MARKET WRAPS
Watch For:
U.K. GDP, industrial production, trade; France consumer
spending; trading updates from Wood Group (John), Dechra
Pharmaceuticals
Opening Call:
European shares look set to open higher Friday as market focus
turns to tensions in the Middle East. Asian stock benchmarks were
mixed; the dollar weakened slightly; Treasury yields edged higher;
oil futures gained on fresh Middle East tensions and gold also
advanced.
Equities:
European stock futures were tracking higher despite a weak lead
from U.S. stock futures as investors track developments in the
Middle East and parse December's hotter-than-expected U.S. consumer
prices.
A U.S.-led coalition launched more than a dozen strikes on
Houthi rebel targets in Yemen late Thursday, officials said, two
days after the Yemeni rebel force defied an ultimatum to halt its
attacks on ships transiting the Red Sea.
Early Friday, official data showed that China's consumer prices
fell 0.3% in December from a year earlier, declining for a third
straight month, suggesting continued weak domestic demand.
U.S. stock markets ended roughly flat Thursday after the
consumer-price index showed inflation rose more than expected in
December.
Also, Cleveland Fed President Loretta Mester on Thursday threw
cold water on market expectations of an interest rate cut as soon
as March saying the December CPI showed that the Fed "has more work
to do" to put inflation on a sustainable downward path to 2%.
"There's this continuing battle between market expectations and
the Fed's projections," said Brian Jacobsen, chief economist at
Annex Wealth Management.
"On a daily basis we're just seeing that tug of war play out
here in the markets."
On Friday, investors will get another reading on inflation when
the U.S. producer-price index is released. The earnings season also
kicks off with bank results.
Forex:
The U.S. dollar weakened in Asia but may rise on geopolitical
risks which could spur safe-haven demand.
A U.S.-led coalition launched more than a dozen strikes on
Houthi rebel targets in Yemen late Thursday, which could be a
factor, said Robert Carnell, regional head of Research for
Asia-Pacific at ING.
The U.S. dollar has the potential to rise further in the near
term after Thursday's stronger-than-expected U.S. inflation data if
Fed policymakers continue to cast doubt over the chances of a first
U.S. rate cut in March, said Matthew Ryan, head of market strategy
at financial services firm Ebury.
Ryan said the inflation report had made him increasingly
confident that calls for a first Fed rate cut in March were
premature.
Bonds:
Treasury yields edged higher as traders looked past a
hotter-than-expected U.S. inflation report for December and focused
on the likelihood of easing price gains going forward.
"In my view, this uptick in CPI is a critical reminder of the
unpredictable nature of economic recovery and the murkiness of the
macroeconomic data," said Jon Maier, chief investment officer at
Global X.
"Markets may need to brace for potential volatility, as the Fed
could maintain or potentially intensify its restrictive monetary
policy stance in response to these inflationary pressures."
The CPI report did little to budge the market's narrative about
Fed's timing and extent of interest rate cuts as fed funds futures
traders boosted the likelihood of a quarter-of-a-percentage-point
rate cut by March to 68.1% from 64.7% a day earlier, according to
the CME FedWatch Tool.
Energy:
Oil futures gained after a U.S.-led coalition launched more than
a dozen strikes on Houthi rebel targets in Yemen.
Risk of escalation could unnerve markets and further prop up
crude oil prices, Saxo Markets analysts said.
"If Iran is drawn more directly into the conflict, it could
again target tankers in the Strait of Hormuz and sabotage regional
energy facilities in order to internationalize the cost of the
war," Helima Croft, head of global commodity strategy at RBC
Capital Markets said.
Metals:
Gold advanced in Asia amid an escalation of geopolitical
tensions in the Middle East.
A U.S.-led coalition launched more than a dozen strikes on
Houthi rebel targets in Yemen. The sudden escalation of the
conflict could enhance gold's role as a safe-haven asset.
The much-anticipated U.S. December inflation report, although
higher-than-expected, doesn't change investors' rate-cut
expectations, Oanda analyst Craig Erlam said.
The yellow metal has been trading around $2,030/oz over the last
couple of months, he added.
--
Copper prices gained in Asia on continued optimism over
potential U.S. Fed rate cuts, which could boost economic
activity.
Markets remain hopeful for rate cuts even after inflation data
came in slightly higher than expected in December, Nanhua Futures
analysts said.
Demand for copper may rise slightly ahead of the Lunar New Year
as buyers stock up, the analysts added.
--
Iron-ore futures were mixed on possible position
adjustments.
While potential normalizing of supply-demand fundamentals could
push the iron-ore market toward surplus by end-2024, elevated
demand in China could continue in the near term and keep iron-ore
prices higher for longer, RBC Capital Markets said.
RBC has lifted its iron-ore estimate for 2024 to $112.50 per ton
from $83.00 per ton previously, it added.
TODAY'S TOP HEADLINES
U.S.-Led Coalition Launches Strikes on Multiple Houthi Rebel
Targets in Yemen
A U.S.-led coalition launched more than a dozen strikes on
Houthi rebel targets in Yemen, officials said late Thursday, two
days after the Yemeni rebel force defied an ultimatum to halt its
attacks on ships transiting the Red Sea with a barrage of missiles
and drones.
The strikes, conducted by U.S. and British forces and supported
by Australia, Bahrain, Canada and the Netherlands, were intended to
reduce the Houthis' campaign, which the Iran-backed rebel group
said it launched in response to Israel's war on the Hamas militant
group in Gaza.
Deflation Worries Deepen in China
HONG KONG-China's consumer prices fell for a third straight
month in December, underscoring the challenges Beijing faces in
reviving its economy as deflationary pressures persist.
An index of prices charged by Chinese manufacturers, meanwhile,
contracted for a 15th straight month. That is a source of growing
concern for U.S. and European officials, as some Chinese business
owners look to unload more low-cost goods on the rest of the world,
competing with Western brands.
Hunt for Critical Minerals Draws World Powers to Saudi
Arabia
RIYADH, Saudi Arabia-The U.S., China and Russia are racing to
secure critical metals needed to power the energy transition away
from fossil fuels. Their latest battleground: oil-rich Saudi
Arabia.
Government officials and top mining executives descended on
Riyadh this week to tap in to the gusher of cash the Saudis are
pouring into mining investments. The kingdom is positioning itself
at the center of a "super region" extending from Central Asia to
the Middle East and Africa, which it says holds at least a third of
the world's natural resources, including critical minerals.
Fed's Mester says March is probably too early for rate cut
Cleveland Fed President Loretta Mester on Thursday threw cold
water on market expectations of an interest rate cut as soon as
March.
Asked in an interview on Bloomberg television about market
expectations for a move in March. Mester replied: "I mean it's hard
to predict the future, as you know, and it's really going to be
dependent on how the economy evolves. I think March is probably too
early in my estimation," Mester said.
Bitcoin ETFs Get Off to a Monster Start, Despite Resistance on
Wall Street
The new bitcoin ETFs had a roaring debut in their first day of
trading, but Vanguard refused to join the party.
The asset-management giant said Thursday it won't offer the new
spot bitcoin exchange-traded funds on its brokerage platform,
highlighting concerns about the digital currency's suitability for
many individual investors.
China's Consumer Prices Fell for a Third Straight Month in
December
China's consumer prices fell for a third straight month in
December, suggesting continued weak domestic demand despite
Beijing's recent efforts to juice up economic growth.
The consumer-price index fell 0.3% in December from a year
earlier, compared with November's 0.5% drop, the National Bureau of
Statistics said Friday. A Wall Street Journal poll of economists
had tipped a 0.4% fall.
U.S.-Led Coalition Launches Strikes on Multiple Houthi Rebel
Targets in Yemen
A U.S.-led coalition launched more than a dozen strikes on
Houthi rebel targets in Yemen, officials said late Thursday, two
days after the Yemeni rebel force defied an ultimatum to halt its
attacks on ships transiting the Red Sea with a barrage of missiles
and drones.
The strikes, conducted by U.S. and British forces and supported
by Australia, Bahrain, Canada and the Netherlands, were intended to
reduce the Houthis' campaign, which the Iran-backed rebel group
said it launched in response to Israel's war on the Hamas militant
group in Gaza.
Hunt for Critical Minerals Draws World Powers to Saudi
Arabia
RIYADH, Saudi Arabia-The U.S., China and Russia are racing to
secure critical metals needed to power the energy transition away
from fossil fuels. Their latest battleground: oil-rich Saudi
Arabia.
Government officials and top mining executives descended on
Riyadh this week to tap in to the gusher of cash the Saudis are
pouring into mining investments. The kingdom is positioning itself
at the center of a "super region" extending from Central Asia to
the Middle East and Africa, which it says holds at least a third of
the world's natural resources, including critical minerals.
Fed's Mester says March is probably too early for rate cut
Cleveland Fed President Loretta Mester on Thursday threw cold
water on market expectations of an interest rate cut as soon as
March.
Asked in an interview on Bloomberg television about market
expectations for a move in March. Mester replied: "I mean it's hard
to predict the future, as you know, and it's really going to be
dependent on how the economy evolves. I think March is probably too
early in my estimation," Mester said.
Bitcoin ETFs Get Off to a Monster Start, Despite Resistance on
Wall Street
The new bitcoin ETFs had a roaring debut in their first day of
trading, but Vanguard refused to join the party.
The asset-management giant said Thursday it won't offer the new
spot bitcoin exchange-traded funds on its brokerage platform,
highlighting concerns about the digital currency's suitability for
many individual investors.
Iran Seizes Oil Tanker Linked to U.S. Sanctions Dispute
The Iranian Navy said it had seized an oil tanker off the coast
of Oman that has been at the center of a dispute between Tehran and
Washington, raising the stakes as a U.S.-led coalition launched
strikes on rebel targets in Yemen.
The seizure came as Secretary of State Antony Blinken wrapped up
a weeklong tour of the region aimed at cooling tensions there,
especially in the waters of the Middle East, where attacks have
risen since the Israel-Hamas war began.
Israelis Express Outrage at Genocide Accusation in U.N.
Court
TEL AVIV-When South Africa presented its case in The Hague on
Thursday that Israel is committing genocide in Gaza, many Israelis
saw an accusation that turned the victim into the perpetrator,
negating the Holocaust and the atrocities committed against them by
Hamas on Oct. 7.
South Africa argued at the International Court of Justice that
Israeli military operations in Gaza are intended to wipe out
Palestinians as a distinct group. Israel has rejected the
accusation and is expected to rebut it at a hearing at the United
Nations court on Friday.
Airbus Shatters Record for Jet Orders as Demand Soars
LONDON-Airbus, the world's biggest plane maker, smashed its
near-decade old record for the highest number of orders in a single
year, as airlines scramble to secure the limited availability of
new aircraft.
The company said it had booked 2,319 gross orders last year,
more than twice the number in 2022 and 29.1% higher than its 1,796
record set in 2014.
Novartis Pursuit of Cytokinetics Cools
Novartis has backed away from its pursuit of Cytokinetics,
putting a damper on the prospects of a deal for the promising
heart-drug developer.
The Swiss drug giant had been closing in on a purchase of South
San Francisco-based Cytokinetics, with an agreement expected as
soon as this week, The Wall Street Journal reported Monday. But
Novartis, which had been pursuing the biotech for several months,
backed away sometime in the past day or two, according to the
people.
The Onetime Auditor Brought In to Reinvent Gucci
MILAN-When Gucci's flagship store here reopened last month, the
space was missing the baroque flourishes and jewel-toned colors
that have defined the brand in recent years.
Instead the look is decidedly less maximalist-all clean lines
and understated tones.
Apple Directors Al Gore, James Bell to Retire
Apple's board of directors is getting a shake up.
Longtime Apple board member Al Gore is retiring from the board,
the company announced Thursday. The former U.S. vice president had
been a board member since 2003, a witness of the company's rise and
transformation a few years after the return of co-founder Steve
Jobs as chief executive.
EPA Calls on Telecom Executives to Meet About Lead-Sheathed
Phone Cables
The Environmental Protection Agency sent letters requesting
telecom companies to meet with the agency about their lead-sheathed
phone cables, in a new phase of an investigation in the EPA's
efforts to protect the public from potential lead hazards.
The agency's move comes on the heels of the EPA finding more
than 100 soil and sediment readings with lead above the regulator's
safety guideline for children at some phone lead-cable sites
identified by The Wall Street Journal in three states.
Write to singaporeeditors@dowjones.com
Expected Major Events for Friday
05:30/NED: Nov International trade
06:00/FIN: Nov Balance of Payments
07:00/TUR: Nov Balance of Payments
07:00/ROM: Nov Industrial production
07:00/ROM: Dec CPI
07:00/UK: Nov UK trade
07:00/UK: Nov Index of production
07:00/UK: Nov Index of services
07:00/UK: Nov Monthly GDP estimates
07:30/HUN: Dec CPI
07:45/FRA: Nov Household consumption expenditure in manufactured
goods
07:45/FRA: Dec CPI
08:00/SVK: Nov Employment and average monthly wage in selected
branches
08:00/SVK: Nov Turnover in selected branches of economy, incl
Industry & Construction
08:00/CZE: Nov Retail trade
08:00/SPN: Dec CPI
09:00/BUL: Oct Trade with EU Member States - preliminary
data
09:00/BUL: Nov Trade with third countries - preliminary data
09:00/CZE: Nov Monthly Balance of Payments
10:00/GRE: Dec CPI
12:30/UK: Dec NIESR Monthly GDP Tracker
13:00/POL: Nov Balance of payments
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(END) Dow Jones Newswires
January 12, 2024 00:14 ET (05:14 GMT)
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