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Top 5 Things to Know in the Market on Thursday

Published 09/26/2019, 06:03 PM
Updated 09/26/2019, 06:33 PM
© Reuters.

Investing.com -- The Fed steps up its efforts to calm short-term funding markets, and gets plenty of opportunities to talk about the issue. European Central Bankers meanwhile get the chance to comment on another shock resignation by one of its German officials. And there's earnings due from Accenture (NYSE:ACN), Micron (NASDAQ:MU) and Carnival (NYSE:CCL). Here's what you need to know in financial markets on Thursday, 26th September.

1. Fed to turn up the liquidity faucet

The Federal Reserve will offer bigger injections of cash to the financial system later to smooth over the volatility that has plagued short-term funding markets for the last two weeks.

It’s raised the overnight funds on offer from $75 million to $100 million and has doubled the size of a similar two-week operation raised from $30 million to $60 million.

Chicago Fed President Charles Evans said Wednesday that a “flat out larger balance sheet” could be the answer to the problem of money-market volatility, but declined to be drawn on whether that would take the form of renewed outright purchases (quantitative easing) or new standing facilities that banks could use on an ad hoc basis.

2. Peloton keeps the IPO market ticking over

Exercise bike-maker Peloton raised $1.16 billion in its IPO, selling 40 million shares at the top end of its marketing range of $26-$29. That gave it a valuation of $8.2 billion.

That comes as something of a relief to the equity capital markets after the unravelling of We Company’s IPO in recent days, not to mention the poor performance of a number of this year’s banner IPOs. Smiledirect has fallen 30% since listing two weeks ago while Slack has fallen 24% in the last month.

Entertainment group Endeavor Group Holdings (NYSE:EDR) is due to price its IPO later, against a backdrop of reports it is considering a price below the bottom end of its marketing range.

3. Stocks set to open a touch higher

U.S. stock markets are set to open modestly higher, supported by comments late Wednesday from President Donald Trump that a trade deal with China was “getting closer”.

Trump, under pressure elsewhere from the start of an impeachment inquiry offered no further detail and his comments contrasted with the U.S. decision on Wednesday to penalize Chinese shipping companies for handling Iranian oil.

By 6 AM ET, Dow Futures were up 48 points or 0.2%, S&P 500 Futures were also up 0.2%, while Nasdaq 100 Futures were up less than 0.1%

The day will feature earnings reports from consulting group Accenture, chipmaker Micron and cruise operator Carnival. Tobacco stocks may be set for another rocky day as U.K.-based Imperial Brands (LON:IMB) fell over 9% after it cut its sales forecast due to the “challenging” environment for vaping and other non-traditional tobacco products.

4. Jaw-jaw from central banks

It’s another busy day for appearances from central bankers, with Richard Clarida, the man seen by many as the Federal Reserve’s leading monetary thinker, arguably topping the bill at 11:45 AM ET. Dallas Fed chief Robert Kaplan, who yesterday predicted the U.S. will avoid a recession, is due to speak at 10:30, while European Central Bank president Mario Draghi is set to speak at a separate event at the same time.

Draghi and German central bank governor Jens Weidmann (due at 2 PM ET) will both be speaking less than a day after Sabine Lautenschlaeger resigned her post on the ECB’s six-person board, a move that many linked to her dissatisfaction with Draghi’s insistence on resuming quantitative easing at the ECB’s meeting last week.

Overnight, Bank of Japan governor Haruhiko Kuroda signalled likely action to ease policy at the BoJ's next policy meeting, citing growing risks of missing the bank's inflation target.

5. Final GDP Reading, Kansas City Fed survey due

The final reading for U.S. gross domestic product growth in the second quarter is due at 8:30 AM, with an annualized print of 2.0% expected. It'll be accompanied by more granular details on personal consumption expenditures, while the August trade balance and last week’s initial jobless claims will be released separately, but simultaneously.

The Kansas City Fed’s regional business survey follows at 11 AM ET.

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