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FTX guilty pleas, Micron shock, Zelenskiy speech - what's moving markets

December 22, 2022 7:24 AM

By Geoffrey Smith

Investing.com -- Two key lieutenants of Sam Bankman-Fried entered guilty pleas and said they will cooperate with the investigation against their former boss/boyfriend. The Ukrainian and Russian presidents both made strong statements about their determination to carry on the war into next year. Micron dents the budding Santa rally and China's institutions eagerly talk up the economy as COVID spreads. CarMax updates on the wobbly state of the U.S. auto market. Here's what you need to know in financial markets on Thursday, December 22nd.

1. SBF’s buddies flip

Two of Sam Bankman-Fried’s key lieutenants pleaded guilty to wire fraud and other charges, raising the former FTX CEO’s legal jeopardy by a couple of notches.

Caroline Ellison, the former CEO of hedge fund Alameda Research and Bankman-Fried's sometime girlfriend; and Gary Wang, FTX’s former chief technology officer, have both signaled that they intend to cooperate with prosecutors’ efforts to bring Bankman-Fried to justice.

Bankman-Fried was extradited to the U.S. earlier this week and is expected to appear in a federal court later Thursday on eight counts of fraud and campaign finance violations.

2. Zelenskiy, Putin signal determination to prolong war

Ukraine’s President Volodymyr Zelenskiy made an impassioned address to the U.S. Congress to continue its support, telling his audience that military aid to the beleaguered eastern European country is “not charity, but an investment in global security and democracy.”

Zelenskiy’s address was received enthusiastically on both sides of the aisle, with only a few Republican critics of what they see as excessive aid withholding applause.

Not to be outdone, Russian President Vladimir Putin promised “unlimited” resources to his military chiefs as they try to reinject some vigor into an invasion that has stalled in recent months at high cost. Ukrainian estimates of Russian casualties since February are set to top 100,000 this week.

3. Stocks set to consolidate as Micron dents sentiment; CarMax eyed

U.S. stock markets – along with most of the rest of the world’s are falling into their usual holiday season slumber, with the mood further subdued by disappointing results from chipmaker Micron (NASDAQ: MU) late on Wednesday.

Micron, the largest U.S. maker of memory chips, fell 3.0% in premarket trading after saying it will lose more money than expected in the current quarter and lay off 10% of its workforce in order to help restore profitability.

By 06:25 ET, Dow Jones futures were down 0.3%, while S&P 500 futures were down 0.2%, and Nasdaq 100 futures were also down by a similar amount.

Stocks likely to be in focus later include CarMax (NYSE: KMX), which reports earnings amid signs of a sharp slowdown in auto sales in recent weeks; and Tyson Foods (NYSE: TSN), after a Wall Street Journal report of further headcount reduction at the meat processor.

4 Chinese policy meetings

China’s authorities - from the central bank to the State Council and securities regulator - all talked up the economy in concert after a suite of meetings aimed at stabilizing growth, but markets ticked down, more concerned with the spread of COVID-19 in the near term.

A study by a London-based research company Airfinity cited by Bloomberg estimated that the country is currently experiencing over 1 million new cases and 5,000 COVID-related deaths a day. The figures are unverifiable, given recent changes to how China compiles its statistics, but do not contradict anecdotal evidence of a surge in demand for hospital and crematoria services.

Separately, BioNTech (NASDAQ: BNTX) said it had shipped 11,500 doses of its COVID-19 vaccine to China, signaling a potential breakthrough in a country that has depended on less-effective home-grown drugs so far.

5. Oil hits one-month high as U.S. inventories drop

Crude oil prices rose to their highest in a month, despite a lack of obvious price triggers except the sharper-than-expected drop in official U.S. crude stocks last week. That was in any case offset by a rise in gasoline stocks that boded ill for final demand.

In Europe too, the physical market for spot delivery appears to be weakening further, with much of the CFD market now in contango – a price structure where the usual premium for immediate delivery is reversed.

By 06:45 ET, U.S. crude futures were up 1.9% at $79.75 a barrel, while Brent was up 1.9% at $83.78.

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