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Inflation, Rivian IPO, Jobless Claims – What’s Moving Markets

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By Geoffrey Smith — Inflation is back on the centre of everyone’s radar as the U.S. prepares to release the highest CPI number in three decades. China’s producers are also letting rip, with a 13% rise in factory gate prices through October. Rivian’s IPO is poised to be the biggest since Facebook (NASDAQ:FB)’s in 2012, while weekly jobless claims are due a day early. Oil prices are close to their highs for the year after a surprise drop in U.S. crude stocks, and Walt Disney (NYSE:DIS) reports earnings after the close. Here’s what you need to know in financial markets on Wednesday, 10th November.

1. Inflation back on the radar; jobless claims set for new low

The official U.S. inflation rate is set to hit a 30-year high at 8:30 AM ET (1330 GMT), when the Bureau of Economic Analysis releases October’s consumer price index. Analysts expect the CPI to be up 5.8% from a year earlier, while the core CPI index which strips out volatile food and energy prices is expected to have risen 4.3%.

In both cases, that will represent an acceleration from September. However, given that annual rates are heavily influenced by basis effects, the monthly price increases may be of more importance in measuring the current strength of an inflation dynamic that is starting to spook markets again – Tuesday’s chunky rise in producer prices being a good illustration.

Additionally, due to the Veterans Day holiday on Thursday, the Labor Department is also releasing weekly jobless claims data at the same time. Initial jobless claims are expected to have inched down to a new post-pandemic low of 265,000 amid a nationwide shortage of workers.

2. Rivian prices IPO above the top of its range

Rivian, the electric van maker backed by Amazon (NASDAQ:AMZN) and Ford, is set to make the biggest market debut by a U.S. company since Faceb-, er, Meta Platforms, in 2012.

The company’s initial public offering was priced late on Tuesday at $78 a share, giving it a valuation of $77 billion on a fully-diluted basis. Not bad for a company that is yet to book any meaningful revenue. Its bankers had already revised up the marketing range from an initial $57-$62 a share to $72-$74.

The listing provides a timely opportunity for investors in electric vehicles, given that Elon Musk is preparing to sell around $21 billion of Tesla (NASDAQ:TSLA) stock to pay his tax bills. Tesla stock steadied in premarket trading on Wednesday after falling 12% on Tuesday in response to an SEC filing that showed Musk’s brother Kimbal cashed out a $110 million chunk of Tesla shares a day before Musk held his social media poll flagging the stake sale.

3. Stocks set to open lower; Disney earnings eyed 

U.S. stock markets more broadly are set to open lower, however, as Tuesday’s producer price data from the U.S. and even more alarming PPI data from China overnight put inflation and the need for tighter monetary policy back on the radar.

By 6:20 AM ET, Dow Jones futures were down 81 points, or 0.2%, while S&P 500 futures were down 0.3% and Nasdaq 100 futures were down 0.4%. All three indices had fallen on Tuesday.

Stocks likely to be in focus later include Upstart (NASDAQ:UPST), which was hit by profit-taking after its results late on Tuesday, and Alphabet (NASDAQ:GOOGL), which was also lower after the EU’s top court dismissed its appeal against a $2.8 billion antitrust fine. Disney is the standout earnings report due Wednesday, but comes after the closing bell.

4. China’s factory gate prices soar

Inflation was the main story of the day in China overnight, after data showing that producer prices rose by 13.5% on the year through October. That was up from 10.7% in September and well above a consensus forecast of 12.4%. Manufacturers were hit by, among other things, high energy prices as they cranked up output to meet booming global demand.

Chinese consumer prices also rose a hefty 0.7% on the month, taking the annual rate to 1.5%, a 12-month high. That sparked concern that the People’s Bank of China may be constrained in its ability to support the economy with looser monetary policy if the crisis in the country’s real estate sector requires it.

China Evergrande (OTC:EGRNY) is widely expected to meet some dollar interest payment obligations Wednesday after announcing a modest asset sale earlier in the week. However, shares in rival Fantasia (HK:1777) slumped to a record low after it said its lenders were demanding early repayment of their loans.

5. Oil gives up some gains ahead of EIA inventory data

Crude oil prices gave up some of their gains after Tuesday’s surge in response to a surprising draw on U.S. crude stocks last week.

By 6:25 AM ET, U.S. crude futures were down 0.5% at $83.80 a barrel, after having tested the $85 mark on Tuesday when the American Petroleum Institute said crude inventories had fallen 2.5 million barrels last week, rather than rising by 1.9 million as expected. Data from the Energy Information Administration are due at 10:30 AM ET as usual.

The U.S. government decision to shelve the idea of releasing oil from the Strategic Petroleum Reserve also supported prices overnight – a move that analysts had dismissed as unlikely to have any lasting effect in any case, given current global supply-demand dynamics.

Inflation, Rivian IPO, Jobless Claims – What’s Moving Markets

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