MARKET WRAPS
Watch For:
Producer Price Index for December; Earnings from Bank of
America, BlackRock, Citigroup, JPMorgan, UnitedHealth, Wells
Fargo
Today's Top Headlines/Must Reads:
- Bitcoin ETFs Are Live. Cue the Fee War.
- America's Gas Bonanza Brings Biden New Political Dilemmas
- U.S.-Led Yemen Strikes Heighten Risk of Broader Middle East
Conflict
Opening Call:
Stock futures fluctuated on Friday as traders awaited quarterly
earnings reports from some of the biggest banks.
Oil prices jumped after a U.S.-led coalition launched more than
a dozen strikes on Houthi rebel targets in Yemen following their
attacks on ships in the Red Sea.
MUFG said that prospects of escalating Middle East tensions
after the airstrikes risk stoking inflation and will dim prospects
of interest-rate cuts.
A rate cut in March looks increasingly unlikely, it said. "It
seems a difficult backdrop for the [Federal Reserve] to shift its
rhetoric in order to provide guidance on a possible rate cut in
March."
Further escalation would extend the time that ships are having
to avoid the Red Sea, raising concerns over supply disruption and
higher energy prices feeding through into inflation, MUFG
added.
Overseas Markets
Europe's Stoxx 600 climbed, while in Asia, the Nikkei 225 was
the only gainer, rising 1.5%.
Premarket Movers
Cytokinetics fell 16% on Thursday after WSJ reported that
Novartis was backing away from its pursuit of the company .
Cytokinetics was up 0.7% in premarket trading.
DocuSign rose 9% on Thursday following a report that said
private-equity firms Bain Capital and Hellman & Friedman were
competing to acquire the provider of online-signature services. The
stock rose 1% premarket.
Exxon Mobil rose 1.2%, Chevron gained 1.2%, and U.S.-listed
shares of BP were up 1% as oil prices climbed after the strikes on
Houthi rebel targets.
International Flavors & Fragrances rose 2.3% after it named
J. Erik Fyrwald as its next CEO.
JPMorgan Chase was up 0.1%, Bank of America fell slightly, and
Citigroup declined 0.7% ahead of earnings reports from the banks in
the premarket session.
Polestar Automotive was up 2.2% after the start-up said it
delivered about 12,800 cars in the fourth quarter. Global
deliveries for the year rose 6% from a year earlier to about 54,600
cars.
Snowflake fell 1.6% after shares were cut to Equal Weight from
Overweight at Barclays and the price target was left unchanged at
$198.
Tesla declined 2.4% after it said it planned to halt production
at its Berlin factory for two weeks as the conflict in the Red Sea
continues to disrupt transport ships.
Thursday's Post-Close Movers
Flexsteel reported second-quarter results and forecast continued
sales growth in fiscal 2025. Shares rose 13%.
The SEC charged Shanchun Huang with allegedly inflating Future
FinTech's share price just before he took over as chief executive.
Shares fell 8.5%.
Sealsq disclosed the close of the second tranche of its private
placement. Shares fell 21%.
Forex:
The euro could weaken against the dollar near term as markets
trim U.S. rate-cut expectations after Thursday's inflation data,
Societe Generale Researchsaid.
U.S. money-market pricing of a March rate cut--which assigns a
68% probability--is premature, it said.
"EUR/USD has already tested 1.10 twice [this year] without
managing to break upwards," SocGen said.
"While we maintain a bullish EUR/USD forecast (towards 1.15)
this year, downside risks will likely prevail in the near
term."
Energy:
Oil prices jumped after the airstrikes against Houthi rebels in
Yemen.
The strikes heightened fears of a wider conflict in the Middle
East and came shortly after Iran seized an oil tanker off the coast
of Oman, adding to concerns over global shipping disruptions.
"The Gulf of Oman is very near the Strait of Hormuz, a critical
choke point for oil flows. [...] more significant disruptions to
oil flows in this region will be much more alarming for markets,"
ING said.
Metals:
Metal prices traded higher after CPI data showed inflation rose
more than expected, challenging market hopes for interest-rate cuts
early this year.
Meanwhile, the latest trade data from top metals buyer China
revealed exports beat expectations in December , a sign that demand
could be picking up, while imports also rose.
TODAY'S TOP HEADLINES
BlackRock to Buy Global Infrastructure Partners for $12.5
Billion
BlackRock has agreed to buy private-equity firm Global
Infrastructure Partners for roughly $12.5 billion in cash and
stock, a significant push into private-market investments for the
world's largest asset manager.
New York-based GIP owns and operates energy, transportation, and
water and waste companies, including a stake in London's Gatwick
Airport. The acquisition would be BlackRock's largest since it
bought Barclays's asset management business in 2009.
Apple Directors Al Gore, James Bell to Retire
Apple's board of directors is getting a shake up.
Longtime Apple board member Al Gore is retiring from the board,
the company announced Thursday. The former U.S. vice president had
been a board member since 2003, a witness of the company's rise and
transformation a few years after the return of co-founder Steve
Jobs as chief executive.
Carta, a Key Silicon Valley Player for Startups, Stumbles,
Prompting Customers to Consider Competitors
Customers of Carta, spurred by the shuttering of its secondary
trading division and a loss of trust in the 14-year-old company,
are reaching out to competitors about potentially switching over to
their services.
Carta, a financial-software provider for many Silicon Valley
startups, said Monday it was closing its secondary trading division
following criticism that it improperly accessed client data.
Secondary Investors Bank on Pricing Gaps Closing This Year
The market for secondhand stakes in private-equity funds saw $43
billion in transactions in the first half of 2023, a 25% decline
from $57 billion in the year-earlier period. Though the second-half
numbers have yet to come out, buyers and brokers pointed to an
uptick in activity in the second half, creating optimism heading
into this year.
Trading in secondaries provides a way for fund investors to
liquidate their private-market positions and allows managers to
recapitalize and extend their ownership of selected businesses by
bringing in new investors. Both functions rose in importance amid a
slowdown in traditional exit channels such as initial public
offerings and mergers and acquisitions after interest rates began a
sharp rise in early 2022.
Deflation Worries Deepen in China
HONG KONG-China's consumer prices fell for a third straight
month in December, underscoring the challenges Beijing faces in
reviving its economy as deflationary pressures persist.
An index of prices charged by Chinese manufacturers, meanwhile,
contracted for a 15th straight month. That is a source of growing
concern for U.S. and European officials, as some Chinese business
owners look to unload more low-cost goods on the rest of the world,
competing with Western brands.
Who Are the Houthis and Why Is the U.S. Attacking Them?
From their perch on the eastern side of the Red Sea, the
Yemen-based rebels pose what could be one of the biggest threats to
global shipping and, by extension, the world economy.
In recent weeks, the Houthis have launched over two-dozen drone
and missile attacks on commercial shipping bound for the Suez
Canal, what they say is a response to Israel's war against Hamas.
Major shippers are now diverting vessels south around the Cape of
Good Hope, adding some 40 days to voyages in what could be a far
more damaging disruption than when the Ever Given cargo carrier got
wedged in the canal in 2021.
$6 Trillion in Taxes Are at Stake in This Year's Elections
WASHINGTON-There isn't a dime's worth of a difference between
the political parties. The chasm is more like $6 trillion.
The winners of November's presidential and congressional
elections will quickly face decisions on extending tax cuts
scheduled to expire after 2025. President Biden and Republicans
support starkly different tax plans.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Corus Ent 1Q
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Aimia CEO Phil Mittleman to Step Down; Chair Tom Finke Named
Executive Chairman; Michael Lehmann, Aimia's Former President, Also
Leaves Company
---
ATCO Raises 1Q Dividend to C$0.4898 Vs. C$0.4756
---
Velan 3Q Loss/Shr 34c; 3Q Sales $80.9M
Expected Major Events for Friday
05:00/JPN: Dec Economy Watchers Survey
07:00/UK: Nov UK trade
07:00/UK: Nov Index of production
07:00/UK: Nov Index of services
07:00/UK: Nov Monthly GDP estimates
07:45/FRA: Nov Household consumption expenditure in manufactured
goods
07:45/FRA: Dec CPI
12:30/UK: Dec NIESR Monthly GDP Tracker
13:00/RUS: Weekly International Reserves
13:00/RUS: Weekly International Reserves
13:30/US: Dec PPI
17:00/US: World Agricultural Supply & Demand Estimates
(WASDE)
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
Bank of America Corp (BAC) is expected to report $0.53 for
4Q.
Bank of New York Mellon Corp (BK) is expected to report $0.85
for 4Q.
BlackRock Inc (BLK) is expected to report $8.67 for 4Q.
Citigroup Inc (C) is expected to report $0.11 for 4Q.
Clearday Inc (CLRD) is expected to report for 3Q.
Corus Entertainment Inc - Class B (CJR.B.T,CJREF) is expected to
report for 1Q.
Delta Air Lines (DAL) is expected to report $1.15 for 4Q.
Environmental Tectonics Corp (ETCC) is expected to report for
3Q.
Franklin Resources Inc (BEN) is expected to report.
Infinity Pharmaceuticals Inc (INFIQ) is expected to report $0.03
for 3Q.
JPMorgan Chase & Co (JPM) is expected to report $3.35 for
4Q.
National American University Holdings Inc (NAUH) is expected to
report for 2Q.
Pure Cycle Corp (PCYO) is expected to report for 1Q.
UnitedHealth Group Inc (UNH) is expected to report $5.66 for
4Q.
Wells Fargo (WFC) is expected to report $0.86 for 4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Aclaris Therapeutics Cut to Neutral From Buy by BTIG
Albemarle Cut to Hold From Buy by Deutsche Bank
Alliant Energy Cut to Market Perform From Outperform by BMO
Capital
American Airlines Group Raised to Buy From Hold by Jefferies
American Electric Power Cut to Neutral From Buy by Mizuho
Barnes & Noble Education Cut to Hold From Buy by
Craig-Hallum
Blackstone Cut to Perform From Outperform by Oppenheimer
Chewy Raised to Overweight From Equal-Weight by Barclays
Cognizant Tech Solutions Raised to Buy From Hold by
Jefferies
EPAM Systems Cut to Hold From Buy by Jefferies
Equifax Cut to Neutral From Buy by Redburn Atlantic
Expeditors International Cut to Underperform From Neutral by
Exane BNP Paribas
Greif Raised to Overweight From Equal-Weight by Wells Fargo
Hamilton Lane Cut to Perform From Outperform by Oppenheimer
Hayward Holdings Cut to Hold From Buy by Jefferies
Juniper Networks Cut to Hold From Buy by Jefferies
Juniper Networks Cut to Sector Weight From Overweight by
Keybanc
Juniper Networks Raised to Equal-Weight From Underweight by
Morgan Stanley
KB Home Cut to Neutral From Buy by Seaport Global
L3Harris Technologies Raised to Overweight From Neutral by JP
Morgan
Louisiana-Pacific Cut to Hold From Buy by TD Cowen
Lyft Cut to Neutral From Buy by Goldman Sachs
Mastercard Raised to Outperform From Perform by Oppenheimer
Paramount Global Cut to Sell From Neutral by Redburn
Atlantic
Plug Power Cut to Neutral From Positive by Susquehanna
Range Resources Cut to Hold From Buy by Benchmark
Salesforce Raised to Outperform From Neutral by Baird
Sealed Air Raised to Overweight From Equal-Weight by Wells
Fargo
Sempra Raised to Outperform From Market Perform by BMO
Capital
SilverBow Resources Cut to Sector Weight From Overweight by
Keybanc
Southern Co Raised to Outperform From Market Perform by BMO
Capital
SunPower Cut to Neutral From Positive by Susquehanna
Vontier Raised to Buy From Neutral by B of A Securities
Wabtec Raised to Buy From Hold by Jefferies
Warner Bros. Discovery Cut to Neutral From Buy by Redburn
Atlantic
WestRock Cut to Equal-Weight From Overweight by Wells Fargo
Williams-Sonoma Raised to Outperform From Neutral by Wedbush
Yum Brands Cut to Equal-Weight From Overweight by Wells
Fargo
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 12, 2024 06:28 ET (11:28 GMT)
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