MARKET WRAPS
Watch For:
Earnings from Oracle
Today's Top Headlines/Must Reads:
- Powell's Inflation Fight Is Succeeding, Raising Questions About Rate Cuts
- When Bond Yields Dropped, the Everything Rally Kicked Off
- Here's Where Prices Are Actually Coming Down
- Why Treasury Auctions Have Wall Street on Edge
Opening Call:
Stock futures were struggling for traction on Monday as investors looked ahead to a busy week on the economic front, with consumer prices and the last Federal Reserve meeting of the year ahead.
Economists expect November consumer prices, due Tuesday, will show soft headline inflation, but a firm core reading. Producer prices are due on Wednesday with retail sales on Thursday.
On Wednesday, Jerome Powell and his colleagues will announce the outcome of the two-day meeting, with the central bank expected to hold its key benchmark interest rate steady in a range of 5.25% to 5.5%.
Friday's strong jobs data could have some bearing on what Powell has to say this week, Noteris said.
"Despite the possibility of a seasonal effect, overall, the data tend to highlight once again the resilience and tightness of the employment market. The release may harden the Fed's hawkish stance and contradict the market's expectations for an early rate cut," Noteris added.
The European Central Bank and Bank of England will each announce policy decisions on Thursday. A Bank of Japan decision will come next week.
Premarket Movers
HP Inc. was upgraded to Outperform from In Line at Evercore ISI and the price target on the stock was raised to $40 from $33. Shares rose 1.5%.
Humana shares were up 2.3% after Cigna stepped away from a possible merger. Cigna rose 9.6%.
Macy's rose 19% after an investor group made a $5.8 billion offer to buy the company , in a bid to take the famed department-store chain private after stiff competition from online rivals took a big bite out of its value.
Nordstrom and Kohl's shares rose roughly 5%, boosted by the jump in Macy's stock.
Paramount Global was rising 2% on reports from Puck and The New York Times that said Shari Redstone was in talks to sell controlling interesting in National Amusements, the parent company of Paramount, to Skydance Media.
Pinterest was up 4.8% after shares were upgraded to Outperform from Sector Perform at RBC Capital Markets and the price target was boosted to $46 from $32.
Friday's Post-Close Movers
Near Intelligence voluntarily filed for Chapter 11 bankruptcy protections and will look to sell its assets. Shares fell 38%.
Nextracker CEO disclosed Friday that he recently purchased nearly 38,000 shares of the company at an average price of $39.63. The stock purchase has a total value of about $1.5 million. Shares rose 4.6%.
Forex:
The U.S. economy is expected to slip into a recession next year, prompting the Fed to start cutting interest rates before the ECB and causing the dollar to weaken versus the euro, LBBW Research said.
A recession should help U.S. inflation approach the 2% mark in 2H, and "against this backdrop, the Fed is likely to initiate a phase of interest rate cuts as early as summer 2024," it said.
LBBW expects the ECB to start cutting rates next autumn. It expects EUR/USD to remain stable at 1.08 in 1Q and 2Q before rising to 1.10 by the end of next year.
Danske Bank Research is looking to buy EUR/USD on any dips in the near term due to the impact of any weaker U.S. economic data.
"The recent significant easing of financial conditions, the most substantial monthly decrease since the April 2020 Covid shock, suggests a favorable environment for EUR/USD in December," Danske Bank Research said.
"We aim to counter the recent downward move, and hence we still see upside potential for EUR/USD in the short term."
Energy:
Oil prices rose as U.S. demand outweighed worries over weak global growth.
Prices gained some support after the U.S. energy department said Friday that it will refill its strategic petroleum reserve through to May, hoping to buy 3 million barrels of crude in March.
Still, worries remain over demand, with Brent down 17% this quarter, amid slower global growth and market skepticism over OPEC+ cuts.
"The 1.7 million barrel a day reduction in output should provide some support to physical balances but the market will have to be convinced before any (of) these cuts are priced in," ANZ said.
Metals:
Base metals and gold prices were sliding, with investors awaiting key central bank meetings due later this week.
"The macro environment is a tug-of-war between the dovish Fed and risk-on trading and lower growth/demand expectations," Peak Trading Research said.
Investors will be looking to see how Tuesday's U.S. consumer inflation data as well as ECB and the Fed meetings, due later in the week, shape the macroeconomic environment, Peak said.
Weak inflation and dovish comments from the Fed should weaken the dollar, it added.
TODAY'S TOP HEADLINES
Boeing Has a Frontrunner to Be Its Next CEO
Boeing is elevating Stephanie Pope to become its No. 2 executive, setting her up as the heir apparent to Chief Executive David Calhoun as the plane maker prepares for its next leadership transition.
Pope, who heads Boeing's services arm, is expected to be named chief operating officer as soon as Monday, according to people familiar with the matter. The three-decade Boeing veteran beat out other top executives for the role.
New York Joins IBM, Micron in $10 Billion Chip Research Complex
New York state is joining chip companies to invest $10 billion in a semiconductor research facility at the University at Albany that is set to include some of the most advanced chip-making equipment in the world.
NY Creates, a nonprofit that oversees the Albany NanoTech Complex where the facility is to be built, will coordinate its construction. It will also use state funds to acquire chip-making equipment from ASML Holding, a Dutch company whose machines can cost hundreds of millions of dollars and are key to making the most advanced chips possible.
A Spot Bitcoin ETF Is Easy. What Comes Next Could Get Dangerous.
Giving fund managers easier access to bitcoin is already a contentious topic for regulators. It is nothing next to the Pandora's box that could be opened with its crypto peer ether.
The price of bitcoin has surged roughly 14% this past month to around $42,000. Investors believe U.S. regulators will soon green light exchange-traded funds, or ETFs, that hold spot bitcoins, bringing billions of dollars into the market.
BOJ Should Raise Interest Rates Before Next Summer, Suntory CEO Says
TOKYO-Takeshi Niinami, chief executive of beverage maker Suntory Holdings and the head of a Japanese business lobby, called on the Bank of Japan to raise interest rates, saying it would help boost the Japanese economy's productivity and competitiveness.
If the Bank of Japan raises interest rates, "the Japanese business community would be ready-which means they should raise interest rates, both long and short," Niinami said in an interview with The Wall Street Journal on Monday.
The Adrenaline-Fueled Trades Sweeping the Market
Oodles of risk. Bold bets on artificial intelligence. Round-the-clock activity. The options market is booming like never before.
About 44 million options contracts have changed hands on an average day in 2023, on track for an annual record based on Options Clearing Corp. data going back to 1973 and more than double the figure from five years ago.
Majority of Americans Back Israel as Democrats Split Over War With Hamas, WSJ Poll Finds
WASHINGTON-U.S. public opinion remains favorable toward Israel in its war with Hamas, but just over a third of Americans say they are equally sympathetic to both the Israeli and Palestinian people, a new Wall Street Journal poll finds.
Fifty-five percent of those polled said they believe Israel is taking the military action needed to defend itself and prevent another attack by Hamas, compared with 25% of respondents who said Israel's military action is disproportionate and going too far.
Hate Crimes in U.S. Increase Amid Israel-Hamas War
Shots fired in the parking lot of a synagogue in New York. A 6-year-old Palestinian-American boy fatally stabbed outside Chicago. Violent assaults on people in religious and cultural attire.
Police in major cities including Los Angeles, New York, Chicago and San Francisco have seen a rise in reports of hateful events, including hate crimes, after the Oct. 7 Hamas attack on Israel and the nation's subsequent military campaign in Gaza. Jews are often on the receiving end, according to cities that have broken down data, while reported attacks on Muslims-which include some of the most violent instances reported recently-are also on the rise.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing scheduled
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Barrick Gold: Porgera Gold Mine in Papua New Guinea Set to Restart Production This Month; Porgera Expected to Start Pouring Gold Again in 1Q 2024; Reopening Follows Satisfaction of Conditions in Porgera Project Commencement Agreement, in Which New Ownership Structure Was Agreed; Equity in New Porgera Shared 51% by PNG Stakeholders, Including Local Landowners and Enga Provincial Govt; 49% Is Held by Barrick Niugini, a JV Between Barrick and Zijin; BNL Will Operate Mine; PNG Shareholders to Receive 53% of Porgera's Economic Benefits
Expected Major Events for Monday
00:01/UK: CBI Economic Forecast
00:01/UK: Nov UK Regional PMI
00:01/UK: Dec Rightmove House Price Index
06:00/JPN: Nov Preliminary Machine Tool Orders
07:00/GER: 3Q Labour cost index
15:00/US: Nov Employment Trends Index
23:50/JPN: Nov Corporate Goods Price Index
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
Air Industries Group (AIRI) is expected to report for 3Q.
(MORE TO FOLLOW) Dow Jones Newswires
12-11-23 0614ET
