MARKET WRAPS
Stocks:
European stocks were struggling for direction on Wednesday as
traders awaited U.S. inflation data later in the week.
"European markets face another empty calendar, with just weekly
U.S. crude inventories on the calendar for the day, as the wait for
U.S. inflation tomorrow goes on," IG said.
Shares on the Move
Sainsbury's was the worst performer on the FTSE 100, with shares
down 5.1%, after it reported a mixed performance during the third
quarter and Christmas period.
Stocks to Watch
Rio Tinto is unlikely to make any changes to its 2024 guidance
alongside its 4Q FY 2023 result given it was last updated at an
investor day on Dec. 6, Morgan Stanley said.
Instead, "we will look for realized price data and will focus on
the volume ramp-up at Kennecott and Oyu Tolgoi" in the report
scheduled for release before the Australian market opens on Jan.
16, it added.
Jefferies said that the biggest risk to miners this year is a
potential U.S. recession . "We have heard arguments as to why
commodity prices might rise even if there is a recession, but we
are very skeptical about this view," it added.
U.S. Markets:
Stock futures traded mostly to the upside with Wall Street
searching for direction ahead of the inflation data and the start
of corporate earnings season later this week.
Stocks to Watch
Coinbase declined 1.6% in premarket trading and Marathon Digital
fell 3.3% as Bitcoin traded about 2% lower. The Securities and
Exchange Commission said its X account was compromised , disavowing
a post from moments earlier that said the agency had approved the
first Bitcoin exchange-traded funds to come to market.
Hewlett Packard Enterprise reached an agreement to acquire
Juniper Networks for about $14 billion. Juniper shares rose about
1% premarket.
Forex:
The euro-dollar exchange rate looks comfortable at current
levels, sticking to a narrow range around 1.0930 and showing few
signs of moving too far away from this mark so far this week, DZ
Bank Research said.
Until Thursday's U.S. inflation data, EUR/USD "should hardly be
able to be dissuaded from its sideways range" as focus centers on
the likely timing and extent of interest-rate cuts by the Federal
Reserve and the European Central, it added.
Sterling could edge higher if Bank of England's Bailey steers
clear of commenting on possible interest-rate cuts in the coming
months when he testifies to the U.K. parliament's Treasury Select
Committee at 1415 GMT, ING said.
"Any reference to the future path of monetary policy may follow
the tone of the latest BOE meeting, where Bailey focused on pouring
cold water on rate cut bets."
Commentary such as this could weigh on EUR/GBP in the near term,
especially if backed up by solid upcoming U.K. data, ING said.
Bonds:
Italy's very large, EUR15 billion dual-tranche syndicated bond
issuance Tuesday, with combined books in excess of EUR160 billion
"did not weigh on market sentiment, which was on the contrary
boosted," UniCredit Research said.
BlackRock said that fixed income markets face greater volatility
as inflation remains persistent. Investors could demand more
compensation for the risk of owning long-term bonds given rising
public debt and a more uncertain inflation outlook, it added.
Markets are currently grappling with the prospect that neutral
rates--the interest rate that neither stimulates nor restricts
economic activity--could be settling higher following the Covid-19
pandemic.
"We think neutral rates are higher in both the U.S. and Europe,
partly due to looser fiscal policy and the investment demands tied
to the low-carbon transition."
Energy:
Oil prices edged higher following reports of a
larger-than-expected crude inventories drawdown in the U.S.
"U.S. crude oil inventories fell by 5.2 million barrels, which
is larger than the market was expecting," ING said.
"However, large builds were once again seen on the products
side, with gasoline and distillate stocks increasing by 4.9 million
barrels and 6.9 million barrels, respectively."
Meanwhile, the Energy Information Administration raised its 2024
U.S. crude oil production forecast to an average of 13.2 million
barrels a day, and predicted a further increase to 13.4 million
barrels a day in 2025.
Metals:
Base metals and gold prices rose as investors await U.S.
inflation data for hints on the timing of potential interest-rate
cuts and China's trade data, which could offer more clarity on
demand prospects.
"Metals prices are likely to struggle to make up ground unless
this week's U.S. inflation data comes in significantly lower and/or
Chinese import data is much stronger than expected," Commerzbank
Research said.
Still, "the downside potential for prices is likely to be
limited by expectations of interest rate cuts, which are likely to
be reinforced by a weakening U.S. economy," it added.
EMEA HEADLINES
Persimmon Sales Rate Fell But Saw Late Year Improvement; Forward
Orders Rose
Persimmon said its 2023 sales rate fell, though demand improved
in the final quarter and its forward sales position rose.
For the year ended Dec. 31, the U.K. house builder said
Wednesday that its private average sales rate declined to 0.58 per
outlet per week, from 0.69 in 2022, though the fourth quarter sales
rate improved to 0.41 from 0.28.
Sodexo Spinoff Pluxee Sets Financial Targets Ahead of Feb. 1
Listing
Sodexo spinoff Pluxee has set short-term and midterm targets
ahead of its planned listing on Feb. 1.
The employee-benefits company, which is being carved out of the
French food-and-catering giant, said on Wednesday that it aims to
grow revenue by a percentage in the low double digits in fiscal
2024, and has the same goal for fiscal 2026.
Global Economic Growth to Slow for Third Straight Year, World
Bank Says
The World Bank expects global economic growth to decelerate for
the third year in a row to a "sorry record by the end of 2024,"
hampered by tight monetary policy, restrictive financial
conditions, and "feeble global trade and investment."
It sees the global economy expanding 2.4% in 2024, slowing from
last year's growth rate of 2.6%-and nearly three-quarters of a
percentage point lower than the average pace between 2010 and 2019,
the World Bank said in its latest Global Economic Prospects report,
released Tuesday.
GLOBAL NEWS
Importers Face Surging Shipping Costs, Delays as Red Sea
Diversions Pile Up
Western importers are reporting a steep rise in ocean-shipping
rates and weekslong delays as carriers divert ships from the Red
Sea to avoid Houthi rebel attacks.
Some companies shipping goods on the crucial trade lane are
starting to chafe at the rising prices and extra fees that ocean
carriers are imposing for the higher cost of routing containerships
on longer voyages around the Horn of Africa following drone and
missile attacks by Houthi rebels in Yemen.
Spending Bill Won't Be Done in Time, Senate Republicans Warn
WASHINGTON-Congress may need to pass another short-term bill to
avoid a partial government shutdown in less than two weeks,
potentially forcing House Speaker Mike Johnson (R., La.) to break a
vow he made to GOP colleagues swearing off such measures.
Senate Minority Leader Mitch McConnell (R., Ky.) said the
dwindling days left before the deadline meant Congress would have
to take up a stopgap bill, known as a continuing resolution or CR,
to keep the government open as work continues on full-year fiscal
2024 legislation. The current interim spending law funds some parts
of the government through Jan. 19 and the rest through Feb. 2.
Israel's Far Right Calls for Palestinians to Resettle Outside
Gaza
TEL AVIV, Israel-Far-right Israeli ministers are increasingly
calling for Palestinians to leave Gaza and for Jews to rebuild
settlements there, complicating Prime Minister Benjamin Netanyahu's
efforts to maintain diplomatic support for the war against Hamas
while also ensuring his own political survival.
Netanyahu faces one of the greatest threats to his 16-year
leadership, with dismal approval ratings after Hamas killed more
than 1,200 people, mostly civilians, and took more than 200 people
hostage on Oct. 7. Careful not to alienate key members of his
cabinet and risk the collapse of his government, he has been quiet
on the remarks despite pressure to disavow them from the U.S.,
Israel's most important ally.
Write to ina.kreutz@wsj.com
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(END) Dow Jones Newswires
January 10, 2024 05:36 ET (10:36 GMT)
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