MARKET WRAPS
Watch For:
Housing Starts for December; Weekly Jobless Claims; Philadelphia
Fed Business Outlook Survey for January; EIA Weekly Petroleum
Status Report
Today's Top Headlines/Must Reads:
- The $8.8 Trillion Cash Pile That Has Stock-Market Bulls
Salivating
- Oil-Demand Growth Slowdown Marks Return to Prepandemic Trends,
IEA Says
- Biden Accedes to Tougher Immigration Policy to Deflect
Criticism, Secure Ukraine Aid
Opening Call:
Stock futures inched higher on Thursday, as Treasury yields
dipped and stress eased in Asian markets.
"The recent very strong correlation between bonds and equities
that started bearishly for both in August around the QRA [quarterly
refunding announcement] and flipped bullish in October around the
QRA, has flipped bearish again in 2024," Deutsche Bank said.
"History tells us the tight correlation won't last forever, and
one will break out from the other, but for now the relationship is
lockstep[...], " Deutsche added.
Traders were pricing the chances of at least a 25 basis point
rate cut by the Federal Reserve at its March meeting at 63%, down
from 73.3% a week ago.
"The recent divergence between market expectations for rate cuts
and the recent Fed rhetoric is gradually tilting toward the Fed's
stance," SPI Asset Management said.
Premarket Movers
Alcoa reported a narrower-than-expected adjusted loss in the
fourth quarter and a revenue decline of 2.5% to $2.6 billion, which
just edged estimates. The company said it expects lower production
in 2024. The stock was down 0.4%.
Apple again has been banned from selling current versions of the
Apple Watch with blood oxygen sensors in the U.S. in connection
with a patent-infringement case filed against it by Masimo. Apple
shares slipped in premarket trading. Masimo was up 0.4%.
Boeing rose 1.6%. India's Akasa Air has ordered 150 Boeing 737
MAX planes. The order doesn't include the 737 MAX 9, which has been
grounded by the FAA.
Sheryl Sandberg said she plans to leave the board at Meta
Platforms. Shares of Meta were up 0.3%.
Plug Power fell 14% after disclosing in a filing that it will be
selling up to $1 billion of shares. The company said it entered
into an at-the-market issuance sales agreement with B. Riley
Securities that would allow it to sell up to $1 billion in common
stock.
Taiwan Semiconductor Manufacturing reported fourth-quarter
profit that fell 19% from a year earlier but still topped analysts'
expectations. Revenue in U.S. dollars fell 1.5% in the quarter to
$19.62 billion but rose but 13.6% from the third quarter.
U.S.-listed shares were up 4%.
Wednesday's Post-Close Movers
Discover Financial Services reported fourth-quarter earnings of
$1.54 a share, down from a year ago and below the $2.50 a share
that analysts surveyed by FactSet expected. The company's
charge-off rate jumped to 4.11%, up from 2.13% a year ago. Shares
fell 10%.
LiveRamp said it expects to report revenue of $174 million for
its fiscal third quarter, up 10% from the same period a year
earlier and above the company's guidance of $165 million. The
company also struck a deal to buy data clean room software provider
Habu in a cash-and-stock deal that the companies valued at $200
million. Shares rose 9%.
R1 RCM completed its $675 million deal to buy Acclara from
Providence. R1 said it expects the Acclara deal and the new
partnership to generate more than $625 million in revenue by year
five of the partnership. Shares rose more than 3%.
Forex:
The dollar edged slightly lower after strong gains on Wednesday
but continued to trade on a strong footing due to rising yields
spurring general risk-off sentiment in markets, Danske Bank
Research said.
"The general risk-off sentiment in markets alongside rising
yields is adding support to the dollar for the time being."
However, since the euro is also performing "decently," keeping
EUR/USD only just below 1.09, Danske said.
EUR/USD is expected to trade in a tight 1.0880-1.0950 range on
Thursday, although ING still expects it to fall to 1.08 by the end
of the first quarter.
Sterling continued to edge higher after Wednesday's inflation
data caused investors to scale back expectations for interest-rate
cuts, and it could be on course to perform better than many
analysts had expected.
ING said it will probably soon have to cut its current forecasts
for EUR/GBP to rise to 0.88 later this quarter and 0.90 later this
year, which now look too aggressive.
The inflation data resulted in a reduction of 20 basis points in
2024 U.K. rate-cut expectations, supporting sterling across the
board, ING added.
Bonds:
The 10-year Treasury yield has scope to rise above the 55-day
exponential moving average, which is currently at 4.163%, UOB
Global Economics & Markets Research said.
Price movements and technical signals suggest the yield could
rise further, but upward momentum appears somewhat tentative, so it
remains to be seen whether there's sufficient momentum for the
yield to clearly breach mid-December high of 4.295%, it said.
On the downside, support is at 3.900% ahead of late-December low
of 3.783%, UOB added.
Energy:
Oil prices inched higher following OPEC's growth expectations
for demand, and as Middle East tensions and a cold blast in the
U.S. raised concerns over supply disruptions.
"For now, the flat price remains firmly below $80/bbl and with
the balance expected to be fairly comfortable over 1H24,
significant upside is probably limited," ING said.
Metals:
Base metals and gold rose slightly on a softer dollar, but
weakening expectations of early interest-rate cuts this year
continued to weigh on sentiment.
"Concerns about resurging inflationary pressures due to
geopolitical uncertainty in the Middle East, combined with a robust
economy, suggest that the Fed may not need to rush into
implementing monetary policy easing," Sucden Financial said.
ANZ said that going forward, gold "is set to benefit from easing
monetary policy, elevated geopolitical risks and strong central
bank buying."
Copper
Copper prices have already likely bottomed, Macquarie said,
which had previously seen them cratering deep into 2024.
It now expects a more balanced copper market this year, with
prices averaging US$8,125/ton, up some 3.8% on its prior
forecast.
TODAY'S TOP HEADLINES
Hyundai and Kia Emerge as Tesla's Biggest U.S. Rivals
As the electric-vehicle race heats up, a pair of Korean
automakers are pulling ahead of larger rivals in the U.S. to emerge
as Tesla's biggest competition.
Hyundai Motor and affiliate Kia jointly captured the No. 2 slot
last year in U.S. electric-vehicle sales, trailing only Tesla,
which still holds a commanding lead. Analysts say the allied
carmakers, both a part of South Korea's Hyundai Motor Group
conglomerate, are poised to cement or advance their lead over
non-Tesla rivals this year with fresh EV models and aggressive
pricing.
Chip Giant TSMC Foresees Delay at Second Arizona Plant
Taiwanese chip maker TSMC said it expected to delay production
at the second of two semiconductor plants it is building in
Arizona, and cast uncertainty on an earlier statement that the
plant would produce an advanced type of chip.
The statement by TSMC Chairman Mark Liu at a news conference
Thursday offered further evidence that the $40 billion Arizona
project is running into challenges in meeting aggressive timeline
targets.
China Goes All In on Green Industry to Jolt Ailing Economy
China is doubling down on manufacturing to reboot its economy
after a turbulent year, a strategy that risks igniting new tensions
over trade as countries step up support for prized industries and
global growth teeters.
The push for new growth drivers comes as figures showed the
world's second-largest economy expanded in 2023 at its weakest rate
in decades, aside from the three years when China was closed to the
outside world during the Covid-19 pandemic. A drawn-out property
crunch means Beijing can no longer rely on debt-fueled real-estate
investment to power the economy, and officials have shown little
appetite to shift activity decisively toward consumer spending.
The U.S. Plan for a Postwar Middle East Isn't Gaining Much
Traction
WASHINGTON-Biden administration officials say the path toward a
more stable Middle East goes through the ruins of Gaza. But that
goal keeps running into the harsh realities of a region plunged
into conflict.
The latest blows to the White House plans are the persistent
attacks by Houthi forces in Yemen against international shipping in
the Red Sea-a show of Arab support for Palestinian militants in
Gaza against Israel that has prompted the U.S. and its allies to
hit dozens of areas controlled by the Iran-backed Houthis with air
and missile strikes. The exchanges are pulling the U.S. into a
wider conflict and threaten to worsen regional tensions.
White House Meeting Revives Hopes for Ukraine, Border Deal
WASHINGTON-Congressional leaders struck a cautiously optimistic
tone Wednesday on reaching a deal combining tighter border security
with aid for Ukraine, as they emerged from meeting with President
Biden at the White House.
House Speaker Mike Johnson (R., La.) said the hour-and-20-minute
sit down was "productive" while reiterating Republicans' demand
that changing border law was a condition for further funding Kyiv,
which is one piece of a stalled $110.5 billion foreign-aid package
championed by Biden.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Blackline Safety 4Q
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Simply Solventless Acquires Recreational Cannabis Brand
Lamplighter
Expected Major Events for Thursday
00:01/UK: Dec RICS Residential Market Survey
04:30/JPN: Nov Revised Industrial Production
09:00/FRA: Jan IEA Oil Market Report
09:30/UK: 4Q Bank of England Credit Conditions Survey
09:30/UK: 4Q Bank of England's Bank Liabilities Survey
10:00/ITA: Nov Balance of Payments
11:00/FRA: Nov OECD Harmonised Unemployment Rates
11:00/FRA: 3Q OECD Quarterly Labour Market Situation
13:00/RUS: Weekly International Reserves
13:30/US: Dec New Residential Construction - Housing Starts and
Building Permits
13:30/US: Jan Philadelphia Fed Business Outlook Survey
13:30/US: 01/13 Unemployment Insurance Weekly Claims Report -
Initial Claims
15:30/US: 01/12 EIA Weekly Natural Gas Storage Report
16:00/US: 01/12 EIA Weekly Petroleum Status Report
21:30/US: Federal Discount Window Borrowings
21:30/US: Foreign Central Bank Holdings
23:30/JPN: Dec CPI (Nation), CPI ex-food (Nation)
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Thursday
1st Source Corp (SRCE) is expected to report $1.15 for 4Q.
American National Bankshares Inc (AMNB) is expected to report
$0.69 for 4Q.
Ames National Corp (ATLO) is expected to report for 4Q.
Bank OZK (OZK) is expected to report $1.46 for 4Q.
Banner Corp (BANR) is expected to report $1.30 for 4Q.
Capstar Financial Holdings (CSTR) is expected to report $0.26
for 4Q.
Chino Commercial Bancorp (CCBC) is expected to report for
4Q.
Commerce Bancshares Inc (CBSH) is expected to report $0.82 for
4Q.
Concentrix Corp (CNXC) is expected to report for 4Q.
EBET Inc (EBET) is expected to report for 4Q.
FNB Corp (FNB) is expected to report $0.32 for 4Q.
Fastenal Co (FAST) is expected to report $0.45 for 4Q.
Fastenal Co (FAST) is expected to report.
First Horizon Corp (FHN) is expected to report $0.27 for 4Q.
Five Point Holdings LLC (FPH) is expected to report for 4Q.
Greene County Bancorp (GCBC) is expected to report for 2Q.
Home BancShares Inc (HOMB) is expected to report $0.44 for
4Q.
Independent Bank Corp (INDB) is expected to report $1.24 for
4Q.
Insteel Industries (IIIN) is expected to report $0.05 for
1Q.
J.B. Hunt Transport Services Inc (JBHT) is expected to report
$1.77 for 4Q.
KeyCorp (KEY) is expected to report $0.04 for 4Q.
M&T Bank Corp (MTB) is expected to report $3.10 for 4Q.
Metropolitan Bank Holding Corp (MCB) is expected to report $1.48
for 4Q.
Northern Trust Corp (NTRS) is expected to report $0.85 for
4Q.
Oak Valley Bancorp (OVLY) is expected to report for 4Q.
OceanFirst Financial Corp (OCFC) is expected to report $0.42 for
4Q.
OrganiGram Holdings Inc (OGI,OGI.T) is expected to report for
1Q.
PPG Industries Inc (PPG) is expected to report $1.48 for 4Q.
Platinum Group Metals Ltd (PLG,PTM.T) is expected to report for
1Q.
Quantum Corp (QMCO) is expected to report $-0.09 for 2Q.
RF Industries (RFIL) is expected to report $-0.10 for 4Q.
RVL Pharmaceuticals PLC (RVLPQ) is expected to report for
3Q.
Richelieu Hardware (RCH.T) is expected to report $0.52 for
4Q.
Technical Communications Corp (TCCO) is expected to report for
4Q.
Texas Capital Bancshares Inc (TCBI) is expected to report $0.57
for 4Q.
Truist Financial Corp (TFC) is expected to report for 4Q.
WNS (Holdings) Ltd - ADR (WNS) is expected to report $0.72 for
3Q.
Westamerica Bancorp (WABC) is expected to report $1.46 for
4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Allakos Cut to Hold From Buy by Jefferies
American Axle Cut to Sell From Neutral by UBS
Ansys Cut to Neutral From Buy by Rosenblatt
Ansys Cut to Peer Perform From Outperform by Wolfe Research
Automatic Data Raised to Neutral From Underperform by B of A
Securities
Axonics Cut to Hold From Buy by Needham
Bally's Cut to Neutral From Outperform by Macquarie
Burlington Stores Raised to Overweight From Neutral by Piper
Sandler
Carrols Restaurant Cut to Hold From Buy by Craig-Hallum
Century Casinos Cut to Neutral From Outperform by Macquarie
CrowdStrike Holdings Cut to Hold From Buy by WestPark
Capital
Definitive Healthcare Cut to Hold From Buy by Needham
DXC Technology Cut to Sell From Neutral by Citigroup
ExlService Raised to Buy From Neutral by Citigroup
FB Financial Cut to Market Perform From Outperform by Hovde
Group
Fisker Cut to Market Perform From Outperform by TD Cowen
Ford Motor Cut to Neutral From Buy by UBS
Fortinet Cut to Equal-Weight From Overweight by Capital One
Full House Resorts Cut to Neutral From Outperform by
Macquarie
Hertz Global Raised to Overweight From Equal-Weight by Morgan
Stanley
Inspired Entertainment Cut to Neutral From Outperform by
Macquarie
Luminar Technologies Cut to Hold From Buy by Deutsche Bank
Maplebear Raised to Outperform From Peer Perform by Wolfe
Research
Marathon Digital Raised to Buy From Neutral by BTIG
Mattel Cut to Equal-Weight From Overweight by Morgan Stanley
Morgan Stanley Cut to Market Perform From Outperform by Keefe,
Bruyette & Woods
Morgan Stanley Cut to Neutral From Overweight by JP Morgan
Nutanix Raised to Outperform From Market Perform by William
Blair
OneMain Holdings Cut to Market Perform From Outperform by
Northland Capital Markets
Polaris Raised to Overweight From Equal-Weight by Morgan
Stanley
Red Rock Resorts Raised to Outperform From Neutral by
Macquarie
Rent the Runway Cut to Neutral From Overweight by Piper
Sandler
Revolve Group Raised to Overweight From Neutral by Piper
Sandler
Rivian Automotive Cut to Hold From Buy by Deutsche Bank
Spirit Airlines Cut to Negative From Neutral by Susquehanna
Spirit Airlines Cut to Neutral From Buy by Seaport Global
Twist Bioscience Raised to Buy From Neutral by Goldman Sachs
Visteon Raised to Buy From Neutral by UBS
Wynn Resorts Raised to Outperform From Neutral by Macquarie
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 18, 2024 06:16 ET (11:16 GMT)
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