MARKET WRAPS
Watch For:
Producer Price Index for December; Earnings from Bank of America, BlackRock, Citigroup, JPMorgan, UnitedHealth, Wells Fargo
Today's Top Headlines/Must Reads:
- Bitcoin ETFs Are Live. Cue the Fee War.
- America's Gas Bonanza Brings Biden New Political Dilemmas
- U.S.-Led Yemen Strikes Heighten Risk of Broader Middle East Conflict
Opening Call:
Stock futures fluctuated on Friday as traders awaited quarterly earnings reports from some of the biggest banks.
Oil prices jumped after a U.S.-led coalition launched more than a dozen strikes on Houthi rebel targets in Yemen following their attacks on ships in the Red Sea.
MUFG said that prospects of escalating Middle East tensions after the airstrikes risk stoking inflation and will dim prospects of interest-rate cuts.
A rate cut in March looks increasingly unlikely, it said. "It seems a difficult backdrop for the [Federal Reserve] to shift its rhetoric in order to provide guidance on a possible rate cut in March."
Further escalation would extend the time that ships are having to avoid the Red Sea, raising concerns over supply disruption and higher energy prices feeding through into inflation, MUFG added.
Overseas Markets
Europe's Stoxx 600 climbed, while in Asia, the Nikkei 225 was the only gainer, rising 1.5%.
Premarket Movers
Cytokinetics fell 16% on Thursday after WSJ reported that Novartis was backing away from its pursuit of the company . Cytokinetics was up 0.7% in premarket trading.
DocuSign rose 9% on Thursday following a report that said private-equity firms Bain Capital and Hellman & Friedman were competing to acquire the provider of online-signature services. The stock rose 1% premarket.
Exxon Mobil rose 1.2%, Chevron gained 1.2%, and U.S.-listed shares of BP were up 1% as oil prices climbed after the strikes on Houthi rebel targets.
International Flavors & Fragrances rose 2.3% after it named J. Erik Fyrwald as its next CEO.
JPMorgan Chase was up 0.1%, Bank of America fell slightly, and Citigroup declined 0.7% ahead of earnings reports from the banks in the premarket session.
Polestar Automotive was up 2.2% after the start-up said it delivered about 12,800 cars in the fourth quarter. Global deliveries for the year rose 6% from a year earlier to about 54,600 cars.
Snowflake fell 1.6% after shares were cut to Equal Weight from Overweight at Barclays and the price target was left unchanged at $198.
Tesla declined 2.4% after it said it planned to halt production at its Berlin factory for two weeks as the conflict in the Red Sea continues to disrupt transport ships.
Thursday's Post-Close Movers
Flexsteel reported second-quarter results and forecast continued sales growth in fiscal 2025. Shares rose 13%.
The SEC charged Shanchun Huang with allegedly inflating Future FinTech's share price just before he took over as chief executive. Shares fell 8.5%.
Sealsq disclosed the close of the second tranche of its private placement. Shares fell 21%.
Forex:
The euro could weaken against the dollar near term as markets trim U.S. rate-cut expectations after Thursday's inflation data, Societe Generale Researchsaid.
U.S. money-market pricing of a March rate cut--which assigns a 68% probability--is premature, it said.
"EUR/USD has already tested 1.10 twice [this year] without managing to break upwards," SocGen said.
"While we maintain a bullish EUR/USD forecast (towards 1.15) this year, downside risks will likely prevail in the near term."
Energy:
Oil prices jumped after the airstrikes against Houthi rebels in Yemen.
The strikes heightened fears of a wider conflict in the Middle East and came shortly after Iran seized an oil tanker off the coast of Oman, adding to concerns over global shipping disruptions.
"The Gulf of Oman is very near the Strait of Hormuz, a critical choke point for oil flows. [...] more significant disruptions to oil flows in this region will be much more alarming for markets," ING said.
Metals:
Metal prices traded higher after CPI data showed inflation rose more than expected, challenging market hopes for interest-rate cuts early this year.
Meanwhile, the latest trade data from top metals buyer China revealed exports beat expectations in December , a sign that demand could be picking up, while imports also rose.
TODAY'S TOP HEADLINES
BlackRock to Buy Global Infrastructure Partners for $12.5 Billion
BlackRock has agreed to buy private-equity firm Global Infrastructure Partners for roughly $12.5 billion in cash and stock, a significant push into private-market investments for the world's largest asset manager.
New York-based GIP owns and operates energy, transportation, and water and waste companies, including a stake in London's Gatwick Airport. The acquisition would be BlackRock's largest since it bought Barclays's asset management business in 2009.
Apple Directors Al Gore, James Bell to Retire
Apple's board of directors is getting a shake up.
Longtime Apple board member Al Gore is retiring from the board, the company announced Thursday. The former U.S. vice president had been a board member since 2003, a witness of the company's rise and transformation a few years after the return of co-founder Steve Jobs as chief executive.
Carta, a Key Silicon Valley Player for Startups, Stumbles, Prompting Customers to Consider Competitors
Customers of Carta, spurred by the shuttering of its secondary trading division and a loss of trust in the 14-year-old company, are reaching out to competitors about potentially switching over to their services.
Carta, a financial-software provider for many Silicon Valley startups, said Monday it was closing its secondary trading division following criticism that it improperly accessed client data.
Secondary Investors Bank on Pricing Gaps Closing This Year
The market for secondhand stakes in private-equity funds saw $43 billion in transactions in the first half of 2023, a 25% decline from $57 billion in the year-earlier period. Though the second-half numbers have yet to come out, buyers and brokers pointed to an uptick in activity in the second half, creating optimism heading into this year.
Trading in secondaries provides a way for fund investors to liquidate their private-market positions and allows managers to recapitalize and extend their ownership of selected businesses by bringing in new investors. Both functions rose in importance amid a slowdown in traditional exit channels such as initial public offerings and mergers and acquisitions after interest rates began a sharp rise in early 2022.
Deflation Worries Deepen in China
HONG KONG-China's consumer prices fell for a third straight month in December, underscoring the challenges Beijing faces in reviving its economy as deflationary pressures persist.
An index of prices charged by Chinese manufacturers, meanwhile, contracted for a 15th straight month. That is a source of growing concern for U.S. and European officials, as some Chinese business owners look to unload more low-cost goods on the rest of the world, competing with Western brands.
Who Are the Houthis and Why Is the U.S. Attacking Them?
From their perch on the eastern side of the Red Sea, the Yemen-based rebels pose what could be one of the biggest threats to global shipping and, by extension, the world economy.
In recent weeks, the Houthis have launched over two-dozen drone and missile attacks on commercial shipping bound for the Suez Canal, what they say is a response to Israel's war against Hamas. Major shippers are now diverting vessels south around the Cape of Good Hope, adding some 40 days to voyages in what could be a far more damaging disruption than when the Ever Given cargo carrier got wedged in the canal in 2021.
$6 Trillion in Taxes Are at Stake in This Year's Elections
WASHINGTON-There isn't a dime's worth of a difference between the political parties. The chasm is more like $6 trillion.
The winners of November's presidential and congressional elections will quickly face decisions on extending tax cuts scheduled to expire after 2025. President Biden and Republicans support starkly different tax plans.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Corus Ent 1Q
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Aimia CEO Phil Mittleman to Step Down; Chair Tom Finke Named Executive Chairman; Michael Lehmann, Aimia's Former President, Also Leaves Company
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ATCO Raises 1Q Dividend to C$0.4898 Vs. C$0.4756
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Velan 3Q Loss/Shr 34c; 3Q Sales $80.9M
Expected Major Events for Friday
05:00/JPN: Dec Economy Watchers Survey
07:00/UK: Nov UK trade
07:00/UK: Nov Index of production
07:00/UK: Nov Index of services
07:00/UK: Nov Monthly GDP estimates
07:45/FRA: Nov Household consumption expenditure in manufactured goods
07:45/FRA: Dec CPI
12:30/UK: Dec NIESR Monthly GDP Tracker
13:00/RUS: Weekly International Reserves
13:00/RUS: Weekly International Reserves
13:30/US: Dec PPI
17:00/US: World Agricultural Supply & Demand Estimates (WASDE)
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Friday
Bank of America Corp (BAC) is expected to report $0.53 for 4Q.
Bank of New York Mellon Corp (BK) is expected to report $0.85 for 4Q.
BlackRock Inc (BLK) is expected to report $8.67 for 4Q.
Citigroup Inc (C) is expected to report $0.11 for 4Q.
Clearday Inc (CLRD) is expected to report for 3Q.
Corus Entertainment Inc - Class B (CJR.B.T,CJREF) is expected to report for 1Q.
Delta Air Lines (DAL) is expected to report $1.15 for 4Q.
Environmental Tectonics Corp (ETCC) is expected to report for 3Q.
Franklin Resources Inc (BEN) is expected to report.
Infinity Pharmaceuticals Inc (INFIQ) is expected to report $0.03 for 3Q.
JPMorgan Chase & Co (JPM) is expected to report $3.35 for 4Q.
National American University Holdings Inc (NAUH) is expected to report for 2Q.
(MORE TO FOLLOW) Dow Jones Newswires
01-12-24 0628ET
