MARKET WRAPS
Watch For:
Conference Board's Employment Trends Index for January; earnings from Tyson Foods, Activision Blizzard, Take-Two Interactive Software, Pinterest.
Today's Headlines/Must Reads
- China Rebukes U.S. for Taking Down Its Balloon
- Upbeat Economic Data Keep Investors on Edge About Fed
- Banks Borrow Unsecured Cash at Record Clip
- U.S. Weighs Sanctions for Chinese Firms Over Iran Surveillance Buildup
- Chevron Explores Algerian Gas Plans Amid Russian Sanctions
- Newmont Proposes $17 Billion Takeover of Australia's Newcrest Mining
- Public Storage Bids for Rival in Unsolicited $11 Billion Offer
- Carlyle to Name Banking Veteran Harvey Schwartz as CEO
Follow WSJ markets coverage here .
Opening Call:
Stock futures pointed to further losses for Wall Street on Monday, after the unexpectedly strong jobs report renewed worries about how high the Federal Reserve will have to take interest rates.
"On the one hand, a resilient labor market could buttress households' willingness and ability to continue consuming and therefore support corporate earnings and equities over the near term," BCA Research said.
But longer-term implications are more dire--if a second wave of inflation is triggered, the Fed would have to act more forcefully, perhaps leading to a deep recession, BCA Research said.
Traders also were reacting to the political rift between the U.S. and China after Joe Biden ordered a balloon to be shot down. China has said the balloon was to monitor the weather, not for spying, and had been blown off course.
The Hang Seng dropped 2% on Monday, with China's Shanghai Composite also lower.
Stocks to Watch
Dell will join the ranks of technology companies slashing jobs as the computer maker will shed 6,650 positions, according to a Bloomberg report on Monday, which cited a company spokesman after seeing a memo.
Jeff Clarke, co-chief operating officer, told employees that the current conditions will "continue to erode with an uncertain future."
The job cuts amount to 5% of its workforce, the report said.
Other Movers
Comera Life Sciences said its stockholders, including some board members, can sell up to 7.2 million shares of common stock in the company from time to time. Its stock rose 5% in after-hours trading.
Jiuzi told the SEC it doesn't intend to proceed with the resale of ordinary shares registered in its statement from Dec. 30, 2021. Its stock jumped 26% in after-hours trading.
Newmont made a $17 billion, all-stock offer to buy Australia's Newcrest Mining. Newmont shares fell 6% premarket.
RH on Friday said it has restated per-share earnings results spanning the last three quarters after identifying errors in its original calculations. Its shares fell 3% in after-hours trading.
Forex:
The dollar continues to gain after Friday's much stronger-than-expected jobs data, reaching its highest in nearly four weeks against a basket of currencies as the U.S. economy looks more resilient and more rate rises look likely, MUFG said.
"Market participants have moved to price in a higher probability of the Fed delivering at least two more 25bps hikes before pausing their hiking cycle," MUFG said.
U.S. rate markets have scaled back expectations for rate cuts beginning later this year, and thus the dollar has reversed most of its losses sustained since the start of the year, MUFG said.
However, MUFG said the currency's strength may not be sustained.
"We do not expect the dollar's recent rebound to be the start of a more sustained upward trend. The underlying trend for job growth is still slowing but not fast enough to make the Fed comfortable over upside risks to inflation from the tight labour market."
In the week ahead, market participants will be watching to see how Fed officials react to the better data releases, MUFG said.
Bonds:
Bond markets are off to a strong start in 2023, running with the downward inflation trend in the U.S., J.P.Morgan Asset Management said.
"As a result, bond demand has picked up and government bond yields have rallied."
This has benefited JPM AM's preference for adding U.S. duration at the beginning of the year, it said, adding that, in the near term, inflation, wage and economic growth data may keep government bond yields range bound.
"Ultimately, we prefer to remain structurally long U.S. duration as we continue to see a 60% chance of the market pricing in a recession later this year."
Energy:
Oil prices were higher in Europe after an EU ban on Russian refined products and a G-7 price cap on those products came into force on Sunday.
The caps prevent shipping and insurance firms from trading Russian refined products unless they are below a cap of $100 a barrel for gasoline, diesel and jet fuel and $45 a barrel for naphtha and fuel oil. The measures have been well-flagged and Europe has built up strong stockpiles in recent weeks, limiting the measures' hit on prices.
"EU buyers have had time to prepare for the ban," ING said.
Read Russia Sanctions Challenge Tight U.S. Diesel Market
Read Oil Industry's Windfall Fails to Excite Wall Street
Metals:
Base metals prices were mixed, while gold was higher, with the dollar still rising after the strong jobs report, hitting risk commodities.
"Any macro disappointment could lead to a short-term price correction before seeing a sustained rise in prices," ANZ said, in reference to industrial metals. It said gold is likely to face headwinds for similar reasons.
TODAY'S TOP HEADLINES
Disney, Pepsi, Uber Set to Report During Lackluster Earnings Season
PepsiCo Inc., Uber Technologies Inc. and Walt Disney Co. are among the companies slated to report earnings in the coming week, during an earnings season marked by cooling demand and throttled profits.
Investors will also hear from the food makers Kellogg Co. and Tyson Foods Inc., the healthcare companies CVS Health Corp. and AbbVie Inc., as well as the private-equity firms KKR & Co. and Apollo Global Management Inc. Other companies reporting earnings include PayPal Holdings Inc., S&P Global Inc. and Chipotle Mexican Grill Inc.
Chevron Explores Algerian Gas Plans Amid Russian Sanctions
Oil giant Chevron Corp. is looking to seal an energy exploration deal with Algeria, as the North African country steps up efforts to replace sanctioned Russian supplies in nearby Europe, according to people familiar with the matter.
Over the past decade, U.S. companies have pulled back from operations in oil-and-gas-rich Middle Eastern and African countries they viewed as politically risky to focus on booming shale production at home.
Newmont Proposes $17 Billion Takeover of Australia's Newcrest Mining
ADELAIDE, Australia-Newmont Corp. has made a roughly $17 billion offer to acquire Australia's Newcrest Mining Ltd., aiming to seal one of the biggest deals for a global gold miner as the industry struggles to make large new discoveries of the precious metal.
Newmont, based in Colorado and one of the world's largest producers of gold, submitted a conditional and nonbinding indicative proposal to acquire Newcrest, Australia's largest listed gold producer. Newmont said it would offer 0.380 of its own shares for each Newcrest share held.
Public Storage Bids for Rival in Unsolicited $11 Billion Offer
Public Storage has made an $11 billion unsolicited offer for Life Storage Inc., ramping up an effort to buy its smaller rival after an earlier bid was rejected.
Public Storage said it sent a letter to Life Storage's management on Sunday detailing its all-stock proposal, worth about $129 a share, confirming an earlier report by The Wall Street Journal. Life Storage shares closed Friday at $110.58.
Carlyle to Name Banking Veteran Harvey Schwartz as CEO
Carlyle Group Inc. plans to name investment-banking veteran Harvey Schwartz its new chief executive, according to people familiar with the matter, as the private-equity firm's founders seek a fresh start after a botched succession plan.
Carlyle is expected to unveil on Monday the appointment of Mr. Schwartz, who most recently served as co-president of Goldman Sachs Group Inc., the people said. He spent more than two decades at the bank, building and leading various businesses.
Judge Releases Decision Approving Meta's Virtual-Reality Deal
WASHINGTON-A judge has made public his decision that allowed Meta Platforms Inc. to acquire a virtual-reality startup, providing new details on why he ruled against the Federal Trade Commission in its high-profile antitrust case against the Facebook parent company.
The ruling, which was initially sealed and was released late Friday, rejected the FTC's arguments for why Meta's acquisition of Within Unlimited was anticompetitive. But the judge sided with the FTC on some legal and factual arguments, bolstering the agency's ability to bring similar cases in the future, some antitrust lawyers said.
Paramount Reveals Plan to Remake Showtime in the Image of 'Yellowstone'
Showtime is producing a wave of spinoffs and expansions for "Billions" and "Dexter," two of its sturdiest hits, the network says. The premium cable brand is reshaping its TV slate with the same mold that turned "Yellowstone" into a sprawling franchise for parent company Paramount Global.
Showtime says it's planning up to four series connected to "Billions," the network's long-running high-finance drama, starting with a spinoff set in Miami, plus other iterations being developed under the titles "Millions" and "Trillions."
Oil Industry's Windfall Fails to Excite Wall Street
Oil companies delivered the market's best shareholder returns last year, but Wall Street is still wary.
The biggest Western oil companies, Exxon Mobil Corp., Chevron Corp. and Shell PLC, together cleared a record of more than $132 billion in annual profit in 2022 and handed investors $78 billion via share buybacks and dividends, about 50% more than the last time oil topped $100 a barrel in 2014.
(MORE TO FOLLOW) Dow Jones Newswires
02-06-23 0602ET
