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Biden's SPR Release, Zoom Earnings, Turkey Trouble - What's Moving Markets

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By Geoffrey Smith

Investing.com -- President Joe Biden is set to announce a coordinated release of strategic petroleum reserves with other big importers, aimed at taking the froth off fuel prices. Zoom Video stock tumbles as its earnings fail to answer questions about its long-term future. Stocks are still under pressure after being dragged down by bonds on Monday in response to Jerome Powell's reappointment at the Federal Reserve. The ECB sounds a more hawkish tone as new data show the economy holding up well, and it's a bad week for Turkey, as well as turkeys. Here's what you need to know in financial markets on Tuesday, 23rd November.

1. Biden to announce oil measures

President Joe Biden is set to announce the release of oil from the U.S.’s Strategic Petroleum Reserve, aiming to stop the economic recovery being derailed by gasoline prices that have hit seven-year highs in recent weeks, according to various newswire reports.

India, South Korea and Japan are also expected to make similar announcements this week, in a concerted effort by oil importers worldwide to relieve the pressure on their economies.

China is unlikely to publicly join the initiative, S&P Global Platts service reported, due to concerns about keeping good relations with Russia and Saudi Arabia.

Reuters and others cited unnamed OPEC sources playing down reports (which had supported prices on Monday) that the bloc could respond to the U.S.-led move by halting its phased increases in production.

By 6:30 AM ET (1130 GMT), U.S. crude futures were down 1.1% at $75.90 a barrel, while Brent futures were down 0.7% at $79.16 a barrel.

2. The Pandemic Trade is over (Zoom redux)

Zoom Video (NASDAQ:ZM) stock shed 8% in premarket trading after publishing results and guidance that were, if anything, a little above market estimates. The pandemic winner par excellence, Zoom stock is now trading back at its lowest since June 2020.

Analysts flagged a disappointing growth outlook both with large customers and with new services. The market move thus arguably reflects disappointment at its ability to grow beyond the basic video-conferencing apps that made its name a verb last year. That leaves it exposed to competition from the likes of Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), whose Meet and Teams apps come with a fuller suite of related services.

More broadly, the news means that Zoom has joined a growing list of stocks that have either mostly or wholly unwound their pandemic-era gains.

3. Stocks set for steady opening after bond-driven sell-off; retail earnings in focus again

U.S. stocks are set to edge lower at the opening later, having been dragged down by the abrupt move in bonds that followed Jerome Powell’s reappointment as Federal Reserve Chair on Monday. The benchmark 2-year Treasury bond yield continues to trade around 0.63%, its highest since April 2020.

By 6:30 AM ET (1130 GMT), Dow Jones futures were essentially flat, while S&P 500 futures were down 0.1% and Nasdaq 100 futures, with their higher concentration of longer-duration, interest rate-sensitive tech stocks, were down 0.4%.

Medtronic (NYSE:MDT) and Analog Devices (NASDAQ:ADI) head the list of companies reporting early, along with Best Buy (NYSE:BBY) and Dollar Tree (NASDAQ:DLTR). The retail theme continues after the close with updates from Gap and JW Nordstrom (NYSE:JWN). Hewlett Packard Enterprise and Autodesk (NASDAQ:ADSK) are also due to report.

4. Europe appears to withstand rise in Covid-19 cases

Europe’s economy withstood the recent rise in Covid-19 cases better than expected, according to the latest round of purchasing manager indices released by IHS Markit.

The flash composite Eurozone PMI rose for the first time in four months in November, with activity ticking up in both manufacturing and services. In the UK, services weakened slightly, bringing down the composite PMI to a still-healthy 57.7.

The price components of both indices continued to show inflation running at a high level. In an interview earlier, Isabel Schnabel became the first European Central Bank board member to admit that inflation risks are now skewed to the upside, while Dutch central bank chief Klaas Knot said that the fresh wave of lockdowns in Europe shouldn’t stop the ECB winding down its bond purchases.

5. Bad week for turkeys, bad week for Turkey

Turkey lurched towards a full-blown currency crisis, the lira falling as much as 8.8% in response to President Recep Tayyip Erdogan’s latest attempts to defy economic orthodoxy.

Erdogan had doubled down after a cabinet meeting late on Monday on his insistence that the central bank cut interest rates despite inflation running at over 20%.

“"I reject policies that will contract our country, weaken it, condemn our people to unemployment, hunger and poverty," Reuters quoted Erdogan as saying.

The dollar has now risen 66% against the lira so far this year, making the lira by far the worst performing G20 currency in the world.

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