis.

5. Oil on course for lowest weekly close in 2022

Crude oil prices ticked up overnight but are still on course for their lowest weekly close this year and their biggest weekly drop since March.

By 06:40 ET, U.S. crude futures were up 0.6% at $71.88 a barrel, while Brent crude was up 0.2% at $76.27 a barrel.

Baker Hughes’ rig count, which hit its highest since March 2020 last week, will round off the week later, along with the CFTC’s positioning data.

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