MARKET WRAPS
Watch For:
EU Harmonised CPI, Euro area balance of payments, ECB Executive Board Member Piero Cipollone speaks at roundtable on the digital euro; U.K. monthly retail sales; Italy balance of payments; German Chancellor Olaf Scholz meets Turkish President Recep Tayyip Erdogan; trading updates from Sberbank, Compass Group, Generali
Opening Call:
Stock futures were mostly higher as investors continue to parse economic data; Asian stock markets were broadly lower; Treasury yields were higher; the dollar gained slightly; while oil futures and gold also advanced.
Equities:
European stock futures were higher early Friday with investor confidence building that interest rates may have likely peaked.
Barclays analysts believe equities will outperform fixed income after two quarters of preferring cash over stocks and bonds.
"The downside risks to the world economy have diminished greatly," the analysts said.
"Stocks will benefit from a fairly benign bottom to this business cycle and look through near-term earnings disappointments."
Investors also parsed comments from Fed governor Lisa Cook saying Thursday that inflation can keep declining without a sharp spike in unemployment but warning that a "soft landing" for the U.S. economy "is not assured."
Meanwhile, Cleveland Fed President Loretta Mester said easing monetary policy was not "part of the conversation right now," in a CNBC interview.
Forex:
The dollar gained slightly supported by a higher 2-year Treasury yield, which increases the appeal of U.S. fixed-income assets and demand for the greenback.
Demand for safe-haven assets, including the Japanese yen, has increased, CMC Markets said, noting the tepid U.S. economic data released overnight.
Bonds:
Treasury yields were higher as investors weighed cooler economic data.
"[T]his is now the seventh time in the last two years we've had a very clear example of markets getting excited about a dovish pivot, and on the previous six those dovish expectations have entirely unwound again," warned Jim Reid, macroeconomic strategist at Deutsche Bank.
Traders were pricing in at least a 97% probability that the Fed will leave interest rates unchanged at a range of 5.25% to 5.50% after its next meeting on December 13th, and the subsequent meeting on Jan. 31, according to the CME FedWatch tool.
Energy:
Oil futures gained in Asia after falling overnight.
Oil demand growth will likely remain solid and core OPEC supply low in 2024 after the recent selloff, Goldman Sachs analysts said.
They expect supply growth outside core OPEC to slow down in 2024, especially in the U.S.
The post-pandemic easing in supply constraints and higher-than-expected oil supply from certain sanctioned economies were one-off factors and unlikely to further boost supply growth, they said.
Metals:
Gold edged higher early Friday after U.S. weekly jobless claims pointed to a slight cooling in the labor market.
That added to data this week showing moderating inflation and dipping retail sales, which bolstered expectations that the U.S. Fed's interest rate hikes have come to an end, Oanda said.
Gold bulls have now set their sights on the $2,000 level again as investors gauge the Fed's next move, it added.
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Copper prices were steady in Asia but may rise over the next week, analysts said.
There's a substantial asymmetry in positioning dynamics for commodity trading advisers' trend followers over the next week, with a continued rally possibly triggering algorithmic-related buying, TD Securities, said.
This buying activity will likely add to upside momentum in prices, it added.
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Iron ore rose amid signs of stronger demand from China.
Crude steel production at major mills in China increased by 2.4% from late October to 1.97 million tons a day in early November, ING commodities strategists said.
This comes as some mills ramped up output this month amid improving profit margins and rising steel prices, the strategists added.
TODAY'S TOP HEADLINES
Fed's Cook says a soft landing is possible, but not assured
Inflation can continue to decline without a sharp increase in unemployment - a so-called soft-landing - a top Federal Reserve official said Thursday.
"I believe a soft landing is possible, with continued disinflation and a strong labor market, but it is not assured," Fed Gov. Lisa Cook said in a speech at the Fed's San Francisco regional bank.
Avoiding China Has Been a Winning Investment Strategy. But It Isn't Easy.
Investors in emerging-market stocks have profited this year by staying away from China.
The MSCI China Index is down 8% this year through Nov. 15, while a broader emerging-markets benchmark that excludes China has risen 8% over the same period. Chinese stocks have been weighed down by the country's shaky economic reopening, a pullback by foreign portfolio managers and an increasing reluctance among the country's small investors to buy stocks.
Oil futures are slipping into a condition known as contango. What that means for prices.
The oil market is slipping into a state known as contango. And while that may sound vaguely dance-inspiring, history suggests the shift isn't a positive sign for crude prices.
Contango is trader lingo to describe when prices for nearby futures contracts - right now, say December West Texas Intermediate crude CLZ23 - trade at a discount to deferred futures contracts, such as January WTI CLF24 or other contracts down the line.
Goodyear Tire & Rubber to Close Two German Plants
Goodyear Tire & Rubber will shut down two of its manufacturing facilities in Germany as part of a turnaround plan in Europe, the Middle East and Africa, according to a Securities and Exchange Commission filing.
The tire manufacturer on Thursday said its Fürstenwalde and Fulda plants will be permanently closed to lower its production expenses and improve its competitive position in the EMEA region, leading to about 1,750 job reductions.
U.S. Sanctions Shipping Companies for Allegedly Evading Russia Oil Price Cap
The U.S. has imposed sanctions on additional shipping companies and vessels that it says evaded a cap meant to cut Russia's oil revenue.
The Treasury Department on Thursday said it placed sanctions on three companies based in the United Arab Emirates: Kazan Shipping, Progress Shipping and Gallion Navigation. Vessels owned by those companies transported Russian crude without respecting a $60-a-barrel price cap imposed by the U.S. and allies, the Treasury said.
International Court Finds Evidence of Torture Violations in Syria
Citing extensive evidence of human-rights abuses during Syria's 12-year-long civil war, the International Court of Justice ordered the regime of President Bashar al-Assad to obey the global treaty prohibiting torture and preserve evidence of violations for future prosecution.
Thursday's 13-2 vote came in a case filed by Canada and the Netherlands against Syria under the Convention Against Torture, a major instrument of international law that has been ratified by more than 170 countries. The Chinese and Russian judges who sit on the ICJ-a judicial arm of the United Nations based in The Hague-dissented.
Applied Materials Posts Strong Earnings. The Stock Drops on Report of Federal Investigation.
Applied Materials reported better-than- expected earnings for the October quarter, but its shares fell after a media report offered new details about a U.S. Justice Department probe into the company.
On Thursday, just as Applied Materials (ticker: AMAT) released its earnings, Reuters reported that the company was under criminal investigation by the Justice Department for sending its equipment to a Chinese company without the required licenses.
Elon Musk's X Loses Bid to Scrap FTC Privacy Order
A federal judge denied X Corp.'s request to modify or terminate a consent order between the social-media company acquired by Elon Musk last year and the Federal Trade Commission over how the platform handled users' information.
In a decision Thursday, U.S. Magistrate Judge Thomas Hixson in the Northern District of California said his court lacked the power to grant X relief from another tribunal's orders. The judge also denied X's request to stop a deposition of Musk by the FTC.
Google Antitrust Judge Says He Has 'No Idea' How He Will Rule
WASHINGTON-The historic antitrust case against Google will soon be in the hands of a judge who says he has no idea how he will rule.
It will be many months before U.S. District Judge Amit Mehta, who oversaw the nonjury trial in Washington, rules on the question at the heart of the Justice Department's case: Did Alphabet-owned Google, which answers about 90% of all internet search queries worldwide, illegally cement its monopoly?
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Expected Major Events for Friday
07:00/SWE: Oct Labour Force Survey
07:00/UK: Oct UK monthly retail sales figures
07:30/SWI: 3Q Industrial production
08:00/AUT: Oct CPI
08:00/SPN: Sep Trade Balance
09:00/BUL: 3Q Labour force survey
09:00/POL: Sep Merchandise trade
09:00/EU: Sep Euro area balance of payments
10:00/CYP: Oct Harmonised CPI
10:00/EU: Oct Harmonised CPI
10:00/MLT: Oct Harmonised CPI
10:00/ITA: Sep Balance of Payments
17:59/POR: Sep Balance of Payments
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
11-17-23 0015ET
