Flying objects, Adani, EU recession, U.S. CPI, Crude - what's moving markets

© Reuters

By Peter Nurse

Investing.com -- The U.S. Air Force continues to shoot down unexplained flying objects over North America, while beleaguered Indian conglomerate Adani plans to reduce capital expenditure. Wall Street is set for a cautious open ahead of Tuesday's key inflation data, while crude falls after last week's strong gains. The European Commission published its latest forecasts and predicts the European Union will avoid recession this year. Here's what you need to know in financial markets on Monday, 13th February.

1. Spy balloons or aliens?

The U.S. military confirmed that it shot down another flying object on Sunday, the fourth such entity to be downed over North America by a U.S. missile in a little more than a week.

While Washington was quick to describe the first object as a suspected Chinese surveillance balloon, there appears to be more mystery around the latest items.

U.S. Air Force General Glen VanHerck, head of North American Aerospace Defense Command, said the military had been unable to date to identify the three latest objects, even refusing to rule out aliens as an explanation.

Despite these muddied waters, it’s pretty clear the initial incident has raised tensions between Washington and Beijing.

China responded on Monday by claiming that U.S. high-altitude balloons had flown over its airspace without permission more than 10 times since the beginning of 2022, widening a diplomatic row.

2. Adani plans to reduce capital expenditure

Adani Group remains in the spotlight Monday after Bloomberg reported over the weekend that the Indian conglomerate plans to cut its revenue growth target as well as capital expenditure.

The group has suffered a drastic selloff since U.S. short-seller Hindenburg Research accused it of stock manipulation in late January.

Bloomberg said, citing sources, the group will now aim for revenue growth of 15% to 20% for at least the next financial year, down from the original target of 40%.

Adani has denied any wrongdoing, adding the balance sheet of each of its portfolio companies was "very healthy" and that it has strong corporate governance and secure assets.

Still, it faces investigations from India's market regulator.

3. U.S. stocks to open flat; CPI data in focus

U.S. stock markets are set to open largely unchanged Monday in cautious trading as investors await crucial inflation data later in the week, seeking more clarity over the Federal Reserve’s rate hike intentions.

By 6:30 ET (11:30 GMT), Dow Jones futures were down 10 points or 0.1%, while S&P 500 futures were up 0.1%, and Nasdaq 100 futures were up 0.4%.

There’s little U.S. economic data due for release Monday, but Tuesday’s CPI number could well provide further clues as to how high the Fed may need to raise rates this year.

Economists expect the data to show monthly rates ticked up in January, but the annual measures declined.

Several Fed officials are due to make appearances during the week, including Michelle Bowman later Monday.

The earnings season is now starting to wind down, but there are still a number of important companies still to report, including Coca-Cola (NYSE:KO) on Tuesday, Biogen (NASDAQ:BIIB) and Deere (NYSE:DE) before Friday’s market open.

4. European Union to avoid recession - EC

The European Commission lifted its economic forecasts for the EU earlier Monday, adding the bloc will likely dodge a recession, thanks in part to a dip in gas prices.

In its interim winter projections, the EU's executive arm said it now expects its 27 member states to expand by a combined 0.8% in 2023, up by 0.5 percentage points compared to its autumn forecast. The Eurozone, which is made up of countries using the euro currency, is seen growing by 0.9%, an increase of 0.6 percentage points versus its prior estimate.

Good news, for sure, but the Commission was at pains to point out that the EU economy is still beset with challenges - including rising core inflation, continuing monetary tightening, and weakness in consumption.

5. Crude hands back some of last week’s gains

Crude oil prices fell Monday, handing back some of last week’s gains, on concerns stubbornly high inflation in the U.S. will result in an economic slowdown in the world’s largest consumer of crude, prompting short-term demand weakness.

Also weighing was the resumption of Azerbaijani oil exports at Turkey's Ceyhan terminal over the weekend after the earthquake earlier this month in the region had disrupted supply.

By 06:30 ET, U.S. crude futures were down 0.5% at $79.32 a barrel, while Brent crude was down 0.5% at $86.00 a barrel.

Oil prices had climbed over 8% last week, helped by Russia stating it will cut its output by 500,000 barrels a day from March, in response to western price caps on its exports.