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Inflation data this week, Alibaba leadership shake-up - what's moving markets

Published 11/09/2023, 08:14 pm
© Reuters

Investing.com -- Key U.S. inflation data later this week looms large, with investors hoping that the figures will help clear up uncertainty around the Federal Reserve's interest rate path for the rest of 2023. Elsewhere, Alibaba announces an unexpected leadership shake-up ahead of a planned restructuring of the sprawling Chinese business, while Arm reportedly eyes pricing its highly-anticipated initial public offering at the top end of its indicated range -- or above.

1. Futures point higher

U.S. stock futures edged into the green on Monday, extending gains made in the final session of the prior week, as investors looked ahead to the release of a batch of fresh economic data in the coming days.

At 05:54 ET (09:54 GMT), the Dow futures contract added 79 points or 0.2%, S&P 500 futures rose by 17 points or 0.4%, and Nasdaq 100 futures jumped by 84 points or 0.5%.

On Friday, the 30-stock Dow Jones Industrial Average climbed by 0.2%, while the benchmark S&P 500 and tech-heavy Nasdaq Composite both inched up by about 0.1%. However, over the whole trading week, all three of the major indices finished lower.

Attention now turns to a series of economic releases out of the U.S. later this week, with traders hoping that the figures will provide some clues about the Federal Reserve's monetary policy path. Recent data have suggested that the world's largest economy has remained resilient despite a nearly year-and-a-half long surge in interest rates, fueling some bets that the Fed may roll out another hike this year.

2. CPI figures to headline U.S. data this week

Consumer prices will be in the spotlight this week as Fed policymakers and markets alike watch out for signs that inflation is cooling back down to the Fed's 2% target.

Economists expect the annual headline consumer price index (CPI) to have accelerated to 3.6% in August from 3.2% in the prior month, due in part to a recent jump in energy costs. On a monthly basis, the measure is anticipated to have picked up to 0.6% after a 0.2% increase in July. The core reading, which strips out volatile items like food and fuel, is estimated to slow to 4.3% year-on-year and hold steady at 0.2% month-on-month.

Following Wednesday's CPI release, Fed officials will have had two separate months of consumer price data to parse through ahead of their Sept. 19-20 policy meeting. The U.S. central bank, which has vowed to be "data-dependent" heading into the gathering, is widely tipped to keep borrowing costs unchanged at a range of 5.25% to 5.50%.

Rounding out the inflation picture this week will be the publication of the latest monthly producer price index, while retail sales numbers on Thursday may sketch a rough outline of the consumer spending picture.

3. Alibaba's (HK:9988) outgoing CEO steps down as cloud unit chief

Outgoing Alibaba boss Daniel Zhang has stepped down as the head of its cloud division, surprising many observers who had expected him to helm the unit after a planned break-up of the Chinese business empire.

In a statement, Alibaba said that Eddie Yongming Wu will take over as acting Chairman and Chief Executive Officer of the division, and will also take over as CEO of the wider group. Hong Kong-listed shares in Alibaba slumped following the announcement.

Earlier this year, Alibaba said Zhang would step down as CEO of the firm as part of a plan to split its core businesses into six separate entities. Zhang was reportedly intended to lead the spun-off cloud unit, which is also set to seek a separate listing.

Alibaba noted that it still intends to go ahead with the proposed spin-off of its Alibaba Cloud Intelligence Group under a separate management team.

4. Renminbi rallies; yen rises

China's renminbi bounced back from a 16-year low against the dollar on Monday after China's central bank set an unexpectedly strong daily midpoint guidance rate, hinting at how uncomfortable policymakers in the country have become with the currency's recent weakness.

The People's Bank of China placed its midpoint rate, which sets a 2% trading band around the onshore yuan, at 7.2148 per dollar, far above of market forecasts.

The PBOC has been setting firmer-than-anticipated daily guidance rates over the past few months to help shore up the currency. Financial regulators in China said on Monday they were still "confident" that they can help bring stability to the yuan after it slumped to its lowest level against the greenback since 2007 late last week.

Elsewhere, Japan's yen was among the best performers in Asia today, buoyed by comments from Bank of Japan head Kazuo Ueda that sparked hopes for policy tightening.

Ueda told a local newspaper that the BOJ could have enough data by the end of the year to determine whether rates should stay below zero. He added that wage growth has also somewhat picked up in the country, adding to speculation that Japan's central bank may be nearing the end of an almost decade-long era of negative interest rates.

5. Arm eyeing IPO pricing at top of range - Reuters

Arm is closing in on attaining enough investor support to secure the fully diluted valuation of $54.5 billion it is seeking in its initial public offering at the top of its indicated range, according to a Reuters report over the weekend.

The British chip designer, which is owned by Japan's SoftBank (TYO:9984) Group, may be able to price the highly-anticipated IPO at the top end -- or even above -- its stated range of $47 to $51 a share, Reuters added, citing people familiar with the matter.

Sources also told the news agency that, due to strong investor demand for the IPO, Arm is exploring possibly increasing that range to a level that could push its valuation above $54.5B. However, Arm will reportedly not be offering more shares, as SoftBank looks to maintain a 90.6% stake in the company following the flotation.

A decision on the price range may come this week, the unnamed sources told Reuters, although they warned that many investor commitments have yet to be finalized. Both Arm and SoftBank declined to comment to Reuters.

Arm is hoping to rake in roughly $5B from its sale of about 10% of the total shares outstanding, in what is expected to be the largest IPO this year.

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