MARKET WRAPS
Watch For:
ISM Report on Business Services PMI for February; speeches by Fed's Logan, Bowman
Today's Top Headlines/Must Reads:
- The World Economy Is Doing Well-This Is Bad News for Central Bankers
- U.S. Export Limits Target 28 Chinese Entities, Citing Alleged Ties to Iranian Military
- China Caixin Services PMI Continues to Indicate Expansion
- Tesla Stock Is More Popular Than Ever Among Individual Investors
- Demand for Himars Rocket Launcher Grows in Asia-Pacific Amid China Threat
- PBOC Governor Tips Reserve Requirement Ratio Cut
Follow WSJ market coverage here
Opening Call:
Stock futures leaned higher on Friday and Treasury yields held above 4%, ahead of data on the services sector and more Fed speakers.
"We're trying to draw a signal from each data release about whether that means that we're close to the peak in inflation and interest rates," Invesco said.
Overseas, Chinese benchmarks rose after stronger-than-expected services data. Japan stocks also gained as data showed core inflation in Tokyo decelerating.
Stocks to Watch
Broadcom reported first-quarter earnings that topped estimates and issued a revenue forecast for the second quarter that also was higher than consensus. The stock rose 0.7% in premarket trading.
C3.ai posted better-than-expected fiscal third-quarter results and the stock surged 14.4% in premarket trading.
ChargePoint Holdings reported a fourth-quarter loss that was wider than analysts expected and sales that missed estimates. The stock was tumbling 11.7%.
Cidara Therapeutics announced "concurrent but separate" underwritten public offerings of its common stock and its Series X convertible preferred stock. Shares fell 17% in after-hours trading.
Costco reported fiscal second-quarter earnings that beat expectations, but the stock was down 2.6% as revenue was lower than projected.
Dell's fourth-quarter adjusted profit and revenue beat analysts' estimates but guidance came up short and the stock fell 4.2% in premarket trading. Dell also announced CFO Tom Sweet will be retiring.
Heritage Insurance reported fourth-quarter financial results that showed the company swinging to a gain for the period. Shares rose 16% in after-hours trading.
Hewlett Packard posted better-than-expected fiscal first-quarter earnings and sales and raised its fiscal-year guidance. The stock was rising 2.8%.
Marvell Technology was falling 9.7% after its fiscal first-quarter adjusted earnings and revenue forecast missed analysts' estimates. The chip company said "inventory corrections and resulting changes in product mix" impacted its guidance.
Victoria's Secret declined 4.4% after it said it expects sales in the fiscal first quarter to fall more than analysts' had anticipated, and adjusted earnings that will come up shy of forecasts.
Zscaler raised its revenue forecast for the fiscal year and announced it was cutting its global workforce by 3%, or about 150 positions. The stock declined in premarket trading by 11.8% after the company said it expects billings to slow sequentially in the current fiscal third quarter.
---
Read Recovery in Chip Industry Could Come in 4Q
Forex:
Services data later on Friday are likely to endorse the Federal Reserve's signals about further interest-rate rises and support the dollar, ING said.
The ISM's non-manufacturing purchasing managers' index is expected to fall marginally to 54.5 in February from 55.2 in January--with a level above 50 signalling an expansion in activity--which would confirm that speculation on a recession is too premature and would support the Fed's stance, ING added.
"We think this should allow further stabilisation of the dollar around current levels."
Read March 10 a Key Date for USD/JPY, JPMorgan Says
---
The euro could fall if some ECB policymakers from countries with high national debt levels in particular become more cautious about rising rates, Commerzbank said.
The minutes of the ECB's February meeting on Thursday showed some policymakers were worried that rates are getting closer to levels that warranted more caution to ensure monetary policy wasn't tightened excessively. This confirms the risk that some ECB officials may prevent sufficient monetary policy tightening.
"If signs indicating this increase, the euro would be at risk of recording significant losses."
---
The ECB sounds more decisive about raising interest rates compared to the Bank of England and this leaves sterling vulnerable against the euro, ING said.
Moreover, the BOE's Decision Maker Panel survey of chief financial officials yesterday signalled the firms now expect to raise prices and wages at a slower pace, which favors more cautious monetary policy, ING added.
"We still think the BOE will hike by 25 basis points on March 23, but the market's pricing for an additional 50bp of tightening after that seems too aggressive."
Unstable risk sentiment could also hit sterling harder than the euro, ING said.
Energy:
Oil prices were flat in Europe but remained on course for a modest weekly rise, as upbeat Chinese data boosted demand hopes.
The data from China has countered concerns about economic weakness elsewhere in the world, as central banks in the U.S., Europe and elsewhere raise interest rates.
Metals:
Copper prices rose 0.9% in Europe and were set for a rise on week thanks to strong Chinese data, while investors awaited further news from key policy meetings from Beijing.
"Pent-up demand has likely contributed to the increase in China's manufacturing PMIs over the last two months and is likely going to be supportive of China's commodity consumption," Commonwealth Bank of Australia said.
Chinese policymakers are set to meet this weekend to discuss economic policy and set targets, which will offer "important color on the outlook of China's commodity-intensive sectors," it added.
Lithium
While some investors are bullish on lithium, most expect prices to fall further, Morgan Stanley said, citing talks with more than 40 global investors on lithium dynamics.
Demand has softened, especially in China, and MS doesn't expect Beijing to renew electric-vehicle subsidies. On supply, MS expects a jump in lithium projects being developed in South America, although some investors question the political will to advance those.
"It is a relevant debate, in our view, as long term prices could be quite different if the bulk of incremental supply comes from the low end [$4,000-$5,000/ton] or the high end [>$10,000/ton] of the cost curve."
Nickel
The world's nickel supply notched its largest-ever annual rise in 2022, mostly because of a sharp increase in output of nickel pig iron that is used entirely by the stainless steel industry, Macquarie said.
Finished nickel supply rose by nearly 17%, pushing the nickel market into a significant oversupply in 2022 from a deficit the year prior.
"With such enormous growth, focused mainly on class 2 nickel [mainly nickel pig iron] and intermediates [MHP and matte], the importance of analyzing nickel markets in specific submarkets has never been more important, with prices of finished nickel products performing radically differently in 2022," Macquarie said.
Prices for different kinds of nickel have diverged as the battery sector emerges as an important buyer of the metal.
TODAY'S TOP HEADLINES
Tesla Stock Is More Popular Than Ever Among Individual Investors
Individual investors can't get enough of Tesla Inc.
In recent weeks, they have scooped up shares of Elon Musk's electric-vehicle maker at a frenzied pace, setting repeated records for one-day purchases. Already in 2023, they have spent a net $13.6 billion on Tesla shares, approaching the record sum of nearly $17 billion for all of last year, according to Vanda Research.
Chief of Digital Freight Startup Transfix Steps Down
Digital freight startup Transfix Inc. said on Thursday that Chief Executive Lily Shen was stepping down and would be succeeded by the company's co-founder and chief technology officer, Jonathan Salama.
Ms. Shen said her resignation was a "personal decision" and that she would stay on as an adviser for a few months to ease the transition.
FTX Says $8.9 Billion in Customer Funds Are Missing
FTX says it has identified a deficit of $8.9 billion in customer funds that it can't account for, the first time the bankrupt cryptocurrency exchange has pinned down how much money has gone missing.
In a public presentation released on Thursday, FTX said it had identified around $2.7 billion of customer assets, compared with $11.6 billion of balances outstanding on customer accounts. The estimated value of FTX's assets and liabilities are based on crypto prices on the day of the company's bankruptcy filing in early November.
Norfolk Southern and Other Freight Railroads Agree to Join Federal Close-Call Reporting System
Norfolk Southern Corp. and its rivals said Thursday they have agreed to join a federal system that lets employees confidentially report close calls, a program the biggest freight railroads had refused to join for years.
Transportation Secretary Pete Buttigieg on Monday had asked the chief executives of the seven so-called Class 1 railroads-Union Pacific Corp., Norfolk Southern, BNSF Railway, CSX Corp., Canadian Pacific Railway Ltd., Canadian National Railway Co. and Kansas City Southern-to join the Federal Railroad Administration's close-call reporting system.
Lufthansa Shares Jump After Return to Profit, Encouraging Guidance
Shares of Deutsche Lufthansa AG climbed in Friday morning trading after the German carrier group swung to a profit and set out what analysts called encouraging guidance for the year.
At 0830 GMT, Lufthansa shares traded 5.7% higher at EUR10.42.
Adani Group Stocks Jump After GQG Partners Invests Nearly $1.9 Billion
(MORE TO FOLLOW) Dow Jones Newswires
03-03-23 0638ET
