MARKET WRAPS
Watch For:
No major economic events expected; trading updates from Associated British Foods, Henkel
Opening Call:
Stock futures are mixed early Monday tracking Asian stock benchmarks mixed performance. Focus in Asia is on this week's China's National People's Congress meeting; Treasury yields broadly edged higher; the dollar weakened slightly; while oil gained and gold declined.
Equities:
European stocks are tracking mixed at the start of the week after U.S. stocks on Friday kicked off March in fresh record territory, with the S&P 500 clinching another big week of gains.
Following the U.S. stock market's 'dramatic increase' over the past four months, investors are beginning to believe in a 'second leg' of the rally on optimism surrounding the potential impact of artificial intelligence on the economy and markets, said Yung-Yu Ma, chief investment officer at BMO Wealth Management.
Earlier Monday, Japan's benchmark stock index rose above 40000 for the first time, driven by greater corporate earnings and a surge in chip-related stocks, thanks to enthusiasm for beneficiaries of artificial intelligence.
Investor focus remains on when central banks will start cutting interest rates with attention this week centering on the European Central Bank rate decision on Thursday, the U.K.'s spring budget on Wednesday and the U.S. monthly jobs data on Friday.
Also on the radar are U.S. Super Tuesday primary elections, and President Joe Biden's State of the Union address.
Forex:
The dollar weakened slightly in Asia, with market focus on China's National People's Congress meetings to be held this week.
The meetings will be closely monitored to gauge the Chinese government's willingness to support the economy, members of Commonwealth Bank said.
Risks are that support measures could disappoint financial markets, thereby weighing on CNH, AUD, and NZD, it added.
Bonds:
Global bond markets will be fixed on a number of key events this week that include China's National People's Congress starting Tuesday; Australia's 4Q GDP growth data on Wednesday, and a policy meeting at the European Central Bank on Thursday, Deutsche Bank said.
Watch for signs of further fiscal easing measures in China, which could help boost sentiment across all markets, it said.
The ECB's comments amid signs that disinflation has slowed will also be critical, while a weak Australian GDP print would stoke recession talk and pressure the RBA to lower interest rates earlier rather than later, it added.
Energy:
Oil futures were higher in Asia after OPEC+'s decision over the weekend to extend voluntary production cuts into the second quarter.
This move will likely continue to support crude oil prices, said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities
However, a continuation of the group's oil output cuts had been widely anticipated and there are no surprises, the economist added.
Metals:
Gold moved lower early Monday after gold futures settled at a record high on Friday.
Coming U.S. economic data such as nonfarm payrolls could well be catalysts for the precious metal to rise further if they come in substantially weaker than expected, TD Securities said.
Once there's more certainty over timing and magnitude of the pending Fed pivot, gold could climb into the $2,300/oz area, it added.
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Iron ore prices fell in Asian trade, as China's weak factory data weighs on sentiment, said ANZ Research.
Last week, data showed that China's manufacturing activity shrank for a fifth straight month in February.
Investors expect China's "Two Sessions" policy meetings to provide further support measures for the country's property sector.
"However, the focus is likely to be on climate targets, which could ultimately weaken demand for iron ore," ANZ said.
TODAY'S TOP HEADLINES
Nvidia's Surge Stokes Talk of a Bubble
Nvidia's meteoric surge has helped push the stock market to record highs. It also has some on Wall Street saying the "B word."
Rising enthusiasm for artificial-intelligence technology has made Nvidia's chips a must-have product, and in turn, transformed Nvidia into the market's hottest stock.
Nikkei Stock Average Rises Above 40000 for First Time, Driven by AI Optimism
Japan's benchmark stock index rose above 40000 for the first time ever, driven by stronger corporate earnings and a surge in chip-related stocks fueled by enthusiasm for beneficiaries of the boom in artificial intelligence.
The Nikkei Stock Average was recently up 0.8% at 40230.19 on Monday morning after rising as high as 40301.30 earlier.
Jobs Data, Target, Costco, and Broadcom Earnings, and More to Watch This Week
February jobs data and the final stretch of fourth-quarter earnings season will keep investors busy this week.
On Friday, the Bureau of Labor Statistics will report February employment figures. Economists' average estimate is for a gain of 200,000 nonfarm payrolls and a steady unemployment rate at 3.7%. Surprisingly strong January jobs growth totaled 353,000 jobs.
Saudi-Led Oil Producing Nations Extend Output Cuts
The Organization of the Petroleum Exporting Countries and its allies have collectively agreed to extend voluntary production cuts through the end of June, constricting global oil supplies for another quarter.
Saudi Arabia, United Arab Emirates, Kuwait, and Algeria agreed to the moves, which are in addition to previous rounds of production cuts that are slated to remain through the end of 2024, and come as U.S. oil production has continued to surge.
Stock Funds Rise 5.2% Thanks to 'Magnificent Seven'
Stock-fund investors continue to move past last fall's sour market. But the question is how long it will last, with much of the gains coming from the Magnificent Seven stocks.
The average U.S.-stock fund in February notched a total return of 5.2%, according to Refinitiv Lipper data, after being flat in January. The overall market is on a four-month winning streak that has sent the Dow, the S&P 500 and Nasdaq to records.
Red Sea Conflict Threatens Key Internet Cables
Conflict in the Middle East is drawing fresh attention to one of the internet's deepest vulnerabilities: the Red Sea.
Most internet traffic between Europe and East Asia runs through undersea cables that funnel into the narrow strait at the southern end of the Red Sea. That chokepoint has long posed risks for telecom infrastructure because of its busy ship traffic, which raises the likelihood of an accidental anchor drop striking a cable. Attacks by Iran-backed Houthis in Yemen have made the area more dangerous.
U.K. pension funds to disclose domestic investment as London stock market falters
Chancellor Jeremy Hunt on Saturday said U.K. pensions will have to disclose how much they have invested domestically, in a move meant to boost the faltering U.K. stock market.
Under the plan, defined contribution funds by 2027 will have to disclose their level of investment in British businesses, as well as their costs and net investment returns. Hunt said the proposal will first be reviewed by the Financial Conduct Authority.
Russia's Backdoor for Battlefield Goods From China: Central Asia
SINGAPORE-Two years after the invasion of Ukraine, drones and U.S.-made computer chips are increasingly flowing to Russia from China through Central Asian trade routes, showing the difficulty of strangling supplies to Moscow's war effort.
Trade routes snaking through former Soviet republics Kazakhstan and Kyrgyzstan are among the many paths into Russia for so-called dual-use goods-singled out by the U.S. and its allies because they can be used on the battlefield.
Negotiators Say Gaza Truce Could Be Near, but Obstacles Remain
TEL AVIV-Hamas officials are in Cairo for negotiations on a potential deal that would see the release of hostages in exchange for a temporary cease-fire in Gaza, according to Egyptian officials, in a push to stop the fighting before the Muslim holy month of Ramadan.
Negotiators believe Hamas and Israel are making slow progress and could strike an agreement before Ramadan, Egyptian officials said. A senior Hamas official said that the first week of Ramadan is a more realistic target for a deal.
How China Is Churning Out EVs Faster Than Everyone Else
China is speeding ahead in the electric-vehicle race. Riding the nation's EV boom, upstart automakers have eclipsed foreign rivals to develop cars faster, push the boundaries of smart tech and swamp consumers with choice.
Chinese automakers are around 30% quicker in development than legacy manufacturers, industry executives say, largely because they have upended global practices built around decades of making complex combustion-engine cars. They work on many stages of development at once. They are willing to substitute traditional suppliers for smaller, faster ones. They run more virtual tests instead of time-consuming mechanical ones. And they are redefining when a car is ready to sell on the market.
Investors Raise Macy's Buyout Bid
An investor group seeking to buy Macy's is raising its offer by nearly $1 billion after the beleaguered department-store chain rebuffed its prior proposal as too low.
Arkhouse Management, a real estate-focused investing firm, and Brigade Capital Management, a global asset manager, revealed Sunday that they are now offering to acquire the Macy's stock they don't already own for $24 per share, or $6.6 billion, confirming an earlier report by The Wall Street Journal.
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Expected Major Events for Monday
00:01/UK: Feb CBI Growth Indicator Survey
07:00/ROM: Jan PPI
07:00/TUR: Feb CPI
07:00/TUR: Feb PPI
08:00/SPN: Feb Unemployment
08:00/SVK: 4Q Labour Force Sample Survey: Employment & unemployment
08:00/SVK: 4Q Average monthly wage of employees
09:30/UK: 4Q Household Finance Review
16:00/DEN: Feb Foreign Exchange & Liquidity
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03-04-24 0016ET
