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Jobless Claims, Stock Rally Cools, ECB Warns - What's up in Markets

EconomyNov 25, 2020 06:44AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com --- The global rally in stocks cools, but the one in oil and Bitcoin continues. France goes after more tax from U.S. tech giants, and the ECB warns that the banking situation in the euro zone isn't as good as third-quarter reports might have you believe. Plus it's a heavy data day as the U.S. moves up all of Thursday's usual releases to Wednesday because of Thanksgiving. Topping the bill - weekly jobless claims and revised data for third-quarter GDP. Here's what you need to know in financial markets on Wednesday, November 25th.

1. Jobless claims, Q3 GDP revision due 

After a quiet start to the week, the U.S. data calendar gets busy today with the top release being initial and continuing jobless claims at 8:30 AM ET (1330 GMT).

Initial claims rose for the first time in six weeks last week, and investors will be on the lookout for any sign of that becoming a trend as the economy weakens under the current surge in Covid-19 cases.

Also due out at 8:30 are durable goods orders for October, and a second reading of gross domestic product data for the third quarter. At 10 AM, there will be the University of Michigan’s consumer sentiment index, new home sales data for October and figures for personal income and spending in October.

2. France revives digital tax collection; EU moves on data protection

France said it will start to collect the digital services tax that it enacted earlier this year in an effort to squeeze more out of Internet giants such as Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB), which routinely channel their profits made in larger EU countries into smaller jurisdictions with lower tax rates.

The move is the latest illustration of the challenges facing the new Biden administration. The Trump administration had threatened to retaliate with import tariffs on French luxury goods if France pushed ahead with its plans. However, since most retailers have already imported their inventories for the holiday season, it looks likely that any retaliation would not affect sales in the near term.

Elsewhere in Europe, the EU Commission proposed new legislation aimed at tightening European control over government and industrial data.

3. Stock rally cools overnight. U.S. set to open mixed

The global stock market rally weakened overnight after U.S. markets roared to record highs on hopes for a vaccine-driven economic rebound in 2021.

Most Chinese stock indices lost over 1%, while European markets shed up to 0.5% in what was still only a modest correction after the gains of recent weeks.

U.S. stocks are also indicated to open slightly lower, with Dow Jones Futures down 65 points, or 0.2%, by 6:30 AM ET (1130 GMT), and S&P 500 Futures down 0.1%. NASDAQ Futures were outperforming with a gain of 0.2%.

The Dow and S&P had finished at record highs on Tuesday in extraordinarily high volume, as retail traders in particular piled into unloved value stocks that many expect to outperform as the real economy recovers next year. Stocks likely to be in focus early include Dell and HP, both of which beat market expectations with their quarterly updates after the bell on Thursday as the working from home trend drove strong sales of PCs and laptops.

4. ECB warns on asset prices, credit losses

The European Central Bank warned that Eurozone banks are by no means out of the woods, despite the prospects for a recovery next year.

The ECB warned in its semiannual Financial Stability Review that the risk of a broad asset price correction had risen after the rallies seen this year in markets from bonds to house prices and beyond.

It also suggested that the healthy-looking balance sheets presented by banks at the end of the third quarter were flattered by government and regulatory support schemes, and warned that actual loan losses may be higher than the banks expect.

Such warnings suggest that the lifting of the ECB’s ban on bank dividends and buybacks at the end of the year is far from assured. In a separate interview, board member Yves Mersch said that while a blanket ban may not survive beyond the end of the year, it’s likely to be replaced by a ‘case-by-case’ approach. The Stoxx 600 Banks index fell around 1.5% in response.

5 Oil, bitcoin rally continues; EIA inventories eyed

Crude oil and Bitcoin were among the few assets that continued to rally overnight, both of them ultimately driven by the prospect of excess liquidity from central banks, but oil also supported by hopes of a real rebound in demand next year.

By 6:40 AM ET, U.S. Crude futures were up 0.6% at $45.17 a barrel, having earlier hit a new eight-month high of $45.67 a barrel. Brent crude futures were up 0.5% at $48.04 a barrel.

The day’s focus is likely to be the publication of the Energy Information Administration’s weekly stockpiles report at 10:30 AM ET.  Data from the American Petroleum Institute on Tuesday had suggested that crude inventories rose 3.80 million barrels last week – a reminder of weak near-term fundamentals that were lost in Tuesday’s blistering risk rally.

 

Jobless Claims, Stock Rally Cools, ECB Warns - What's up in Markets
 

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Comments (12)
Bulls MakeMore
Bulls MakeMore Nov 25, 2020 11:09AM ET
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Patience is a virtue...the consensus is that 2021 will be a big year for stocks. Don't listen to the perma bears with short positions or you will end up paying higher prices in a few months (or sooner).
Musical Critic
Musical Critic Nov 25, 2020 10:56AM ET
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Just hit the LOWER CIRCUITS. enough pumping!
Kaveh Sun
Kaveh Sun Nov 25, 2020 10:40AM ET
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After a huge day up, if u dont book some profit, u r a p/i/g. Bulls make money; bears make money; p/i/gs get klled
Daniel Lu
Daniel Lu Nov 25, 2020 10:25AM ET
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Preferably to buy after 10% market correction from recent new highs
Aziz Saud
Aziz Saud Nov 25, 2020 10:08AM ET
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same report results were issued last week but the market reacted positivly & today the market chosse to be logic
Terry Barker
Terry Barker Nov 25, 2020 9:26AM ET
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It is not over. Going to the SCOTUS
BILETIRI BLESSING
BILETIRI BLESSING Nov 25, 2020 9:26AM ET
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hello
Steve Dyer
WaveRunner Nov 25, 2020 8:36AM ET
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The DNC all done with the paid protestors I guess.
American Truth
American Truth Nov 25, 2020 7:03AM ET
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There will be no Biden/Heels up administration. Election fraud will not be tolerated by Americans.
Samui Lo
Samui Lo Nov 25, 2020 7:03AM ET
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Cute silly MAGA Y lackey but you sticking your fingers in your ears and shouting "ner-ner-ner-ner" will not change the outcome
Eric Dubeau
Eric Dubeau Nov 25, 2020 7:03AM ET
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You must be dilusional, even as a canadian i know that there was no voter fraud, but congrats on supporting the first president to lose the popular vote twice. Being ignorant of one’s own ignorance is the malady of the ignorant!
Tre Hsi
Tre Hsi Nov 25, 2020 7:03AM ET
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must be a slow day at the St Petersburg bot farm......
Dennis Palcher
Dennis Palcher Nov 25, 2020 7:03AM ET
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Eric Dubeau well you have your head up your ******then
Zack Harding
Zack Harding Nov 25, 2020 7:02AM ET
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Its 2009 again, but this time, we are not starting with the market already tanked. Not good, last time this C-crew was in charge, the economy was so bad they coukdnt fail.
Samui Lo
Samui Lo Nov 25, 2020 7:02AM ET
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Cute but under Obama unemployment was halved and from 2009 to 2016 stock market TRIPLED.
Tre Hsi
Tre Hsi Nov 25, 2020 7:02AM ET
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stock market keeps going up after the election as Trump loses one lawsuit after another, me think the traders like the fact that Biden is going to be the president, what do you think?
Andre Viparich
Andre Viparich Nov 25, 2020 6:56AM ET
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Hopes are down.... lol
Matthew PM
Matthew PM Nov 25, 2020 6:56AM ET
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yeah, because people are starting to realize Bidens plans will be pushing our factories and businesses ot of the country.
Jörg Holl
Jörg Holl Nov 25, 2020 6:56AM ET
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Matthew PM The Dollar is already slipping
Olarewaju Mercy
Olarewaju Mercy Nov 25, 2020 6:56AM ET
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Hello
Joe Ibrahim
Joe Ibrahim Nov 25, 2020 6:51AM ET
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Unusual times
 
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