Rail Deal, Retail Sales, Xi Meets Putin - What's Moving Markets

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By Geoffrey Smith 

Investing.com -- The U.S. publishes the last big economic data dump before next week's crucial Federal Reserve meeting, with retail sales, jobless claims and the Philadelphia Fed business survey all due. Labor unions and railroad operators reach a tentative agreement to avert a national rail strike. California sues Amazon (NASDAQ:AMZN) for anti-competitive behavior toward third-party sellers and wholesalers. Adobe (NASDAQ:ADBE) reports earnings. The Ethereum network completes its long-awaited 'Merge'  - and Xi Jinping meets Vladimir Putin for the first time since Russia's invasion of Ukraine. Here's what you need to know in financial markets on Thursday, 15th September.

1. Pre-Fed data dump

The U.S. will publish retail sales numbers for August, the last major piece in a puzzle of economic data that the Federal Reserve will have to consider when it meets next week to set interest rates.

Analysts expect the headline number to have risen 0.2% which would represent a modest increase in real terms, given the modest 0.1% increase in headline consumer prices during the month. Core retail sales are expected to have risen 0.1%.

Elsewhere, the Philadelphia and New York Federal Reserve Banks both publish their monthly manufacturing surveys, while weekly jobless claims are expected to have bounced along at historically low levels thanks to the still-high availability of new jobs to those being laid off. Industrial production numbers for August are also due at 09:15 ET (13:15 GMT).

2. U.S. rail strike averted?

Unions and railroad operators have reached a ‘tentative agreement’ that averts the threat of a U.S. rail strike, according to the Department of Labor.

The agreement, if approved by union members, prevents strike action that would have had a severe impact on domestic supply chains which have still not entirely recovered from the effects of the pandemic.

Union Pacific (NYSE:UNP) stock and CSX (NASDAQ:CSX) stock both rose over 3% in premarket on the news, while Norfolk Southern (NYSE:NSC) stock rose 1.7%. Refiners, auto manufacturers, coal companies and retailers will also likely breathe a sigh of relief.

3. Stocks set to open higher; Amazon, Adobe in focus

U.S. stock markets are expected to open slightly higher later, supported by the news from the rail negotiations.

By 06:20 ET (10:20 GMT), Dow Jones futures were up 44 points, or 0.1%, while S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.1%. The three benchmark cash indices had risen by as much as 0.7% on Wednesday thanks to a late rally that, in hindsight, appears to have front-run the news from the rail negotiations.

Stocks likely to be in focus later include Amazon, which was sued late on Wednesday by the state of California for alleged anti-competitive practices in its dealings with third-party sellers and wholesalers. Also in the news is energy group Shell (LON:RDSa), which has named Wael Sawan, the head of its integrated gas business, as its new CEO. He’ll take over from Ben van Beurden at the end of the year.

Adobe reports earnings after the closing bell.

4. Ethereum network completes "The Merge"

The Ethereum network completed its long-awaited, much-hyped and much-delayed transition to a new ‘proof of stake’ system for validating transactions.

The so-called ‘Merge’ is intended to vastly reduce the network’s energy consumption and thus make it easier for the host of applications running on it to achieve scale. 

While that should be supportive in the long term for ether, the digital currency used on the network, the short-term price action in ether suggests both that the move was more than fully discounted in advance, and was not a bigger market driver than the broader issues concerning risk appetite right now. Ether fell 0.9% to $1,590, having lost more than half of its value this year.

5. Xi-Putin meeting

Chinese President Xi Jinping will meet his Russian counterpart Vladimir Putin on the sidelines of a regional security conference taking place in Kazakhstan.

The two are likely to discuss the consequences of Russia’s war in Ukraine, which Putin launched only days after the two declared a ‘partnership with no limits’ in February this year. The meeting comes at an awkward time for Putin, whose army is hurriedly regrouping after suffering an embarrassing defeat in eastern Ukraine last week.

China has been a crucial support to the Russian economy since then, dramatically increasing its purchases of Russian oil and refined products. However, while the two have a common interest in resisting what they see as U.S. ambitions for hegemony, it has held off from publicly supplying aid in the form of military materiel.