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CPI, Bond Sales, Roblox IPO and Oracle - What's up in Markets

EconomyMar 10, 2021 06:42
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By Geoffrey Smith -- The Treasury auctions $38 billion of 10-year bonds a couple of hours after February's U.S. inflation data. Roblox makes its debut on the stock exchange through a direct listing after setting its reference price at $45. The pattern of tech underperformance looks set to reassert itself. Oracle (NYSE:ORCL) earnings are due, and the U.S. government reports its weekly oil stockpiles data. Here's what you need to know in financial markets on Wednesday, March 10th.

1. Treasury prepares for massive bond sale

Inflation data for February, due at 8:30 AM ET (1330  MT) will give some indication as to whether the Great Inflation Scare of 2021 needs to be taken more seriously. The consumer price index is expected to have risen 0.4% in the month while the annual rate is expected to have risen to 1.7% from 1.4%. The core CPI, which strips out more volatile elements such as food and energy, is expected to have risen 0.2%, with the annual rate staying at 1.4%.

The ability of the CPI to track actual inflation is disputed, due to its inability to track the changes in consumer spending patterns in real time. That’s a big deal in the Year of the Pandemic.

However, the numbers are sure to gain attention, coming ahead of the Treasury’s auction of $38 billion of 10-year notes at 1 PM ET (1800 GMT), which is set to be more of a challenge than the 3-year note sale on Tuesday. Also of note will be weekly data on mortgage refinancings, which are likely to have suffered from the rise in long-term rates in recent weeks.

2. Chinese markets bounce weakly; Loan data stronger than expected

China’s stock markets also managed to stop the rout, at least for a day, with all of the major indices posting gains of as much as 1%, after monthly data on credit were stronger than expected. Bloomberg reported that the authorities appeared to have banned the search term “stock market” on popular search engines as selling speeded up last week.

Aggregate financing, the broadest measure of credit growth, grew by nearly twice as much as forecast at 1.7 trillion yuan. The stock of outstanding credit was up over 13% from a year ago, a rate that is likely to slow given that the Chinese central bank appears to be targeting a rate closer to 9%.

There was also fresh pressure on base metals prices as the country’s top steelmaking town issued a smog warning that will hit steel production. Iron ore futures fell 3%, but copper futures held above the $4 a pound level.

3. Tech underperformance set to return; Oracle earnings due

U.S. stock markets are set to open mostly higher again on Wednesday, although the recent trend of tech underperformance appears to be reasserting itself.

By 6:30 AM ET, Dow Jones futures were up 103 points, or 0.3%, while S&P 500 futures were up 0.1% and Nasdaq 100 futures were down 0.2%. That follows a whopping 3.7% gain in the Nasdaq on Tuesday as battered tech names suddenly found a bid from bargain-hunters.

Stocks likely to be in focus later include GameStop (NYSE:GME), which rose another 25% on Monday as news about its online sales push reintensified the ongoing short-squeeze in the stock. GameStop was up 11%. Also of interest will be whether names such as Tesla (NASDAQ:TSLA), which added $100 billion to its valuation on Tuesday with a 20% rise, can sustain its refound momentum.

Software giant Oracle reports its earnings after the close.

4. Roblox to debut after setting $45 reference price 

Game platform Roblox is set to make its debut on the New York Stock Exchange later, after setting the reference price for its direct listing at $45 a share.

The price values the company at around $30 billion.

The company, which has experienced a surge in daily average users and average playing times due to the pandemic, has opted against a traditional IPO, preferring the direct listing route taken by the likes of Palantir (NYSE:PLTR) and Spotify (NYSE:SPOT).

For the nine months through September, it still had a consolidated net loss of $197 million on revenue of $614 million.

The debut comes as Epic Games, the publisher of Fortnite whose revenue model is similar to Roblox’s, widened its antitrust attack on Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) with a lawsuit in Australia.

5. Oil consolidates; EIA inventories eyed

Crude oil prices consolidated, after absorbing the shock of another big build in U.S. crude inventories last week and shrugging at the news that Iraq, the second-biggest producer in OPEC, produced above its agreed quota in February.

By 6:40 AM, U.S. crude futures were flat at $64.02 while Brent crude was down 0.2% at $67.20 a barrel.

The focus of the day is likely to be on the government’s inventories data, after the American Petroleum Institute’s weekly estimate showed a 12.8 million-barrel surge in crude stocks, the biggest weekly rise since last April. API data for the last two weeks together appear to map closely to the 21 million barrel increase registered last week by the Energy Information Administration. As such, any overshoot of the 816,000 barrel increase expected may be received negatively.

CPI, Bond Sales, Roblox IPO and Oracle - What's up in Markets

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