MARKET WRAPS
Stocks:
European shares were little changed on Friday ahead of a string of central bank decisions next week, with investors for now continuing to speculate about the likely timing of interest-rate cuts, IG said.
U.S. Markets:
Stock futures were pointing to a steady start, with worries that inflation will linger capping momentum after a hot start to the year.
Friday will see the release of the Empire State manufacturing survey, import prices, industrial production and University of Michigan consumer sentiment data.
Options tied to more than $5 trillion in stocks, exchange-traded funds and equity indexes are set to expire Friday during the quarterly triple witching.
Adobe was in the spotlight as the midpoint of its current quarter's sales guidance lagged Wall Street estimates.
Forex:
SEB Research has lowered its medium-term EUR/USD forecast due to a more optimistic view on the U.S. growth outlook and fewer positive drivers for the euro.
It now forecasts EUR/USD at 1.08 in the second quarter, 1.08 in the third, and 1.10 in the fourth-revised down from previous forecasts of 1.11, 1.13 and 1.14 respectively and compared with a current EUR/USD rate of 1.0882.
Fewer Federal Reserve rate cuts and an upgrade to U.S. growth expectations should mean the dollar strengthens, SEB said.
Sterling is expected to receive support if the Bank of England continues not to open the door to interest-rate cuts, BNP Paribas Markets 360 said.
"For now we think the BOE continuing to not open the door to rate cuts is a source of support for the pound when other G10 central banks have already done so."
BNP Paribas remains positive on sterling as a result of this, as well as low uncertainty going into the general election and our reduced concerns around the current account deficit.
Bonds:
German 10-year Bund yields are expected to trade mostly in the 2.20%-2.50% range until the European Central Bank's April 11 meeting, SEB Research said.
When the ECB gives the green light for a first rate cut, the yield is likely to tilt towards the lower end of the range, but a sustainable fall below 2% is unlikely, it added.
"We think a sustainable break below 2% in the Bund yield is unlikely unless there is a significant softening in ECB policy rate expectations for the coming two years."
SEB also said the 10-year Treasury yield is expected to drift lower to around 4% in the coming months as markets embrace the prospect of Federal Reserve rate cuts.
"We think that Fed expectations will remain the key driver of the 10-year Treasury in the coming months."
SEB Research expects the federal-funds rate to bottom out at 3.25%-3.50%, two percentage points below the current 5.25%-5.50% level.
Societe Generale said that despite a resilient economy and sticky inflation in the U.S., the bar remains high for a meaningful rise in Treasury yields at a time when the Fed is biased to ease. It expects "dip buyers" to cap the selloff.
"We continue to believe that the 2-year Treasury yield at 4.75% and the 10-year at 4.30% are opportunities to buy the dip."
Energy:
Oil prices edged lower but remained on track for strong weekly gains on signs of a tightening market balance.
"Trend and momentum indicators support a further rise in oil prices," Swissquote Bank said.
Yet, "oil bulls could hit a wall if we see a hawkish shift from the Fed at next week's meeting."
Metals:
Gold has stabilized just below its record high set at the end of last week, which likely reflects pricing in the Fed's cautious stance for now, with no expectations of interest rate cuts until the middle of the year, Commerzbank said.
EMEA HEADLINES
Swisscom to Buy Vodafone's Italy Unit for $8.7 Billion
Swisscom said it agreed to buy Vodafone Group's Italian business for 8 billion euros ($8.71 billion), a deal that completes the U.K. telecom company's simplification of its European portfolio.
The Swiss telecommunications group said Friday that the price will be paid fully in cash and is on a debt- and cash-free basis. Swisscom plans to merge Vodafone Italia with its Fastweb subsidiary in the country, reshaping one of Europe's largest telecoms markets.
Iveco Raises 2024 Targets as Part of New Business Plan
Iveco raised several 2024 financial targets and adjusted longer-term goals following the releases of its new strategic plan.
The changes come after the Italian truck-and-bus maker said its met several goals early. They are based on conservative assumptions about the macroeconomic situation and industry expectations about the changing market, Iveco said.
Berkeley Group Backs Profit Views on Robust Sales
Berkeley Group Holdings said it expects profit to be in line with market consensus and backed its short-term guidance, citing a robust sales position.
The house builder on Friday said it expects to deliver a pretax profit for the year ending April 30 in line with the company-provided consensus of around 550 million pounds ($701.4 million), down from GBP604 million in fiscal 2023.
Kazatomprom's Profit Surges on High Uranium Prices
NAC Kazatomprom, the world's largest producer of uranium, booked a jump in full-year profit while revenue beat guidance on soaring uranium prices, and said global output won't cover market needs this decade.
Kazakhstan's state uranium company said Friday that its net profit surged to 580.34 billion Kazakh tenge ($1.29 billion) in 2023 from KZT473.0 billion in 2022 after prices for the heavy metal more than doubled through 2023.
Swiss Private Bank EFG to Settle U.S. Sanctions Violations
EFG International agreed to pay about $3.7 million to settle allegations the Swiss private bank violated U.S. sanctions by holding and investing securities on behalf of blacklisted individuals, the U.S. Treasury Department said.
Between 2014 and 2018, Zurich-based EFG allegedly processed 868 securities transactions for customers in Cuba and for a Chinese national blacklisted for foreign narcotics trafficking, Treasury's Office of Foreign Assets Control said Thursday. EFG, which has around 40 global subsidiaries, also processed five dividend payments in 2023 for another person blocked under sanctions imposed over Russia's anti-democratic activities abroad. The U.S. has a comprehensive economic embargo on Cuba.
GLOBAL NEWS
Sorry Stock Bulls, the 'Wall of Cash' Isn't All Headed Your Way
Trillions of dollars are seemingly available to move out of cash funds and be put to work in the stock market. That possibility has had stock-market bulls salivating, but they are probably in for disappointment.
Despite the expectation that the Federal Reserve's next move is to cut rates, money-market-fund assets have continued to grow at a fast pace. They are now around $6.5 trillion, according to industry tracker Crane Data. While the S&P 500 is up 8% year to date, total money funds added more than $150 billion in assets through the first two months of 2024, or about $50 billion more than they did in the same period last year, according to Crane.
Bitcoin Drops Near 10% in Crypto Correction. How Far Prices Could Fall.
Bitcoin and other cryptocurrencies fell on Friday in what looked like a short-term correction after a red-hot rally in digital assets. Prices could fall further even as traders continue to be bullish on the outlook for cryptos in the months ahead.
The price of Bitcoin dropped 9% over the past 24 hours to $67,100, with the largest crypto falling below $66,900 in its recent trough-what seems like a short-term correction from record levels. Bitcoin hit an all-time high near $74,000 earlier this week, after blowing through the November 2021 high around $69,000 in the week prior, amid a rally that has seen the market capitalization of digital assets rise to $2.6 trillion.
China's Central Bank Keeps Key Policy Rates Steady
China's central bank kept its key policy rates unchanged on Friday while reporting a net withdrawal of liquidity from the financial market.
The People's Bank of China held its one-year medium-term lending facility steady at 2.5% while injecting 387 billion yuan ($53.80 billion) worth of liquidity through the monetary tool, according to a statement on its website. There was a total of CNY481 billion of MLF loans due Friday, indicating a net withdrawal of liquidity.
China's Real-Estate Market Just Set a Record-but Not a Good One
China's real-estate market set an unwelcome record last month.
The price of secondhand homes in the country's most developed cities fell 6.3% in February, the worst monthly decline since the government started releasing data in 2011. That was part of a widespread drop in prices across the country, as China's painful real-estate slump shows no signs of losing steam.
Hamas Calls for Confrontation Against Israel in Jerusalem
JERUSALEM-Hamas has called for Palestinians to confront Israel at the Al Aqsa Mosque on Friday, when the arrival of large numbers of worshipers presents a test for Israeli authorities aiming to sustain a fragile peace over Ramadan as war rages in Gaza.
In recent years, the Islamic holy month has been an occasion for violent confrontations between Palestinians, Israeli authorities and Jewish worshipers at the compound in East Jerusalem, considered the holiest site in Judaism, and one of Islam's holiest.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
03-15-24 0642ET
