MARKET WRAPS
Watch For:
NFIB Index of Small Business Optimism for March; World Agricultural Supply & Demand Estimates (WASDE); Fed's Goolsbee speaks at Economic Club of Chicago Forum Luncheon; Fed's Kashkari speaks at Montana State University College of Business and Entrepreneurship Town Hall
Today's Top Headlines/Must Reads:
- Top Fed Official Plays Down Divergent Rate Outlook With Investors
- Exxon Deal Hunt Signals Possible Shale M&A Wave
- Newmont Raises Bid for Australia's Newcrest to $19.5 Billion
- China Consumer Price Growth Eases, Reflecting Caution on the Economy
- Biden Administration Weighs Possible Rules for AI Tools Like ChatGPT
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Opening Call:
Stock futures on Tuesday pointed to the market opening little changed and just shy of eight-week highs as traders eyed inflation data and the start of first-quarter earnings season in coming days.
Attention turns to the CPI report due Wednesday, and the minutes of the Federal Reserve's recent policy meeting.
After last week's strong labor-market data, traders think the central bank is likely to raise rates by a further quarter of a percentage point, according to CME Group.
Then, on Friday, the first-quarter corporate earning season kicks into gear with the financial sector in the vanguard.
"The banks will be an early test of investors' mettle on any number of fronts, not least of which will be the early fallout from the recent banking turmoil, as JP Morgan Chase, Wells Fargo and Citigroup open the season," Interactive Investor said.
"In particular, loan growth will be scrutinized and could prove to be tepid in view of tightening lending conditions, while there will also be a close eye on any increase in souring loans, given the slowing economy. In turn, this could lead banks to increase provisions for bad debts once more, with the additional pressures of a deal-making drought and trading volatility also potentially weighing on earnings," it added.
Bulls will be hoping a well-received earnings season can help push the S&P 500 through the top of the 3,800 to 4,200 range in which it has fluctuated for nearly six months.
"The recent stalling out in SPX doesn't appear too serious and prices remain within striking distance of a possible breakout above 4200," Fundstrat said.
"While a decline lower under 4039 might suggest some minor pullback is getting underway, it's still difficult to make a strong bearish technical case. Trends from mid-March remain bullish while momentum is positively sloped while not overbought," Fundstrat added.
Stocks to Watch
Coinbase rose 3% in premarket trading, MicroStrategy gained 4%, and Marathon Digital was up 4% after Bitcoin traded above $30,000 for the first time in 10 months.
Brookdale Senior Living raised its earnings guidance for the first quarter. Shares rose 9% to $3.25 in after-hours trading.
Kalera reported a Nasdaq delisting determination that it doesn't expect to appeal at this time. Shares fell 29% to $1.93 in after-hours trading.
Newmont raised its takeover offer for Australia's Newcrest Mining to about $19.5 billion. Newmont offered $17 billion back in February but Newcrest, Australia's largest-listed gold miner, rejected the offer. Newmont stock rose 1% in premarket trading. Newcrest Mining gained more than 5% in Australia trading.
Tesla shares were the most actively traded early Tuesday, and rose more than 1%.
Cannabis company Tilray Brands fell 8% after agreeing to buy Hexo, the maker of pot products, for $56 million in an all-stock deal. Tilray will pay about $1.25 a share for Hexo, which sank 19% in premarket trading to $1.33. Tilray also reported fiscal third-quarter results that were worse than analysts' expectations.
Virgin Orbit Holdings was falling 23% to about 13 cents after saying that Nasdaq planned to delist shares of the space launch startup. Virgin Orbit filed for Chapter 11 bankruptcy protection last week.
M&A News
Albemarle's takeover pursuit of Liontown Resources could reflect concerns that the U.S. company doesn't have enough raw material to feed its operations in the country, according to Jarden.
Jarden highlighted Albemarle's investor presentation in March, which talks about its proposed Megaflex lithium hydroxide refinery system in South Carolina.
The scope of the operation targets initial output of 50,000 tons/year, with an option to double its size.
"The key issue is the source of raw material and this may potentially have been a factor why the Liontown approach was made," Jarden said.
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Newmont's revised proposal for Australia's Newcrest Mining looks sweet enough to win the support of one top shareholder.
Allan Gray Australia told WSJ it was "unenthusiastic" about Newmont's earlier all-stock bid, but that the revised stock ratio-of 0.400 Newmont share per Newcrest one-and plans for a franked dividend help level the scales somewhat.
"Subject to various future bits of information which are impossible to predict, the rebalancing of the scales is enough to gain our support," it said.
"But, like all well pitched transactions, we still feel a little cheated."
Allan Gray and its sister company Orbis owned a combined 7.4% of Newcrest's stock at the end of December.
Read A Newmont-Newcrest Deal Not Yet a Sure Thing
Forex:
The dollar fell slightly after rising on Monday on expectations for the Fed to raise interest rates further following the strong nonfarm payrolls data.
"Looking at the rest of this week, market attention is set to remain on US economic data, including consumer price index inflation, retail sales, industrial production and the University of Michigan consumer sentiment index," Unicredit Research said.
CPI data on Wednesday may show core inflation accelerated slightly, which could lift the dollar if markets further adjust Fed rate cut bets but only briefly as rate differentials between the U.S. and the rest of the world are expected to tighten, it added.
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The euro was trading in a narrow range against the dollar after showing a muted reaction to the nonfarm payrolls data, ING said.
If it weren't for the Easter public holidays, EUR/USD may have fallen much further on the jobs data as it strengthened expectations for the Fed to raise interest rates by 25 basis points in May, ING added.
EUR/USD is now waiting for fresh catalysts, probably from the U.S., it said.
"EUR/USD can edge back up to the 1.0930/50 area today assuming that equities stay mildly bid and the U.S. NFIB emerges on the soft side."
Energy:
Oil prices edged higher in Europe ahead of a week busy with data on demand.
The U.S. Energy Information Administration releases its short-term energy outlook report on Tuesday, followed by OPEC's monthly report on Thursday and the International Energy Agency's monthly report on Friday.
The oil market is hungry for information on demand and oil balances after OPEC+ members made a surprise cut to their production levels.
"Investors are weighing supply tightness against prospects of slowing demand," ANZ said.
Saudi Cuts
Investors sharply slashed short positions on crude oil and added to longs following a Saudi-led round of production cuts.
Speculative investors' net long position-the balance of their bullish and bearish bets-jumped by around 73,000 contracts in the week through April 4, according to data from ICE Futures Europe.
Investors added around 44,000 long positions during that time and reduced their short positions by almost half, or around 29,000 lots.
The changes mean investors hold a net long position of 234,461 lots on Brent crude.
Metals:
Base metal prices fell while gold futures rose as markets look to tomorrow's inflation data - with higher inflation likely to mean interest rate increases from the Fed.
"The macro environment is sending mixed signals for commodity money flows," Peak Trading Research said.
Markets are expecting a drop in CPI to 5.1% from 6% on month, it said.
"Softer inflation data tomorrow (below 5.0%) would be a bullish tailwind for commodity markets via a more dovish Fed and a weaker U.S. dollar."
TODAY'S TOP HEADLINES
Newmont Raises Bid for Australia's Newcrest to $19.5 Billion
ADELAIDE, Australia-Newmont Corp. raised its takeover offer for Newcrest Mining Ltd. to around $19.5 billion, as it aims to seal what would be the largest-ever M&A deal in the gold-mining industry.
Newmont's decision to improve its all-stock offer for Newcrest comes at a time when gold prices are approaching a record high amid stress in the global banking system and heightened worries over the economic outlook. The U.S. company had previously had an around $17 billion bid rebuffed by Newcrest, Australia's largest-listed gold miner.
Exxon Deal Hunt Signals Possible Shale M&A Wave
Exxon Mobil Corp.'s hunt for a blockbuster deal in U.S. shale could kick off a bonanza of deal-making in the oil patch as drillers look to put large war chests of cash to work.
The oil giant has held preliminary talks with Pioneer Natural Resources Co., a Texas fracker with a roughly $52 billion market capitalization, about a potential acquisition, The Wall Street Journal reported last week. Exxon, which has been on the prowl in the Permian Basin for months, has also discussed a potential deal with at least one other company, the Journal reported.
Biden Administration Weighs Possible Rules for AI Tools Like ChatGPT
WASHINGTON-The Biden administration has begun examining whether checks need to be placed on artificial-intelligence tools such as ChatGPT, amid growing concerns that the technology could be used to discriminate or spread harmful information.
In a first step toward potential regulation, the Commerce Department on Tuesday put out a formal public request for comment on what it called accountability measures, including whether potentially risky new AI models should go through a certification process before they are released.
Goldman Sachs Paying $15 Million to Settle Investigation of Swaps Business
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04-11-23 0617ET
