Jobless claims, Costco, Broadcom results, China COVID - what's moving markets

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Jobless claims, Costco, Broadcom results, China COVID - what's moving markets

By Geoffrey Smith -- The U.S. releases weekly jobless claims into a market spooked by labor market tightness, Costco, Lululemon, and Broadcom announce earnings. China's rally pauses for breath as investors switch their focus to the risk of the COVID-19 virus spreading and Vladimir Putin returns to rattling his nuclear saber. Here's what you need to know in financial markets on Thursday, December 8th.

1. Jobless claims to cast light on labor market tightness

Normally when weekly jobless claims feature in this slot, it’s a sign of a quiet day ahead. And that’s probably true this time around too, but last week’s labor market report has kept the tightness of the labor market at the top of the agenda.

That’s because labor market concerns are at the heart of this week’s risk-off market movements – the U.S. is running out of workers and that has pushed labor costs up across the board, keeping the upward pressure on inflation. U.S. Inc’s traditional answer to that over the last 30 years – outsource more to China – is now no longer an option, of course.

Analysts expect initial claims for benefits to have risen to 230,000 keeping a slow but nonetheless clear upward trend intact. Continuing claims are expected to have stayed more or less flat at 1.60 million.

2. One fraud trial ends, another begins

As one high-profile fraud trial ends, another one begins.

Wirecard founder and former CEO Markus Braun went on trial along with two other former executives in Munich Thursday, in what is Germany’s biggest-ever fraud trial.

The trial, which is expected to run over a whole year, has already led to upheaval at the regulators who oversee Europe’s largest economy.

On Wednesday, meanwhile, a U.S. judge sentenced Ramesh Balwani, the former president of the fraudulent blood-testing group Theranos, to nearly 13 years in prison. The sentence will make for an interesting yardstick if any of the figures behind this year’s house-of-cards collapse in crypto ever generates fraud trials in the U.S.

3. Stocks eke out modest gains in premarket; Costco, Broadcom results due later

U.S. stock markets are struggling to get over the gain line again, despite three straight days of losses so far this week.

By 06:25 ET, Dow Jones futures were flat, while S&P 500 futures and Nasdaq 100 futures eked out a meager 0.2% gain. The Dow had held its own on Wednesday, while the S&P and Nasdaq lost a modest 0.2% and 0.5%, respectively, suggesting that the selloff was losing momentum.

Stocks likely to be in focus later include Alphabet (NASDAQ: GOOGL ), which is reportedly merging its Waze and Maps divisions in an effort to cut costs, one of the first signs that pressure from activist investors is starting to generate results at the company. Also in focus will be Tesla (NASDAQ: TSLA ) after Bloomberg reported that the banks holding Twitter’s buyout debt are looking at swapping it for a new margin loan secured against Elon Musk’s holding in the car company.

Costco (NASDAQ: COST ), Lululemon (NASDAQ: LULU ), and Broadcom (NASDAQ: AVGO ) all report earnings after the bell.

4. Chinese rally halts on fears of virus spread

The rally in Chinese markets stalled as focus shifted from the announced relaxation of COVID-19 restrictions to concern about how the country will cope if the disease spreads again.

Official case counts have dropped sharply in the last week, but the relaxation of testing requirements means that a higher proportion of cases is likely to go unregistered in the short term. That increases the importance of anecdotal evidence, such as a Financial Times report that the country is running short on fever medicines.

The FT quoted local health officials as saying that pharmacies in the district of Beijing where the recent COVID outbreak has been concentrated have been emptied of basic medicines such as ibuprofen and paracetamol. FT modeling suggests that a winter wave of COVID could kill as many as 1 million people.

5. Putin returns to saber-rattling; oil rises

Another factor weighing on risk assets in overnight trading has been fresh comments about the risk of nuclear war by Russian President Vladimir Putin.

“Such risks are rising, it would be wrong to hide that,” Putin said in his first comments on the subject since the G20 condemned the use of nuclear threats at its summit last month. However, Putin added that Russia would not use such weapons first.

His comments came two days after Ukrainian forces apparently struck military targets deep inside Russia using drones.

Oil prices staged a modest bounce overnight as delays to shipments through the Bosporus Strait put a floor under the spot market. U.S. crude futures were up 1.7% at $73.22 a barrel, while Brent was up 1.0% at $77.97 a barrel.

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