MARKET WRAPS
Watch For:
Retail Sales for March; Industrial Production & Capacity Utilization for March; University of Michigan Preliminary Consumer Survey for April; Janet Yellen press briefing at the IMF and World Bank Spring Meetings; earnings from BlackRock, Citigroup, JPMorgan Chase, UnitedHealth, Wells Fargo
Today's Headlines/Must Reads
- Saudi-Led Oil Cuts Risk Fueling Inflation, IEA Says
- As Bond Market Turbulence Eases, Companies Borrow Again
- U.S. Buyback Tax Could Hit More Foreign Firms Than First Expected
- BOJ Gov Tells G-20 That Japan Will Keep Easing Monetary Policy
- Boeing Pauses MAX Deliveries After Parts Problem
Follow WSJ markets coverage here .
Opening Call:
Stock futures pointed to a weaker open for Wall Street on Friday, as the start of first-quarter reporting season loomed with earnings ahead from a number of big banks.
Investors are anxious to see how the collapse of Silicon Valley Bank and two other U.S. lenders last month might be affecting big banks, given signs lending standards could be tightening up. Analysts have been cutting earnings estimates for both large and regional banks in the wake of the crisis.
Against the backdrop of the recent crisis, JPMorgan's outlook is clearly more important, notably what it will say about funding costs and the outlook for loan growth, Saxo Bank said.
"Well Fargo is even more interesting because of its large exposure to the U.S. West Coast which has been hit the hardest by the slowdown in the technology sector," Saxo Bank said.
Overseas indexes rose. In Europe, the Stoxx Europe 600 edged up 0.4%, while in Asia, Japan's Nikkei 225 rose 1.2% the Shanghai Composite index gained 0.6%. and Hong Kong's Hang Seng index rose 0.5%.
Stocks to Watch
Boeing fell 4% in premarket trading after the company halted deliveries of its 737 MAX jet after the discovery of a parts compliance problem from a supplier.
Express and the management firm WHP Global are acquiring Walmart's menswear brand Bonobos for $75 million. Shares of the fashion retailer rose 20% in after-hours trading.
Lucid declined 6% after first-quarter deliveries at the electric-vehicle maker missed analysts' expectations.
Meta Materials said it plans to offer stock and warrants. Its shares dropped 17% in after-hours trading.
Purple Innovation said it would reconstitute its board after entering into a memorandum of understanding with Coliseum Capital Management, its largest shareholder. Its shares rose 14% in after-hours trading.
Tabula Rasa Healthcare raised its first-quarter revenue guidance. Its shares rose 9% in after-hours trading.
Economic Insight
Recent indicators point to a cooling jobs market but these softening signs aren't enough to ease wage pressures significantly and bring inflation under control, Commerzbank said.
"Some measures of wage inflation seem to have peaked, the number of job openings is falling, and there has been a slight upward trend in initial jobless claims since fall 2022," it said.
However, these indicators still need to improve further, while others such as job creation also need to soften, Commerzbank said.
"If job creation does not weaken toward the 100,000 [a month] mark soon, the easing in wage growth could come to an end."
Forex:
The dollar remained weaker after Thursday's producer prices data supported expectations for the Fed to cut interest rates later in the year.
"Just like the consumer price inflation data...it confirmed the situation on the inflation front is improving," Commerzbank said.
From the market's perspective, conditions for Fed rate cuts in the second half of 2023 have therefore been met, it added.
Commerzbank said an emerging divergence in monetary policy between the Fed and the ECB makes the euro more attractive than the dollar.
Even if the ECB's determination to fight inflation is likely to falter soon, the Fed and ECB are in different phases of their interest-rate raising cycles, Commerzbank added.
"Whereas the Fed seems to be aiming to end the rate hike cycle with the market betting on imminent rate cuts the question regarding the ECB is not whether but by how much it is going to hike interest rates."
Read Positive Demand Shock in UK May Support Sterling
Bonds:
With uncertainty remaining elevated entering the second quarter, Goldman Sachs Asset Management retains its preference for high-quality fixed income.
"Higher yields alleviate the need to go down the quality spectrum or out the curve for income."
Goldman Sachs also believes that recent market stress reaffirms the protective power of core fixed income in portfolios.
Read Eurozone Bond Yields Seen in Narrow Ranges Until Next Inflation Data
Read Eurozone Government Bond Spreads Seen Rangebound With Lower Volatility
Read Some Upward Room Seen for 10-Year Bund Yields Near Term
Energy:
Oil prices drifted lower in Europe, with uncertainty over both supply and demand since the start of the month.
"The supply side should remain broadly price supportive over the remainder of the year, with OPEC+ maintaining strict curbs on its supply, the Iranian nuclear deal slipping further out of reach and the U.S. shale sector under mounting pressure," Fitch said.
However, a macroeconomic slowdown is hitting oil demand at the same time, Fitch added, expecting an average price of $85 a barrel this year, down from $99 a barrel in 2022.
Metals:
Base metals were pushing higher in Europe as investors looked toward risk assets such as commodities. Meantime, gold was flat having settled on Thursday at its second-highest closing level on record.
"Risk appetite returned to markets over the last 24 hours, aided by some weak U.S. data that supported expectations the Fed might soon call it a day on their rate hikes," Deutsche Bank said.
Leading indicators are pointing to a mild recession in the U.S. this year which should mean a pullback in monetary tightening from the Fed, aiding assets such as commodities, Deutsche Bank said.
Silver
Silver prices are set to remain high this year as a weakening dollar and possible cuts in interest rates from the Fed boost appeal for precious metals. UBS has forecast silver to reach $29 by December.
"Silver has been the best-performing precious metal of late. Since the pullback in early March, the metal's price is up around 30%," UBS said, adding that gold by comparison has risen 12% in this time.
Steel
A rise in China's net steel-product exports reaffirms concerns that steel demand in the world's second-largest economy may already be fading, Commonwealth Bank of Australia said.
"It will be challenging for China's net steel-product exports to remain elevated through 2023," though, "given our expectations that the global economy will continue to slow," CBA said.
China's net steel-product exports rose by 30% on-month and 83% on-year in March, to the highest level since September 2016.
TODAY'S TOP HEADLINES
Bud Light Faces Boycott Calls, but Punishing Brands Is Harder Than It Looks
Bud Light's partnership with transgender influencer Dylan Mulvaney has led some conservative critics to call for a boycott, generating headlines and social-media posts including a video of musician Kid Rock shooting a rifle at cases of the beer, but such campaigns often have failed to deliver a meaningful blow.
Many social media-fueled boycott efforts do no material damage to the businesses in question, studies suggest, and may even have an opposite effect by increasing awareness and briefly boosting sales.
Boeing Pauses MAX Deliveries After Parts Problem
Boeing Co. said it was pausing deliveries of some 737 MAX jets because of incorrectly installed parts, disrupting an important business line as the plane maker seeks to improve its finances.
The company said Thursday there would be a significant impact on near-term deliveries of the 737 MAX 7, 737 MAX 8 and larger MAX 8-200 jets, as well as the P-8 military reconnaissance planes that are also based on the 737.
Walmart Selling Bonobos for $75 Million to Express, WHP
Walmart Inc. is selling Bonobos Inc. for $75 million, a fraction of what it paid for the menswear brand and the latest sign the big-box retailer is unwinding some of its e-commerce plays.
Walmart is selling Bonobos to the fashion retailer Express Inc. and the management firm WHP Global, the companies said Thursday. WHP Global will buy Bonobos's brand for $50 million, while Express will acquire Bonobos's operating assets and assume the related liabilities of the business for $25 million.
Exxon CEO's Pay Jumps 52% Amid Rising Oil Prices, Record Profit
Exxon Mobil Corp. Chief Executive Darren Woods's compensation rose 52% to $35.9 million last year, as the oil-and-gas company brought in record profit.
Most of Mr. Woods's compensation came from stock awards of $24.9 million, according to a company filing Thursday made to the U.S. Securities and Exchange Commission. That is up more than $11 million from the year prior.
Saudi-Led Oil Cuts Risk Fueling Inflation and Harming Global Economy, IEA Says
The oil market will fall into a far larger oil deficit sooner than expected following surprise production cuts from some of OPEC's leading members, the International Energy Agency said Friday.
The gaping hole in the global oil market between the availability of crude and rebounding demand will reach 2 million barrels a day by the third quarter of the year, the Paris-based energy watchdog said in a closely followed monthly report.
As Bond Market Turbulence Eases, Companies Borrow Again
Trading in U.S. government bonds has become much less volatile in recent weeks, helping fuel a rebound in corporate borrowing after a chaotic stretch that followed Silicon Valley Bank's collapse in early March.
Yields on U.S. Treasurys, which fall when bond prices rise, have dropped sharply since the run on SVB, but their decline has occurred over two distinct phases.
BOJ Gov Tells G-20 That Japan Will Keep Easing Monetary Policy
(MORE TO FOLLOW) Dow Jones Newswires
04-14-23 0614ET
