MARKET WRAPS
Watch For:
EU retail trade; Germany foreign trade; trading updates from Pirelli, Salvatore Ferragamo, Nexi, Telecom Italia, Deutsche Post, Capita, Legal & General Group, Tullow Oil, ConvaTec Group, Norwegian Air Shuttle, DS Smith
Opening Call:
Stock futures were broadly higher early Wednesday. Asian stock benchmarks were mixed with investors underwhelmed by the lack of policy details and bolder support at China's ongoing NPC; the dollar steadied; Treasury yields were mixed; while oil futures gained and gold declined.
Equities:
European stock futures were higher early Wednesday with investors' focus on Fed Chairman Powell's testimony to the House of Representatives later in the day and to the Senate on Thursday. Also on the radar is the presentation of U.K.'s spring budget.
"This is an important week for a market that has been pricing in a host, a series, of rate cuts," said Quincy Krosby, chief global strategist at LPL Financial, adding that investors will be listening hard for clues on the pace, timing and extent of any interest-rate cuts for the rest of 2024.
Meanwhile, in the Super Tuesday in the U.S. former president Trump and President Biden raked up wins to set up a potential rematch in November.
Forex:
A bigger-than-expected fiscal stimulus at Wednesday's U.K. spring budget could delay the likely timing of Bank of England rate cuts and lift the sterling, Deutsche Bank strategist Shreyas Gopal said.
"We would even suggest that any modest upside to our economist's expectation for GBP15 bln of fiscal easing this year would end up being positive for sterling via higher yields and rate cuts being pushed further out the curve."
Some tax cuts are expected to be set out at the budget ahead of a likely general election later in the year.
Unlike the autumn 2022 mini budget, when plans for unfunded tax cuts caused gilt yields to spike, the pound looks relatively shielded from fiscal policies or politics, Gopal said.
Bonds:
U.S. Treasury yields were mixed as soft February U.S. services PMI keeps alive the prospect of interest-rate cuts this summer and as markets wait for Chair Powell's testimony in the House later today and in the Senate on Thursday.
Odds of rates remaining unchanged beyond the Fed's July meeting are priced at only 12% in the CME's FedWatch tool, while repricing is expected to happen if data shows resilient inflation and employment. Focus is on February payrolls due Friday.
Energy:
Oil gained but skepticism prevails over China achieving its economic growth target of around 5% for 2024, Phillip Securities Research team said.
Although China's growth target is similar to the government's objective for 2023 and in line with analysts' expectations, the lack of "big-ticket" stimulus plans to support the struggling economy has disappointed investors, the team said.
According to analysts, the absence of such plans could lead to weakening demand from the world's largest oil importer.
Metals:
Gold edged lower in a likely technical correction. Investors seem to be increasingly expecting a U.S. recession by late 2Q against a backdrop of stickier housing and services inflation, Citi Research analysts said, adding that this can favor gold as a "risk-off and macro-overlay hedge."
Citi's base-case targets for the precious metal are now at $2,200/oz for up to three months and at $2,300/oz for 6-12 months.
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Copper and aluminum edged lower as investors weighed China's economic targets for the year.
Traders appear unimpressed by the additional Chinese government support, including the CNY1 trillion in ultralong special government bonds, Daria Efanova, head of research at Sucden Financial said.
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Iron-ore prices declined. Investors watching China's key NPC meeting had been waiting for signs of more aggressive action aimed at addressing the country's property crisis, said Westpac analysts.
Measures to help the property sector recover and drive up construction activity in China would help boost demand for materials such as iron ore.
TODAY'S TOP HEADLINES
The Believers Who Rode Bitcoin to a Record High-and the Ones Who Missed Out
Joe Oathout lost $500,000 on bitcoin, but he didn't lose faith.
Few would have the stomach to hold on after watching a $20,000 investment soar halfway to $1 million in 2021 only to have nearly all of it evaporate.
Yes, Even Cookie Monster Is Upset About 'Shrinkflation'
Cookie Monster is a blue furry muppet who lives on a fake street, but even he is sick of a real menace in supermarket aisles.
"Me hate shrinkflation!," the "Sesame Street" character wrote to his 626,000 followers on X. "Me cookies are getting smaller."
Mediators Try to Buy More Time as Israel, Hamas Dig In Heels on Truce Talks
CAIRO-U.S. and Arab negotiators proposed a short pause in fighting in the Gaza Strip to buy time for a longer cease-fire between Israel and Hamas, as talks appeared stuck with time running out for a deal before a Ramadan deadline.
Tuesday's push for a shorter cease-fire-even lasting a few days-could prove to both sides that the other is serious about a longer deal, negotiators said. Israel and some negotiators believe Hamas only wants to escalate fighting to inflame regional tensions during Islam's holy month in March while Hamas points to Israel's threat to launch a final offensive on Gaza's southern border if no agreement is reached.
Tesla Halts Production in Germany After Arson Attack
GRÜNHEIDE, Germany-Tesla halted production at its plant outside Berlin after what police said was a suspected arson attack on the power grid by opponents of the factory's planned expansion.
Police said they believe attackers set a high-voltage pylon ablaze overnight about 3 to 6 miles from the plant, knocking down power to it and across the region.
Ericsson Names New Compliance Chief
Ericsson has tapped its investigations team leader to be its new chief compliance officer, as the Swedish telecommunications-equipment company continues to serve a probation period imposed by the U.S. Justice Department after it breached an earlier settlement over bribery violations.
Rebecca Rohr, an American who currently serves as Ericsson's head of corporate and government investigations, has been appointed compliance chief, bringing both its investigations and compliance teams under a single leader, the company said on Tuesday.
International Criminal Court Issues Arrest Warrants for Top Russian Commanders
The International Criminal Court issued arrest warrants Tuesday for two Russian commanders it accused of targeting Ukraine's power grid, ramping up an investigation into war crimes during Moscow's invasion that earlier produced charges against President Vladimir Putin.
The ICC charged Lt. Gen. Sergei Ivanovich Kobylash, head of a long-range air force bombing unit at the time of the attacks, and Adm. Viktor Nikolayevich Sokolov, who was commander of the Black Sea Fleet, with directing missiles against Ukrainian power plants and distribution stations. Such acts would violate the humanitarian-law prohibition on targeting civilian facilities.
Meta to Wind Down Sales Partner Program, Have Advertisers Work Directly With Company
Meta Platforms plans to wind down its authorized sales partner program by July and move to a model where advertisers work directly with the company, a spokesperson said Tuesday.
ASPs are extensions of Meta's sales teams that have local presences in various countries. The move is meant to help make the company's operating model consistent across markets around the world, the spokesperson added.
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Expected Major Events for Wednesday
05:30/NED: Jan Consumer Spending
07:00/GER: Jan Foreign Trade
07:00/ROM: Jan Retail trade
07:00/SWE: 4Q Balance of Payments
07:30/NOR: 4Q Balance of Payments
07:30/HUN: Jan Retail Sales
07:30/HUN: Jan Preliminary Industrial Production
07:30/HUN: Jan Preliminary External Trade
08:00/SVK: Jan Internal trade, incl Wholesale & Retail
09:30/UK: Feb Narrow money (Notes & Coin) and reserve balances
09:30/UK: Feb S&P Global UK Construction PMI
09:30/GER: Ifo Economic Forecast
10:00/EU: Jan Retail trade
10:00/LUX: Feb CPI
11:00/IRL: Feb Monthly Unemployment
11:00/FRA: Jan OECD CPI
16:59/POL: Polish interest rate decision
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
03-06-24 0017ET
