OPENING CALL
Stock futures were mixed on Friday, pointing to muted opening moves, with results from three of the biggest banks due.
Bank stocks have missed out on this year's stock-market rally, and investors are on the lookout for signs of trouble in the financial system, particularly in debt tied to commercial real estate.
Overseas Markets
A commodities rally boosted oil, gas and mining companies, lifting European stocks. In Asia, the Hang Seng index fell nearly 2%.
Premarket Movers
Advanced Micro Devices, Intel and Micron Technology shares fell premarket, after WSJ reported that Chinese officials earlier this year directed China's largest telecom carriers to phase out foreign processors .
Amazon closed a record high Thursday, rising 1.7% to finish at $189.05. In premarket trading, shares fell slightly to $189.
Apple edged slightly lower in premarket trading after it rose 4.3% on Thursday to $175.04.
Globe Life rose about 9% before the bell. The stock plunged 53% on Thursday, after it was targeted by short-seller Fuzzy Panda Research.
Morgan Stanley slipped 0.4% after falling 5.3% on Thursday following a report from WSJ that said federal regulators were probing the investment bank over how it handles wealth management clients "who are at risk of laundering money."
Rivian Automotive was falling 0.4% in premarket trading after shares of the electric-vehicle maker closed at a record low Thursday.
Southern Coppe, Freeport-McMoRan and Newmont got a boost in premarket trading as copper and gold prices rose.
Post Close Movers
Applied Digital revenue in the fiscal third quarter missed Wall Street's expectations after a power outage at one of its sites dented results. Shares fell 6.9%.
Nurix Therapeutics said it would sell $125 million in stock in a public offering. Shares fell 6%.
Watch For:
Import Prices for March; University of Michigan Preliminary Consumer Survey for April; earnings from Blackrock, Citigroup, JP Morgan Chase, Wells Fargo
Today's Top Headlines/Must Reads:
- Energy-Guzzling AI Is Also the Future of Energy Savings
- Gold Futures Hit New Record on Central Bank Buying, Safe-Haven Demand
- IEA Expects Global Oil-Demand Growth to Slow Further in 2025
MARKET WRAPS
Forex:
The dollar keeps strengthening, hitting another 5-month high against a basket of currencies and against the euro as it builds on recent solid gains, Brown Brothers Harriman said.
"Higher yields and economic outperformance will continue to underpin the dollar's uptrend."
Federal Reserve officials are reacting to 'sticky' U.S. inflation by urging more patience before they start cutting rates, it added.
AllianceBernstein said divergence between the interest-rate outlooks in the eurozone and U.S. could weigh further on a weak euro.
As it stands, the ECB will not only be cutting before the Fed, but probably also by more even in the most conservative scenario, AllianceBernstein said.
A weaker euro will mean higher imported inflation, which will be reflected in the ECB's June projections but shouldn't prevent inflation from slowing nor derail plans to cut rates.
Pepperstone said the path of least resistance for the euro should continue to lead lower, at least against the dollar, as the policy outlook between the ECB and the Fed is set to diverge.
"Risks to the ECB outlook tilt in an increasingly dovish direction, and risks to the FOMC outlook become increasingly hawkish," especially after the above-forecast U.S. CPI figures, Pepperstone said.
A continued grind lower in EUR/USD over coming quarters seems a reasonable expectation, it said.
Bonds:
The hot inflation print, third in a row, triggered a sharp selloff in Treasurys, led by the front end, but the room for a further selloff is capped, Societe Generale Research said.
"With yields near the highs for the year and the Fed biased towards easing, we do not see much room for a further selloff."
The longer policy rates are kept on hold, the greater the potential impact on growth and inflation.
"In our view, this limits the room for much higher long-end yields."
The ECB confirming the downward trend for inflation should lead to a decoupling of the European bond market from the U.S. market, Neuberger Berman said.
"Indeed, the market could expect the ECB to deliver at least three rate cuts this year, supporting the 10-year Bund which yield should stay below 2.5%."
The main uncertainty is more about the speed of the rate cuts than their magnitude, Neuberger Berman said.
Energy:
Oil prices rose, as geopolitical risks remained high on rising Middle East tensions and the increased targeting of downstream infrastructure in the Russia-Ukraine war.
Iran has renewed threats to close the Strait of Hormuz--a vital global trade route--if any attempts are made to disrupt its oil operation in the region, BMI said.
Although it is unlikely it will close, the effect on oil markets would be severe and market participants are sensitive to any perceived threats to trade flows, BMI added.
BMI forecast brent crude prices to average $85 a barrel in 2024 and $82 a barrel in 2025.
Metals:
Gold's upward trajectory shows no signs of slacking over the near term, though the metal is likely to be weighed by real rates later in 2024, HSBC said.
HSBC notes that gold is historically sensitive to real rates, though there has been a notable disconnect in this relationship recently. It attributes the metal's recent resilience to factors such as strong China-based demand, geopolitical risks and record U.S. equity market valuations.
HSBC forecasts a wide 2024 trading range of $1,975/oz-$2,500/oz, and raises its average price forecast for this year to $2,160/oz from $1,947/oz.
Gold Chart
Comex gold futures are poised to rise beyond resistance at $2,400/oz, as the contract is riding on strong upward momentum, RHB Retail Research said.
On the daily chart, the contract has stayed on track with its bullish trajectory and its relative strength index is pointing upward, which suggest upward momentum is picking up speed, RHB said.
Given the bullish setup, the contract will probably see an upside breakout, with next resistance at $2,500/oz.
TODAY'S TOP HEADLINES
Tech Earnings Are Almost Here. It's All About AI and These 8 Stocks.
Earnings season is upon us, and once again, it will be all about AI.
We're almost 17 months into the generative artificial intelligence revolution, if you set the starting line as the launch of OpenAI's ChatGPT in November 2022. So far, most of the benefits have gone to the picks-and-shovels plays, chip companies like Nvidia, Advanced Micro Devices, and Micron Technology, cloud providers like Amazon Web Services and Microsoft Azure, and hardware vendors like Dell Technologies and Super Micro Computer.
Paramount plans to trim size of its board amid merger talks
Paramount Global on Thursday said it plans to trim the size of its 11-member board of directors to seven, as it continues exclusive merger talks with Skydance Media.
The disclosure from the entertainment giant, made in a proxy filing, comes a day after the Wall Street Journal reported that four directors - Dawn Ostroff, Nicole Seligman, Frederick Terrell and Rob Klieger - would likely leave Paramount's PARA PARAA board in the weeks ahead as discussions over a deal continue.
China's Economy Isn't Gaining Much Steam. Why That Could Be a Problem.
China's economy appears to have turned a corner in the first quarter, but a new batch of indicators from the independent research firm China Beige Book shows that the momentum needed for a sustained rebound has yet to develop.
It's a problem because there is little sign the government is going to change the way it is trying to stimulate the economy. And that approach is creating friction with China's trading partners.
Interest Rates Have Investors Worried. Profits Give Them Comfort.
Companies are starting to report their first set of earnings for 2024, and they matter more than usual for stocks because the other main support for elevated markets-hope for rate cuts-is being chopped away.
The trouble is that Wall Street expects a lot of profit this year, next year and, in early forecasts, 2026. The future is bright, investors and analysts think, even though it's extremely rare for reality to come in better than originally hoped. On a quarterly basis, of course, companies tend to talk down earnings as the season approaches, as they have done again in recent months, so they can report a "beat." Earnings "surprises" should be no surprise, but quarterly earnings still tend to come in weaker than originally predicted.
Israel Wins Gaza Battles but Risks Losing the War
TEL AVIV-For six months, Israel's military has won battle after battle against Hamas. But as the fight loses momentum and postconflict plans fail to gel, Israel is facing the prospect of losing the war.
The invasion of the Gaza Strip is stalling. Most Israeli troops have gone home. And Hamas is returning to areas that previously had been cleared of militants.
Iranian Attack Expected on Israel in Next Two Days
TEL AVIV-Israel is preparing for a direct attack from Iran on southern or northern Israel as soon as Friday or Saturday, according to a person familiar with the matter. A person briefed by the Iranian leadership, however, said that while plans to attack are being discussed, no final decision has been made.
Iran has publicly threatened to retaliate for an attack last week in Damascus, Syria, that Tehran said was an Israeli airstrike on a diplomatic building. The strike killed top Iranian military officials, including a senior member of the Islamic Revolutionary Guard Corps' elite Quds Force.
U.S. and Russia Pursue Secret Prisoner Swap Talks, Russian Diplomat Says
(MORE TO FOLLOW) Dow Jones Newswires
04-12-24 0618ET
