North American Morning Briefing: Investors Await Pivotal Data This Week

Feb 16, 2024

MARKET WRAPS

Watch For:

Dallas Fed Manufacturing Outlook Survey for August

Today's Top Headlines/Must Reads:

- Chinese Stocks Rally After Beijing Moves to Boost Market

- Why Central Bankers Are Unsure Whether They've Raised Rates Enough

- Rising Long-Term Rates Loom Over Autumn on Wall Street

Follow WSJ market coverage here

Opening Call:

Stock futures edged higher on Monday, as investors looked ahead to a week that will deliver important inflation and employment data, following a cautious view from Jerome Powell last week.

The central bank will be paying close attention to the data set to be released, with its preferred inflation measure, the July personal consumption expenditure index, due on Thursday, followed by August payrolls data on Friday.

Meanwhile, Chinese indexes gained after the government cut a trading tax and said it will take more steps to revive markets. Hong Kong's Hang Seng Index gained 1%, while the Shanghai Composite added 1.1%. Japan's Nikkei 225 jumped 1.7%. European stocks also gained, while U.K. markets were closed for a holiday.

Pre-Market Movers

ADRs of Alibaba rose 1%, https://urldefense.com/v3/__http://JD.com__;!!F0Stn7g!ECyf0m1NJdzvLoUN_usbElrfGuGhCwBjGRZMxRk9BPANymm-pjvRGCY8qZpadYPuz6aDukFKCL1epzOya-IYj5PSZOCGarFaE2Qgb64-A5Y$ gained 1.2%, and Baidu rose 1.1% after the Chinese government said it would reduce a tax on trading and take other steps to boost its capital markets.

3M rose 4.3% in premarket trading following a report from WSJ that said the company and plaintiffs attorneys were nearing a settlement in which 3M would pay $5.5 billion to resolve claims it sold faulty combat earplugs to the U.S. military.

Read 3M Nears Roughly $5.5 Billion Earplugs Settlement

Jabil reached an agreement to sell its mobility business to BYD Electronic in a deal valued at about $2.2 billion. Jabil shares were up 2.4%.

Nvidia was rising 1% in premarket trading.

Forex:

Investors continue to favor the dollar over other major currencies due to the conviction that economic weakness is greater outside of the U.S. than inside it, UniCredit said.

"Markets remain convinced that economic weakness is likely to remain more evident outside the U.S. and yield spreads will probably move further in favor of the dollar."

Powell said at Jackson Hole that interest rates could rise further, but that the central bank will proceed carefully, which was enough to keep the dollar firm across the board, UniCredit added.

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EUR/USD has scope to fall further, based on technical charts, UOB said. Last week, the currency pair broke below July's low of 1.0832 and dipped slightly below the 55-day week exponential moving average near 1.0790.

However, EUR/USD's downward momentum hasn't increased much and its fall is approaching oversold territory, so the pace of any drop is expected to be relatively gradual, UOB added, noting next significant support is at late May's low near 1.0635.

Energy:

Oil prices edged higher in Europe as Chinese stimulus efforts offset concerns about demand and higher supply.

Concerns about China's economy have been a key drag on demand expectations. Adding to those concerns, China's Industrial profits fell 12.6% in May, according to data released Sunday.

Reports of easing tensions between the U.S. and both Iran and Venezuela have also emerged, which could also see sanctions on Caracas and Tehran lifted, boosting their oil exports.

Metals:

Read Barron's September Is Bad for Stocks. Is It Still Good for Gold?

TODAY'S TOP HEADLINES

China Evergrande's First-Half Net Loss Narrowed; Shares to Resume Trading

China Evergrande Group, the world's most indebted developer, narrowed its first-half loss significantly mainly due to an absence of impairment loss on investments.

Net loss during the period ended-June was 33.01 billion yuan ($4.53 billion) compared with CNY66.35 billion loss a year earlier, the company said late Sunday.

XPeng Shares Rise after Announcing Strategic Partnership with DiDi

XPeng's shares rose sharply in Hong Kong after the electric-vehicle maker announced a strategic partnership with ride-hailing giant DiDi Global.

XPeng's Hong Kong-listed shares rose 14% to 74.45 Hong Kong dollars (US$9.49), taking its year-to-date gains to 94%.

BYD Electronic Plans Acquisition Worth Nearly $2.2 Billion

BYD Electronic plans to buy NYSE-listed Jabil Inc.'s mobile-electronics manufacturing business for nearly $2.2 billion to expand its smartphone components footprint.

The acquisition will mark BYD Electronic's "expansion of the core supply chain for consumer electronics, and thus further increasing its market share and consolidating its leading position in the industry," the companies said in a joint statement Monday.

Fed's Inflation Fight, China's Slowdown Hammer Emerging Markets

Rising U.S. interest rates and China's economic sluggishness are dealing a double blow to emerging markets.

Investors had expected developing economies from Brazil to Thailand to shine this year as U.S. interest rates fell, the dollar weakened and Chinese demand rebounded after three years of pandemic-driven lockdowns.

Gina Raimondo Says China Visit Aimed at Protecting U.S. Economic Interests

BEIJING-Commerce Secretary Gina Raimondo said she would use a four-day visit to China this week to ensure an easing in tense relations while standing firm in confrontations over technology restrictions and Chinese trade practices.

Raimondo, who arrived in Beijing on Sunday, said that she will seek to "protect what we must and promote where we can" as she discusses economic and commercial relations with her Chinese counterparts.

Foxconn Founder Stirs Up Taiwan Presidential Race by Declaring Bid

SINGAPORE-Terry Gou, the billionaire founder of iPhone assembler Foxconn Technology Group, said he plans to run for Taiwan's presidency, complicating a closely watched contest that could reshape the island's testy relations with Beijing and affect U.S. policy toward China.

Gou announced his bid at a Monday briefing in Taipei, where he cast himself as an independent candidate who can unite Taiwan's disparate opposition forces and unseat the ruling Democratic Progressive Party, which has tightened ties with Washington, at the presidential election due in January.

Student Loans Are Emerging From Deep Freeze, and Borrowers Are Confused

Student-loan borrowers are finding out that restarting a $1.6 trillion federal program is much more confusing than switching it off.

With pandemic relief ending, borrowers will start owing interest as of Friday. They are learning of new payment schedules, often via email, from servicers they might have never heard of-and could be reluctant to pay. That is because about four-in-10 borrowers' loans transferred to a new servicer during the pause that began in March 2020, according to government data.

Write to [email protected]

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Calendar (ET):

Nothing major scheduled

Stocks to Watch:

American Future Fuel Corp: New Mexico Mining and Minerals Division Issued Company's First Drilling Permit at Its 100%- Owned Flagship Cebolleta Uranium Project Located in the Grants Uranium Mineral Belt West of Albuquerque; Entered a Contract With Stewart Brothers Drilling Co., Drilling Is Scheduled to Begin in Aug; Is a Canadian-Based Resource Co Focused on the Strategic Acquisition, Exploration and Development of Alternative Energy Projects

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FSD Pharma Rebuts Claims Of GBB Drink Lab Now Acquired By Jupiter Wellness Trading Under The Symbol

Other News:

California Pipeline Pause Weighs on Brookfield-Backed Carbon Business

Expected Major Events for Monday

05:00/JPN: Jun Indexes of Business Conditions - Revision

08:59/JPN: Aug Monthly Economic Report

10:00/FRA: 2Q OECD Quarterly National Accounts: GDP growth

14:30/US: Aug Texas Manufacturing Outlook Survey

23:01/UK: CBI Service Sector Survey

23:01/UK: Aug Shop Price Index

23:30/JPN: Jul Labour Force Survey

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Monday

Aceragen Inc (ACGN) is expected to report for 2Q.

Ault Alliance Inc (AULT) is expected to report for 2Q.

Battalion Oil Corp (BATL) is expected to report for 2Q.

Charah Solutions Inc (CHRA) is expected to report for 2Q.

DZS Inc (DZSI) is expected to report for 2Q.

Heico Corp - A Share (HEI,HEIA) is expected to report $0.73 for 3Q.

JOANN Inc (JOAN) is expected to report for 2Q.

LifeVantage Corp (LFVN) is expected to report for 4Q.

Omnitek Engineering (OMTK) is expected to report for 2Q.

Portage Biotech Inc (PBT.U-L,PRTG) is expected to report for 1Q.

Prairie Provident Resources Inc (PPR.T) is expected to report for 2Q.

Spanish Broadcasting System Inc (SBSAA) is expected to report for 2Q.

TAG Oil (TAO.V,TAOIF) is expected to report for 1Q.

Tattooed Chef Inc (TTCFQ) is expected to report for 2Q.

Vyant Bio Inc (VYNT) is expected to report for 2Q.

Waitr Holdings Inc (ASAP) is expected to report for 2Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Abercrombie & Fitch Raised to Equal-Weight From Underweight by Morgan Stanley

Ardelyx Raised to Overweight From Neutral by Cantor Fitzgerald

Avista Raised to Sector Weight From Underweight by Keybanc

Clarivate Cut to Sector Perform From Outperform by RBC Capital

Crestwood Equity Partners Cut to Market Perform From Outperform by Raymond James

Cullen/Frost Bankers Raised to Neutral From Sell by UBS

Digital Realty Cut to Hold From Buy by Deutsche Bank

Domo Cut to Market Perform From Outperform by TD Cowen

FactSet Research Cut to Sector Perform From Outperform by RBC Capital

Fidelity National Cut to Neutral From Outperform by Evercore ISI Group

Hibbett Raised to Buy From Hold by Williams Trading

Holly Energy Partners Cut to Market Perform From Outperform by Raymond James

(MORE TO FOLLOW) Dow Jones Newswires

August 28, 2023 06:20 ET (10:20 GMT)