FTX impact, Pelosi, Saudi ties thaw

©Reuters

By Peter Nurse

Investing.com — The fallout from crypto exchange FTX’s collapse continues to resonate, while good news for US retail stocks will lead to a higher open on Wall Street. Nancy Pelosi has announced that she is stepping down as a senior member of the Democratic Party in the House of Representatives, ending an era. President Joe Biden signals a thawing in ties with Saudi Arabia as companies anticipate a jump in sales from the FIFA World Cup. Here’s what you need to know about the financial markets on Friday November 18th.

1. The FTX fallout continues

The collapse of cryptocurrency exchange FTX continued to reverberate as Genesis Block, a leading retail cryptocurrency services provider in Hong Kong, announced on Friday that it was halting trading.

“We have halted trading as we do not know which counterparties will default next, so we would rather close all our positions to regain some of our liquidity,” Chief Executive Wincent Hung said, according to Reuters.

This followed last week’s filing for bankruptcy by FTX, on which the company’s new CEO, John J. Ray III, said the company’s situation included a “complete failure of corporate controls.”

It is now likely that there will be an unsightly scramble for the remaining FTX assets as the Securities Commission of The Bahamas orders the transfer of all FTX digital assets to a digital wallet owned by the commission “for safe keeping”.

A lawsuit has also previously been filed in Miami by FTX account holders alleging fraudulent business practices, and this is likely the first of many to be brought amid billions of dollars in losses on the cryptocurrency exchange.

2. End of the Pelosi era

The loss of control of the House of Representatives by the Democrats as a result of the US midterm elections also marks the end of Nancy Pelosi’s long career as Congress leader.

Pelosi announced during a speech Thursday that she would step down from her leadership role in the House of Representatives but remain in Congress and represent San Francisco as she has since 1987.

She was the highest-ranking and most powerful woman elected in US history until Kamala Harris became vice president in January 2021, after first serving twice as speaker from 2007 to 2011 and regaining the job in 2019.

President Joe Biden called Pelosi “the most consistent Speaker of the House in our history” in a statement.

She will be replaced as Speaker of the House by Republican Kevin McCarthy, while Hakeem Jeffries is widely expected to take on the role of House Minority Leader, becoming the first black person to hold that role.

3. Stocks will go up; Gap beats quarterly expectations

US stock markets are expected to open higher on Friday as investors digest some upbeat retail gains as well as hawkish comments from several Federal Reserve speakers.

By 6:20 ET (11:20 GMT), they were up 145 points, or 0.4%, while they were up 0.6% and 0.8%, respectively.

Retail chain Gap (NYSE:) stock is seen with strong premarket gains after quarterly selling and gains after the close on Thursday, supported by steady demand for formal wear and dresses from affluent consumers.

Competitor Macy’s (NYSE:) had also signaled strong demand for high-end apparel earlier in the week leading up to the holiday season.

It wasn’t all good news, though Online trading giant Amazon (NASDAQ:) said late Thursday it would take until 2023, with reports suggesting the company is still targeting about 10,000 job cuts.

Economic data is concentrating around while the Boston Fed President is expected to speak during the meeting.

4. Thawing in US-Saudi Arabia relations

In a sign of a possible thawing in US-Saudi Arabia relations, the Biden administration on Thursday ruled that Saudi Arabia’s Crown Prince Mohammed bin Salman enjoys immunity from a lawsuit over the murder of Jamal Khashoggi.

President Joe Biden had previously vowed to make Saudi Arabia a “pariah” for its human rights record, making it clear that the 2018 assassination was “of vital importance to me and the United States.”

The relationship was bolstered by the decision by the Organization of Petroleum Exporting Countries, led by Saudi Arabia, to curb crude oil production to prop up oil prices last month, drawing heavy criticism from Biden.

Oil prices fell this week on concerns that rising COVID cases in China, the world’s largest importer of crude oil, will hurt demand recovery. However, they remain at elevated levels, adding to global inflationary pressures.

As of 06:20 ET, futures were trading 0.2% lower at $81.50 a barrel, down over 8% week-to-date, while the contract fell 0.5% to $89.33. around 7% lower this week.

5. Companies looking for WM bonus

With the FIFA World Cup kicking off this weekend, many companies are looking to the world’s most watched and followed single sporting event as central to their fortunes this quarter.

Gaming companies, seeing a decline in online gaming due to COVID spikes, are now facing the challenges of a cost-of-living crisis as customers seek to cut non-essential spending.

Adidas (OTC:), the official kit supplier to the FIFA World Cup, lowered its 2022 outlook earlier this month but will be looking for a boost from the massive presence such a tournament brings.

FIFA sponsor Budweiser, which owns Anheuser-Busch InBev (NYSE:), the world’s largest brewer, is also hoping for a jump in sales. However, FIFA has announced that fans will be banned from buying alcohol near World Cup stadiums just two days before the start of the football tournament in a dramatic reversal.

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