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Market Disruption Strategies: The Game-Changer for Market Trends
Since the July producer price index is scheduled to be revealed later on Friday, investors are attempting to sort out the implications of the softer-than-expected U.S. inflation data. In other news, News Corp. discusses its intentions for generative AI, while the Supreme Court temporarily halts the $6 billion bankruptcy settlement for OxyContin-maker Purdue Pharma.
1. Futures trading mixed ahead of producer price information
As traders analyzed lower-than-expected U.S. inflation statistics and anticipated the release of a monthly indicator of producer price rise later in the session, U.S. stock futures were neutral on Friday.
By 05:21 ET (09:21 GMT), the Nasdaq 100 futures had fallen by 19 points or 0.12%, the S&P 500 futures had remained largely steady, and the Dow futures contract had gained 32 points or 0.09%.
The U.S. consumer price index from Thursday, which revealed that annual headline inflation in the largest economy in the world increased by less than anticipated in July, supported optimism going into the final trading day of this week. For the second consecutive month, the measure rose by 0.2% on a monthly basis, supporting predictions that the Federal Reserve will soon end its protracted campaign of interest rate increases.
With the release of the producer price index for last month, the inflation picture will probably gain more specificity today. The indicator, which measures the selling prices paid to domestic producers, is anticipated to have increased to 0.7% annually and 0.2% monthly in July, according to economists. The core number, which excludes food and energy, is observed to accelerate somewhat to 0.2% month over month while edging a little slower to 2.3% year over year.
2. News Corp. considers AI
Rupert Murdoch’s News Corp. (NASDAQ: NWSA), owner of the Wall Street Journal and the Sunday Times, experienced a revenue decline of about a tenth in the most recent quarter, resulting in a three-month deficit.
The company’s Dow Jones subsidiary did, however, help to slow the drop. Market Watch and Barron’s publishers reported segment earnings of $133 million, a 25% increase, and the division’s biggest profit since joining News Corp.
Robert Thomson, the group’s chief executive, described the organization’s larger ambitions to adapt to the emergence of generative artificial intelligence. Thomson saw it as a “challenge” to the preservation of publishers’ intellectual property and stated that News Corp is currently engaged in negotiations to determine a price for its content and IP.
However, Thomson insisted that generative AI still offered a “remarkable opportunity” to create new sources of income and reduce expenses.
3. The Purdue Pharma opioid deal is halted by the Supreme Court.
The bankruptcy of Purdue Pharma has been temporarily halted by the U.S. Supreme Court, raising questions about whether the company’s owners, the Sackler family, can be protected from any future lawsuits arising from the U.S. opioid crisis.
An agreement protecting the Sacklers from prospective legal action in exchange for a one-time $6 billion payment to crisis victims was earlier this year accepted by a lower court.
After that, the Justice Department requested a postponement of the agreement, arguing that it wrongly absolves third parties of any responsibility for future contributions to the issue. Oral arguments will now be heard in December by the Supreme Court.
To emerge from bankruptcy, OxyContin producer Purdue would require the deal. The business rejected the DoJ’s demand, claiming that doing so would drain “billions of dollars” from opioid recovery programs and ultimately make “meaningful recovery” for victims more challenging.
4. UBS cancels the governmental guarantee of the Credit Suisse (SIX: CSGN) acquisition.
UBS (SIX: UBSG) declared on Friday that it no longer required the CHF 9 billion, or slightly over $10 billion, in government support that had been put in place to shield the Swiss banking behemoth from losses resulting from its acquisition of competitor Credit Suisse.
As part of the rescue plan, the state had promised to protect UBS from the CHF 9 billion in losses from the deal in exchange for a CHF 5 billion hit.
UBS also stopped the Swiss National Bank’s offer of a CHF 100 billion liquidity backstop. The funding was initially established in March, during a crisis that shook the nation’s banking industry and ultimately resulted in the state-sponsored merger of UBS and Credit Suisse.
UBS claimed that it had come to the conclusion that it was not required to continue these liquidity assistance measures after conducting a “comprehensive assessment” of Credit Suisse’s non-core assets. Meanwhile, Credit Suisse paid back a CHF 50 billion emergency loan from the Swiss government in full first, according to UBS.
UBS’s Swiss-listed shares increased on Friday.
5. Crude is roughly flat.
With traders attempting to assess U.S. inflation statistics, worries about a faltering economic recovery in the world’s largest crude importer, China, and upbeat OPEC demand projections, oil prices were volatile on Friday but mainly remained near the flatline.
With the dollar increasing after the release of the US CPI on Thursday, the price of petroleum increased for consumers using foreign currencies, which damaged the market.
Oil markets were also affected by growing concerns about China’s economy, but this was offset by the Organization of the Petroleum Exporting Countries’ confirmation on Thursday that it still anticipates a 2.25 million barrel per day increase in global oil demand in 2024 compared to this year’s growth of 2.44 million barrels per day.
By 05:22 ET, the price of U.S. crude futures was down 0.4% at $82.47 per barrel, while the price of the Brent contract was down 0.5% at $86.01.
