MARKET WRAPS
Watch For:
NFIB Index of Small Business Optimism; CPI; Real Earnings; Fed speakers include Thomas Barkin, Michael Barr, Austan Goolsbee; Home Depot earnings
Today's Headlines/Must Reads
- Climate Change's $150 Billion Hit to the U.S. Economy
- ICBC Hackers Used Methods Previously Flagged by U.S. Authorities
- China's Economy Is Sending Mixed Signals. What to Watch
Opening Call:
Stock futures were a touch firmer on Tuesday, with traders wary of taking big positions before the October CPI report that may determine the next move by the Federal Reserve.
"Markets have been extremely dull over the last 24 hours, with bonds and equities seeing little movement as investors look forward to the U.S. CPI print today," Deutsche Bank said.
The consumer price index is forecast to have risen 3.3% in the year to October, slower than the annual 3.7% pace recorded for September. The decline is the result of lower energy prices, which may take the month-on-month growth to just 0.1%, down from 0.4%.
However, the core measures are expected to be sticky, with the annual rise unchanged from September at 4.1% and the monthly measurement remaining at 0.3%.
"[A]n inflation read in line with expectations, or ideally softer than expected, should give further support to the Fed doves, cement the idea that the Fed is done hiking the interest rates and boost the rate cut expectations for next year," Swissquote Bank said.
Markets are currently pricing just a 14% chance the Fed will increase interest rates by another 25 basis points to a range of 5.50% to 5.75% at its December meeting.
However, Deutsche Bank noted that "[I]f these forecasts are right, it would be the third consecutive month with core CPI running at +0.3% or more," and given that is not compatible with the Fed's 2% annual inflation "then there's little doubt that the Fed would look to tighten policy again."
Overseas
International markets were mixed, with moves muted for major benchmarks in Europe, Hong Kong and Tokyo.
Premarket Movers
Fisker was down 14% after it reported a wider-than-expected third-quarter loss and sales of $71.8 million that missed estimates of $143.1 million.
Nvidia was up 0.8% after the stock closed 0.6% higher on Monday, extending its winning streak to nine sessions.
Teck Resources was up 3.9% after Glencore bought a 77% stake in the Canadian miner's steelmaking coal business for $6.93 billion.
Tesla was up 1.8% after shares closed 4.2% higher on Monday. The gains in the premarket session put the price up about $18 from where it closed last Thursday, when HSBC launched coverage of the stock with a sell rating and a price target of $146.
Forex:
Tuesday's inflation data may need to be surprisingly strong to spark speculation the Fed could raise interest rates again and "provide significant positive momentum" for the dollar, Commerzbank said.
The threshold for a further rate hike is likely to be quite high, particularly after October's weak jobs data. However, the threshold for rate cuts is also quite high, which means stubborn inflation could add to the view that rates will stay higher for longer and at least prevent the dollar from weakening further, Commerzbank added.
The latest U.K. labor market report revealed stronger-than-expected employment growth, providing modest support to sterling, MUFG said.
"While labor demand is stronger in this report, there remain signs of a trend of softening labour demand in the vacancy data and the moderating wage growth."
The jobs report lacks sufficient market-moving data to cause big moves in sterling or gilt yields, MUFG said.
"Sterling is likely to remain in a narrow trading range, albeit to the firmer side, ahead of the U.S. CPI this afternoon and the U.K. CPI data tomorrow," MUFG added.
Energy:
Oil prices inched higher, despite worries over global growth, with ING saying the recent selloff has been extreme and the market is much tighter than appears.
"While fundamentals may not be as bullish as initially thought, they are still supportive, with the market likely to be in deficit for the remainder of this year. The surplus we see early next year could even be erased if the Saudis roll over their additional voluntary supply cuts," ING added.
Metals:
Base metals and gold fell in early trading, with Peak Trading Research saying a weaker inflation print, "something closer to 3%, would help keep Fed expectations dovish, push the dollar lower, keep this risk-on rally alive, and boost dollar-denominated futures markets."
TODAY'S TOP HEADLINES
Tesla to Double Component Imports From India, Trade Minister Says
Tesla plans to double its component imports from India, the country's Trade Minister Piyush Goyal said in a post on social-media platform X.
"Also proud to see the growing importance of auto component suppliers from India in the Tesla EV supply chain," he said on the platform formerly known as Twitter after visiting the U.S. electric-vehicle maker's manufacturing facility in Fremont, Calif.
AstraZeneca Targets New Pill as Cheaper Option for Losing a 'Bit of Weight'
The U.K.-based drugmaker AstraZeneca is jumping into the increasingly crowded race to bring an effective weight-loss pill to market, and it says its late start won't be a major setback.
AstraZeneca (ticker: AZN) last week announced a licensing deal with a Chinese biotech for a weight-loss pill still in early-stage trials. Investors have swooned over the opportunity for record-obliterating sales from the new class of weight loss drugs from Novo Nordisk (ticker: NVO) and Eli Lilly (LLY), making both the companies among the most valuable in healthcare.
Foxconn Profit Rises as Margins Improve
Foxconn Technology Group reported a rise in third-quarter net profit thanks partly to an improvement in margins even as revenue from consumer electronics and cloud and networking equipment fell.
The Taiwan-based electronics maker, formally known as Hon Hai Precision Industry, said Tuesday that net profit rose 11% from a year earlier to 43.13 billion new Taiwan dollars (US$1.33 billion) for the three months ended Sept. 30. That beat the estimate of NT$34.89 billion taken in a poll of analysts by S&P Global Market Intelligence.
Why Xi Can No Longer Brag About the Chinese Economy
In 2021, Chinese President Xi Jinping popularized a slogan signifying China's expected displacement of the U.S. as the world's leading economic power: "The East is rising, the West is declining."
China that year had largely suppressed the Covid-19 pandemic and went on to record its fastest growth in a decade, while the U.S. struggled with repeated outbreaks of Covid and surging inflation. On the eve of a virtual meeting with President Biden at an Asia Pacific summit that fall, Xi was formally enshrined as China's most powerful leader in a generation. Biden still labored under the shadow of his predecessor's failed attempt to stay in office.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings [3Q Unless Stated Otherwise]:
Alithya Group
Argonaut Gold
Aya Gold & Silver
CAE [2Q]
Canaccord Genuity [2Q]
Converge Technology
H2O Innovation [1Q]
Hut 8 Mining
K92 Mining
Lithium Royalty
Orezone Gold
Premium Brands
Titanium Transportation
Torex Gold
WELL Health
Economic Calendar [ET]:
0830 Sep New motor vehicle sales
N/A Northwest Territories legislative assembly elections
Stocks to Watch:
Kolibri Global Energy 3Q Rev $12.7M Vs. $9.9M; 3Q EPS $0.06 Vs. EPS $0.26; 9-Mos Rev $37.2M Vs. $27.8M; 9-Mos EPS $0.40 Vs. EPS $0.39; 3Q Avg BOE/D Production Up 61%; 9-Mos Production Up 78%
Expected Major Events for Tuesday
07:00/UK: Oct UK monthly unemployment figures
09:00/FRA: Nov IEA Oil Market Report
10:00/GER: Nov ZEW Indicator of Economic Sentiment
11:00/US: Oct NFIB Index of Small Business Optimism
11:00/FRA: Sep OECD Harmonised Unemployment Rates
13:30/US: Oct CPI
13:30/US: Oct Real Earnings
13:30/CAN: Sep New motor vehicle sales
13:55/US: 11/11 Johnson Redbook Retail Sales Index
21:30/US: 11/10 API Weekly Statistical Bulletin
23:50/JPN: 3Q 1st Preliminary Quarterly GDP Estimates
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
2seventy bio Inc (TSVT) is expected to report for 3Q.
AVROBIO Inc (AVRO) is expected to report $-0.34 for 3Q.
Advent Technologies Holdings Inc (ADN) is expected to report for 3Q.
Aimia is expected to report for 3Q.
AquaBounty Technologies Inc (AQB) is expected to report for 3Q.
Argonaut Gold is expected to report for 3Q.
Athersys Inc (ATHX) is expected to report for 3Q.
Bakkt Holdings Inc (BKKT) is expected to report for 3Q.
Beam Global (BEEM) is expected to report for 3Q.
BioXcel Therapeutics Inc (BTAI) is expected to report $-1.19 for 3Q.
CAE Inc (CAE,CAE.T) is expected to report $0.20 for 2Q.
Converge Technology Solutions Corp (CTS.T) is expected to report $-0.02 for 3Q.
ENGlobal (ENG) is expected to report for 3Q.
EVI Industries Inc (EVI) is expected to report for 1Q.
Excellon Resources is expected to report for 3Q.
Fathom Digital Manufacturing Corp (FATH) is expected to report for 3Q.
H2O Innovation is expected to report $0.00 for 1Q.
Home Capital (HCG-T) is expected to report $0.49 for 3Q.
Hut 8 Mining Corp (HUT.T) is expected to report $-0.07 for 3Q.
Immunic Inc (IMUX) is expected to report for 3Q.
Intercept Pharmaceuticals Inc (ICPT) is expected to report $-0.24 for 3Q.
K92 Mining is expected to report for 3Q.
Lordstown Motors Corp (RIDE) is expected to report for 3Q.
Luna Innovations (LUNA) is expected to report $0.00 for 3Q.
Ondas Holdings Inc (ONDS) is expected to report for 3Q.
PDS Biotechnology Corp (PDSB) is expected to report $-0.38 for 3Q.
Pennsylvania Real Estate Investment Trust (PRET) is expected to report for 3Q.
(MORE TO FOLLOW) Dow Jones Newswires
11-14-23 0615ET
