MARKET WRAPS
Watch For:
Housing Starts; Canadian CPI; Earnings from FedEx
Today's Top Headlines/Must Reads:
- These Bull Markets Could Keep Charging Ahead
- The Office Market Had It Hard in 2023. Next Year Looks Worse.
- Bank of Japan Chief, Bucking Expectations, Avoids Talk of Rate Increase
Opening Call:
Stock futures hovered on Tuesday as investors continued to revel in an expected loosening of monetary policy in 2024 amid a 'soft landing' for the economy.
Some Fed officials in recent days appeared to push back against the market's hopes for lower borrowing costs as early as March, but equity investors seem to have shrugged off those comments, for now.
Meanwhile, the Bank of Japan reminded traders that an important spigot of cheap money still remains open.
The BOJ left its main interest rate at minus 0.1%, and in the accompanying news conference, Governor Ueda provided little evidence he was minded to exit the central bank's ultra-loose monetary policy anytime soon, despite inflation running above its 2% target for 19 consecutive months.
Traders were also warily eyeing the oil market, after benchmark Brent crude jumped on Monday following BP's statement it was halting shipments through the Red Sea , and thus the Suez Canal, because of attack's by the Houthi in Yemen.
Many of the world's biggest shipping companies have said they also will steer clear of the region, prompting concerns about rising costs that may build inflationary pressures.
"An extended period of disruption in global trade ways should not only sustain energy prices, but also put a renewed pressure on global supply chains and shipping prices," Swissquote Bank said.
"The latter is a threat to inflation. Remember, the pandemic-related supply chain disruptions were the major reason that sent inflation to almost 10% in the U.S.," it added.
Premarket Movers
Alphabet agreed to pay $700 million and make certain changes to its app store in a settlement with a group of states that claimed Google operated its app store, Google Play, as an illegal monopoly. Shares rose slightly.
Bluebird Bio was falling 13% after the company said it would sell $150 million of common stock in a public offering.
Ebix fell nearly 68% Monday after the software services company filed for bankruptcy. Shares fell another 9% premarket.
Heico said fiscal fourth-quarter profit rose from a year earlier as revenue jumped 54% to $936.4 million and topped analysts' estimates. The stock was up 3.4%.
Nikola rose about 5% in premarket trading, after falling nearly 10% in the previous session. A judge sentenced the electric-truck company's founder Trevor Milton on Monday to four years in prison for defrauding investors.
Plug Power was downgraded to Underweight from Neutral at Piper Sandler and the price target on shares of the clean energy company was reduced to $2.30 from $6.50, the Fly reported. Plug Power fell 4.3%.
Forex:
The yen fell after the BOJ kept its ultra-loose policy unchanged and offered no hints of a possible switch in direction, but losses were limited, suggesting investors still expect the central bank to tighten next year, UniCredit Research said.
"This relatively moderate reaction... suggests that investors are still confident that a change in the BOJ monetary policy might occur next year although the Japanese central bank refrained from indicating any timeframe yet."
The dollar's gains against the yen were also insufficient to lift the DXY dollar index, with the U.S. currency remaining "sluggish."
Energy:
Oil prices were mixed on concerns over global trade disruptions after major shipping and oil-and-gas companies paused transit in the Red Sea due to escalating attacks from Yemen's Houthi rebels.
The U.S. and other nations have set up a naval force to protect vessels in the area, while an increasing number of companies were rerouting ships via southern Africa's Cape of Good Hope.
"Investors and consumers haven't forgotten the impact snarled up supply chains had on prices following the pandemic," AJ Bell said.
"News that shipping firms will cease using the Red Sea route after a number of attacks on shipments will be unsettling."
Metals:
Copper prices edged higher despite broad concerns over weak demand in top metals consumer China, and as investors continued to keep a close eye on the path of interest rates.
According to analysts, markets continue to price in a 25 basis-point interest rate cut by the Fed as early as March.
"The communication and timing of these cuts will be an important driver for risk assets, the dollar, and our commodity markets next year," Peak Trading Research said.
Saxo Bank has kept a bullish outlook for gold into 2024 "in the firm belief that rates have peaked, and that Fed funds and real yields will start to trend lower."
Central banks' demand for gold is also potentially heading for another record year, with more than 1000 tons being removed from the market for a second year running, Saxo Bank said, adding that this is one of the main reasons the yellow metal has managed to rally despite surging real yields.
TODAY'S TOP HEADLINES
Why UBS Wants to Be the No. 6 Investment Bank in the U.S. (Yes, No. 6)
More than a decade after throwing in the towel on its hopes of being a major player in the lucrative U.S. investment-banking market, UBS is making another push, but this time the Swiss financial giant's ambitions are a bit more measured.
The takeover of local rival Credit Suisse and turmoil at other global peers has opened a door of opportunity to build back up a business that has been lagging behind rivals, UBS executives say. They have been on a hiring spree for senior deal makers, expanded research coverage and are ramping up pitches to potential clients.
End of Adobe's Takeover Bid for Figma Spells New Challenges for Venture Deals, Startups
The collapse of Adobe's effort to acquire collaboration-software startup Figma for about $20 billion amid pushback from regulators in the U.K. and Europe could be one more sobering influence on venture capital.
Higher interest rates have already depressed the startup ecosystem at both ends of the spectrum, including private funding of early-stage startups and the ability of late-stage startups to enter the public markets via an initial public offering. The demise of the Figma deal reflects the increasing difficulty that some startups will face as they pursue an acquisition by another company.
Russia Tried to Weaken Democrats Ahead of 2022 Midterm Vote, U.S. Spy Agencies Say
WASHINGTON-The Russian government and its proxies attempted to denigrate the Democratic Party and undermine voter confidence ahead of the 2022 midterm elections, an operation that most likely sought to weaken U.S. support for Ukraine, U.S. intelligence agencies said.
China also tacitly approved efforts to try to influence a handful of unidentified midterm races, though it refrained from favoring one party, as Beijing exhibited a greater willingness to target the U.S. with election influence activities than it has previously, according to a newly released intelligence community assessment. Iran also was blamed for trying to undermine confidence in U.S. democracy, while other foreign governments, including Cuba, were said to have experimented with small-scale U.S. influence pushes.
U.S. Military Struggles to Stop Osprey Crashes After Decades of Flaws
In late November, Amber Sax awoke to learn that eight more families were facing her nightmare. A deluge of messages told her that a U.S. military Osprey aircraft had crashed into the ocean near a Japanese island with eight crew on board.
Sax lost her husband, a 33-year-old Marine Corps pilot, in June 2022. The MV-22 Osprey co-piloted by Capt. John J. Sax reported a problem with an overheating gearbox and, moments later, plunged into the Southern California desert, killing all five aboard.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Calendar (ET):
0830 Nov Industrial product and raw materials price indexes
0830 Nov CPI
Stocks to Watch:
LOGISTEC CORPORATION PROVIDES UPDATE ON PROPOSED PLAN OF ARRANGEMENT TO BE ACQUIRED BY BLUE WOLF CAPITAL PARTNERS; 99.9% of Hldrs Approve Arrangement
Expected Major Events for Tuesday
08:59/JPN: Japan Monetary Policy Meeting decision
11:00/UK: Dec CBI Industrial Trends Survey
13:30/CAN: Nov Industrial product and raw materials price indexes
13:30/US: Nov New Residential Construction - Housing Starts and Building Permits
13:30/CAN: Nov CPI
13:55/US: 12/16 Johnson Redbook Retail Sales Index
21:00/US: Oct Treasury International Capital Data
21:30/US: 12/15 API Weekly Statistical Bulletin
23:50/JPN: Nov Provisional Trade Statistics for the Month
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Accenture PLC (ACN) is expected to report $3.01 for 1Q.
Axcella Health Inc (AXLA) is expected to report for 3Q.
Broadway Financial Corp (BYFC) is expected to report for 3Q.
CalAmp (CAMP) is expected to report $-0.15 for 3Q.
Cohbar Inc (CWBR) is expected to report for 3Q.
Conn's (CONN) is expected to report $-1.48 for 3Q.
Enerpac Tool Group Corp (EPAC) is expected to report for 1Q.
Factset Research Systems (FDS) is expected to report $3.74 for 1Q.
FedEx Corp (FDX) is expected to report $3.96 for 2Q.
FuelCell Energy Inc (FCEL) is expected to report for 4Q.
Greenlane Holdings Inc (GNLN) is expected to report for 3Q.
Helix BioPharma (HBP.T,HBPCF) is expected to report for 1Q.
Home Capital (HCG-T) is expected to report $0.49 for 3Q.
NeuBase Therapeutics Inc (NBSE) is expected to report for 4Q.
OrganiGram Holdings Inc (OGI,OGI.T) is expected to report for 4Q.
Pure Bioscience (PURE) is expected to report for 1Q.
Rafael Holdings Inc (RFL) is expected to report for 1Q.
Spark Networks SE - ADR (LOVLQ) is expected to report for 3Q.
(MORE TO FOLLOW) Dow Jones Newswires
12-19-23 0615ET
