MARKET WRAPS
Watch For:
Retail Sales for December; Import Prices for December;
Industrial Production & Capacity Utilization for December;
Business Inventories for November; Fed's Beige Book; Canada
Industrial Product and Raw Materials Price Indexes for December
Today's Top Headlines/Must Reads:
- Markets Expect Rate Cuts Soon. Central Banks Say Not So
Fast.
- What to Watch in Retail Report: Strength of Consumers Heading
Into 2024
- A Pandemic-Era Tax Break Is Unraveling, and the Lawsuits Are
Flying
Opening Call:
Stock futures fell on Wednesday as central-bank officials'
cautious comments regarding the speed of rate cuts continued to
weigh.
European Central Bank President Christine Lagarde said this
morning that interest-rate cuts were likely, but data dependent and
that there was still some uncertainty.
This came after Fed governor Christopher Waller said Tuesday
that continued declines in inflation would allow the Federal
Reserve to lower rates, but there was "no reason to move as quickly
or cut as rapidly as in the past."
Overseas Markets
Weak China data hit Asian markets, as Hang Seng fell more than
3%, while the mainland's CSI 300 index declined 2%. The data
highlighted slowing economic growth, a property-market meltdown and
population decline .
European stocks also slipped with the Stoxx 600 Index losing
over 1%, while London's FTSE 100 fell further after data showed an
unexpected rise in U.K. inflation .
Premarket Movers
U.S.-listed shares of Alibaba were down 3.2%, JD.com slumped
5.2%, and PDD Holdings fell 4.4% after gross domestic product in
China expanded 5.2% in the fourth quarter and for 2023.
Impinj said it expects fourth-quarter revenue of more than $70
million, above its prior guidance of $65.5 million to $68.5
million. Shares rose 5.9%.
Interactive Brokers reported fourth-quarter adjusted earnings of
$1.52 a share, missing analysts' estimates by 1 cent. The stock
declined 3.6%.
NIO's stock fell almost 10% in Hong Kong after rival Tesla cut
its prices in China. NIO's ADRs declined more than 6%
premarket.
Progress Software posted fourth-quarter adjusted earnings that
fell from a year earlier but topped Wall Street expectations.
Shares were up 2.9%.
Spirit Airlines fell 47% on Tuesday and was down a further 4.4%
in premarket trading after a federal judge blocked the budget
carrier's acquisition by JetBlue Airways, saying the deal would do
harm to the airline's cost-conscious fliers. JetBlue rose 1%.
Forex:
The euro fell to its lowest level against the doll ar so far in
2024 as bond markets reassessed interest-rate cut pricing, driving
Treasury yields higher, Danske Bank Research said.
"EUR/USD faced renewed pressure as markets reassessed the
aggressive pricing of rate cuts."
Danske Bank Research maintained its strategic case for a lower
EUR/USD, and in the near term, prefering to sell on any
rallies.
The euro repeatedly failed to sustain a break above $1.10
throughout 2023 and is shy of this level so far in 2024, but BNP
Paribas Markets 360 believes it has the potential to rise in the
longer term.
"Going forward, we think it's more likely than not that this
barrier [1.10] is broken through and we forecast EUR/USD to close
the year at 1.15."
Sterling rebounded after data showed U.K. annual CPI inflation
unexpectedly rose to 4.0% , dulling chances of an early
interest-rate cut.
The data prompted some to slash bets on the currency falling
below $1.26 against the dollar, Swissquote Bank said.
The U.K.'s anemic growth should limit gains in sterling against
the U.S. dollar, Swissquote added.
Energy:
Oil prices traded lower on a stronger dollar as investors scaled
back expectations of imminent interest-rate cuts following comments
from a Fed official.
"Oil markets continue to trade in a fairly rangebound manner
despite developments in the Middle East," ING said.
"Comments from a Fed official and a surge in the USD yesterday
held large parts of the commodity complex back."
Meanwhile, tensions in the Middle East were escalating amid
fresh Houthi attacks on ships transiting the Red Sea and
retaliation strikes from the U.S. and its allies.
Metals:
Metals prices were falling as the latest figures from top
consumer China weighed on market sentiment, revealing the country's
economy grew at one of its slowest rates in decades last year.
Meanwhile, the impact of shipping disruptions in the Red Sea
seems to be having only a marginal impact on commodities, but
further escalation of the conflict could be supportive for
prices.
"While the conflict at the Red Sea is not directly translating
into higher base metals prices, the indirect impacts are mounting,
possibly delaying shipments and increasing freight costs," Sucden
Financial said.
Copper
Copper prices are likely to trough around $8,000 a metric ton in
3Q , Macquarie said, who raised its expected copper-price nadir
from a previous forecast of $7,600/ton.
"We have taken a more constructive view" following supply
disruptions that suggest a smaller-than-anticipated surplus of the
metal in 2024, it said.
TODAY'S TOP HEADLINES
Maersk, Hapag-Lloyd Form Shipping Alliance
Danish shipping giant A.P. Moeller-Maersk and Germany's
Hapag-Lloyd are teaming up to form a new vessel-sharing agreement
from next year, shaking up the global lineup of shipping
alliances.
Following the end to the pandemic-fueled cargo boom, when
freight demand outstripped the supply of ships, the industry has
been left with a surplus of vessels and sharply lower freight
rates, while the recent escalation of hostilities in the Middle
East has forced shippers to divert their vessels by thousands of
miles.
BP Veteran Named as CEO, Signaling Commitment to Renewable
Shift
BP appointed Murray Auchincloss as chief executive, turning to a
company veteran to continue the oil giant's shift toward renewable
energy.
Auchincloss has run the London-based company on an interim basis
since September following the abrupt resignation of Bernard Looney
over his failure to disclose details about past relationships with
colleagues.
Tesla cuts prices in Germany after reductions in China, report
says
Tesla cut the prices of its Model Y in Germany, just a week
after cutting prices in China, according to a report.
Reuters reported that Tesla TSLA has cut one Model Y vehicle by
9% and another by 8.1%.
Europe Braces for Trade Hit as Global Commerce Slows
Europe's trade relationships are set to suffer as global
conflicts and protectionism open a chillier chapter in
international commerce, hitting growth on the continent.
Trade is now growing at a slower pace than the world economy,
marking a fundamental shift away from the trade-centric globalism
prevalent since the end of the Cold War, Boston Consulting Group
said in a report published this month. The slowdown is due to
rising protectionism, including in China, and increased disruptions
from conflict, BCG said.
How Quickly Donald Trump Could Clinch the Republican
Nomination
Florida Gov. Ron DeSantis muscled out a second-place finish in
Iowa, but he trailed Donald Trump by roughly 30 points. Polls have
shown Nikki Haley on the rise in New Hampshire, in some cases
closing the gap with Trump to single digits. But beyond that, there
is little to suggest anyone is positioned to damp the air of
inevitability around Trump's campaign. If Trump continues winning
by margins similar to his dominant performance in Iowa, he is on a
path to securing the delegates needed to clinch the nomination in a
matter of weeks.
Here's a look at how the delegate math might add up through
Super Tuesday.
Taiwan's New Leader Says He'll Stick to the Status Quo-but His
Past Makes the U.S. Nervous
TAINAN, Taiwan-More than a decade ago, some residents of this
southern Taiwanese city got a lesson in the character of the man
who is now set to be Taiwan's next president.
Lai Ching-te, then Tainan's mayor, wanted to move a section of
railway underground. Residents whose homes would have to be
demolished blocked bulldozers with their bodies and accused him of
selling them out to property developers. Political opponents called
him a dictator.
China's Population Decline Accelerates as Women Resist Pressure
to Have Babies
Births in China dropped by more than 500,000 last year to just
over 9 million in total, accelerating the decline in the country's
population as women shrugged off the government's exhortations to
reproduce.
The number of newborns has gone into free fall over the past
several years. Official figures released Wednesday showed that
China had fewer than half the number of births in 2023 than the
country did in 2016, after China abolished the one-child policy.
The latest number points to a fertility rate-the number of children
a woman has over her lifetime-that is close to 1.0, a level
considered by demographers as "ultralow."
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Haivision Syss 4Q
Economic Calendar (ET):
0830 Nov International transactions in securities
0830 Dec Industrial product and raw materials price indexes
Stocks to Watch:
Gildan Activewear Provides Update on Former CEO; Gildan
Activewear Alleges Glenn Chamandy Failed to Disclose Investments in
Funds Managed by Shareholder Who Has Now Come Out in Support of
Reinstalling Chamandy as CEO
---
Mandalay Resources Achieves 2023 Production Guidance,/ Provides
Outlook for 2024; Consolidated Annual Production Guidance of 90,000
to 100,000 Gold Equivalent Ounces
---
Parex Resources Announces Approval of Normal Course Issuer Bid
and Automatic Shr Purchase Plan; to Buy Up to 10.2M Shares
Expected Major Events for Wednesday
07:00/UK: Dec CPI
07:00/UK: Dec UK producer prices
09:30/UK: Oct Card Spending statistics
09:30/UK: Nov UK House Price Index
12:00/US: 01/12 MBA Weekly Mortgage Applications Survey
13:30/US: Dec Import & Export Price Indexes
13:30/CAN: Nov International transactions in securities
13:30/US: Dec Advance Monthly Sales for Retail & Food
Services
13:30/CAN: Dec Industrial product and raw materials price
indexes
13:55/US: 01/13 Johnson Redbook Retail Sales Index
14:15/US: Dec Industrial Production & Capacity
Utilization
15:00/US: Nov Manufacturing & Trade: Inventories &
Sales
15:00/US: Jan NAHB Housing Market Index
19:00/US: U.S. Federal Reserve Beige Book
21:30/US: 01/12 API Weekly Statistical Bulletin
23:50/JPN: Nov Orders Received for Machinery
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
Alcoa Corp (AA) is expected to report $-1.04 for 4Q.
Avalon Advanced Materials Inc (AVL.T) is expected to report for
1Q.
BancFirst Corp (BANF) is expected to report $1.44 for 4Q.
Bar Harbor Bankshares (BHB) is expected to report $0.67 for
4Q.
CNB Financial Corp (Pennsylvania) (CCNE) is expected to report
$0.54 for 4Q.
Caldwell Partners International Inc (CWL.T) is expected to
report for 1Q.
Cass Information Systems (CASS) is expected to report $0.48 for
4Q.
Charles Schwab Corp (SCHW) is expected to report $0.50 for
4Q.
Citizens Financial Group (CFG) is expected to report $0.60 for
4Q.
Community Trust Bancorp (CTBI) is expected to report $1.08 for
4Q.
Discover Financial Services (DFS) is expected to report $2.51
for 4Q.
FRMO Corp (FRMO) is expected to report for 2Q.
First Community Corp. (South Carolina) (FCCO) is expected to
report $0.37 for 4Q.
First Financial Bankshares Inc (FFIN) is expected to report
$0.34 for 4Q.
Fortrea Holdings Inc (FTRE) is expected to report for 4Q.
HB Fuller Co (FUL) is expected to report $1.07 for 4Q.
Hingham Institution for Savings (HIFS) is expected to report for
4Q.
John Marshall Bancorp Inc (JMSB) is expected to report for
4Q.
Kinder Morgan Inc (KMI) is expected to report $0.31 for 4Q.
Madison Pacific Properties Inc - B Share (MPC.T) is expected to
report for 1Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
Parke Bancorp Inc (PKBK) is expected to report for 4Q.
Plumas Bancorp (PLBC) is expected to report $1.23 for 4Q.
Prologis Inc (PLD) is expected to report $0.60 for 4Q.
SeaChange International Inc (SEAC) is expected to report for
3Q.
Synovus Financial (SNV) is expected to report $0.40 for 4Q.
U.S. Bancorp (USB) is expected to report $0.71 for 4Q.
Wayne Savings Bancshares Inc (WAYN) is expected to report for
4Q.
Wintrust Financial Corp (WTFC) is expected to report $2.42 for
4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Acadia Realty Trust Cut to Hold From Buy by Truist
Securities
Ambrx Biopharma Cut to Neutral From Outperform by Baird
Americold Realty Trust Raised to Buy From Hold by Truist
Securities
APA Cut to Sector Perform From Sector Outperform by
Scotiabank
AvalonBay Cut to Hold From Buy by Truist Securities
Axonics Cut to Hold From Buy by Truist Securities
Bank of America Cut to Hold From Buy by Odeon Capital
BlackRock Raised to Outperform From Market Perform by TD
Cowen
Boeing Cut to Equal-Weight From Overweight by Wells Fargo
Boot Barn Holdings Cut to Hold From Buy by Williams Trading
Boston Beer Raised to Market Perform From Underperform by
Bernstein
Brinker International Cut to Underweight From Equal-Weight by
Morgan Stanley
Brinker International Raised to Buy From Hold by Gordon
Haskett
Cactus Cut to Hold From Buy by Benchmark
Carrols Restaurant Cut to Equal-Weight From Overweight by
Stephens & Co.
Celanese Cut to Underperform From Neutral by B of A
Securities
Centerspace Raised to Outperform From Sector Perform by RBC
Capital
Chevron Cut to Sector Perform From Sector Outperform by
Scotiabank
CMS Energy Raised to Outperform From Peer Perform by Wolfe
Research
Coherent Raised to Overweight From Equal-Weight by Barclays
CVR Energy Cut to Sector Underperform From Sector Perform by
Scotiabank
DocuSign Raised to Equal-Weight From Underweight by Morgan
Stanley
Dollar General Raised to Overweight From Equal-Weight by Morgan
Stanley
Domino's Pizza Raised to Buy From Hold by Gordon Haskett
Dow Raised to Buy From Neutral by B of A Securities
Driven Brands Holdings Cut to Equal-Weight From Overweight by
Morgan Stanley
DTE Energy Cut to Peer Perform From Outperform by Wolfe
Research
DuPont de Nemours Cut to Underperform From Buy by B of A
Securities
Dutch Bros Raised to Buy From Hold by Stifel
Ecolab Raised to Neutral From Underperform by B of A
Securities
Equinix Raised to Buy From Hold by Truist Securities
Equity Lifestyle Cut to Hold From Buy by Truist Securities
Federal Realty Raised to Buy From Hold by Truist Securities
Five Below Cut to Hold From Buy by Craig-Hallum
Floor & Decor Holdings Cut to Market Perform From Outperform
by Bernstein
Fluence Energy Raised to Outperform From Market Perform by BMO
Capital
FMC Corporation Cut to Underperform From Neutral by B of A
Securities
G-III Apparel Cut to Underweight From Equal-Weight by Wells
Fargo
Harpoon Therapeutics Cut to Market Perform From Outperform by TD
Cowen
Helmerich & Payne Cut to Hold From Buy by Benchmark
Hercules Capital Cut to Neutral From Buy by Compass Point
Hewlett Packard Ent Cut to Market Perform From Outperform by
Bernstein
Home Depot Raised to Overweight From Neutral by Piper
Sandler
Hyatt Hotels Cut to Neutral From Buy by Redburn Atlantic
Levi Strauss Cut to Equal-Weight From Overweight by Wells
Fargo
MasTec Cut to Neutral From Outperform by Baird
Mid-America Apartment Raised to Buy From Hold by Truist
Securities
Mid-America Apartment Raised to Sector Perform From Sector
Underperform by Scotiabank
Nabors Cut to Hold From Buy by Benchmark
NetApp Cut to Market Perform From Outperform by Raymond
James
Northrop Grumman Cut to Neutral From Outperform by Baird
NOV Cut to Hold From Buy by Benchmark
OGE Energy Cut to Neutral From Buy by Ladenburg Thalmann
Omega Healthcare Cut to Neutral From Buy by B of A
Securities
Parsons Raised to Outperform From Neutral by Baird
Patterson-UTI Cut to Hold From Buy by Benchmark
PayPal Holdings Cut to Neutral From Buy by Mizuho
ProPetro Holding Cut to Hold From Buy by Benchmark
Raytheon Technologies Cut to Neutral From Outperform by
Baird
Rent the Runway Cut to Equal-Weight From Overweight by Wells
Fargo
Revvity Cut to Neutral From Buy by UBS
Rocket Cos. Cut to Sell From Neutral by Citigroup
Sallie Mae Raised to Buy From Neutral by Citigroup
Sana Biotechnology Raised to Buy From Neutral by HC Wainwright
& Co.
SL Green Realty Cut to Hold From Buy by Truist Securities
Starbucks Cut to Hold From Buy by Gordon Haskett
Starbucks Raised to Overweight From Equal-Weight by Morgan
Stanley
Sun Communities Cut to Hold From Buy by Truist Securities
Sweetgreen Cut to Underweight From Equal-Weight by Morgan
Stanley
Tractor Supply Cut to Underweight From Equal-Weight by Morgan
Stanley
Transphorm Cut to Hold From Buy by Benchmark
Triumph Group Raised to Outperform From Neutral by Baird
Valvoline Raised to Overweight From Equal-Weight by Morgan
Stanley
Ventas Raised to Buy From Neutral by B of A Securities
Wabtec Raised to Buy From Neutral by B of A Securities
Wayfair Raised to Overweight From Equal-Weight by Morgan
Stanley
Wendy's Cut to Hold From Buy by Gordon Haskett
Western Digital Raised to Buy From Hold by Deutsche Bank
Western Digital Raised to Overweight From Equal-Weight by
Barclays
Whitestone REIT Raised to Buy From Hold by Truist Securities
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 17, 2024 06:29 ET (11:29 GMT)
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