MARKET WRAPS
Watch For:
Weekly Initial Jobless Claims; October Import Price Index; Philadelphia Fed Business Outlook Survey; Industrial Production & Capacity Utilization; EIA Weekly Natural Gas Storage Report; Canada Housing Starts; Fedspeak from Mester, Williams, Barr, and Cook; Earnings from Macy's, Walmart, Warner Music
Today's Top Headlines/Must Reads:
- Squeezed Property Owners Put Their Faith in the Fed
- The Global Fight Against Inflation Has Turned a Corner
- Bank Stocks Are on the Move. What Can Send Them Even Higher
Opening Call:
Equity futures were little changed on Thursday, holding near two-month highs as traders took stock after the latest strong rally.
Investors were becoming more confident that the Federal Reserve's 500 basis points or so of rate rises this cycle will not cause a sharp slowdown for the economy, and that any so-called soft landing will still support corporate earnings.
However, with the CBOE VIX index trading back down near 14, and the S&P 500's 14-day relative strength index moving from an oversold indication to the threshold of overbought within the space of just three weeks, there were some observers advising caution.
"[S]tock futures indicated a subdued opening amidst concerns that the market has jumped too far over its skis," SPI Asset Management said.
"The top question now for markets is whether traders and investors have been too hasty extrapolating a run of soft U.S. macro data into a Fed easing cycle commencing from late Q1 2024. The concern is that markets are now overestimating the chances of full-on Fed accommodation."
Overseas Markets
Hong Kong's Hang Seng Index fell more than 1% after data showed new home prices in China fell at a faster pace in October .
Premarket Movers
Cisco Systems reported fiscal first-quarter adjusted earnings that beat analysts' estimates but reduced its outlook for the fiscal year and the stock was falling 10%.
Maxeon Solar Technologies cut its revenue guidance for the current fiscal year for a second time and posted third-quarter results that showed a decline in both revenue and shipments. Shares fell 3.3%.
Palo Alto reported fiscal first-quarter earnings and revenue that beat Wall Street estimates and raised its adjusted earnings outlook for the fiscal year, but the stock was falling 5.4% after the company reduced guidance for total billings.
Forex:
The dollar has rebounded from its recent substantial drop following weaker-than-expected inflation and it should continue to recover, CPT Markets said.
The dollar has been helped by Wednesday's stronger-than-expected retail sales, while its slide since Tuesday was the most significant fall in a year, CPT said.
Still, the inflation data "has strengthened the conviction among investors that the Fed may refrain from raising interest rates again" and expectations that the central bank could cut rates in May next year have increased, it added.
EUR/USD's rebound has room to extend beyond the end-August high of 1.0945, based on technical charts, UOB said.
Although EUR/USD's outsized recovery since Tuesday seems to be running ahead of itself, its weekly moving average convergence divergence indicator is turning positive, suggesting there's scope for the currency pair to rebound further, it said.
However, any EUR/USD advance is probably part of a "recovery phase," and the probability of it breaking above subsequent resistance at 1.1065 seems lower, UOB added.
ING said the euro should rise in 2024 as the U.S. economy slows, adding that EUR/USD strength should become more apparent from the second quarter onwards and end the year at 1.15.
Energy:
Oil prices were lower after the U.S. administration said it would enforce sanctions against Iran.
"While sanctions have remained in place, the U.S. has not enforced them strongly, which has allowed Iranian oil exports to grow this year," ING said, adding that a stricter enforcement and subsequent supply loss would be enough to tighten up the global oil balance significantly through 2024.
Metals:
Base metals were weaker in early trading in London, with gold a touch firmer, as worries over demand and economic growth pressured commodities.
"The macro environment has lost some upward momentum over the past 24 hours," Peak Trading Research said.
Lower crude oil prices helped bring the whole commodity complex lower, Peak said, but most concerns remained around economic growth with demand subdued.
TODAY'S TOP HEADLINES
Lenovo's Quarterly Profit Falls 54%, But Tops Consensus
Lenovo Group's net profit fell 54% in its fiscal second quarter due to a high base in the same period last year when market conditions were more favorable.
Net profit for the three months ended September was $249 million, the world's largest PC maker said Thursday, compared with a profit of $541 million a year earlier. However, the result beat analysts' expectations of $236 million in a FactSet poll.
China's Xi Draws Standing Ovation From U.S. Business Leaders-and Some Doubts
SAN FRANCISCO-Foreign capital is fleeing China. Yet on his first trip to the U.S. in six years, Chinese leader Xi Jinping didn't make a pitch to win back American businesses and investors.
Instead, at a dinner with U.S. corporate chiefs and other guests, Xi sought to enlist corporate America's help in easing bilateral tensions, emphasizing the room for both nations to work together-a theme of his meeting with President Biden earlier Wednesday. Throughout his speech, Xi described himself as a leader of the people and stressed the importance of buttressing bilateral ties with people-to-people exchanges, but didn't specifically highlight trade or investment.
Senate Approves Short-Term Spending Bill as Lawmakers Eschew Shutdown Politics
WASHINGTON-Congressional shutdown brinkmanship is taking a break, but it could be back with a vengeance soon.
Faced with a government-funding deadline this weekend, House lawmakers of both parties agreed Tuesday to back a short-term Republican plan that extends the status quo until early next year, rather than stage another bare-knuckle fight now over spending and policy priorities. The far-less-pugnacious Senate followed Wednesday, approving the proposal 87 to 11. The bill now goes to President Biden for his signature.
Biden, Xi Jinping Dial Back Rancor in Summit to Stabilize Ties
WOODSIDE, Calif.-President Biden and Chinese leader Xi Jinping struck a less contentious tone at their summit Wednesday, a reset that will be quickly tested by deep U.S.-China disagreements.
With relations between the two countries near a low point, Biden and Xi agreed to resume communications between their militaries, cooperate on choking off fentanyl production and begin a dialogue on the risks of artificial intelligence. Their four hours of talks at a secluded estate outside San Francisco included a walk in the wooded grounds.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Calendar (ET):
0815 Oct Housing Starts
0830 Sep Employment Insurance
Stocks to Watch:
Taiga Building Products Declares C$0.2316 Special Div; Cites Strong Performance; Doesn't Plan to Pay Regular Dividends in the Future and No Ongoing Dividend Strategy Is Currently in Place
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Westaim: Follow-On Offering of 5M Shrs of Common Stock Priced at US$30.50 Each; 2,150,000 Shrs Being Sold by Skyward Specialty; Upsized 2,850,000 Shrs Being Sold by Westaim; Has Granted Underwriters Option for Additional 750,000 Shrs; Barclays, Keefe, Bruyette & Woods, a Stifel Company, Among Manager for Offering; Westaim Is a Canadian Investment Company
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Wheaton Precious Metals Announces the Acquisition of Existing Streams From Orion Mine Finance Including the Platreef and Kudz Ze Kayah Projects, and Enters Into a New Stream on the Curraghinalt Project
Expected Major Events for Thursday
04:30/JPN: Sep Tertiary Industry Index
09:00/ITA: Sep Foreign Trade EU
09:30/UK: Aug Card Spending statistics
13:00/RUS: Weekly International Reserves
13:15/CAN: Oct Housing Starts
13:30/US: Oct Import & Export Price Indexes
13:30/US: Nov Philadelphia Fed Business Outlook Survey
13:30/US: 11/11 Unemployment Insurance Weekly Claims Report - Initial Claims
13:30/CAN: Sep Employment Insurance
13:30/US: U.S. Weekly Export Sales
14:15/US: Oct Industrial Production & Capacity Utilization
15:00/US: Nov NAHB Housing Market Index
15:30/US: 11/03 EIA Weekly Natural Gas Storage Report
15:30/US: 11/10 EIA Weekly Natural Gas Storage Report
16:00/US: Nov Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing
21:00/US: Sep Treasury International Capital Data
21:30/US: Foreign Central Bank Holdings
21:30/US: Federal Discount Window Borrowings
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Thursday
AEterna Zentaris Inc (AEZS,AEZS.T) is expected to report for 3Q.
Aeglea BioTherapeutics Inc (AGLE) is expected to report for 3Q.
Astrotech (ASTC) is expected to report for 1Q.
Aura Biosciences Inc (AURA) is expected to report for 3Q.
Bath & Body Works Inc (BBWI) is expected to report for 3Q.
Berry Global Group Inc (BERY) is expected to report $1.65 for 4Q.
Brady Corp (BRC) is expected to report $0.92 for 1Q.
BrightView Holdings Inc (BV) is expected to report $0.20 for 4Q.
Canlan Ice Sports (ICE.T) is expected to report for 3Q.
Chase Corp (CCF) is expected to report for 4Q.
Denbury Inc (DEN) is expected to report for 3Q.
Dianthus Therapeutics Inc (DNTH) is expected to report for 3Q.
Dixie Group (DXYN) is expected to report for 3Q.
EQ is expected to report for 3Q.
Eiger Biopharmaceuticals Inc (EIGR) is expected to report $-0.22 for 3Q.
Energy Focus Inc (EFOI) is expected to report for 3Q.
Enterprise Group is expected to report for 3Q.
IGM Biosciences Inc (IGMS) is expected to report for 3Q.
(MORE TO FOLLOW) Dow Jones Newswires
11-16-23 0619ET
