OPEC begins two days of meetings on the course of its production policy. The Trump administrations adds CNOOC (NYSE:CEO) and SMIC to its blacklist. Stocks are set to take a breather after a muted Black Friday weekend, and Zoom reports earnings. Here’s what you need to know in financial markets on Monday, November 30th.
The Organization of Petroleum Exporting Countries kicks off two days of meetings that will have a huge influence on oil prices for the foreseeable future.
Oil prices have rallied sharply over the last month as investors have bought into the narrative that widely available vaccines will give people across the world more confidence to travel next year, after the biggest ever drop in global consumption this year.
The group has to decide whether the improved outlook for demand actually warrants the 1.9 million barrel a day increase in production that OPEC and its allies (chiefly Russia) have pencilled in for January 1. Newswire reports over the weekend reinforced the consensus that the group may delay that increase for up to three months, in view of the second wave of the pandemic hitting Europe and North America. However, the recent surge in prices has raised the risk that one or more of the producer groups will break ranks.
China blacklist expanded to include CNOOC and SMIC
The outgoing Trump administration is set to add one of the world’s biggest chipmakers and China’s second-largest oil producer to a blacklist of companies off limits to U.S. partners, according to Reuters.
The news agency reported at the weekend that the administration will add China National Offshore Oil Corp, Semiconductor Manufacturing International (SMIC), China Construction Technology Co. Ltd. and China International Engineering Consulting to a list of companies controlled by the Chinese military, which already has 31 names on it.
The report hasn’t been confirmed by either government yet, but CNOOC stock fell 14% in response to the move.
The U.S. has already leaned heavily on the Dutch government to ensure that ASML, which makes the machines that make the world’s high-performance chips, can’t sell them to SMIC. Elsewhere in the chip sector Monday, Taiwan’s Global Wafers agreed to buy Germany’s Siltronic for $4.5 billion.
Stocks set to take a breather after muted holiday weekend
U.S. stocks are set to open lower on Monday, with institutional accounts reportedly taking profits at the end of a bumper month.
By 6:30 AM ET (1130 GMT), the Dow 30 futures contract was down 165 points, or 0.6%, while the S&P 500 futures contract was down 0.4% and Nasdaq futures were flat.
Stocks likely to be in focus later include S&P Global (NYSE:SPGI), which was reported by The Wall Street Journal to be close to buying data and analytics firm IHSMarkit for around $44 billion.
The market will also need to absorb data from the weekend that suggested a big fall in overall spending at the holiday weekend. Adobe Analytics suggested that footfall in U.S. malls and stores fell by some 50% from last year, something unlikely to be compensated in full by a 22% rise in online spending.
Zoom to report
One of the market’s favorite stay-at-home plays reports earnings after the closing bell. Zoom Video Communications (NASDAQ:ZM) is expected to report earnings per share of 76c, on revenue of $693 million.
That would represent an eightfold rise in profit on a fourfold rise in revenue.
The stock has risen some 350% since the start of the pandemic on expectations that the shift to remote working that Covid-19 has caused will be lasting.
However, it last lost momentum over the last month as the market has bought into the 2021 recovery story. It hasn’t posted a new high for seven weeks, raising the pressure on management to deliver a picture of uninterrupted future growth tonight.
Trump eyes Supreme Court bid
President Donald Trump said at the weekend he’ll leave the White House if the Electoral College votes for Joe Biden.
However, both he and his legal team indicated that they intend to make one last appeal to the Federal Court to pursue claims of electoral fraud that have been thrown out of 38 of 39 lower courts so far.
President-elect Joe Biden meanwhile continued to flesh out his economic team. He tapped labor economist Cecilia Rouse to head the Council of Economic Advisors and Neera Tanden, head of the Center for American Progress, to be director of the Office of Management and Budget. Adewale Adeyemo, who served Barack Obama as an international economic adviser, is slated to become Janet Yellen’s deputy at Treasury.