MARKET WRAPS
Watch For:
EU FCCI flash consumer confidence indicator; UK public sector finances; trading updates from Fresenius, Glencore, JDE Peet's, Rio Tinto, BAE Systems, Wolters Kluwer
Opening Call:
Stock futures were little changed as traders await the release of Fed minutes and Nvidia's earnings later today. In Asia, stock benchmarks were mixed; the dollar edged lower; Treasury yields were little changed; oil futures were mixed and gold steadied.
Equities:
European stock futures were little changed early Wednesday as investors await fresh cues from the Federal Reserve's FOMC meeting minutes due later today as well as a number of Fed officials scheduled to speak over the next few days.
Jeffrey Schulze at ClearBridge Investments said he expects the January minutes to reiterate Fed chair Jerome Powell's comments at the press conference after the meeting, so his big focus is on what Fed officials will have to say this week.
Meanwhile, Nvidia's highly anticipated earnings report today is also in focus, after the stock slid 4.4% on Tuesday, its steepest decline since October, weighing on U.S. indexes.
"Unsurprisingly, there are big expectations for Nvidia, and if they fail to deliver this could be a major upset to the S&P 500, as the top-five stocks in the U.S. blue-chip index have fueled 75% of its gains so far in 2024," said Kathleen Brooks, analyst at XTB.
Forex:
Although Fed rate-cut bets have been trimmed, market debate over when it will lower rates rather than whether rate cuts will be possible should remain on track, said Sim Moh Siong, currency strategist at Bank of Singapore.
USD could stay firm for time being, however, as the largest part of the currency's rebound is likely finished, he added.
Bonds:
Emerging markets' record issuance of sovereign debt at the beginning of this year doesn't look excessive, as yields may be too high for some countries to be borrowing too heavily, said Liam Peach, senior emerging markets economist at Capital Economics.
Based on Refinitiv data for over 50 emerging markets, Capital Economics estimates USD- and EUR-denominated sovereign bond issuance exceeded $50 billion for the first six weeks of 2024, a record amount so early in a calendar year. This issuance has happened against a backdrop of declining Treasury yields, which offered attractive entry points for many countries to lock in lower rates, Peach added.
Energy:
Oil futures were mixed early Wednesday amid Middle East tensions that may disrupt the supply of oil in the region. Yemen's Houthi militants said they had attacked the Rubymar cargo vessel in the Gulf of Aden.
"With concerns regarding demand gradually waning and geopolitical tensions persisting, there is potential for further escalations in oil prices on the horizon," said Ricardo Evangelista, senior analyst at ActivTrades, noting market participants may show renewed concerns over potential supply disruptions.
Metals:
Gold was steady in Asia, underpinned by USD weakness of the USD. The currency moves are tailwinds for gold, said ANZ. Also, central banks are looking to increase gold holdings, ANZ added, citing forecasts from the World Gold Council.
-
Copper advanced, helped by overnight weakness in the U.S. dollar. Recent supply cuts and strong demand from new-energy technologies are also supportive of copper prices, ANZ said.
-
Iron ore futures fell as concerns over China's steel demand continued to weigh on market sentiment. Investors shrugged off the cut to the 5-year loan prime rate, while hopes for additional stimulus are stopping a greater drop in iron ore prices, said Vivek Dhar, analyst at Commonwealth Bank of Australia.
Steel mill margins at negative levels historically indicate that a sharp downward correction in iron ore prices is expected, he added.
TODAY'S TOP HEADLINES
Stock-market investors fear short-volatility bets could crush the rally
A popular trade that triggered a historic market meltdown back in 2018 made a comeback last year, as one barometer of its performance logged its best year in six.
But as with any successful trade on Wall Street, some derivatives-market experts now fear that shorting volatility, or being "short vol," has become overcrowded, increasing the risk that a sudden spike in the Cboe Volatility Index VIX, or the VIX, could spark a selloff that might send the S&P 500 tumbling.
Traders are flirting with the idea of a Fed rate hike as January meeting minutes loom
It's taken months to sink in, but traders are finally coming around to the once-unthinkable scenario of possibly no rate cuts in 2024 and even considering the idea of another hike by the U.S. central bank.
The readjustment in thinking comes after last week's consumer-price index for January came in hotter than expected and was followed three days later by the producer-price index for the same month, which confirmed that the Federal Reserve's inflation fight isn't over.
HSBC Swung to Fourth Quarter Loss; Announces Share Buyback
HSBC Holdings announced plans for a new $2.0 billion share buyback, coming after impairments pushed its bottom line to a loss in the latest quarter.
The Asia-focused lender said Wednesday that it swung to a loss of $153 million in the fourth quarter, compared with a profit of $4.38 billion a year ago, as it booked a $3.0 billion impairment loss related to its investment in Bank of Communications. Analysts expected a profit of $2.80 billion, according to Visible Alpha consensus.
Amazon Is Joining the Dow Jones Industrial Average
Amazon.com is officially joining the blue chips.
The online retail powerhouse will be added to the venerable Dow Jones Industrial Average at the start of trading Monday, succeeding Walgreens Boots Alliance.
Nvidia Lost a Record $78 Billion in Market Cap Today. Earnings Are Up Next.
Nvidia shed $78 billion in market cap on Tuesday, its largest one-day decline in valuation on record, according to Dow Jones Market Data.
Write to singaporeeditors@dowjones.com
Expected Major Events for Wednesday
07:00/DEN: Feb Consumer expectations
07:00/UK: Jan Public sector finances
08:00/SPN: Dec Industrial Orders & Turnover
09:00/ICE: Jan Labour Force Survey
10:00/BEL: Feb Consumer Confidence Survey
11:00/FRA: 4Q OECD Quarterly National Accounts: GDP growth
11:00/UK: Feb CBI Industrial Trends Survey
15:00/EU: Feb FCCI Flash Consumer Confidence Indicator
23:00/NED: Jan House Price Index
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
02-21-24 0019ET
