MARKET WRAPS
Watch For:
Services PMI for eurozone, Italy, Germany, France, UK; EU PPI,
ECB consumer expectations survey results; France industrial
production index; Italy's economic outlook; UK official reserves;
OECD CPI; trading updates from Ashtead Group, Ferguson, Ryanair
Holdings, Norwegian Air Shuttle
Opening Call:
Shares are set to open mixed in Europe on Tuesday. In Asia,
stock benchmarks were mostly lower; Treasury yields were slightly
lower; the dollar consolidated; while oil was mixed and gold
gained.
Equities:
European stocks may start out on a mixed note on Tuesday as
investors take a breather ahead of the release of both U.S. and
European economic data.
Many investors see this week's monthly U.S. jobs data, due
Friday, and inflation reports next week as the next tests for the
market.
It's a busy week for economic data, but it's the U.S. jobs
report on Friday "which will likely end the week with either a bang
or a whimper as the expectations for just steady growth in the U.S.
for the month ahead seem at ends with the pricing of both bonds and
stocks," BNY Mellon said.
"Both markets can't rally together for long without something
breaking," it said.
Forex:
The dollar is little changed as traders reassess bets for the
Fed's rate cuts next year.
Market participants seem to be reconsidering whether the
aggressive Fed rate cuts priced in for 2024 could be possible, Saxo
Markets' APAC Strategy Team said.
The odds of a first-quarter rate reduction have declined to 67%
from 75% previously, the team noted.
Bonds:
Treasury yields were a bit lower, with markets betting on an end
to interest rate increases by the Fed and cuts approaching
fast.
Data due this week is expected to confirm that U.S. labor
markets are easing, ahead of next week's FOMC meeting, which is
widely expected to keep rates unchanged.
"As markets are already pricing a soft landing close to
perfection and term premia remain too low, the risk reward for
steepeners is attractive, " Deutsche Bank said.
The Fed is likely to generate recession to bring inflation down
to target, it said, and forecasts that "the market will price a
deeper rate cut cycle combined with higher term premia [which]
should result in a significant steepening of the U.S. curve."
Energy:
Oil futures were mixed after settling at the lowest levels in
more than two weeks on Monday.
Futures may be seeing some support from a media report quoting
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman that
OPEC+ oil production cuts can "absolutely " continue past the first
quarter if needed.
Saudi Arabia has reportedly ramped up its charm offensive as it
seeks to support oil prices following last week's agreement to
reduce output further, ANZ Research said.
Metals:
Gold rose on a likely technical rebound after gold futures fell
more than 2% on Monday.
Citi Research remains bullish on gold and silver by mid-2024,
expecting strong demand for both precious metals as a hedge against
downside risks in developed-market equities and property.
This view also partly reflects Citi's call for a U.S. recession
by mid-2024, it said, adding that gold should also be supported by
robust central-bank buying activity.
---
Copper prices were flat as traders weighed the prospects of
another Fed rate hike.
Prices of the metal were being weighed down amid fading hopes
about rate cuts that fueled a strong rally last week, ANZ said.
That optimism now looks overdone after Fed Chair Jerome Powell
said the central bank may raise rates again if required, it
said.
A stronger U.S. dollar could also weaken investor appetite for
riskier assets like copper, it added.
The metal typically trades inversely to the dollar as it is
denominated in USD.
---
Iron ore prices were lower amid higher inventories ahead of the
winter season when industry demand typically slows down.
Total iron-ore stockpiles across ports in China rose 2% on week
to 110.7 million tons last week, according to Steelhome data, ANZ
said.
Traders continue to eye developments in China's property sector
for guidance on steel demand, it said.
Seven Chinese banks have convened with developers to review
their funding needs as Beijing ramps up its support for social
housing, it added.
TODAY'S TOP HEADLINES
China's November Caixin Services PMI Rose to Three-Month
High
A private gauge of China's services activities rose to a
three-month high in November, contrasting with an official index
that tumbled into contraction.
The Caixin services purchasing managers index climbed to 51.5 in
November from 50.4 in October, Caixin Media Co. and S&P Global
said Tuesday. A reading above the 50 mark suggests activity
expansion, while one below that level indicates contraction.
Tight monetary policy, economic headwinds fuel negative outlook
on banks from Moody's
Moody's Investor Service on Monday issued a negative outlook for
global banks in 2024 as financial firms face tighter central bank
monetary policies, lower economic growth and greater asset
risk.
Higher cost of capital will cause profitability gains to slow
down while impacting loan growth. Banks are expected to build up
reserves to shore up their balance sheets in an economic slowdown,
Moody's said.
AT&T Drops Nokia for Ericsson in $14 Billion Deal
AT&T struck a deal with Ericsson to buy up to $14 billion of
its hardware and services after the Swedish equipment supplier
pledged to open up its software to competing systems.
The five-year agreement would move virtually all of AT&T's
new purchases of certain cell-tower equipment to Ericsson,
replacing existing machinery from Finnish rival Nokia in many
markets. The Dallas-based telecom giant said it plans to start the
swap next year and aims to have 70% of its wireless network traffic
passing through open platforms by late 2026.
Write to singaporeeditors@dowjones.com
Expected Major Events for Tuesday
00:01/UK: Nov BRC-KPMG Retail Sales Monitor
01:01/IRL: Nov Ireland Services PMI
07:00/ROM: Oct PPI
07:00/SWE: 3Q Balance of Payments
07:45/FRA: Oct Industrial production index
08:00/SVK: 3Q GDP
08:00/SPN: Oct Industrial Production
08:00/SPN: 3Q Housing Price Index
08:15/SPN: Nov Spain Services PMI
08:45/ITA: Nov Italy Services PMI
08:50/FRA: Nov France Services PMI
08:55/GER: Nov Germany Services PMI
09:00/EU: Nov Eurozone Services PMI
09:00/UK: Nov UK monthly car registrations figures
09:30/UK: Nov S&P Global / CIPS UK Services PMI
09:30/UK: Nov UK Official Reserves
10:00/EU: Oct PPI
10:00/CYP: Nov Registered Unemployed
11:00/FRA: Oct OECD CPI
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(END) Dow Jones Newswires
December 05, 2023 00:17 ET (05:17 GMT)
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