ECB, China Hits Gaming Again, Commodities on Fire – What's Moving Markets

© Reuters.

By Geoffrey Smith — The European Central Bank may announce it will reduce its bond-buying program, while Federal Reserve speakers hint that weak recent economic data aren’t enough to push the start of tapering into next year. Weekly jobless claims data due at 8:30 may reinforce that perception. Stocks on both sides of the Atlantic are struggling as a result. China ratchets up the pressure on videogame companies just before its new limits on playing times for minors come into effect. Commodity prices continue their record-breaking run, with nickel, aluminum and all hitting multi-year highs. Here’s what you need to know in financial markets on Thursday, 9th September.

1. ECB to start tapering?

The European Central Bank may beat the Federal Reserve to that has been in place since the first phase of the pandemic.

The ECB’s governing council will say at 8:45 AM ET (1245 GMT), whether it will reduce its monthly bond purchases as some expect. President Christine Lagarde will hold her regular press conference 45 minutes later.  She’s expected to reiterate that there is little chance of the ECB raising rates for a long time to come, even if it does scale down its quantitative easing.

European stocks again struggled ahead of the decision, with the falling 0.4% and falling over 1% on a continued negative reaction to the government’s on Tuesday.

2. China levels up in fight against gaming sector

China , sending the shares of Tencent Holdings (OTC:) and NetEase (NASDAQ:) tumbling in Hong Kong and in the U.S. premarket session. The South China Morning Post reported that China will suspend new game launches, after a meeting in which authorities issued fresh demands about removing undesirable content and relenting from the “solitary pursuit of profit” by gaming companies.

Perhaps sensing an opportunity in the broader far east region, Sea Ltd (NYSE:), the Tencent-backed multi-app company that offers gaming and other services across South-East Asia, said it will in new equity and debt.

Elsewhere, Alibaba (NYSE:) stock also fell on reports that authorities had blocked its LinkDoc unit from listing in the U.S., forcing it to seek a new round of private funding elsewhere.

3. Stocks set to extend losses; jobless claims, Fed speakers eyed

U.S. stocks are set to extend their losses on the growing awareness that the day when the Federal Reserve will start to withdraw its stimulus is drawing nearer, even if comments over the last 24 hours suggest it won’t be at the Fed’s next meeting in two weeks’ time.

New York Federal Reserve president John Williams – one of the most dovish regional Fed presidents this year – said on Wednesday that he still felt a tapering of bond purchases could start this year, and his Atlanta Fed counterpart Raphael Bostic in an interview early Thursday.

By 6:15 AM ET (1015 GMT), were down 95 points, or 0.3%, while were down by a similar amount and were down by 0.2%.

The day’s big data release in the U.S. will be weekly jobless claims numbers at 8:30 AM ET. Stocks likely to be in focus – in addition to the big Chinese ADRs – include Lululemon (NASDAQ:), whose second-quarter results and outlook late on Wednesday.

4. Commodities on fire

The backdrop for nervousness about monetary policy tightening is stark, with commodity markets in particular giving signs that the price spikes caused by the pandemic and subsequent stimulus policies are going to be both higher and longer-lasting than at first thought.

rose to an annual rate of 9.5% in August, according to data released overnight, a degree of inflation that is being accentuated by to U.S. ports.

Base metals continued their charge on Thursday, with rising 2.4% to a new seven-year high, while rose 1.3% to a new 13-year high, amid reports that makers of air-conditioning, who account for some 10% of Chinese demand, are substituting aluminum for copper. Benchmark global prices for coking coal, used to make steel, have also hit $300 a ton.

5. Natgas hits 7-year high on LNG-led squeeze

prices at Henry Hub hit $5 per mm Btu for the first time since 2014, as the on European and Asian markets lifted prices for liquefied natural gas exports.

Crude oil prices also rose overnight as the from the Gulf of Mexico helps to keep the spot market tight.  The cumulative loss of output since production platforms were shut in ahead of Hurricane Ida is now approaching 20 million barrels.

By 6:20 AM ET, futures were up 0.2% at $69.42 a barrel, while futures were up 0.3% at $72.80.

The U.S. government will publish its weekly at 11 AM ET.