Watch For:

EU Foreign trade; U.K. monthly unemployment figures; Germany ZEW Indicator of Economic Sentiment; trading updates from Beiersdorf, Sika, LVMH, Vinci, X5 Retail Group

Opening Call:

European stock futures were lower tracking declines in Asian equities; the dollar and Treasury yields edged higher; oil futures and gold also advanced.


European stock futures were lower early Tuesday mirroring the downbeat sentiment in Asia which failed to be enthused by China's economy picking up in the first three months of the year, driven in large part by Beijing's push to turbocharge manufacturing.

However, real estate, which once accounted for as much as one-quarter of economic output, was a major drag on growth as housing sales and construction tumbled.

U.S. stocks fell broadly Monday, extending their recent slump in response to continuing Middle East tensions and surging U.S. Treasury yields.

Investors are facing "more volatility in the interest-rate market, getting more volatility around inflation, and you sprinkle on some geopolitical just suggests a bumpier near-term path for the market," said Keith Lerner, co-chief investment officer at Truist Advisory Services.


The U.S. dollar edged higher in Asia. Waning expectations for U.S. Federal Reserve interest-rate cuts remain a potent force that could boost the dollar, said Paul Turner, executive director at Middle East.


JPY strengthened against most other G-10 and Asian currencies buoyed by prospects of forex intervention by Japanese authorities.

USD/JPY closed above 154 on Monday for the first time since 1990, said Matt Simpson, market analyst at and City Index. This brings a test of 155 into focus this session, a level recently highlighted by Japan's former top currency official Hiroshi Watanabe as a point at which authorities could intervene if it is breached, Simpson added.


Ten- and 30-year Treasury yields finished at their highest levels since mid-November on Monday after healthy U.S. retail sales data prompted traders to price in stronger economic growth over the longer term.

"While the resilience of the U.S. consumer continues to power the economy forward, we continue to expect a slowdown in consumer spending this year as cost fatigue and softer labor-market conditions curb income growth and constrain households' spending power," said EY-Parthenon Senior Economist Lydia Boussour.

March housing starts, due later today, are expected to contract 2.7% after expanding 10.7% in February, according to a Wall Street Journal survey with economists.

Fed Chairman Powell has a moderated discussion with his Canadian counterpart Tiff Macklem in Washington.


Oil was higher after some volatile trading on Monday, as markets await Israel's response to Iran's attacks over the weekend.

"Oil markets have grown accustomed to volatility," said Regina Mayor, global head of client and markets at KPMG. "They can shrug off a lot of risk."

The "risk premia" had been priced into oil since an Israeli strike on Iran's consulate in Syria took place early this month, said Darwei Kung, head of commodities and portfolio manager at DWS Group.


Gold could rise to $3,000/oz over the next 6-18 months, Citi Research analysts said.

RBC Capital Markets sees prices pulling back in the current quarter but still expects the precious metal to fare better than it previously thought, raising its 2Q price forecast by 8% to $2,150/oz.

"Near-term downside risks to gold include rising U.S. 10-year yields and USD, plus a lack of inflow into ETFs," analyst Alexander Barkley said.


Aluminum prices edged higher following fresh sanctions by U.S. and U.K. sanctions on Russian metal supplies, Westpac said. However, LME's position as the global hub of metals trading means the sanctions will reverberate across the globe, ANZ Research analysts said.

"At a minimum it makes it more costly to trade the metals, adding shipping and storage costs," they added.


It's too early to forecast deficits for nickel and lithium markets, despite recent production cuts, said RBC Capital Markets.

Nickel supply from Indonesia is likely to stay strong, underpinning RBC's expectation that nickel prices will remain low this year. "However, our forecast is for lithium prices to rise in 2025 and 2026 as global EV sales increase, despite increasing supply," analyst Kaan Peker said.


China Surprises With Strong Start to Year as Factories Power Expansion

SINGAPORE-China said its economy picked up in the first three months of the year, driven in large part by Beijing's push to turbocharge manufacturing.

China's economy grew 5.3% in the first quarter compared with the same three months a year earlier, China's National Bureau of Statistics said Tuesday.

Market Reaction to Iran Attack Tells Us Stocks Aren't in a Bubble

Investors are terrible at assessing geopolitical risks, let alone the prospects of war. But the market reaction to Iran's attack on Israel tells us something about their current state: Investors may be putting superhigh valuations on stocks, but they're still capable of making reasoned judgments. Even better, investors aren't on a hair-trigger to dump their portfolios, so this adds to evidence that we're probably not in a bubble, at least not yet.

Before getting to the lessons, the logic. Stocks and bond yields fell and oil and gold rose during the day on Friday as investors worried about Iran's move in the cycle of revenge with Israel. They reversed their moves late in the day and on Monday-with the 10-year Treasury yield on Monday morning back to where it began on Friday morning-as it became clear that Iran didn't want to escalate. Markets might be wrong to conclude that a wider Middle East war isn't about to break out. But the price moves had strong internal logic.

Wall Street Is Betting OPEC+ Can Fend Off $100 Oil

The specter of a widening war in the Middle East has put $100-a-barrel oil back on the table. But Wall Street is looking elsewhere in the region for hints about how high prices could go.

The Saudi-led Organization of the Petroleum Exporting Countries and its Russia-aligned counterparts have dialed back production of millions of barrels of oil a day in recent years. Investors are betting that spare capacity, which the countries could yet tap in to, will effectively put a cap on oil prices-and protect Americans from an inflationary shock.

Israel-Iran Confrontation Forces Gulf Powers to Choose Sides

DUBAI-Saudi Arabia and other oil-rich Persian Gulf states have tried to avoid taking a position on America's geopolitical rivalries in recent years, staying neutral in the Ukraine war and building ties with China. With Israel and Iran in open conflict, they might be forced to choose a side.

Saudi Arabia and the United Arab Emirates struggled to stay on the sidelines when it became clear last week that Iran would attack Israel in retaliation for a strike in Syria that killed senior Iranian military officers.

Alantra Partners Leads Growth Deal for Energy AI-Software Maker GridBeyond

Alantra Partners led a roughly $55.6 million growth investment in GridBeyond, a developer of artificial intelligence-powered systems that help businesses and grid operators balance electricity supply and demand.

Existing backer Energy Impact Partners, a clean energy-focused investment firm in New York, also participated in the EUR52.3 million deal that aims to help GridBeyond speed up its expansion in the U.S. as increasing use of intermittent renewable power creates hurdles for grid operators.

Justice Department to File Antitrust Suit Against Live Nation

The Justice Department is preparing to sue Live Nation as soon as next month, an antitrust challenge that could spur major changes at the biggest name in concert promotion and ticketing.

The agency is preparing to file an antitrust lawsuit against the Ticketmaster parent in the coming weeks that would allege the nation's biggest concert promoter has leveraged its dominance in a way that undermined competition for ticketing live events, according to people familiar with the matter.

Evolution Equity Raises $1.1 Billion for Cybersecurity Bets

Evolution Equity Partners has wrapped up fundraising with $1.1 billion collected for a fund to back cybersecurity companies through growth investments.

Evolution Technology Fund III eclipses the firm's second main pool, which held $400 million in committed capital for investing in cybersecurity and software companies when it closed in 2021.

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Expected Major Events for Tuesday

06:00/GER: Mar WPI

06:00/UK: Mar UK monthly unemployment figures

07:00/SVK: Feb New orders in industry

08:00/ITA: Mar CPI

09:00/CRO: Mar CPI

09:00/GER: Apr ZEW Indicator of Economic Sentiment

09:00/ITA: Feb Foreign Trade EU

09:00/EU: Feb Foreign trade

10:00/IRL: Feb Goods Exports and Imports

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

04-16-24 0015ET