Crude losses deepen, U.S. retailers' holiday worries - what's moving markets

November 23, 2023 09:18 PM AEDT | By Investing
Follow us on Google News: -- U.S. stocks are set to be shuttered for Thanksgiving festivities, after equities on Wall Street gained in the last full day of trading this week on Wednesday. Meanwhile, oil prices extend declines after OPEC+ unexpectedly delayed a much-anticipated output policy meeting. Elsewhere, Reuters reports that staff researchers at OpenAI had warned of the risks of a new artificial intelligence breakthrough prior to the temporary dismissal of chief executive Sam Altman.

1. U.S. stock markets to close for Thanksgiving

U.S. equity markets will be closed on Thursday for the Thanksgiving holiday.

On Wednesday, stocks on Wall Street climbed in the last full session of a truncated trading week, as investors remained optimistic that the Federal Reserve may have finished its long-running campaign of interest rate hikes.

The 30-stock Dow Jones Industrial Average rose by 185 points or 0.5%, the benchmark S&P 500 added 18 points or 0.4%, and the tech-heavy Nasdaq Composite gained 66 points or 0.5%.

New economic data showed that the amount of Americans filing for unemployment aid, considered to be a proxy for layoffs, dropped by more than expected last week. University of Michigan price growth expectations were also revised higher, while durable goods orders in October were softer than projected.

Traders seemed to view the figures as signs that the world's largest economy may be easing, but will remain resilient enough to avert a recession. Coupled with minutes from the Fed's November meeting earlier this week which suggested that policymakers will "proceed carefully" before further raising borrowing costs, hopes remain that the Fed's tightening cycle -- which has lifted rates to more than two-decade highs -- could be over.

2. Crude losses deepen amid OPEC+ uncertainty

Oil prices fell Thursday, adding to the previous session’s sharp losses as the unexpected delay in an upcoming OPEC+ meeting spurred uncertainty over the extent of the intended reduction in supplies by the producer group.

By 04:44 ET (09:44 GMT), the U.S. crude futures traded 1.4% lower at $76.02 a barrel, while the Brent contract dropped 1.58% to $80.73 per barrel. Both contracts fell at least 4% on Wednesday.

The Organization of the Petroleum Exporting Countries and allies including Russia -- also known as OPEC+ -- delayed to Nov. 30 a ministerial meeting, originally scheduled for Sunday, where they were expected to discuss oil output cuts.

This has prompted speculation that the group of major producers were struggling to agree on output levels and possible reductions going forward.

3. Retailers brace for Black Friday

Retailers in the U.S. are preparing for the key Black Friday shopping event, but are bracing for a possible slowdown in big spending by inflation-hit consumers in the final weeks of the year.

Even before the post-Thanksgiving sales bonanza, which typically kicks the holiday shopping season into full gear, retail companies have been rolling out promotions and deals to entice American gift-buyers.

However, several big-box brands, including low-cost giant Walmart (NYSE:WMT) and home improvement group Lowe's (NYSE:LOW), have presented a relatively downbeat outlook for customer spending heading into the holidays. Describing the trading environment in the electronics chain's most recent earnings, Best Buy (NYSE:BBY) head Corie Barry called demand "even more uneven and difficult to predict."

According to the National Retail Federation, U.S. holiday sales are seen increasing at their slowest pace in five years, suggesting that shoppers are more reluctant to open up their wallets in the face of headwinds like price growth, elevated interest rates, and the resumption of student loan repayments.

4. OpenAI researchers warned of AI breakthrough prior to Altman ouster - Reuters

Prior to OpenAI boss Sam Altman's dramatic and short-lived sacking last week, several staff researchers at the high-profile start-up sent a letter to its board of directors warning about the threat to humans posed by a powerful new artificial intelligence discovery, according to Reuters.

Citing two people familiar with the matter, the news agency said that the letter and the AI algorithm were both instrumental in Altman's ouster on Friday. The sources told Reuters that board members had also raised concerns about the commercialization of the nascent technology without fully understanding the consequences.

Altman, who has become a leading figure in the global debate over the usage of AI, was reinstated earlier this week under the supervision of a new board following heavy backlash from both OpenAI employees and investors.

OpenAI declined to comment to Reuters.

5. Zhongzhi unveils over $30 billion liquidity gap - reports

Chinese wealth manager Zhongzhi Enterprise Group has reportedly warned its investors that it faces a liquidity hole worth between 220 billion yuan to 260 billion yuan ($1 = 7.2111 Chinese yuan renminbi), which would both amount to more than $30B.

According to reports citing a letter to investors, Beijing-based Zhongzhi said it had total liabilities of around 420 billion yuan to 460 billion yuan, while its total assets were estimated at approximately 200 billion yuan.

Signs of trouble at the company -- a major player in China's $3 trillion shadow banking sector that is heavily exposed to the country's ailing real estate industry -- first appeared when Zhongrong, a trust firm controlled by Zhongzhi, missed payments on dozens of investment products earlier this year.

Zhongzhi said it has "significant continuing operational risks," Reuters reported, adding that it vowed to move with "urgency" to resolve the matter. The group's woes threatened to exacerbate contagion fears, although analysts told Reuters that financial regulators would likely intervene if Zhongzhi's issues began to spread throughout the world's second-biggest economy.

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