MARKET WRAPS
Watch For:
Germany trade, industrial production index; trading update from SAS
Opening Call:
European stock futures rose slightly at the start of the week. Asian stock benchmarks rose; the dollar and Treasury yields steadied; while oil futures retreated and gold rose.
Equities:
Stock futures edged higher early Monday, after a strong U.S. jobs report on Friday rekindled a stock-market rally on Wall Street.
Investors and analysts have been sifting through economic data for signs that the U.S. jobs market isn't quite as strong as it seems on the surface. This time around, investors said that key points in the monthly report all pointed toward labor-market strength.
More traders are betting the Federal Reserve may cut the benchmark federal-funds rate just once or twice this year, fewer than officials' last median forecast of three quarter-point cuts. And a handful are even starting to wager that the central bank will leave rates where they are.
Investors are turning their attention to U.S. CPI data due Wednesday. Inflation is seen moderating, but surprises to the upside haven't been rare.
Forex:
USD could stay supported this week if U.S. March CPI due out this week remains solid as Commonwealth Bank of Australia expects. A higher-than-anticipated inflation outcome might lead to market pricing for a June rate cut by the Fed being wound back and lift USD, CBA said.
Bonds:
Rates on U.S. government debt jumped Friday after data showed the economy created far more jobs than expected last month.
"Payrolls for March once again defied expectations posting the third consecutive major upside surprise," said David Page, head of macro research for AXA Investment Managers.
The report "is not the be all and end all for the Fed's expected easing cycle," he said. "However, the still solid state of the labor market would likely lead the Fed to consider it [has] more time to consider easing policy, and we think a deceleration is likely to be necessary from here for the Fed to deliver a cut in June."
Energy:
Oil futures declined early Monday, dragged lower by ebbing concerns over reduced supply amid easing tensions in the Middle East. Negotiations for a cease-fire in Gaza and for the release of hostages held by Hamas resumed Sunday.
-
Brent oil prices may rise to $95/bbl-$105/bbl in the near term, from around $90/bbl currently, given likely higher demand and supply shortages, BIMB Securities said, noting the International Energy Agency has revised its oil demand growth forecast upward due to increased bunker fuel demand resulting from the Red Sea crisis. The IEA has reduced its oil supply estimate amid expectations of a rollover in OPEC+ production cuts until end-2024, it noted.
Metals:
In the short term, gold is likely to consolidate, but may make an extension to $2,500/oz, said Ole Hansen, head of commodity strategy at Saxo Markets.
However, the biggest threat to prices will partly be a lowering of geopolitical tensions, said Hansen. Talks for a cease-fire in Gaza and for the release of hostages held by Hamas resumed Sunday.
-
Copper prices declined in Asian trading. Metals saw some signs of profit-taking after stronger-than-expected U.S. nonfarm payrolls data on Friday, Westpac said. However, concerns over copper's supply remain, Westpac said, noting that Ivanhoe Mines' flagship Kamoa-Kakula mine in the Democratic Republic of the Congo reported a drop in copper production recently.
-
Iron ore prices rose amid a better demand outlook. Demand could rebound marginally over the next month as Chinese steel mills are more willing to resume production on recovering profitability, Tongguan Jinyuan Futures said.
As April is the traditional peak season for steel demand, inventory destocking could accelerate and push up iron-ore prices, it added.
TODAY'S TOP HEADLINES
Suddenly, expectations for Fed rate cuts are all over the place
Federal Reserve interest-rate policy expectations have become like a boat without an anchor drifting down a river, moving randomly between the possibility of three rate cuts this year and a chance of no cuts at all.
The Fed's story, as told by Chair Jerome Powell, has been that the labor market is softening and the level of interest rates is putting enough downward pressure on demand, which, if it continues, should keep inflation moving lower, allowing the Fed to cut interest rates sometime this year.
Stock Funds Zoom to 9.1% Gain in First Quarter
Stocks galloped out of the gates in the first quarter of 2024, a winning ticket for the average stock-fund investor.
Stock-market rally faces key test: Will hot inflation data kill rate-cut hopes?
Stock-market bulls can be forgiven for wondering if interest rate cuts really matter.
Investors, after all, had stormed into 2024 on expectations the Federal Reserve would deliver around six quarter-percentage point rate cuts by year-end, beginning in March. Those expectations have since been whittled down to around three rate cuts, according to the CME FedWatch Tool. March, of course, came and went with no cut.
Earnings Season to Test Stock-Market Rally
Stocks have been on a tear this year. The coming earnings season will show investors whether corporate profits are backing up the market rally.
The S&P 500 has increased 9.1% year to date and is trading near all-time highs. It just clinched its best first-quarter performance since 2019.
Something's got to give: European regulators crack down on AI as U.S. tech companies plunge into the market
An ever-expanding assault on Big Tech by the European Union has U.S. companies scrambling to adhere to rules there while trying to not slow their dash to embrace generative artificial intelligence.
The contrasting timelines have U.S. tech companies watching their actions in the more progressive E.U., where regulations are years ahead of those in the U.S.
Gaza Cease-Fire Talks Resume as Israel, Hamas Face Calls for Concessions
Talks for a cease-fire in Gaza and for the release of hostages held by Hamas resumed Sunday, as Israel allowed a significant increase in humanitarian aid into the enclave and international pressure built to reduce the civilian toll of the fighting.
Central Intelligence Agency Director William Burns began meeting with Egyptian and Qatari mediators in Egypt's capital on Sunday, as the conflict enters its seventh month. An Israeli delegation led by David Barnea, director of Israel's Mossad intelligence agency, was set to join them in Cairo. Hamas officials were also in Cairo, Egyptian officials said.
Luxury Brands Go Shopping for Upmarket Boutiques
There's no commercial real estate crash on New York's Fifth Avenue or the Champs-Élysées in Paris.
Luxury brands are racing to buy properties on the world's most famous shopping streets. One reason is the fear that, if they don't buy their flagship store from the landlord, one of their rivals will do so and send them packing.
'Social Order Could Collapse' in AI Era, Two Top Japan Companies Say
TOKYO-Japan's largest telecommunications company and the country's biggest newspaper called for speedy legislation to restrain generative artificial intelligence, saying democracy and social order could collapse if AI is left unchecked.
Nippon Telegraph and Telephone, or NTT, and Yomiuri Shimbun Group Holdings made the proposal in an AI manifesto to be released Monday. Combined with a law passed in March by the European Parliament restricting some uses of AI, the manifesto points to rising concern among American allies about the AI programs U.S.-based companies have been at the forefront of developing.
As Congress returns this week, TikTok steps up its fight against a possible ban
While the U.S. Senate is preparing to get back to work Monday on Capitol Hill, it's not expected to move fast on a House-passed bill that could lead to a nationwide ban for TikTok - and a new advertising blitz from the app aims to help give senators pause.
Pushing the #KeepTikTok hashtag, the ads feature testimonials from American business owners who use the video-sharing app. One rancher looks into the camera and says: "TikTok has allowed me and my family to share our livelihood with all of y'all."
Something's got to give: European regulators crack down on AI as U.S. tech companies plunge into the market
An ever-expanding assault on Big Tech by the European Union has U.S. companies scrambling to adhere to rules there while trying to not slow their dash to embrace generative artificial intelligence.
The contrasting timelines have U.S. tech companies watching their actions in the more progressive E.U., where regulations are years ahead of those in the U.S.
Big Tech Has a Big Cash Problem
Having more money than you know what to do with used to be a high-quality problem. Now it is just a problem.
The largest tech companies in the world are also the richest. Apple, Amazon, Microsoft and the parent companies of Google and Facebook now collectively sit on a little more than $570 billion in cash, short-term and long-term investments. That is more than double the collective pile of the next five richest nonfinancial companies on the S&P 500 index, according to data from S&P Global Market Intelligence.
Write to singaporeeditors@dowjones.com
Expected Major Events for Monday
05:45/SWI: Mar Unemployment
06:00/GER: Feb Foreign Trade
06:00/NOR: Feb Industrial Production Index
06:00/DEN: Feb Industrial production & new orders
06:00/FIN: Feb Foreign trade
06:00/GER: Feb Industrial Production Index
07:00/CZE: Feb Industry, Construction
07:00/CZE: Feb External trade
07:00/TUR: Feb Industrial Production Index
08:00/ICE: Mar External trade, preliminary figures
09:00/LUX: Mar CPI
09:00/CRO: Mar PPI
10:00/FRA: Feb OECD CPI
10:00/IRL: Mar Irish Live Register latest monthly figures
23:01/UK: Mar BRC-KPMG Retail Sales Monitor
23:01/UK: Mar Scottish Retail Sales Monitor
(MORE TO FOLLOW) Dow Jones Newswires
04-08-24 0021ET
