Stock Market Futures Edging Up Ahead Of December’s Consumer Price Index Readings
Stock market futures are marginally higher in early morning trading today. This comes after a recovery rally on Tuesday following a whipsaw-like start to the trading week. All in all, this volatility in stocks is not all that surprising. Especially after comments from Federal Reserve Chairman Jerome Powell ensuring that the central bank is working on reeling in inflation. He said, “If we see inflation persisting at high levels, longer than expected, if we have to raise interest rates more over time, then we will.”
If that wasn’t enough, there is also more inflation-related data on tap today. At 8:30 a.m. ET, the Bureau of Labor Statistics is going to release the Consumer Price Index (CPI) figures for December. As it stands, economists are projecting a 7% year-over-year CPI increase, its highest since 1982. For reference, this is versus a year-over-year jump of 6.8% in November.
Providing some insight into all this is Brian Belski, BMO Capital Markets chief investment strategist. Belski notes, “I think the biggest comment on most investors’ minds that we talk to around the world would be a ‘policy mistake’ that the Fed might be too aggressive.” He continues, “Mr. Powell basically came out today and said this is going to be a process … with respect to how long this is going to take, and I think that’s what’s calming investors.”
As of 7:13 a.m. ET, the Dow, S&P 500, and Nasdaq futures are trading higher by 0.06%, 0.03%, and 0.05% respectively.
ExxonMobil Selling Ohio Shale Gas Properties Valued At About $200 Million; Invests In Biofuels Firm Biojet
Oil giant ExxonMobil (NYSE: XOM) is making several notable plays this week. As of yesterday, the company is currently trying to sell its shale gas properties in Ohio’s Appalachian Basin. The likes of which could be worth about $200 Million, given the current natural gas prices and production. In detail, the news came from Reuters who cited a marketing document alongside company confirmation. Now, Exxon’s current shale gas properties in the region span a whopping 27,000 acres. To highlight, 61 oil wells make up this asset. All of which produced around 81 million cubic feet per day equivalent of natural gas. Moreover, 274 wells being operated by other companies are also included in the current sale.
Also, while the company is divesting in this conventional energy asset, it is making investments in clean energy. On the same day, Exxon announced that it bought a 49.9% stake in Biojet, a Norwegian biofuels company. Through the current deal, Exxon can purchase up to 3 million barrels of Biojet’s biofuel a year. Ideally, this would serve to help the company grow its investments in low-carbon businesses. Additionally, Biojet is currently planning to develop five facilities to produce biofuels from forestry and wood-based construction waste.
In the larger scheme of things, this would be crucial in Exxon’s efforts to achieve net-zero greenhouse gas emissions. It aims to do so for its working assets in the U.S. Permian basin by 2030. As a result of all this, XOM stock is currently up by over 12% year-to-date. It seems that Exxon is looking to adapt to the times and investors are eager to tag along for now.
Oil Prices Soar As Fed Sees Omicron Having Short-Lived Impact On Economy
At the same time, oil prices are on the rise following the latest comments from Federal Reserve Chair Jerome Powell yesterday. The price per barrel of Brent crude gained by a solid 3.52%, settling at $83.72. Furthermore, U.S. West Texas Intermediate (WTI) rose by 3.82%, ending the day with a price of $81.22 per barrel. Notably, both are at their highest levels since November. Overall, this is likely due to a positive outlook regarding energy demands. Yesterday, Powell argued that the economic impacts from the Omicron Covid variant will be “short-lived”.
On top of that, Powell also added that the upcoming quarters could be good for the recovering economy as Omicron subsides. Weighing in on the current price movement of oil in general is Phil Flynn, senior analyst at Price Futures Group. Flynn says, “Combination of facts – that demand is going to be stronger than anticipated and that OPEC’s supply may not grow as fast as the demand – is why prices are climbing.” All this alongside oil companies making notable plays continues to put the industry on investors’ radars this week.
Nio Pops On News Of Supply Agreement And HSBC Price Target Bump
In other news, Chinese electric vehicle (EV) maker Nio (NYSE: NIO) appears to be making a rebound. For the most part, this comes as Nio continues to power through on the operational front. To begin with, the company is now working with Chinese steel producer Baoshan Iron & Steel. This deal will see the duo collaborate via a product and supply chain partnership. According to Nio CEO William Li, “Nio needs a global partner like Baosteel to work hand-in-hand on products, supply chain, technology innovation, new material applications, and zero-carbon pathways.”
On top of that, analysts over at HSBC (NYSE: HSBC) are also bullish on NIO stocks’ growth prospects. Just this week, analyst Yuqian Ding reiterated a Buy rating on it with a price target of $54 per share. This would suggest a possible upside of 79.8% from its closing price of $30.02 at yesterday’s closing bell. Generally, the firm cites Nio introducing more models this year and strong demand for its ET5 EVs as driving factors. The real question now is whether investors should be buying into NIO stock’s current weakness or not.
Walgreens Conducting “Strategic Review” Of U.K-Based Operations
Walgreens (NASDAQ: WBA) is currently conducting a “strategic review” of its Boots pharmacy chain in the U.K. This announcement comes from CEO Roz Brewer at the virtual JPMorgan (NYSE: JPM) Healthcare Conference this week. She said, “While the process is at an exploratory stage, we do expect to move quickly.” As it stands, the company is not giving a definite answer as to whether it would be selling its U.K.-based drugstore chain. If anything, a potential sale of the business would help fund the company’s ongoing push to bolster its health care offerings in the U.S.
To put things into perspective, Boots currently operates a network of 2,200 stores in the U.K. They provide for U.K. consumers’ day-to-day health, optical, and hearing needs. Moreover, Boots also sells a wide array of beauty products alongside its drugstore essentials. Not to mention, there is also the ongoing surge in Omicron cases in the U.S. to consider. Analysts from Mizuho believe that demand for Covid vaccines and test kits could continue to bolster sales for the quarter. Given all this exciting news about Walgreens, I could see investors eyeing WBA stock in the stock market today.
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