MARKET WRAPS
Watch For:
S&P manufacturing PMI; Construction Spending for
December
Today's Top Headlines/Must Reads:
- New Disruptions, Geopolitics Hang Over 2024 Supply Chains
- Optimism Abounds on Wall Street This New Year
- Investors' Hope for 2024: A Return to Long-Lost Normalcy
Opening Call:
Stock futures struggled for traction on Tuesday after some soft
data from China raised concerns about the health of the global
economy.
Hong Kong's Hang Seng shed 1.5% and the Shanghai Composite
dipped 0.4% after an official report over the weekend showed
China's factory activity in December eased to its slowest pace in
six months .
"The PMI figures indicate a slowdown in China's economic
recovery in the last months of the year," SPI Asset management
said.
"This development is expected to pressure fiscal and monetary
policymakers to take urgent action, especially after leaders
committed to maintaining a pro-growth stance in 2024," it
added.
Adding to investor caution was heightened geopolitical angst as
Iran said it would send a warship to the Red Sea after the U.S.
navy sank some boats of the Tehran-backed Houthi militia.
Oil prices rose in response , and the move raised concerns that
higher energy costs may again build inflationary pressures.
This may have contributed to a 6.4 basis point move higher in
10-year Treasury yields to 3.994% on Tuesday.
Interactive Investor said "the stage is set for further gains,
certainly in terms of historical trends which suggest that the
momentum could spill over into January." But it added that "the
initial tests of investors' mettle will come thick and fast during
the month."
These potential market catalysts include the nonfarm payrolls
report for December, due this coming Friday, and the fourth quarter
corporate earnings season, which starts in a couple of weeks
time.
Premarket Movers
ASML fell 1.1% after the Dutch government blocked the company
from exporting to China certain lithography systems , which are
essential to making advanced microprocessors. WSJ reported the rule
came after officials from the Netherlands, Japan, and the U.S.
reached an agreement to start restricting such exports.
Coinbase Global was up 6.4%, MicroStrategy rose 9.2%, and
Marathon Digital surged 14% as crypto-related stocks received a
boost from Bitcoin's move above $45,000 for the first time in more
than a year on expectations that approval of Bitcoin
exchange-traded funds couldcome as soon as this week.
Tesla is expected by analysts on Tuesday to report
fourth-quarter deliveries of between 475,000 and 480,000 units. The
stock was up 0.9% premarket.
BYD reported fourth-quarter deliveries of about 526,000
all-electric vehicles, up from about 432,000 delivered in the third
quarter of 2023. If Tesla meets expectations, BYD's numbers would
make it the largest seller of all-battery electric vehicles on the
planet.
U.S.-listed shares of fellow Chinese EV makers Li Auto, NIO, and
XPeng traded lower after issuing deliveries numbers for December.
Li Auto was down 4.1% even after reporting it delivered 50,353
vehicles in December, a jump of 137.1% from a year earlier. NIO
declined 1.4% and XPeng dipped 0.4%.
Forex:
The dollar rose against a basket of currencies as the market
awaits economic data releases this week for insight into the Fed's
next move, XS.com said.
"It seems that the main driver for [the dollar for] 2024 is
whether the markets will continue to price in Federal [Reserve]
interest rate cuts or if the Fed has lost control and made a policy
mistake."
Entering 2024, the dollar's weakness reflects mixed sentiments
in the markets, balancing between expected shifts in Fed policy and
global economic developments, XS.com added.
The inversion of the Treasury yield curve and the weakness of
the dollar have likely gone too far in the near term, although this
week's data releases are unlikely to prompt a reversal of this
trend yet, Danske Bank Research said.
For now, the market will probably look for confirmation of the
disinflationary trend to justify an inverted money-market curve and
the weaker dollar, it said.
Treasury bill supply hitting the market from the end of January
could prove the trigger for a reversal in front-end rates and
EUR/USD.
Energy:
Oil prices moved sharply higher after attacks on ships in the
Red Sea by rebel Houthi forces added to worries that the war in
Gaza could spread further into the Middle East.
The U.S. destroyed three boats carrying militants supported by
Iran on Sunday after a Maersk-owned container ship came under
attack from Houthi forces late Saturday.
Maersk is still planning to ship via the Red Sea and Suez Canal
in the near term, according to a company schedule released
Monday.
Metals:
Base metals and gold prices rose, with a weaker dollar
supporting commodities.
The dollar fell 2.1% last month, helping to lift commodity
prices, according to Peak Trading Research. This trend is likely to
continue depending on how the dollar moves, Peak said.
Markets will be looking to U.S. jobs data, with a series of
releases lined up this week, it added.
"Bond markets are pricing a very dovish Fed this year, with the
first interest-rate cut projected by March, and six more cuts
penciled in by the end of 2024."
TODAY'S TOP HEADLINES
Americans Are Canceling More of Their Streaming Services
It's getting a lot harder for streaming services to hold on to
their customers.
Crystal Revis, a mother of six in Lynn Haven, Fla., recently
canceled her subscriptions to Disney+ and Paramount+, among others,
because of their swelling price tags and the rising cost of living.
She is also considering canceling Netflix, home to shows such as
"The Crown" and films including "Leave the World Behind."
Wealthy Investors Rescued Juul From Bankruptcy. Others Are
Crying Foul.
Two of Juul Labs' longtime directors-a Hyatt Hotels heir and a
venture capitalist-helped bail out the e-cigarette maker when it
was on the brink of insolvency.
It was a deal that preserved the equity investments of Nick
Pritzker and Riaz Valani, cemented their influence over the company
and secured them releases from liability in thousands of lawsuits
against Juul. Now Juul is fighting a lawsuit from a group of
investors alleging that those two directors were looking out for
their own interests, not the company's.
Big Tech Braces for Wave of Antitrust Rulings in 2024
U.S. antitrust cases against tech giants Google and Meta
Platforms are expected to come to a head in 2024, likely producing
long-awaited rulings that could shape the legacies of top Biden
administration regulators.
Silicon Valley and its critics have seen their patience tested
on some of these cases. A U.S. antitrust case brought against
Alphabet's Google unit in 2020 went to trial in 2023 and now heads
to closing arguments in May.
Outlook for Chinese Equities May Remain Challenging in 2024
China's equity markets were the worst performers in the
Asia-Pacific region for 2023, and the new year is likely to bring
more of the same, as recovery for the economy and corporate
earnings remains challenging due to the lingering property downturn
and local government debt risks.
Investors are struggling to find conviction that the worst is
over for China's economy amid the country's on-and-off recovery
momentum following the pandemic.
Shale Is Keeping the World Awash With Oil as Conflicts
Abound
A surprise surge in American oil and gas production and exports
is helping to keep the world stocked, blunting the impact of
widening conflict in the Middle East that has crimped key shipping
lanes.
When Iranian-backed Houthi militants began launching missiles
and drones at ships crossing the Red Sea near Yemen in October,
many feared disruption to the vital shipping lane would drive up
energy prices. But oil and gas prices this past month have sunk
about 5% and 23%, respectively.
Republicans' Narrow Control of House Sets Up Barnburner in
2024
WASHINGTON-Both Republicans and Democrats see realistic paths on
the November election map to win control of the House of
Representatives next term, setting the stage for an intense
campaign season in which a handful of close races are likely to tip
the balance in the 435-seat chamber.
Republicans, who currently have a thin 220-213 majority, say
that their tougher stance on crime and border security will steer
voters toward conservative candidates in the House. Democrats are
focused on winning seats they narrowly lost during the 2022 midterm
election, when the party ceded its own small majority but gave up
less ground than expected. Softening inflation and continued voter
concern over abortion access could boost their prospects.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing scheduled
Economic Calendar (ET):
0930 Dec Canada Manufacturing PMI
N/A Day after New Year provincial holiday in Quebec
Stocks to Watch:
Aimia: Settlement Agreement Entered With Milkwood Capital
---
Crown Capital Partners Announces Amendment to Credit Facility;
Names Charles Frischer to Board; Announces Closing of Private
Placement Offering of Units
Expected Major Events for Tuesday
00:01/UK: Dec Shop Price Index
08:45/ITA: Dec Italy Manufacturing PMI
08:50/FRA: Dec France Manufacturing PMI
08:55/GER: Dec Germany Manufacturing PMI
09:30/UK: Dec S&P Global UK Manufacturing PMI
14:30/CAN: Dec Canada Manufacturing PMI
14:45/US: Dec US Manufacturing PMI
15:00/US: Nov Construction Spending - Construction Put in
Place
16:00/US: Dec Global Manufacturing PMI
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Anixa Biosciences Inc (ANIX) is expected to report for 4Q.
Cohbar Inc (CWBR) is expected to report for 3Q.
Kaspien Holdings Inc (KSPN) is expected to report for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Cytosorbents Cut to Neutral From Buy by HC Wainwright &
Co.
Lyft Cut to Reduce From Neutral by Nomura
Uber Technologies Cut to Neutral From Buy by Nomura
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 02, 2024 06:12 ET (11:12 GMT)
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