MARKET WRAPS
Watch For:
Existing Home Sales for February; FOMC meeting; Canada CPI for February; Earnings from Nike, GameStop
Today's Top Headlines/Must Reads:
- Fed Faces Balancing Act Between Bank Rescues, Inflation Fight
- Bank Fears Rattle Oil Markets Poised for Chinese Boom
- Anxiety Strikes $8 Trillion Mortgage-Debt Market After SVB Collapse
- Banking Turmoil Tests the American Consumer
- U.S. Warns China Against Using Taiwan President's U.S. Stop to Raise Tensions
Follow WSJ market coverage here
Opening Call:
Stock futures moved higher on Tuesday as anxiety about the banking sector eased and traders eyed the looming Federal Reserve rate decision.
Easing tensions in the financial sector makes it more likely the Fed will raise interest rates on Wednesday, analysts said.
"[T]he more positive shift in sentiment saw investors put growing weight on the probability of the Fed hiking rates tomorrow," Deutsche Bank said.
"Our own U.S. economists published their preview of tomorrow's Fed meeting, and they agree with the view that the Fed will opt for 25bps [basis points]. Our economists expect the Fed to follow the ECB's lead and raise rates in line with expectations, do away with forward guidance, but signal a continued tightening bias," Deutsche added.
Read Fed Is More Likely Than Not to Raise Interest Rates on Wednesday
Read Fed's Rate Decision and Outlook Seen Subject to Financial Stability
Stocks to Watch
Bridger Aerospace Group said it expects revenue to double in 2023, as its current aircraft fleet is set to generate revenue of between $84 million and $96 million for the year. Shares rose 4.8% in after-hours trading.
U.S.-listed shares of Credit Suisse extended losses, falling 2.4% in premarket trading to about 92 cents, after tumbling 53% on Monday.
First Republic Bank shares rose 15% in premarket trading after shedding almost half their value Monday. JPMorgan CEO Jamie Dimon is leading discussions with the chief executives of other big banks about fresh efforts to stabilize troubled First Republic Bank, WSJ reported.
Lantern Pharma released its fourth-quarter results along with operational highlights. Shares rose 7.7% in after-hours trading.
Nvidia kicked off its developer conference on Monday, and CEO Jensen Huang will be delivering the keynote address on Tuesday. The stock was up 0.5% in premarket trading.
PacWest shares added more than 5% premarket, building on a Monday rebound.
Tesla was rising 1% in premarket trading. Its debt was upgraded by Moody's to Baa3, its lowest level for investment grade, up one ratings notch from Ba1, the highest level of speculative grade, or so-called junk-rated debt.
Shares of UBS rose more than 3% in Zurich alongside a broader rise in European bank shares.
Forex:
The dollar was slightly higher and has the potential to gain further ahead of the Fed policy decision as investors conclude that a 25 basis-point rate rise is more likely than rates being left steady, ING said.
"We wouldn't be surprised to see the dollar--which fell yesterday as risk sentiment rebounded--find some support into the FOMC announcement as markets turn more defensive and potentially factor in a greater risk of a hawkish scenario."
The Fed decision will be "a big risk event," with markets currently only pricing in around a 60% chance of a rate increase, ING said.
Energy:
Oil prices edged down in Europe as investors cautiously await the Fed decision.
Oil losses over recent days, while not driven by changes to supply or demand expectations, have been heightened as demand in China has been slow to recover, Natixis said.
"The oil market sell-off can be partially attributed to fundamentals disappointing relative to lofty expectations-as of yet, China hasn't overtightened the physical market, whilst Russian exports have remained robust," Natixis said.
Metals:
Base metals and gold were slightly weaker in early London trading, with traders looking to the Fed decision and how this will shape monetary policy.
"Markets are in waiting mode ahead of tomorrow's Fed decision," Peak Trading Research said.
"How Powell balances inflation pressures versus financial risks will be critical."
Copper
Tight supply and a hike in demand from the energy transition is likely to push copper prices higher, according to Goldman Sachs.
The bank said near term, it is targeting $10,500 a metric ton for LME copper, and in the longer term, $15,000 a ton.
"The forward outlook is extraordinarily positive," Goldman Sachs said.
Referring to the U.S. inflation reduction act, the bank said demand is likely to spike because of the drive to electrify. Near term, prices should rise on tight inventories, with the expected 125,000 tons of observable inventories by the second quarter the lowest level on record.
Goldman Sachs expects peak mine supply by 2024.
TODAY'S TOP HEADLINES
Tesla outpaced European competitors in February, growing EU market share
Tesla Inc.'s new car registrations in the European Union shot up in February as the company took a bigger chunk of the bloc's passenger car market compared with a year ago, according to figures released Tuesday by the European Automobile Manufacturers Association, known as ACEA.
ACEA said that Tesla's TSLA EU registrations, which reflect sales, rose to 19,249 this February from 12,860 in the prior period. That 50% jump outpaced every car company in the EU market, though brands like Stellantis NV's Alfa Romeo or Volkswagen AG's Cupra grew faster than Tesla last month.
FTX Lawsuit Says Affiliate in Bahamas Has No Claim to Company Assets
Managers of FTX are suing a company affiliate based in the Bahamas, seeking a bankruptcy court ruling to end a dispute with liquidators there over who should control and distribute assets of the failed cryptocurrency exchange.
The managers said in their complaint they are suing because of "serial threats" by the liquidators of affiliate FTX Digital Markets Ltd. to try to move FTX's bankruptcy proceedings to the Bahamas to pursue the company's cash, crypto and other assets there.
TikTok Chief Executive Shou Zi Chew to Face Skeptical Lawmakers
WASHINGTON-TikTok Chief Executive Shou Zi Chew can expect a chilly reception when he testifies before the powerful House Energy and Commerce committee this week, Republican aides said Monday.
Committee Chair Cathy McMorris Rodgers (R., Wash.) and other lawmakers plan to lay out the threat posed by TikTok to Americans' national security and privacy, and particularly its potential to harm children, aides said.
Stanley Black & Decker to Close Texas, South Carolina Plants
Stanley Black & Decker Inc. said it is closing factories in Texas and South Carolina, relocating some operations to Tennessee facilities as the company revamps its manufacturing and distribution network.
The Connecticut-based tool maker said the moves would affect the jobs of 357 employees. Eighty jobs will be added in Tennessee, the company said.
Pro Take: Fed Faces Balancing Act Between Bank Rescues, Inflation Fight
The Federal Reserve's new bank-rescue plan injects cash into troubled financial firms through loans while Fed officials also seek to tighten credit in the banking system and slow the economy-a contradictory set of aims.
On the one hand, the Fed is making money available for banks so they can continue to lend. On the other, it is making it more expensive for consumers and businesses to borrow.
Bank Fears Rattle Oil Markets Poised for Chinese Boom
Wall Street's outlook for oil this year is suddenly looking a bit less bright.
Crude prices dropped to 15-month lows after strains in the U.S. banking system sent tremors throughout financial markets and intensified fears of a broader economic slowdown. Those worries have hit prices just as energy-hungry China has finally shown signs of revving up from strict pandemic lockdowns.
Anxiety Strikes $8 Trillion Mortgage-Debt Market After SVB Collapse
Strains in the banking sector are roiling a roughly $8 trillion bond market considered almost as safe as U.S. government bonds.
So-called agency mortgage bonds are widely held by banks, insurers and bond funds because they are backed by the mortgage loans from government-owned lenders Fannie Mae and Freddie Mac. The bonds are far less likely to default than most debt and are easy to buy and sell quickly, a crucial reason they were Silicon Valley Bank's biggest investment before it foundered.
European Ports Brace for Cybersecurity Regulation
European ports are preparing for a major regulatory change next year in how the hundreds of companies in their global supply chains address cybersecurity as ports have become a target for criminal hacker groups and state-sponsored attacks.
Cybersecurity rules approved by the European Union for pharmaceuticals, transportation, energy and other critical infrastructure companies are set to take effect in 2024 and will require hundreds of firms that operate out of Europe's big ports to use basic security measures and report hacks to cybersecurity authorities. The regulation will be the first such cybersecurity requirements for many companies that provide services to critical sectors. Violators face fines of up to 10 million euros, equivalent to roughly $10.7 million, or up to 2% of global revenue, whichever is higher.
Banking Turmoil Tests the American Consumer
American consumers are facing another test, from banking-sector turmoil and tighter financial conditions, as households already grappling with elevated inflation and rising interest rates threaten to trim the spending that has been a hallmark of the resilient U.S. economy.
(MORE TO FOLLOW) Dow Jones Newswires
03-21-23 0622ET
