MARKET WRAPS
Watch For:
E.U. business & consumer surveys; trading updates from Holcim, Just Eat Takeaway, Cellnex, Taylor Wimpey, Reckitt Benckiser, Harmony Gold Mining, St. James's Place
Opening Call:
Shares look set for muted trade in Europe on Wednesday as the market looks ahead to this week's economic data. In Asia, stock benchmarks were mixed; Treasury yields were barely changed; the dollar was flat; while oil and gold both weakened.
Equities:
European stocks are poised for a muted start on Wednesday amid caution ahead of U.S. and eurozone data later in the week.
U.S. PCE inflation on Thursday and eurozone inflation data on Friday will be watched for indications on the timing of future interest-rate cuts.
"It's more a wait-and-see environment than a risk-on or risk-off environment," said B. Riley Wealth Management.
Traders have scaled back their bets on near-term rate cuts significantly since the start of 2024. They now expect the first cut to arrive in June, not March or May, according to the CME FedWatch Tool.
The chance of at least a 25-basis-point rate cut by June was seen at 49.7% as of Tuesday afternoon.
Forex:
The dollar was flat in Asia, as Fed rate-cut bets continue to wane.
U.S. Federal Reserve Gov. Michelle Bowman said it is too soon to lower rates and that she remains "willing" to raise rates if inflation fails to ease further, said CBA.
Expectations of higher-for-longer U.S. rates will probably keep the dollar well-supported in the near term, it added.
Bonds:
Treasury yields were little changed in Asia as investors await further data this week that may help shape the trajectory of Fed monetary policy.
The first revision of fourth-quarter U.S. gross domestic product is due on Wednesday, and Thursday brings the personal-consumption expenditure price index, the Fed's favored inflation gauge.
"The Treasury market is faced with dueling narratives that won't convincingly resolve in either direction anytime soon. As a result, we're unlikely to see anything beyond choppy range-trading behavior further out the curve," said BMO Capital Markets.
Energy:
Oil futures were lower in a possible technical correction.
Oil prices are near their highest for this year, with strong demand for U.S. exports and Chinese buyers active in the spot market following strong consumption during the Lunar New Year holiday, ANZ said.
There are "suggestions that China has been buying crude cargoes at an accelerated pace since the mid-February holiday, while also increasing its term supplies from Saudi Arabia in March," said ING.
Metals:
Gold slipped, although the outlook for the metal this year remains positive, supported by waning risk appetite spurred by mild losses in U.S. stock-index futures.
However, the U.S. economy will likely avoid a recession and the Fed will probably lower rates later and less sharply, Commerzbank Research said.
Hence, the rise in gold price that it expects will be delayed and less pronounced than previously thought, said Commerzbank.
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Aluminum rose, with a better performance from stock markets in China helping to support sentiment toward the industrial metal.
Recent measures by Beijing appear to have stemmed the selling of local equities, thereby easing concerns of weaker economic activity, ANZ Research said.
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Iron ore rose, showing signs of a slight recovery after falling for two straight sessions.
Expectations of stronger construction activity in China are higher, with construction sites reopening after the Lunar New Year holiday, and with buyers likely to take advantage of iron ore's recent declines, ANZ said.
TODAY'S TOP HEADLINES
China Expands State-Secrets Law, Highlighting Risks for Foreign Businesses
HONG KONG-China revised its law on state secrets on Tuesday to encompass sensitive information that didn't previously fall under its scope, potentially adding to foreign businesses' concerns over the risks of operating in the country.
The changes, the first to the law since 2010, were adopted by China's top legislative body and signed by leader Xi Jinping, the state-run Xinhua News Agency reported. The amendments are the latest sign of Beijing's heightened vigilance around potential national-security threats, following the passage of a strict information-security law and the rewriting of a law against espionage last year to expand the scope of state control of information.
Shutdown Fears Fade After White House Meeting
WASHINGTON-Democratic and Republican congressional leaders struck an optimistic tone that they would avert a government shutdown this weekend after a White House meeting in which lawmakers also stepped up pressure on House Speaker Mike Johnson (R., La.) to allow a long-stalled vote on Ukraine aid to go forward.
Johnson is expected to put forward legislation in coming days that would keep the government fully open, but the details remained uncertain. The Congress has until Saturday at 12:01 a.m. to fund the departments of Veterans Affairs, Transportation, Agriculture, Energy and several other agencies that have been operating on temporary extensions since Sept. 30. The funding for the rest of the federal government expires after March 8.
Virgin Galactic narrows losses, but the space-tourism stock drops
Virgin Galactic Holdings Inc. lost less money than expected in the latest quarter, but its stock declined in Tuesday's extended session.
The aerospace and space-travel company logged a fiscal fourth-quarter net loss of $104 million, or 26 cents a share, whereas it lost $151 million, or 55 cents a share, in the year-before quarter. Analysts tracked by FactSet were expecting a 30-cent loss per share.
Bud Light Missed Out on the Super Bowl Party
The maker of Bud Light hoped that the Super Bowl might turn things around for the struggling brand. It barely moved the needle.
Bud Light came in second in the big game with 7.3% of all beer sold in U.S. retail stores in the week before and the week after the Super Bowl, according to an analysis of Nielsen data by consulting firm Bump Williams. Modelo Especial was the champion with 8.7%.
Apple Ends Quest to Build Its Own Electric Vehicle
Apple has put an end to its decadelong push to build its own electric vehicle, an effort once seen as having the potential to transform the auto industry.
That transformation, which has been under way for years without Apple, continuously increased the level of difficulty Apple faced as it spent billions trying to catch or exceed the capabilities made available during a revolution led by Tesla.
Country Garden Holdings Faces Winding-Up Petition in Hong Kong
Country Garden Holdings said a winding-up petition against the company was filed at a court in Hong Kong.
The Chinese developer said Wednesday that Ever Credit Ltd. filed the petition in relation to the nonpayment of a term loan of about 1.6 billion Hong Kong dollars, equivalent to $204.5 million, and accrued interest at the High Court of the Hong Kong Special Administrative Region.
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Expected Major Events for Wednesday
00:01/UK: CBI Service Sector Survey
05:30/NED: Feb Producer confidence survey
06:00/FIN: Jan PPI
07:00/DEN: Jan Retail Sales Index
07:00/TUR: Jan Foreign Trade
07:00/SWE: Jan PPI
07:00/SWE: Jan Foreign trade
08:00/SWE: Feb Monthly Business Tendency Survey
08:00/SWE: Feb Consumer Tendency Survey
08:00/SVK: Feb Business tendency survey
08:00/SVK: Feb Economic sentiment indicator
08:00/SVK: Jan PPI
08:00/CZE: Jan PPI
09:00/ITA: Feb Business Confidence Survey
09:00/ITA: Feb Consumer Confidence Survey
09:00/ICE: Feb CPI
10:00/CYP: Dec Industrial Production Index
10:00/EU: Feb Business & Consumer Surveys - Business Climate Indicator & Economic Sentiment Indicator
10:00/BEL: 4Q Final GDP
10:00/MLT: 4Q GDP
10:30/BEL: Feb CPI
11:00/IRL: Jan Retail Sales Index
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
02-28-24 0016ET
