By Peter Nurse
Investing.com -- The fallout from the collapse of crypto exchange FTX continues to reverberate, while good news for U.S. retail stocks is set to lead to a higher open on Wall Street. Nancy Pelosi has announced she is standing down as the senior member of the Democrat Party in the House of Representatives, ending an era. President Joe Biden signals a thawing in the relations with Saudi Arabia, while companies will be looking to the FIFA World Cup for a sales bounce. Here's what you need to know in financial markets on Friday, 18th November.
1. FTX fallout continues
The collapse of the cryptocurrency exchange FTX continues to reverberate, as Genesis Block, a leading cryptocurrency retail service provider in Hong Kong, announced Friday it was ceasing trading.
"We have ceased trading, as we don't know which counterparties would fail next, so we would rather close out all our positions to regain some of our liquidity," chief executive Wincent Hung said, according to Reuters.
This followed FTX filing for bankruptcy last week, at which point the company's new CEO, John J. Ray III, said that the company's situation involved a "complete failure of corporate controls."
There is now likely to be an unsightly scramble for the FTX assets which still exist, with the Securities Commission of The Bahamas ordering the transfer of all FTX digital assets to a digital wallet owned by the commission "for safekeeping."
There has also already been a lawsuit filed in Miami by FTX account holders claiming deceptive business practices, and this is likely the first of many that will be brought given the billions of dollars in losses on the cryptocurrency exchange.
2. End of the Pelosi era
The loss of control of the House of Representatives by the Democrats as a result of the U.S. midterm elections also marks the end of Nancy Pelosi's long career of congressional leadership.
Pelosi announced on Thursday during a speech that she would give up her House leadership role but remain in Congress, representing San Francisco as she has done since 1987.
She was the highest ranking and most powerful elected woman in U.S. history until Kamala Harris became vice president in January 2021, having served two stints as speaker, first from 2007 to 2011 and then regaining the job in 2019.
President Joe Biden, in a statement, called Pelosi "the most consequential speaker of the House of Representatives in our history."
She will be replaced as House speaker by Republican Kevin McCarthy, while Hakeem Jeffries is widely expected to take the role of House Minority Leader, becoming the first black person in that role.
3. Stocks set to rise; Gap beats quarterly expectations
U.S. stock markets are set to open higher Friday, as investors digest some positive retail earnings as well as hawkish comments from a number of Federal Reserve speakers.
By 6:20 ET (11:20 GMT), Dow Jones futures were up 145 points or 0.4%, while S&P 500 futures were up 0.6%, and Nasdaq 100 futures were up 0.8%.
Retail chain Gap (NYSE:GPS) stock is seen with strong gains premarket after beating estimates for quarterly sales and profit after the close Thursday, helped by steady demand for its formal clothing and dresses from affluent consumers.
Rival Macy's (NYSE:M) had also signaled strong demand for high-end apparel ahead of the holiday season earlier in the week.
However, it wasn't all good news, as online retail giant Amazon (NASDAQ:AMZN) said late Thursday that its layoffs would extend into 2023, with reports suggesting the company is still targeting around 10,000 job cuts.
Economic data centers around existing home sales, while Boston Fed President Susan Collins is scheduled to speak during the session.
4. Thawing in U.S./Saudi Arabia relations
In a sign of a possible thawing of relations between the U.S. and Saudi Arabia, the Biden administration ruled on Thursday that Saudi Arabian Crown Prince Mohammed bin Salman has immunity from a lawsuit over the murder of Jamal Khashoggi.
President Joe Biden had previously promised to make Saudi Arabia a "pariah" over its human rights record, making it clear the killing in 2018 was "vitally important to me and the United States."
Adding frost to the relationship had been the decision of the Organization of Petroleum Exporting Countries, led by Saudi Arabia, to cut crude production to support oil prices last month, a move that sparked fierce criticism from Biden.
Oil prices have fallen back this week on concerns that rising COVID cases in China, the world's largest importer of crude, will hit the demand recovery. However, they still remain at elevated levels, adding to global inflationary pressures.
By 06:20 ET, U.S. crude futures traded 0.2% lower at $81.50 a barrel, down over 8% week-to-date, while the Brent contract fell 0.5% to $89.33, around 7% lower so far this week.
5. Corporates looking for World Cup bounce
The FIFA World Cup kicks off this weekend, with many companies viewing the most widely viewed and followed single sporting event in the world as central to their fortunes this quarter.
Gambling firms, which are seeing a drop in online gaming from COVID peaks, are now staring at challenges from a cost-of-living crisis as customers seek to cut non-essential spending.
Adidas (OTC:ADDYY), which is the official supplier of the FIFA World Cup, cut its 2022 outlook earlier this month but will be looking for a boost from the massive exposure such a tournament brings.
Similarly, FIFA sponsor Budweiser, owned by Anheuser-Busch InBev (NYSE:BUD), the world's largest brewer, will be hoping for a jump in sales. That said, FIFA has announced that fans will not be allowed to buy alcohol around World Cup stadiums in a dramatic reversal just two days before the soccer tournament starts.