MARKET WRAPS
Stocks:
Major European indexes rose on Thursday, buoyed by the Federal Reserve's reassurance that it was still aiming to lower interest rates three times this year.
"Markets will probably breathe a sigh of relief that recent upside surprises in inflation haven't triggered a more hawkish response from the Federal Reserve," Abrdn said.
The Fed is "clearly feeling comfortable to wait and see how the inflation data evolve, especially with some tentative signs of slowing growth starting to emerge."
Abrdn said a cut in June continues to look most likely, should inflation cool a little over coming months, and Abrdn sees further indicators that activity is losing momentum against the backdrop of tight policy settings.
Earlier, the Swiss National Bank unexpectedly cut its key interest rate, becoming the first central bank from a rich, advanced economy to make such a move since inflation rates began to ease from a postpandemic surge.
And later on Thursday, the Bank of England is widely expected to keep its benchmark interest rate unchanged. After that, the question is how quickly it can start to lower interest rates.
"If the services inflation and wage growth data surprise to the downside ahead of the June meeting, then there's a chance we get a rate cut at this point," ING said.
"But more likely we think the committee will wait for a few more numbers and also a new round of forecasts, which makes August a more likely candidate for the first rate cut."
Stocks to Watch
Pernod Ricard seems to offer an attractive long-term mix despite continued challenges in some markets, Deutsche Bank said. upgrading the stock to hold from sell.
The drinks group might continue to face normalization growth trends in the U.S.--after positive trends during the pandemic--and uncertainty in China, Deutsche Bank said.
However, the company seems to offer long-term appeal, in part due to its exposure to key markets. After a period of underperformance for Pernod Ricard and most spirits companies, a less cautious and more selective approach to the industry looks fair.
Deutsche Bank also upgraded Remy Cointreau to buy from hold, saying the company looks set to see improving trends in the U.S. in the coming months.
After an acceleration in growth during the pandemic, the French distiller and other spirits companies are grappling with a more normalized growth environment that prompted an increase in inventories particularly in the U.S. The company now seems to be close to ending a period of destocking, Deutsche Bank said.
In China, Remy Cointreau's sales remain below trend, but the company could accelerate growth if the macroeconomic environment is favorable and regulatory headwinds are limited.
U.S. Markets:
Stock futures were higher, with investors still upbeat after the Fed sustained its outlook for interest-rate cuts.
Results are due from Nike, FedEx and Lululemon among others.
Economic data on the docket include the weekly initial jobless claims, the March Philadelphia Fed manufacturing survey, S&P flash manufacturing and services PMI surveys for March, the leading economic indicators for February and existing home sales for February.
Forex:
The dollar was lower after the Fed kept its forecast for three interest-rate cuts this year, and ING said a "dollar bear trend" could now gain momentum over the coming months.
ING noted that many Fed policymakers cited "seasonal problems" with January's high inflation reading and Jerome Powell said strong employment data wouldn't delay a rate cut.
"The Fed seems biased to cut rates even though the economy is doing quite well," ING said.
The Swiss franc hit a multi-month low against the euro after the Swiss National Bank lowered its policy rate by 25 basis points to 1.5%, citing falling inflation, when a majority had expected unchanged rates.
Capital Economics said the SNB could follow Thursday's cut with two more reductions in September and December.
"With the Bank sounding more dovish and inflation likely to undershoot its forecasts, we continue to expect two more rate cuts this year."
Bonds:
Eurozone government bond yields edged lower after the Fed maintained its projections for three interest-rate cuts this year but some pressure on Bunds might emerge if purchasing managers indices improve, analysts said.
. "The post [FOMC] rally in Treasurys will be put to test today, with three major central bank meetings and various macro indicators on the agenda," Commerzbank Research said. "Improving eurozone PMIs could renew the pressure on Bunds."
Energy:
Oil prices rose on signs of a tighter market and a weaker dollar after Fed officials reaffirmed they see three interest-rate cuts this year despite firmer-than-anticipated inflation.
Oil is still hovering around levels last seen in early November, propped up by concerns over supply amid Ukrainian attacks against Russia's refineries.
Metals:
Metals rose after the Fed proved more dovish than the market had expected, denting the dollar, and helping gold gain more than 2%.
Peak Trading said investors were surprised by the Fed's reaction to higher inflation metrics and strong jobs data, shrugging off this month's stronger U.S. inflation numbers as a "bumpy road towards 2%" and confirming it sees three interest rate cuts over 2024, analysts say in a note.
Peak said this is good news for commodity markets, getting a boost from the softer dollar and better U.S. growth prospects.
Meantime, ICICI Direct Research said gold may extend its rally toward $2,230/oz on the lower dollar and Treasury yields.
EMEA HEADLINES
Eurozone Activity Nears Recovery Despite Ailing Industry
The eurozone is edging closer to a rebound in private-sector activity despite continued weakness in the bloc's manufacturing sector, according to a purchasing managers' survey published Thursday.
The HCOB Flash Eurozone Composite PMI Output Index-a gauge of activity in the manufacturing and services sectors across the 20 nations that use the euro-rose to 49.9 in March from 49.2 in February, just shy of the 50 reading that marks the hinge between contraction and expansion.
BMW Expects Relatively Stable Car Unit Profitability, Lower Group Margin
BMW Group expects a stable margin for its key automotive division this year but forecasts a lower group margin as used-car demand falls and investments peak.
The German luxury-car maker, which released 2023 earnings last week, said Thursday that its automotive segment-BMW, Mini, and Rolls-Royce-will experience a slight increase in demand this year as new models reach the market. However, depreciation related to Chinese joint-venture Brilliance Automotive will damp gains, BMW said.
Galderma Prices IPO at Upper End of Range
Swiss skincare company Galderma said it has priced its initial public offering at the high end of the previously announced range as it prepares to list in Switzerland tomorrow.
The pricing of the IPO will be of 53 Swiss francs ($59.77) per share, implying a market capitalization at listing of CHF12.6 billion, the Switzerland-headquartered company said Thursday.
Next PLC Backs Guidance After Profit Rose
Next PLC's pretax profit rose as expected in fiscal 2024, while it confirmed its expectation of further growth next year.
The fashion retailer-which is seen as a bellwether for the sector in the U.K.-said Thursday that its pretax profit rose to 1.02 billion pounds ($1.30 billion) in the year ended January 31 from a restated GBP869 million in fiscal 2023, mainly driven by an 11% rise in profit from its online segment.
GLOBAL NEWS
The Fed's Conundrum: Interest Rates Are Both Too High-and Too Low
The Federal Reserve is still aiming to lower interest rates later this year, and for many U.S. households and small businesses those rate cuts can't come soon enough. But for big companies able to tap the corporate bond market, and for investors riding a rising stock market, relief from the Fed doesn't seem all that necessary.
The Fed on Wednesday left its federal-funds rate target steady at a range of 5.25% to 5.5%, the highest level in more than two decades. But it left in place plans to cut interest rates this year. Fed Chair Jerome Powell again characterized the level of rates as "restrictive," and said that "it will likely be appropriate to begin dialing back policy restraint at some point this year."
China's Central Bank Hints at More Monetary Easing
China's central bank hinted at more monetary easing ahead and pledged more support for technological innovation, as Beijing doubles down on efforts to juice up its economy and manufacturing sector.
Xuan Changneng, a deputy governor at the People's Bank of China, said that there is still room to cut the amount of cash that lenders have to keep in reserve, adding that the central bank will launch a new relending facility to aid the country's high-end manufacturing and digital economy.
Biden Has Massive Campaign Cash Lead Over Trump as General Election Begins
WASHINGTON-Donald Trump crushed his opponents in nearly every Republican primary this year. But when it comes to the money race, President Biden has a big head start on his predecessor.
In February, Biden's campaign apparatus said it brought in more than $53 million, leaving it with more than $155 million on hand at the end of the month. Trump's operation by comparison reported raising $39.3 million-with $74.4 million in the bank-across his campaign committee, the Republican National Committee, a supportive super PAC and a leadership PAC, which has been drained by shelling out more than $53 million in legal-related expenses since early last year.
Russian Threat Forces Europe to Choose: Bolster Defense or Protect Social Spending
BRUSSELS-European countries are waking up to Russia's danger, but the cost of building robust defenses able to withstand a potential U.S. pullback is so great that it threatens Europe's post-Cold War social model.
(MORE TO FOLLOW) Dow Jones Newswires
03-21-24 0652ET
