MARKET WRAPS
Watch For:
EU retail trade, business & consumer surveys; Germany
foreign trade, manufacturing orders; trading update from SAS
Opening Call:
European stock futures declined slightly at the start of the
week. Asian stock benchmarks fell; the dollar was steady; while oil
and gold futures slipped.
Equities:
Stock futures fell early Monday ahead of inflation data from a
number of major economies this week, including the U.S. and
China.
On Friday, data showed the U.S. economy added more jobs in
December than economists had forecast. Meanwhile, revisions showed
that employers added fewer jobs in October and November than
previously estimated.
All told, the report did little to clarify when the Federal
Reserve is likely to begin cutting interest rates. Central bank
officials have signaled that they anticipate lowering rates this
year, but with fewer cuts than many investors expect.
The Fed needs to keep interest rates higher because of all the
uncertainty around inflation's most likely path forward, and the
U.S. labor market "won't degrade fast enough in the first quarter
to justify a first rate cut in March," said Mike Sanders, head of
fixed income at Wisconsin-based Madison Investments.
Rate-cut expectations are "going to be the issue for 2024, and a
lot of it is going to be revolving around inflation getting back to
that 2% target," Sanders said.
Forex:
The dollar was steady in Asia. Few hints are expected this week
in terms of altering traders' views on the Fed's rate trajectory,
said Jeff Ng, SMBC's head of Asia macro strategy, and Ryota Abe, an
SMBC economist.
This week's focus is likely to be on the U.S. December CPI, for
which easing inflationary pressures could encourage the Fed to
shift its stance on rate cuts gradually, they add.
Bonds:
Treasurys didn't trade in Asia due to a market holiday in
Japan.
Treasury yields finished mostly higher Friday, leaving long-term
rates with their biggest weekly rise since October, after robust
jobs data outweighed a weaker-than-expected ISM survey of business
conditions.
Friday's jobs data supports the notion of the Fed "pivoting to
rate cuts on a slower timeline relative to market expectations,"
said BNP Paribas.
"A labor stall (not our baseline) could yet pull cuts forward
into March, but notably there will not be another jobs report ahead
of the Jan. 31 rate decision. We continue to see the first rate cut
in May," BNP Paribas said.
Energy:
Oil futures fell early Monday after Saudi Arabia slashed prices
of its Asian crude exports amid weak demand.
However, geopolitical risks still post an upward risk to oil
prices, Saxo Markets said. U.S. Secretary of State Antony Blinken
warned that the Israel-Hamas war could easily spill over into a
full-blown regional conflict.
Meanwhile, oil supply risk in the region has been highlighted by
Maersk's announcement that it will divert all vessels away from the
Red Sea for the foreseeable future, warning customers to prepare
for significant disruption, Saxo added.
Metals:
Gold prices edged lower in Asia after higher-than-expected U.S.
December nonfarm payroll data. The jobs report released last Friday
showed the resiliency of the U.S. economy and once again lifted
Treasury yields, Nanhua Futures said. Gold tends to move inversely
to Treasury yields, as higher yields undermine the appeal of the
non-interest-bearing precious metal.
The data also casts some doubt on market expectations of the Fed
cutting interest rates soon, Nanhua said. Markets are focusing on
U.S. CPI data this week to further gauge the precious metal's price
movements.
-
Greater-than-expected industrial metals supply growth continues
to push up stockpiles, especially for aluminum, said Ruben Gargallo
Abargues, assistant economist at Capital Economics.
Still, Abargues reckons metals supply growth will be more modest
this year, while growth in demand will rebound as the energy
transition gathers pace. "Accordingly, we expect base metals prices
to fare better this year," with copper prices likely to rise the
most, Abargues said.
-
Most iron-ore futures dropped, weighed by signs of weak seasonal
demand for the underlying metal. A seasonal lull in demand has
lifted iron-ore port inventories in China to the highest level
since the week ended Sept. 1, 2023, ING said.
Iron-ore port inventories in China have been on seven straight
weeks of increases, rising by 1.5 million tons over the last week
to 116 million tons.
TODAY'S TOP HEADLINES
Saudis cut crude prices to all regions amid oil-price
weakness
Saudi Aramco on Sunday said it would cut crude prices to all
regions, including its largest market in Asia - a move that comes
amid weaker global oil prices and increased production by producers
outside the Organization of the Petroleum Exporting Countries.
In a notice, state producer Aramco SA:2222 said February prices
for various grades of Saudi crude, including its flagship Arab
light, in Asia would fall $2 a barrel versus the Oman/Dubai
regional benchmark from their January levels.
Congressional Negotiators Reach Agreement on $1.6 Trillion
Government Spending Level for 2024
WASHINGTON-Congressional leaders reached a bipartisan deal on
Sunday setting a roughly $1.6 trillion federal spending level for
the year, but the pact drew quick criticism from some conservatives
and it remained unclear whether lawmakers would be able to quickly
pass legislation averting a government shutdown.
The House and Senate now have less than two weeks to craft
underlying bills funding the government, with several federal
agencies set to run out of money later this month and the rest to
follow in February, a tall order in a Congress that has struggled
to pass major legislation on time.
The Stock Rally Has Stalled. Now Comes Earnings Season
After a recent pullback in stocks, investors are looking to the
coming earnings season for clarity on companies' growth
prospects.
U.S. stocks defied expectations to rally in 2023 but have
struggled to extend gains into the new year. The S&P 500 shed
1.5% in the first week of January. Tech stocks, which led the
market last year, have stumbled, with Apple and Microsoft falling
5.9% and 2.2%, respectively, in the past week.
The Crypto Industry Holds Its Breath in Anticipation of the
First Spot Bitcoin ETFs
Bitcoin has rallied for months ahead of the expected launch of
the first U.S. exchange-traded funds to hold the cryptocurrency.
Skeptics say it is nearly out of room to run.
The Securities and Exchange Commission could approve the funds,
known as spot bitcoin ETFs, as soon as next week. Approval would
mark a watershed moment for the industry, allowing investors to
purchase bitcoin in their brokerage accounts as easily as stocks.
(Funds that track bitcoin futures are already on the market.)
Israel's Yoav Gallant: 'We Are Fighting an Axis, Not a Single
Enemy'
TEL AVIV-Israel's defense minister, Yoav Gallant, says the scale
and severity of the Oct. 7 assault on Israel by Palestinian
Islamist militant group Hamas deeply shook Israelis' sense of
security and profoundly altered the way they view the world around
them.
"October 7 was the bloodiest day for Jewish people since 1945,"
Gallant, a general-turned-politician, told The Wall Street Journal.
"The world needs to understand. This is different."
Europe's Decision to Ground Boeing 737 MAX 9 Jets Tells
Investors Something
The European aviation regulators have followed orders by the
Federal Aviation Administration for the temporary grounding of many
Boeing 737 MAX 9 aircraft, after a MAX 9 operated by Alaska Air
lost a section of its fuselage in midair on Friday.
The damaged plane was able to return to the Portland, Ore.,
airport, where the flight originated, and no one onboard was
injured.
Israel Presses Egypt to Better Secure Borderland Against Hamas
Smugglers
Israel and Egypt are negotiating the future of a corridor
between Egypt and Gaza that Israel says has been used by Hamas to
smuggle weapons and people through underground tunnels and is key
to destroying the militant group.
Israel has requested that sensors be installed along the
Philadelphi Corridor-the sliver of land controlled by Egypt that
borders Gaza-according to senior Egyptian officials, to alert
Israel in case Hamas attempts to rebuild a tunnel and smuggling
network after the war. Israel, which used to control the corridor,
also requested direct notifications if the sensors are triggered
and the right to send surveillance drones into the area in case of
such a trigger, the officials said.
Nvidia's New China Pickle: Customers Don't Want Its Downgraded
Chips
SINGAPORE-After U.S. regulations barred Nvidia from selling its
high-performance artificial-intelligence chips to China in October,
the company's engineers quickly designed a new lineup to comply
with the tightened rules.
The U.S. tech company may have found some wiggle room, but it
faces a bigger problem: Chinese cloud companies-some of Nvidia's
biggest customers globally-aren't so keen on buying its
lower-powered AI chips.
Boeing Is Back in the Spotlight-This Time Over a MAX 9
The last thing Boeing needed was more trouble with its 737 MAX
jet. That is exactly what it got to start the new year.
The company had just started to regain its footing after years
of tumult around the popular but troubled line of narrow-body jets
when a MAX 9 operated by Alaska Airlines had a structural failure
Friday night.
Write to singaporeeditors@dowjones.com
Expected Major Events for Monday
00:01/UK: Dec KPMG and REC UK Report on Jobs
07:00/FIN: Nov Foreign trade
07:00/GER: Nov Foreign Trade
07:00/GER: Nov Manufacturing orders
07:00/GER: Nov Manufacturing turnover
07:00/ROM: Nov Retail trade
07:00/NOR: Nov Industrial Production Index
07:30/SWI: Dec CPI
07:30/HUN: Nov Retail Sales
07:30/SWI: Nov Retail Sales
08:00/SVK: Nov Internal trade, including Wholesale &
Retail
08:00/CZE: Nov External trade
08:00/CZE: Nov Industry, Construction
10:00/EU: Nov Retail trade
10:00/EU: Dec Business & Consumer Surveys - Business Climate
Indicator & Economic Sentiment Indicator
10:00/LUX: Dec CPI
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized
for viewing on mobile devices and sent directly to your email
inbox. If you would like to sign up, please go to
https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 08, 2024 00:17 ET (05:17 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Jun 2024 to Jul 2024
FTSE 100
Index Chart
From Jul 2023 to Jul 2024