Arm set to extend gains, Chinese data lifts sentiment - what's moving markets

Investing.com -- Arm (NASDAQ:ARM) shares climb in premarket U.S. trading, putting them on track to extend their strong start after a much-anticipated debut on Thursday, while investors look ahead to another public listing by grocery-delivery service Instacart. Elsewhere, workers at factories owned by three major automakers go on strike, while new data suggests that China's faltering economy may be starting to stabilize.

1. Futures mixed after Arm IPO drives positive session

U.S. stock futures were mixed on Friday after shares in chip designer Arm rallied in their debut trading day, fueling hopes for a revival in technology company listings.

At 05:47 ET (09:47 GMT), the Dow futures contract added 84 points or 0.2%, S&P 500 futures rose by 4 points or 0.1%, and Nasdaq 100 futures slipped by 15 points or 0.1%.

All three of the major indices posted positive sessions on Thursday, with equities bolstered by SoftBank-backed Arm's successful initial public offering (IPO). Economic data on Thursday also showed that so-called "core" producer price growth, stripping out volatile items like food and fuel, slowed in August -- although the headline measure of prices received by businesses for their goods and services accelerated by more than anticipated during the month.

The data reenforced bets that the Federal Reserve, which has declared a dependence to data in future policy decisions, will keep interest rates unchanged at its upcoming meeting this month. Fresh economic figures due out later today, including preliminary September consumer sentiment figures, could help clarify the policy path ahead for both Fed officials and markets alike.

2. Arm debut sparks hopes of tech IPO revival

Shares in Arm were higher by more than 6% in premarket U.S. trading after they soared by nearly 25% in their first day of trading on the Nasdaq exchange.

The stock, which had an IPO price of $51, closed at $63.59, giving the British company a fully diluted value of almost $68 billion. The surge suggesting that investors were persuaded by Arm's stated push to diversify its business away from the flagging smartphone market into burgeoning sectors like artificial intelligence and automobiles.

SoftBank (TYO:9984), which maintains around a 90% stake in Arm, raised about $5B from the float. The tech investment giant had lined up a $40B sale of Arm to chipmaker Nvidia (NASDAQ:NVDA) last year, but the deal was scuttled due to regulatory opposition.

Arm's IPO has fanned enthusiasm for the recently dormant market for tech IPOs, with investors looking ahead to a planned public listing by Instacart. Bolstered by Arm's debut, the grocery-delivery chain is now expected to raise the indicated price of its shares to between $28 to $30 apiece, according to people familiar with the matter cited by the Wall Street Journal. The group had been looking for $26 to $28 when the shares begin trading next week.

3. UAW strikes at key auto plants

Members of the United Auto Workers have gone on strike at key assembly plants for the first time ever after failed talks between the union and the so-called "Big Three" major carmakers on a new labor contract.

The walkouts, which have seen a little under 13,000 workers taking to the picket lines, hits factories in Michigan, Ohio and Missouri owned by General Motors (NYSE:GM), Ford Motor (NYSE:F) and Jeep-maker Stellantis (NYSE:STLA). Other facilities may also see sporadic labor actions, the Wall Street Journal reported.

UAW President Shawn Fain vowed that the strikes will go on until workers "get our share of economic justice," according to CNBC.

In a statement, Ford said the terms presented by the UAW would lead to "unsustainable" labor costs, adding that the union's proposals showed "little movement" from their initial demands.

The negotiations, which so far have proven fruitless despite the involvement of U.S. President Joe Biden, have some economists worried about a broader impact on the American economy. When combined, Ford, GM and Stellantis account for roughly half of the 15 million cars produced in the U.S. per year.

4. Potential green shoots for China's economy

Chinese industrial production increased by more than expected in August, spurring hopes of a nascent rebound in the key sector, thanks to an improvement in local demand and a continued stream of monetary support from the government.

Industrial output rose 4.5% during the month compared to the prior year, data from the National Bureau of Statistics showed on Friday. The reading was above projections for growth of 4% and faster than the 3.7% jump in July.

Production for the year to August also ticked higher to 3.9% from 3.8% in the prior month, in line with estimates.

A low annual basis for comparison -- China still had large parts of the country under COVID restrictions in 2022 -- aided the positive figures. But the stronger-than-anticipated number, as well as a pick-up in retail sales, hinted at some recovery in economic activity, which has been stuttering following an initial spurt in the wake of Beijing's decision to ease strict COVID rules.

Meanwhile, the People’s Bank of China announced on Thursday that it will cut the reserve requirement ratio for local banks by 25 basis points -- its second such cut this year -- in order to release more liquidity into the world's second-largest economy and potentially shore up growth.

5. Oil rally extends after Chinese data, stimulus

Oil prices climbed on Friday, touching their highest level since last November, on the back of better-than-expected economic data and additional stimulus measures from top importer China.

China's oil refinery throughput in August also surged to a record high, data on Friday showed, as solid summer travel demand and a rush to take advantage of strong export margins led processors to keep run rates elevated. The refining figures come as markets are attempting to gauge if output reductions by key producers Saudi Arabia and Russia will keep supplies tight this year.

By 05:49 ET, the U.S. crude futures traded 0.4% higher at $90.50 a barrel, while the Brent contract edged up by 0.3% to $94.00.

Both benchmarks were up around 4% from a week ago, on course for a third weekly gain.

This article first appeared in Investing.com