North American Morning Briefing: Cautious Start to Week With Fed, Other Central Banks Primed

iHub News
Latest News
September 18 2023 02:45AM

Market Wraps

Watch For:

Canada Housing Starts for August; Earnings from Stitch Fix; Airbnb and Blackstone are set to join the S&P 500

Today’s Top Headlines/Must Reads:

– Why a Soft Landing Could Prove Elusive

– An Even Bigger Housing Crisis Threatens China’s Economy

– Republican Groups Craft Short-Term Bill to Keep Government Open

Opening Call:

Stock futures were a tad firmer on Monday, but caution prevailed as bond yields rose and traders looked ahead to Wednesday’s Federal Reserve comments.

“Investors are increasingly concerned that the latest flurry of data points to firming inflation and perhaps a higher-for-longer rate environment that could weigh on the heavily Mega CAP Tech concentrated S&P 500 Index,” SPI Asset Management said.

A clue to how central banks view these developments will be provided during the week. The Fed will deliver its policy decision midweek, followed by the Bank of England on Thursday and the Bank of Japan Friday, local dates.

“The Fed decision on Wednesday is fully expected to result in a no-change decision, but crucially the accompanying comments should give something of an insight into its current thinking,” Interactive Investor said.

“With investors currently split on the outlook over the next year, the latest thoughts from the Fed could well prove to be market moving.”

Premarket Movers

Ford and General Motors stocks climbed cautiously higher after negotiations between the ‘Big Three’ car makers and the United Auto Workers resumed over the weekend.

General Motors pointed 0.3% higher, while Ford was 0.2% up.Stellantis fell 0.8% ahead of the open.

Friday’s Post-Close Movers

Five Point Holdings named Kim Tobler as CFO. The company said that Tobler has served as vice president for treasury and tax for Five Point since 2016. Shares rose 14%.

Runa Capital said Friday it had made an offer to acquire MariaDB for 56 cents a share in cash. The firm, which currently has a 7.8% stake in the company, said that the offer represents a premium of around 24% based on the Sept. 13 closing price. MariaDB shares rose 24%.


The dollar’s medium-term prospects are starting to look gloomier, Capital Economics said.

It expects that as disinflation is more advanced in the U.S. than in Europe, the Fed will cut rates a little earlier and the ECB a little later than mid-2024.

“That would turn interest rate differentials back into a headwind for the greenback.”

Growing pushback from Chinese and Japanese authorities against the depreciation of the renminbi and the yen could also work against the dollar, it added.

The euro is set to fall against the dollar up until year end before starting to recover next year, Metzler forecast.

It expects the euro to end the year at $1.06, before climbing to $1.07 and then $1.08 in the first and second quarters of 2024, respectively.

“The [U.S.] economy is weakening, but then it keeps surprising on the upside, and not only on the labor market, but also, for example, recently again with retail sales,” Metzler said.

“In addition, U.S. inflation has seen its low point for this year and should tend to rise again in the remaining months.”


Oil prices rose to a fresh 10-month high, as Saudi Arabia’s production cut, plus its plan to extend cuts until year-end, appear to be working to boost prices.

ANZ estimates the oil market will witness a 2 million barrel-a-day supply deficit this quarter thanks to the cuts and growing demand in China.


Base metals prices edged higher across the board though traders remained cautious about the prospects for China’s property sector.

Some more positive Chinese data led some Western investors to increase their bullish bets on copper but that was quickly countered as Shanghai traders took profits, TD Securities said.

“This highlights the still shaky environment for industrial metals. Indeed, property-market weakness has persisted in [China] despite the stronger data, and looking forward we see little evidence that recent dynamics in the red metal have shifted.”

Today’s Top Headlines

CEO of Naspers and Prosus Steps Down

Bob van Dijk has stepped down as chief executive and board member of Naspers and its Prosus unit, after running the South African internet and media conglomerate for more than nine years.

Naspers didn’t give a reason for the change, which it said was mutually agreed to and effective Monday. It appointed Ervin Tu, the group’s chief investment officer, as interim CEO, and said van Dijk would help with the leadership transition and remain as a consultant until the end of September 2024.

China Evergrande Shares Dip After Police Detain Some Wealth-Management Unit Staff

China Evergrande Group’s shares dipped after police in southern China detained some staff at its wealth-management unit, adding to the debt-laden developer’s woes.

Shares of China Evergrande fell as much as 24% to 0.47 Hong Kong dollar (US$0.06 on Monday before reversing to trade higher. The stock was recently up 4.8% at HK$0.65.

Instacart IPO Debuts Tuesday. Will its Stock Pop or Plop?

Online grocery delivery company, Instacart, will soon get a spot in retail brokerage accounts. It’s a test for investors’ appetite for gig companies.

San Francisco’s Instacart, incorporated as Maplebear, is set to start trading as “CART” on Tuesday and like most IPOs, will price the night before and celebrate the listing with its staff, a person close to the company told Barron’s.

Is China’s Economic Predicament as Bad as Japan’s? It Could Be Worse

HONG KONG-Starting in the 1990s Japan became synonymous with economic stagnation, as a boom gave way to lethargic growth, declining population and deflation.

Many economists say China today looks similar. The reality: In many ways its problems are more intractable than Japan’s. China’s public debt levels are higher by some measures than Japan’s were and its demographics are worse. The geopolitical tensions that China is dealing with go beyond the trade frictions Japan once faced with the U.S.

New York Regulator to Require Higher Standards for Coin Listings and Delistings

New York’s financial regulator wants cryptocurrency companies regulated in the state to be more transparent about how they list and delist crypto coins.

The New York State Department of Financial Services, in proposed guidance to be published Monday, spells out its expectations for how crypto firms evaluate a coin offering before adoption, based on a prior version of the framework. The regulator also describes its expectations of the steps and criteria a crypto firm must consider before delisting a coin.

Ukraine Hunts for Cash as Fighting Drains Coffers

War in Ukraine is cruel, but also expensive.

The counteroffensive aimed at driving Russian occupiers from its southern region has bogged down. Faced with another year of fighting-and a more than $40 billion budget deficit in 2024-finance officials in Kyiv are grasping for cash to keep the wartime economy running.

Ukraine’s Hunger for Howitzers Transforms an Arms Industry

CHANGWON, South Korea-On a recent afternoon in a South Korean factory, robots assembled bulletproof plates and workers drilled steel parts onto dozens of 47-ton howitzers destined for Poland. Outside the factory in the southern coastal city of Changwon, howitzers destined for Estonia rumbled through a testing area.

The 155mm K9 self-propelled howitzer is at the center of South Korea’s unlikely rise as a weapons exporter. Manufactured by Hanwha Aerospace, it is the country’s bestselling weapon. Demand for howitzers and other weapons made in South Korea has been turbocharged as Russia’s invasion of Ukraine has turned into a grinding land war.

Source: Dow Jones Newswires