MARKET WRAPS
Watch For:
E.U. retail trade; Germany manufacturing orders; France industrial production index; trading updates from Norwegian Air, Finnair
Opening Call:
European stock futures decline amid jitters over the Fed's rate-cut path. Asian stock benchmarks fell; the dollar strengthened; Treasury yields steadied; oil futures gained amid Mideast tensions; while gold retreated.
Equities:
Stock futures tumbled early Friday, tracking moves by Asian equities and U.S. markets after a number of Federal Reserve officials suggested rate cuts might not be imminent.
"The big debate for the remainder of this year will really be how many rate cuts we get and how quickly does inflation come down, if it continues to," said Michael Sheldon, an executive director at RDM Financial Group.
Friday's U.S. jobs report for the month of March also remains a major focus for investors, who are hoping for a reading that isn't too hot, or too cold.
While either a "too hot" or "too cold" jobs figure is often sufficient to spark a market selloff, the biggest danger on Friday is firmly tilted toward a stronger-than-expected reading, said Tom Essaye, founder of Sevens Report Research.
"Investors are on edge the Fed may delay rate cuts from June until later in the summer (or late in 2024) if we get another hot employment report, " Essaye said.
Forex:
Safe-haven currencies such as JPY and USD strengthened in Asia as geopolitical tensions heightened. Markets have entered a risk-off phase, said Matt Simpson, market analyst at FOREX.com and City Index. He added that both JPY and USD have attracted safe-haven bids.
Bonds:
Yields on U.S. government debt finished lower Thursday as Israel-Iran tensions flared and a lineup of Federal Reserve policy makers pointed to the possibility of higher-for-longer interest rates to curb inflation.
The decline in yields suggests that traders think the Fed will either win its fight against inflation, commit a policy error by keeping rates too restrictive for too long and hurting economic growth, or a combination of all those things. Overseas, Israel braced for retaliation from Iran after a deadly strike - prompting flight-to-safety trades in Treasurys and other havens, and a further rally in oil.
Energy:
Oil futures rose early Friday, boosted by escalating Middle East tensions. Israeli Prime Minister Netanyahu has said Israel will take an aggressive stance against Iran and its proxies. An actual disruption to Iran's oil supply could lead to a bull case, with Citi Research seeing oil sustaining prices at an average $90/bbl by 3Q.
Although such a disruption hasn't yet materialized for now, Citi acknowledges that even a higher probability of a bull case brings the expected value of crude oil higher.
Metals:
Gold fell in Asia amid potential correction risks. Market expectations for the Fed's monetary policy continue to change, said Wael Makarem, financial market strategist at Exness.
Traders continue to monitor various comments from Fed officials such as Powell, Bostic, Daly and Mester, as well as U.S. economic data. Overall, gold prices still remain in an upward trend, he added, noting central banks continued to bolster their gold reserves in February.
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Fawad Razaqzada, market analyst at StoneX Group's City Index and Forex.com, expects to see more gains for silver this year, particularly because the metal has not even neared the highs of its most recent years around $30. In contrast, gold has been hitting repeated all-time highs.
"Up until a couple of weeks ago, silver wasn't finding much love," he said. "But stronger industrial data from China has boosted demand for industrial materials like copper and silver."
"Silver has a lot of catching up to do on the upside, and this week's technical breakout from a multi-year consolidation phase may well be the start of a long bull market," he said.
TODAY'S TOP HEADLINES
Barkin says Fed would be 'smart' to take its time to cut rates due to persistent inflation
The president of the Richmond Federal Reserve said it would be "smart for the Fed to take our time" before lowering interest rates in light of the elevated inflation readings in early 2024.
"No one wants inflation to reemerge," Thomas Barkin said in a speech to homebuilders in Virginia. "And given a strong labor market, we have time for the clouds to clear before beginning the process of toggling rates down."
Oil Is Hitting Its Highest Level in Months-Just in Time for Summer Driving Season
Drone attacks in Russia, unrest in the Middle East and strong consumer demand have propelled oil prices to their highest level in months, setting the stage for what could be a summer surge in gas prices.
The rally in crude picked up speed this week after an Israeli strike on an Iranian diplomatic building fanned worries of a broader regional war. Undergirding prices: a relative lack of crude in global markets thanks to production cuts from OPEC and its allies.
Biden Ties Support for Israel to Civilian Protection in Gaza
WASHINGTON-President Biden warned Israeli Prime Minister Benjamin Netanyahu on Thursday that future U.S. support hinges on protecting civilians and aid workers in Gaza, signaling for the first time that the White House would reassess backing Israel's war in the enclave.
In a phone call, Biden demanded an immediate cease-fire in Gaza and urged Netanyahu to empower his negotiators to conclude a deal to bring Israeli hostages home, according to a White House statement. The call came days after Israel killed seven aid workers from World Central Kitchen in what Netanyahu has described as a tragic mistake.
Silver prices settle near a three-year high. A long bull market may be close behind.
Silver prices finished higher Thursday to notch a sixth consecutive session gain and their highest settlement in nearly 3 years.
On Comex, the most-active May silver contract SI00 SIK24 climbed 19 cents, or 0.7%, to settle at $27.25 an ounce, trading 9.4% higher week to date, according to Dow Jones Market Data. Prices settled at their highest since June 16, 2021.
Europe Is Itching to Cut Interest Rates, Unlike the Fed. Why It Matters.
While Federal Reserve officials say they are in no rush to cut interest rates, central bankers in Europe seem eager to get the rate-cutting started.
There are good reasons for U.S. investors to pay attention: If European central banks cut rates sooner and more aggressively than the Fed, that could reinforce the dollar's strength.
British Billionaire Joe Lewis Avoids Prison Time in U.S. Insider-Trading Case
British billionaire Joe Lewis won't serve prison time for his role in an insider-trading scheme, a New York federal judge said Thursday, citing the businessman's advanced age and poor health as reasons for not imposing a sentence of incarceration.
Lewis, 87 years old, pleaded guilty in January to securities-fraud charges for tipping off a romantic partner, a poker buddy and the pilots of his private jet to confidential information about companies he was invested in. Federal prosecutors said while Lewis-one of the 500 richest people in the world-didn't profit from the scheme, his associates collectively made millions of dollars by trading on the information.
Apple to lay off more than 600, weeks after canceling electric-vehicle project
Apple Inc. is laying off more than 600 workers in Silicon Valley, weeks after pulling the plug on its secretive, self-driving EV.
Those are the first significant job cuts for Apple AAPL since the pandemic. According to a filing with the state of California, 614 employees were informed on March 28 that they'll lose their jobs, effective May 27. The San Francisco Chronicle first reported the layoffs.
Samsung Electronics Forecasts 10-Fold Profit Increase
Samsung Electronics said it expects a 10-fold increase in first-quarter operating profit, fueling hopes of a turnaround in its flagship semiconductor business after four straight quarters of losses.
The South Korean technology giant said in a preliminary earnings report Friday that its operating profit is expected to have risen sharply to 6.600 trillion won, equivalent to $4.88 billion, from 640.00 billion won a year earlier. That would be its strongest performance in a year and a half.
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Expected Major Events for Friday
06:00/GER: Feb Foreign trade price indices
06:00/GER: Feb Manufacturing orders
06:00/GER: Feb Manufacturing turnover
06:00/ROM: Feb Retail trade
06:00/UK: Mar Halifax House Price Index
06:00/UK: 1Q Halifax House Price Index: UK Regional Breakdown quarterly release
06:30/HUN: Feb Preliminary Industrial Production
06:30/HUN: Feb Retail Sales
06:45/FRA: Feb Industrial production index
07:00/CZE: Feb Retail trade
07:00/SPN: Feb Industrial Production
07:00/AUT: Mar Wholesale Price Index
07:00/SWI: Mar SNB foreign currency reserves
07:00/AUT: Jan Foreign Trade
07:00/SVK: Feb Internal trade, incl Wholesale & Retail
07:00/SWI: Mar Consumer Sentiment Index
08:30/UK: Mar Narrow money (Notes & Coin) and reserve balances
08:30/UK: Mar S&P Global UK Construction PMI
09:00/MLT: Feb Registered Unemployed
09:00/ITA: 4Q General Govt Quarterly Accounts
09:00/GRE: Feb External Trade (provisional data)
09:00/EU: Feb Retail trade
All times in GMT. Powered by Onclusive and Dow Jones.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
04-05-24 0016ET
