JOLTS, Russian Saber-Rattling, COP26 Failure - What's Moving Markets

© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. employment vacancies data and the University of Michigan's consumer sentiment poll head a quiet Friday for economic data. Russia keeps Europe on edge with aggressive posturing on the borders of Ukraine and Poland. Stocks are set to edge higher but are still on course for an inflation-stamped down week, and the COP26 ends as it began, in distinctly underwhelming fashion. Here's what you need to know in financial markets on Friday, 12th November.

1. JOLTS, inflation expectations in focus

The U.S. labor market – and its ability to drive inflation – will be in focus again later, as the Labor Department releases its monthly Job Openings and Labor Turnover Survey.

Analysts expect the number of vacancies to have fallen slightly in October to 10.30 million from 10.44 million in September, but that’s still not far off the all-time record of 11.10 million seen in August. It’s also nearly 3 million above its pre-pandemic peak in 2019.

The University of Michigan also releases its consumer sentiment survey for November, where the focus is likely to be on the inflation expectations subindex, which hit its highest since 2008 last month. Given the barrage of headlines about actual inflation hitting a 30-year high in October, that seems vulnerable to an upside surprise.

2. Russia rattles its saber at Europe

Russian saber-rattling reached its loudest in some years, buttressing the efforts of its ally Belarus to deflect fresh EU sanctions against its leadership over fraudulent elections and political repression.  

The Kremlin has massed troops on its Ukrainian border again, prompting U.S. diplomats to warn that Russia may make a fresh incursion into the country that it invaded seven years ago. It’s also conducting joint military exercises with Belarus near the town of Grodno in northwest Belarus, which borders on both Poland and Lithuania.

Meanwhile, the standoff between Polish border security guards and thousands of migrants deliberately delivered  to the border by Belarusian President Alexander Lukashenko continues. Lukashenko threatened to stop supplies of Russian gas through the key Yamal-Europe pipeline on Thursday. While the Kremlin is unlikely to allow such an overt politicization of its gas supplies, the move indirectly raises the pressure on Europe to allow the start of exports through the Nord Stream 2 pipeline.

The ruble - one of the year's best-performing currencies - fell against the dollar for a third straight day, by 1%, to a five-week low.

3. Stocks set to open higher; Chinese e-commerce giants have a mixed Singles Day

U.S. stock markets are expected to open a touch higher Friday, with sentiment driving direction in the absence of major market-moving news.

By 6:15 AM ET (1015 GMT), Dow Jones futures were up 78 points, or 0.2%, on course for a weekly loss thanks to rising fears of inflation and higher interest rates. The S&P 500 futures contract was up 0.1% and the Nasdaq 100 contract also edged up 0.2%.

Stocks likely to be in focus later include Beyond Meat (NASDAQ:BYND), which has lost nearly 20% this week against a backdrop of a weaker outlook (it still trades at over 10 times forward sales). Chinese e-commerce giants Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) will also be in focus after mixed fortunes on their ‘singles day’ sales event. Gross merchandise value processed by Alibaba’s Taobao marketplace grew at less than 10% for the first time ever.

4. COP26 ends with another victory for fossil fuels

The world’s biggest hot air fest came to a characteristically underwhelming conclusion in Glasgow, Scotland, as negotiators at the COP26 conference watered down yet another pledge to move beyond fossil fuels and head off the risk of catastrophic climate change.

A draft final declaration from the summit softened language on phasing out coal power and removing subsidies for fossil fuel use – largely at the insistence of Arab countries, according to Reuters.

That adds to failures earlier in the week to make any substantial progress on creating a global market for carbon, enforcing earlier promises to help poorer countries finance the energy transition, or committing to annual reviews of how countries implement their promises.

Agreement on long-term energy ideals was arguably never going to be realistic, given the short-term energy crisis currently afflicting many parts of the world, and the absence of Xi Jinping, who chose to stay home to secure a mandate from the Communist Party to rule as long as he wants.

5. Oil prices fall again as stronger dollar weighs

Crude oil prices fell overnight, leaving them barely ahead of the gain line for the week, as a stronger dollar continued to make life harder for non-U.S. buyers.

By 6:30 AM ET, U.S. futures were down 1.7% at $80.20 a barrel, threatening to dip below $80 for the first time this week. Brent futures were down 1.5% at $81.67 a barrel.

Baker Hughes’ rig count later will give fresh indications as to whether U.S. producers are accelerating production plans in response to the recent surge in prices, or whether they are continuing to prefer to repair balance sheets. The CFTC’s net positioning data will round off the week. Last week’s data showed that money managers were not excessively long of oil, by historical standards.