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Powell Stays Dovish, Biden/Xi, Oil Reports, Uber Misses - What's up in Markets

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By Geoffrey Smith

Investing.com -- Jerome Powell's keynote speech supports Treasuries and stocks and keeps a lid on the dollar. The U.S. and Chinese presidents have their first phone call, while OPEC and the IEA release their monthly updates on the world oil market. Here's what you need to know in financial markets on Thursday, February 11th.

1. Powell Speech

Treasury bond prices firmed and the dollar remained soft overnight after Federal Reserve Chairman Jerome Powell reiterated that there will be no early withdrawal of monetary support as the U.S. economy recovers from the pandemic.

In a keynote speech on Wednesday, Powell stressed the need for policy to remain “patiently accommodative” policy, pointing repeatedly to the lasting damage done by Covid-19 to the labor market.

“Published unemployment rates during Covid have dramatically understated the deterioration in the labor market,” Powell said, adding that both households and small businesses are likely to need “continued support.”

The context for Powell’s comments will be in evidence again at 8:30 AM ET with the release of weekly jobless claims.

By 6:30 AM ET (1130 GMT), the dollar broadly flat against its major trading partners, while the 10-year Treasury yield was down 2 basis points at 1.14%.

2. Biden, Xi talk

President Joe Biden had his first call with Chinese counterpart Xi Jinping, on the eve of the Lunar New Year holiday to mark the start of the Year of the Ox.

According to the White House, Biden stressed the need for China to abandon “coercive and unfair” economic practises such as the use of slave labor, not least in the mainly Muslim province of Xinjiang. He also drew attention to human rights issues in Hong Kong and repeated U.S. support for Taiwan.

Xi pushed back, describing Taiwan, Hong Kong and Xinjiang as China’s “internal affairs”, according to the South China Morning Post.

Economic relations between China and the U.S. are set to remain a cardinal factor for world markets, with the world anxious to see whether Biden will signal any substantial change from his predecessor’s policy, beyond outwardly adopting a less aggressive and hyperbolic tone.

3. Stocks set to open up on Powell comments

U.S. stocks are set to open higher again on Thursday, supported by Fed Chairman’s Powell reaffirmation of his commitment to keeping monetary policy loose. Any doubts that the Fed may be stampeded into withdrawing stimulus earlier than planned were banished again on Wednesday after consumer inflation data for January came in below expectations.

By 6:30 AM ET, Dow Jones futures were up 88 points, or 0.3%, while S&P 500 futures were up 0.4% and Nasdaq futures were up 0.5%.

Stocks likely to be in focus later include Pepsico (NASDAQ:PEP), Kraft Heinz (NASDAQ:KHC) and Tyson Foods (NYSE:TSN), all of which report quarterly results before the opening. Walt Disney (NYSE:DIS) leads the bill of those reporting after the close.

4. UBER falls after disappointing quarter

Uber (NYSE:UBER) stock fell 5% in premarket trading after the ride-hailing company reported a disappointing set of figures for the final quarter of the year.

While revenue from its food delivery business more than tripled from a year earlier, overall revenue fell 20% from a year earlier to $3.17 billion, some way short of the $3.58 billion expected. The company’s net loss was also marginally wider than expected at 58c.

Uber CEO Dara Khosrowshahi has said the company will turn profitable this year, but gave few new details as to exactly when that will happen. He noted that the airport business, which accounted for up to 15% of gross bookings before the pandemic, will take time to recover.

5. IEA&OPEC reports out

Iran is again making uranium metal, which can form the core of nuclear warheads, the U.S. administration said late on Wednesday. The development is likely to complicate any return to the UN-sponsored deal between the country and the West, and consequently any relaxation of the sanctions that have crippled its oil exports.

U.S. crude futures shrugged off the news, however, falling 0.8% to $58.22 on profit-taking after a sharp rally. Brent crude was down 0.9% at $60.93 a barrel.

Earlier, the International Energy Agency’s monthly report had little impact, while OPEC’s is due to follow at 8 AM ET.

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