Here is what you need to know.
Zinc prices are exploding. Commodities giant Glencore announced it is removing 500,000 tonnes of zinc from the market, and now zinc prices are up about 9%. Glencore says it’s reducing production at its operations in Australia, Kazakhstan, and South America to preserve the value of its reserves in the ground “at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources.” Glencore’s stock is up more than 6% on the news.
Alcoa whiffs. Aluminium giant Alcoa unofficially started earnings season with a lacklustre report. The company announced earnings of $US0.07 per share, missing the $US0.13 that Wall Street was anticipating. Revenue tumbled 10.7% versus a year ago to $US5.57 billion, missing the $US5.64 billion that was expected. China proved to be a headwind for the quarter and the company lowered its 2015 automotive production forecast for China to 1% to 2% from 5% to 8%. “The third quarter brought economic headwinds and significant volatility in some of our markets,” said CEO Klaus Kleinfeld in the earnings statement. The stock is down about 3.5% in pre-market trade.
AB InBev really wants SABMiller. After SABMiller said AB InBev’s takeover offer “substantially undervalues” the company, AB InBev has fired back. InBev argues SABMiller’s rejection “lacks credibility” with AB InBev CEO Carlos Brito suggesting, “Our proposal creates significant value for everybody.” Brito also indicated it will be a long time before SABMiller shareholders see the stock go to InBEv’s offer price of $US63 (£42) per share.
Patriot Coal’s bankruptcy was approved. A US bankruptcy judge granted Patriot Coal approval of its Chapter 11 filing. The Wall Street Journal reports, “The plan proposes to sell Patriot’s mines to Blackhawk Mining LLC and a unit of nonprofit Virginia Conservation Legacy Fund, which aren’t offering cash for the assets but instead would issue new debt or take responsibility for existing Patriot debts.” As part of the plan, Patriot reached an agreement with retirees over how their benefits would be administered.
PC demand is weak. Research firm Gartner says worldwide PC shipments totaled 73.7 million units in the third quarter, down 7.7% compared to last year. According to Gartner, demand in emerging markets was weak because of the strong US dollar. “The global PC market has experienced price increases of around 10 per cent throughout the year, due to the sharp appreciation of the U.S. dollar against local currencies. In the third quarter of 2015, this continued to be a major cause for weaker demand in those regions,” said Mikako Kitagawa, principal analyst at Gartner.
Crude oil is up again. Crude oil is back above $US50 per barrel and trading at a two and a half-month high. West Texas Intermediate crude oil hit a low of $US38.24 per barrel on August 24, and has rallied more than 30% from that level. Currently, West Texas Intermediate is trading higher by 2.8% at $US50.84 per barrel.
The UK’s trade deficit narrowed. The UK’s trade deficit narrowed to
£11.1 billion in August, which was larger than the £9.9 billion deficit that was anticipated by Bloomberg’s consensus. Exports rose 3.5% month-over-month while imports slipped 0.7% from July. The British pound is little changed at 1.5343.
Global stock markets continue higher. Japan’s Nikkei (+1.6%) led the way higher in Asia and Spain’s IBEX (+1.5%) paces the advance in Europe. S&P 500 futures are up 2.50 points at 2009.00.
US economic data remains light. Import and export prices will be released at 8:30 a.m. ET and wholesale inventories will cross the wires at 10 a.m. ET. The US 10-year yield is down 1 basis point at 2.09%.
The earnings calendar is clean, but picks up next week. No companies are scheduled to report on Friday. Next week, things pick up as Infosys reports on Monday; Johnson & Johnson and JPMorgan Chase announce their results on Tuesday; Bank of America, Delta Airlines, Netflix and Wells Fargo are scheduled for Wednesday; Citigroup, Goldman Sachs and Phillip Morris International highlight the names reporting on Thursday; and General Electric closes out reports for the week on Friday.