OPENING CALL
Stock futures hovered on Thursday ahead of more testimony from Jerome Powell.
Neel Kashkari said on Wednesday that he had penciled in two interest-rate cuts in 2024 during the central bank's last forecasting round in December, but added he may reduce the number of cuts he expects at the Fed's next meeting in two weeks.
Fed officials will update their forecasts at the March 19-20 meeting.
The European Central Bank is also in focus ahead of its policy announcement at 08:15 am ET.
It is expected to hold interest rates steady but investors will closely listen for any signals from ECB's Lagarde on a potential June rate cut.
Overseas Markets
Europe's Stoxx 600 ticked up ahead of the ECB meeting.
Chinese indexes fell, even after data showed that China's exports started the year on strong footing.
Premarket Movers
Foot Locker was down 1.2% following a fiscal-year profit outlook that missed expectations and pushed back the timing on when it would reach its target for adjusted margins.
New York Community Bancorp was up 3.2%. The lender announced Wednesday it was getting an equity injection of more than $1 billion from the investment firm run by former Treasury Secretary Steven Mnuchin and other funds.
Nvidia advanced more than 1%, putting it on pace to rise for a sixth consecutive session.
Rivian Automotive was rising 2% to $11.25 after it was initiated with a Buy recommendation and price target of $16 at Jefferies.
Tesla edged lower in premarket trading. It fell out of the top 10 U.S. companies by market cap Wednesday for the first time since January 2023, according to Dow Jones Market Data.
Victoria's Secret was declining 32% after the lingerie and clothing retailer issued sales guidance for its fiscal first quarter and year that was weaker than expected.
Wednesday's Post-Close Movers
Honest swung to a profit in the fourth quarter as revenue increased 10% and passed Wall Street's predictions, according to FactSet. The company said it expects revenue to grow 4% to 6% annually after 2024. Shares rose 31%.
Rush Street Interactive forecast revenue growth in 2024 that beat analysts' expectations. The company surpassed analysts' estimates in revenue and earnings in the fourth quarter. Shares rise 20%.
Watch For:
Trade for January; Weekly Jobless Claims; Biden's State of the Union; Canada Trade for January; Earnings from Broadcom, Costco, Gap, Kroger
Today's Top Headlines/Must Reads:
- How Apple Stands to Lose From Europe's New Tech Law
- China Intensifies Push to 'Delete America' From Its Technology
- Bitcoin Bulls Cite a Simple Reason for Its Rally: Not Enough Coins
- Biden Offers More Corporate-Tax Ideas as He Draws Contrast With Trump
MARKET WRAPS
Forex:
Morgan Stanley Research continues to forecast dollar strength against G10 currencies by the end of 2024, although in the near term the dollar is less certain to rise given current high levels of risk appetite.
Near-term risks are more balanced for the dollar, leaving Morgan Stanley Research tactically neutral on the currency.
"Continued U.S. growth outperformance could be a tailwind for the dollar but an improving growth outlook in Europe is a headwind," it said.
Societe Generale Research said EUR/USD continues to track short-term rate differentials closely.
It expects both the ECB and the Fed to cut interest rates by 75 basis points this year.
EUR/USD is unlikely to fall as far as 1.05 nor rise to 1.15 in the next year, although "further out, the likelihood is that the Fed will stop easing before the ECB and start tightening first too," it said.
Bonds:
Morgan Stanley Research is tactically neutral on U.S. duration for now.
"Yields have settled into a higher range that is too high versus our economists' base case for the Fed path," it said, adding that February data pose downside risks to rates.
Meanwhile, front-end repricing continues to diverge from economic fundamentals, cheapening euro duration, MS added.
It believes that the sell-off at the front end of the curve is mostly done, leaving German Bunds an attractive vehicle to be long duration.
It forecast the 10-year Treasury yield to decline to 3.95% in the fourth quarter, and expect the 10-year Bund yield at 1.80% in 4Q.
Energy:
Oil prices were lower in Europe despite upbeat Chinese trade data and heightened tensions in the Middle East after the first fatal attack on Red Sea shipping.
A jump in China's exports at the start of the year sent encouraging signals on global demand, but Powell's remarks that continued progress on lowering inflation "is not assured" are weighing on sentiment, according to some analysts.
Meanwhile, "the macro vibe is bullish," Peak Trading Research said, with all eyes on the ECB policy decision later in the day and U.S. employment data on Friday.
Metals:
Base metals and gold gained in early European trading, and MUFG said the case for further, patient advances for bullion looks intact.
Gold is MUFG's most bullish call this year, with a year-end forecast of $2,350 an ounce, backed up by a trifecta of Fed cuts, supportive central bank demand and bullion's role as the geopolitical hedge of last resort.
The base metal market focus remains fixated on China, and investors are watching for further stimulus measures to alleviate some uncertainty over the country's economic prospects, MUFG said.
HSBC said gold's upward trajectory may be slowing .
Jerome Powell's remarks to Congress "were not especially gold friendly" and record-high prices may cool physical demand for the metal, particularly from central banks, HSBC said.
Based on technical charts, gold may extend its rally in the coming months , UOB said.
UOB said gold's upward momentum has surged and its weekly moving average convergence divergence indicator has crossed into positive territory.
TODAY'S TOP HEADLINES
Temu's Push Into America Pays Off Big Time for Meta and Google
Meta Platforms' top advertiser by revenue in 2023 was the e-commerce company Temu, an upstart discounter founded in China that has emerged as an increasingly potent force in American business.
PDD Holdings, the parent company of Temu, spent nearly $2 billion on advertisements last year at Meta, according to people familiar with the matter, surprising executives at the parent company of Facebook and Instagram. Temu also became one of Google's top five advertisers by spending last year, according to people familiar with the business.
OECD Government Borrowing Expected to Rise to Record $15.8 Trillion This Year
Total borrowing by governments in rich countries is set to hit a record high of $15.8 trillion this year, with the cost of making interest payments rising over coming years as bonds issued before the inflation surge mature, the Organization for Economic Cooperation and Development said.
In a report on global debt, the Paris-based research body said Thursday that gross borrowing-which includes refinancing maturing bonds as well as new issuance-rose to $14.1 trillion in 2023 from $12.1 trillion in 2022. That total is set to rise further in 2024, and will surpass the previous peak of $15.4 trillion in 2020, when governments borrowed heavily to support households and businesses during the Covid-19 pandemic.
The Next Red-Blue State Divide: EV Taxes
A number of Republican-led states are charging higher fees and taxes for electric-vehicle owners to make up for lost gasoline-tax revenue that helps fund roads and highways, prompting pushback from EV industry groups and drivers who say they are being squeezed more than owners of gas-guzzling cars.
The debate goes to the heart of one of the thorniest transportation challenges the country faces: how to pay for highway construction and maintenance when the traditional funding mechanism for such work is slowly collapsing.
China's Foreign Minister Questions U.S. Confidence as World Power
BEIJING-China's foreign minister painted the U.S. as a paranoid superpower and criticized Europe's policy toward Beijing as increasingly muddled, comments that laid bare how deep distrust persists between China and the West despite a surge of diplomacy to stabilize ties.
In a 90-minute press conference Thursday, Foreign Minister Wang Yi also warned of the possible escalation in the war between Russia and Ukraine, celebrated the close ties between Beijing and Moscow and echoed recent comments by Russian President Vladimir Putin about the risk of a protracted conflict.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings [4Q Unless Stated Otherwise]:
AutoCanada
Bitfarms
CareRx
Cathedral Energy
Dexterra
Doman Bldg Mtrls
Enghouse Sys 1Q
Ero Copper
Greenlane Rnwbles.
illumin Hldgs
KP Tissue
Oncolytics Biotech
Park Lawn
Profound Medical
Economic Indicators (ET):
0830 Jan International merchandise trade
0830 Jan Building permits
Stocks to Watch:
Aris Mining 4Q Loss/Shr 4c; 4Q Adj EPS 9c
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Fortuna Silver Mines 4Q Sales $265.3M Vs. $164.7M; 4Q Loss/Shr 30c Vs. Loss 52c; 2023 Rev $842.4M Vs. $681.5M; 2023 Loss/Shr 17c Vs. Loss 44c; 4Q Gold Production 107,376 Oz; Silver Production 1.35M Oz; Gold Equivalent Production 136,154 Oz; 2023 Gold Production 326,638 Oz; Silver Production 5.9M Oz; Gold Equivalent Production 452,389 Oz
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Genesis Land 4Q EPS C$0.15; 4Q Net C$8.06M; 4Q Rev C$71.6M
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Optiva 4Q Loss/Shr 65c; 4Q Rev $12M
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Surge Energy 4Q Loss C$29.7M; 4Q Rev C$168.5M; 4Q Loss/Shr C$0.29
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TeraGo 4Q Loss/Shr C$0.18; 4Q Loss C$3.56M; 4Q Rev C$6.5M
Expected Major Events for Thursday
07:00/GER: Jan Manufacturing orders
07:00/GER: Jan Manufacturing turnover
07:00/UK: Feb Halifax House Price Index
12:30/US: Feb Challenger Job-Cut Report
13:00/RUS: Weekly International Reserves
13:30/US: 4Q Revised Productivity and Costs
13:30/CAN: Jan Building permits
13:30/CAN: Jan International merchandise trade
13:30/US: Jan U.S. International Trade in Goods & Services
(MORE TO FOLLOW) Dow Jones Newswires
03-07-24 0614ET
