US economic data, Rio Tinto’s proposal to buy lithium mining company and oil price are among the topics
The main future stock indices on Wall Street fell this Monday (Oct 7, 2024), after ending on a high last Friday (Oct 4), thanks to a jobs report. payroll, above expectations.
Now, markets turn their attention to new US inflation data, which could offer more clarity on the direction of US interest rate policy. Fed (Federal Reserve, North American Central Bank) in the coming months. In the corporate market, global mining company Rio Tinto (NYSE:RIO) confirms a proposal to acquire Arcadium Lithium, based in the USA.
1. US stocks
US stock futures pointed to a lower opening this Monday (Oct 7), after a rally in the previous session driven by a robust September employment report.
At 7:50 a.m. Brasília time, Dow futures fell 184.8 points, or 0.44%, S&P 500 futures fell 27.4 points, or 0.48%, while Nasdaq 100 futures lost 126.7 points, or 0.63%.
On Friday (Oct 4), Wall Street’s main indices registered a sharp rise after the US Department of Labor revealed that the economy added many more jobs than expected in the previous month. These numbers reinforce the perception that the world’s largest economy is on solid ground as the 4th quarter begins.
Although the number reduced expectations of a 50 basis point interest rate cut – a measure that corresponds to 0.01 percentage point – by the Fed in its last meetings this year, it increased optimism that the central bank could achieve a “soft landing” — a scenario where high inflation would be controlled without causing a widespread recession or affecting the job market.
The Dow Jones hit a record closing high, while the Nasdaq Composite advanced 1.2% and the S&P 500 rose 51 points or 0.9%. These increases also guaranteed the 4th consecutive week of gains for the main indices.
2. Data and balances
Investors have more economic data and a slew of quarterly corporate earnings to monitor this week.
The CPI (Consumer Price Index) for September, which will be released on Thursday (Oct 10), should show a slowdown in inflationary pressures at the end of the 3rd quarter. This data, combined with Friday’s strong jobs report, will likely shape expectations about the pace and magnitude of the Fed’s next rate cuts.
On Friday (September 11), the release of inflation data to producers should also point to milder inflationary pressures.
“September’s CPI will be crucial data. If prices rise more than expected, coupled with strong employment data, the chances of the Fed not acting at the November meeting increase.”said UBS analysts in a recent note.
Meanwhile, the US Q3 earnings season is about to begin, presenting a test for a stock market that is near all-time highs and trading at high multiples.
Major financial institutions including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and BlackRock (NYSE:BLK) will release earnings on Friday.
3. Mining
Global mining company Rio Tinto (LON:RIO) has made a proposal to acquire lithium producer Arcadium Lithium (NYSE:ALTM), as announced in separate press releases this Monday (7.Oct).
Both companies described the approach as “non-binding” and stated that they would provide more details about a possible agreement when they had “news to share”.
If completed, the deal would transform Rio Tinto into one of the largest global producers of lithium, a metal essential for electric vehicle batteries and energy storage. Before the announcement, media had speculated about the possibility of a bid after months of falling lithium prices, in part due to oversupply in China and weak demand for electric vehicles.
No financial details were revealed, but Arcadium Lithium has a market capitalization of about $3.3 billion. Shares of the Philadelphia-based company rose more than 35% in after-hours trading.
THE Reuters previously reported that negotiations could value Arcadium at between $4 billion and $6 billion, or even more.
4. Starboard Value
Activist investor Starboard Value has acquired a stake in Pfizer (NYSE:PFE) worth about $1 billion as part of an effort to restructure the pharmaceutical giant, according to the The Wall Street Journal.
Starboard reportedly contacted 2 former Pfizer executives — former CEO Ian Read and former CFO Frank D’Amelio — to assist in the process, according to the newspaper, citing sources close to the matter.
The report comes amid growing pressure on Pfizer’s leadership team to turn around recent performance. The company, which was one of the main manufacturers of vaccines against Covid-19 during the pandemic, has faced difficulties in compensating for the drop in sales after the end of the health crisis. At the end of 2023, Pfizer issued a revenue warning and a disappointing outlook for 2024, as well as announcing a $3.5 billion cost cut.
Pfizer’s shares, which are below pre-pandemic levels, rose slightly in trading after the report was released at the end of the day.
5. Oil
Oil prices showed volatility this Monday (Oct 7), after strong gains recorded the previous week, with investors closely following tensions in the Middle East.
At 7:50 am Brasília, a barrel of Brent rose 2.24%, to US$79.83, while a barrel of Texas WTI rose 2.64%, to US$76.31, on the futures market.
Last week, oil prices posted their biggest weekly gains in more than a year amid the growing threat of a full-scale war in the Middle East. Israel promised to attack Iran in response to Tehran’s missile launches after the assassination of the leader of Hezbollah, supported by the Persian country.
With information from Investing Brazil.
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