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JOLTS, Fed Minutes, China Listing Crackdown


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By Geoffrey Smith — The Fed publishes the minutes from its latest meeting, and the Labor Department’s job openings survey is expected to show a new record high number of vacancies. More details on China’s crackdown on U.S. listings emerge and Samsung (KS:)’s latest quarter shows it cashing in on high chip prices. And oil is bouncing as Royal Dutch Shell (LON:) drops a big hint about how it sees crude prices going. Here’s what you need to know in financial markets on Wednesday, 7th July.

1. JOLTS, Fed Minutes to hog the limelight

Two events on the day’s data calendar stand out. In chronological order: the JOLTS job openings survey for May will be published at 10 AM ET (1400 GMT) and is expected to show another increase to 9.388 million, from 9.286 million in April. That would represent a third straight monthly high and add to the data suggesting strong economic momentum.

Four hours later, the Federal Reserve will publish the minutes of its latest policy meeting. Attention here is likely to focus on any extra detail provided about the discussion over tapering the Fed’s bond purchases, which are still running at $120 billion a month.

Some individual Fed officials have started to come out in favor of tapering sooner rather than later since the meeting, with one eye on a housing market that is in danger of overheating – partly due to the Fed’s purchase of mortgage bonds.

2. China’s crackdown on U.S. listings

More detail emerged on China’s crackdown on companies listing in the U.S. Bloomberg reported unnamed sources as saying that China’s Securities Regulatory Commission is considering closing a loophole that has allowed companies to float in New York without having a domestic listing. 

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The report comes a day after a vaguely worded but broad statement from China’s State Council warning of the need for a review of listing regulations.

Chinese companies have listed abroad outside of regulators’ purview largely through the Variable Interest Entity model. Beijing has never really endorsed it, despite the system being used by virtually every Chinese tech giant to tap foreign investors. Under the structure, corporations transfer profits to an offshore entity with shares that foreign investors can then own.

3. Stocks set to open higher; JEDI contract win boosts Amazon 

U.S. stocks are set to open mostly higher later, after a mixed day on Tuesday that was dominated by concerns about Chinese regulatory risk and oil price volatility.

By 6:15 AM ET, were up 24 points, or 0.1%, while were up 0.1% and Nasdaq futures were up 0.4%.

Nasdaq futures were lifted by sustained demand for Amazon, which rose nearly 5% on Tuesday after the Pentagon said it would cancel its decision to award a $10 billion Cloud computing contract.  While the contract itself won’t be re-submitted for tenders, the work is now likely to be divided between (NASDAQ:) and the original winner of the tender, Microsoft (NASDAQ:).

4. Samsung cashes in on chip shortage

Another factor supporting tech stocks in premarket trade was a strong update from Samsung Electronics (OTC:), whose preview of second-quarter earnings illustrated how the global chip shortage is supporting margins for chipmakers of all stripes.

The Korean giant said that it expects operating profit to have risen 53% year-on-year in the quarter, as strong pricing for memory chips offset the negative effect of lower device sales due to chip shortages. The forecast of 12.5 billion won ($11 billion) in profit was some 10% above consensus, but  Samsung’s shares in Seoul ended the day little changed.

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The company is seen as a bellwether for the industry as a whole, given that it is the world’s largest producer of memory chips, smartphones and electronic displays.

5. Shell helps confidence returns to the oil market; API inventories eyed.

prices rebounded after Tuesday’s sell-off, as the market reverted to its focus on the near-term tightness in the global market due to rising demand, falling inventories and stagnant output.

That tightness is likely to be underlined later, when the American Petroleum Institute releases its weekly estimate of U.S. oil and product inventories.

At the company level, there was the first sign of confidence returning to the oil and gas sector as Royal Dutch Shell said it will accelerate its shareholder returns program and scrap its net debt target. The measures suggest the company expects prices to stay higher for longer than previously.


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Bellie Brown
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