Central bank action; Latest on Carlos Ghosn; Nike earnings

Posted at 3:21 AM, Dec 20, 2018
and last updated 2018-12-20 05:42:07-05

1. Fed sparks market sell-off: The Dow slumped to the lowest level of the year on Wednesday after the Federal Reserve raised interest rates and indicated it expects more hikes next year.

The index declined 352 points, or 1.5%. The S&P 500 fell 1.5%, while the Nasdaq dropped 2.2%.

Investors had been hoping the Fed would signal a more significant slowing of rate hikes in 2019 due to signs of economic weakness. Most Fed governors said they expect to hike rates twice next year, after hiking four times this year. Fed Chairman Jerome Powell said the economy at the end of the year was “more subdued than most expected,” and recent “developments signal softening” in the economic outlook.

Wall Street was also unnerved by Powell’s comments about continuing to shrink the central bank’s balance sheet.

The pain extended to global markets: European stocks opened sharply lower on Thursday, with major indexes dropping around 1.5%. Stocks in Asia finished the trading session down.

2. Carlos Ghosn latest: A Japanese court has rejected prosecutors’ request to extend the detention of former Nissan Chairman Carlos Ghosn, setting the stage for his possible release.

Ghosn’s arrest in Tokyo last month on allegations of financial misconduct has rocked the global car industry and put strains on the alliance he presided over between Nissan (NSANY) and Renault (RNSDF).

The Tokyo District Court also denied a request from prosecutors to extend the detention of Greg Kelly, a former Nissan director who is accused of helping Ghosn under-report his compensation for years.

A Nissan spokesman declined to comment on the court’s decision, saying the pair’s detention was a matter for prosecutors. The Tokyo public prosecutors’ office declined to comment.

3. More central bank action: The Bank of England will announce its policy decision at 7:00 a.m. ET. It left interest rates unchanged at 0.75% when it last met in September.

Britain is paralyzed by Brexit chaos and investors will be watching for more details on how the bank would respond to a disorderly break with the European Union on March 29.

The Bank of Japan, which also met on Thursday, left monetary policy unchanged. Japan’s Topix stock index slumped into bear market territory on Thursday, having fallen over 20% from its January high.

4. Market preview: US stock futures were pointing lower. US crude futures were almost 5% lower at one point on Thursday, dipping below $46 per barrel.

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5. Companies and economics: BlackBerry (BB), Carnival (CCL) and Walgreens Boots Alliance (WBA) will release earnings before the open.

Nike (NKE) will publish its trading results after the close. Thursday’s earnings will also be its first full report since the company debuted its controversial Colin Kaepernick ad.

AB InBev (BUD) said Wednesday that it’s teaming up with Canada’s Tilray (TLRY) to research cannabis-infused drinks. Tilray’s Nasdaq-listed stock surged following the announcement, gaining about 13% premarket.

Facebook (FB) plunged 7% on Wednesday after a New York Times report revealed the amount of data the company shared with big tech firms.

6. Coming this week:
Thursday — Nike (NKE), Walgreens Boots Alliance (WBA) and Blackberry (BB) earnings; Bank of England meeting
Friday — Carmax (KMX) earnings; GDP third estimate