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Suez Jam, Jobless Claims, AstraZeneca Update - What's up in Markets

EconomyMar 25, 2021 10:41
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© Reuters.

By Geoffrey Smith 

Investing.com -- More and more ships are backed up waiting to get into the Suez Canal, which may remain blocked until Sunday. The EU and U.K. dial down their vaccine war, ahead of a summit President Joe Biden will Zoom in to call for a united front against China, where a government media-led backlash against Nike (NYSE:NKE) and H&M (ST:HMb) is in progress after the companies said they would cut ties with cotton suppliers in Xinjiang over claims of forced labour. AstraZeneca (NASDAQ:AZN) revises down its assessment of the efficacy of its Covid-19 drug - not by much, but enough to create some more head-scratching. And jobless claims data are expected to show  the downward trend in unemployment reasserting itself. Here's what you need to know in financial markets on Thursday, March 25th.

1. Suez still blocked

The Suez Canal, one of the most important arteries for global trade, remained blocked for a third day after a massive container ship jammed against its walls in heavy winds on Tuesday.

Bloomberg reported that an elite salvage squad is due to arrive on site later Thursday to add its efforts to those of tugboats and diggers which have so far failed to extract the ship, which is longer than Paris’s Eiffel Tower is tall. Dutch state TV quoted the head of that salvage company as saying that it might "take weeks" to unblock the canal.

The blockage has left over 100 ships stranded while waiting for entrance to the Canal, a disruption that promises to be reflected in commodity prices and trade flows for at least a month. The Canal acts not only as a major conduit of crude oil from the Persian Gulf to Europe and the U.S. east coast, but also for Russian oil being shipped to Asia. 

Crude futures were down 1.7% at $60.17 a barrel, while Brent crude was down 1.3% at $63.55 a barrel.

2. Europe, U.K. dial down vaccine war; AstraZeneca revises drug data

The U.K. and EU signalled a truce in their fight over vaccines, pledging to work together in a joint statement released ahead of an EU summit later in the day. The summit will also be attended, remotely, by U.S. President Joe Biden.

Overnight, AstraZeneca PLC (LON:AZN) updated its U.S. trial results to show a slightly lower efficacy rate for its Covid-19 vaccine. It now says the drug is 76% effective in stopping the virus, and repeated that it is 100% successful in preventing death and hospitalization.  

The discrepancy with the initial results nonetheless sheds an unwelcome light on AZ’s internal processes, adding to previous confusion over its initial test results in Europe.  The AZ virus is a vital part of the global vaccination campaign, being substantially cheaper than those offered by Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA). That’s important because the two worst outbreaks in the world at the present are raging in India and Brazil. 

 3 Stocks set to open higher; jobless claims, Fed speakers eyed

U.S. stocks are set to open modestly higher after their declines on Wednesday, with attention likely to be focused on the weekly jobless claims report at 8:30 AM ET (1230 GMT).

By 6:30 AM ET (1030 GMT), Dow Jones Futures were up 75 points, or 0.2%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.5%.

Initial claims are expected to have fallen to 730,000 from 770,000 the previous week, but arguably the more important number will be, as always, the total number of people on unemployment-related benefits. The final reading of fourth-quarter GDP is also due at the same time.

There will be speeches from Federal Reserve members, John Williams, Richard Clarida, Charles Evans, Mary Daly and Raphael Bostic in the course of the day.

4. Emerging central banks ponder rising inflation; Bitcoin's slide continues 

It’s another big day for emerging market central banks, with South Africa and Mexico both due to announce their latest monetary policy decisions. Inflationary pressures forced Turkey, Russia and Brazil into raising interest rates last week, and while analysts don’t expect a hike at either meeting, the Mexican central bank in particular is expected to move to more hawkish guidance.

Overnight, Switzerland left its monetary policy unchanged but toned down its talk about possibly intervening to cap the franc’s rise.

In the digital currency space, Bitcoin continued to slide against a backdrop of negative commentary about Tesla’s embrace of it. Bank of America (NYSE:BAC) analysts issued a note highlighting the currency’s carbon footprint, which is at odds with Tesla’s stated goal of reducing carbon emissions. At a conference held by the Bank for International Settlements, former ECB board member Benoit Coeure repeated that Bitcoin has “failed” to establish itself as a genuine currency.

5. Nike, H&M feel Chinese backlash after Xinjiang cotton boycott

Stocks in focus later may include Nike, which is facing a backlash in China after cutting ties with cotton suppliers in the province of Xinjiang. Swedish fashion chain H&M is having the same problem.

The companies made their moves after the U.S., EU and U.K. all imposed sanctions on Chinese officials in relation to allegations of human rights violations in Xinjiang, where the U.S. says China is conducting a genocide of its Muslim Uighur minority. China has angrily responded to what it sees as interference in its domestic affairs.

Biden’s participation at the EU summit later is intended to reflect a more united stance by the West vis-à-vis China.

Suez Jam, Jobless Claims, AstraZeneca Update - What's up in Markets
 

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Comments (1)
David Hawley
David Hawley Mar 25, 2021 12:52
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Jobless claims came in lower than expected. if Jobless claims came in lower than expected a year ago the Dow would be climbing through the roof. But today its inflation we're scared about. No body cares about inflation then.
David Hawley
David Hawley Mar 25, 2021 12:52
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and bond yields are falling. crazy
Darren MNM
Darren_M Mar 25, 2021 12:52
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They'll use whatever narrative that suits the direction they want the market to go in.
David Hawley
David Hawley Mar 25, 2021 12:52
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Yes its a bear market. and when its a bear market it'll go down ni matter what. there's money to be made
 
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