MARKET WRAPS
Watch For:
No major economic data expected; trading updates from OMV, Imperial Brands
Opening Call:
European stock futures were lower. Asian stock benchmarks broadly rose; the dollar edged higher and Treasury yields declined; while oil futures and gold rose.
Equities:
European stock futures were tracking lower early Tuesday, on a weak lead from U.S. stock indexes that closed flat at the start of the week.
With no mjaor economic data due in Europe today the U.S. inflation data for March due Wednesday is likely to be the market's focus as traders reprice the likelihood of multiple interest-rate cuts this year.
"You flash back to earlier this year and everyone was like 'We're getting six rate cuts,' and that seemed beyond optimistic at best," said Alex McGrath, chief investment officer for NorthEnd Private Wealth. "One might be the max we see this year, because inflation's not going anywhere."
Forex:
EUR/USD has performed well recently and could remain resilient, Generali Investments said.
A nascent recovery of the eurozone economy, even if shallow, will contrast with a U.S. slowdown, the asset manager said, adding that largely synchronized European Central Bank and Federal Reserve rate cuts over the second half of the year will lower rates uncertainty and erode dollar support.
"Despite near-term volatility, the transatlantic yield gap is set to narrow medium term as we expect the total amount of U.S. rate cuts over the next two years to exceed the ECB's easing," it said.
Speculative long positions in the U.S. dollar have soared recently, leaving them--and the dollar--vulnerable to a setback.
Bonds:
Yields on U.S. government debt finished at new four-month highs on Monday as investors prepared for Wednesday's March consumer-price index report.
Inflation, based on the annual headline rate, is expected to have risen to 3.5% last month from 3.2% previously, according to a median estimate of economists polled by the Wall Street Journal. Meanwhile, the monthly inflation reading is expected to ease to 0.3%.
On Monday, JPMorgan Chase & Co. Chief Executive Jamie Dimon warned that continued inflationary pressures driven by fiscal deficits and military conflicts, among other factors, may lead to U.S. interest rates of 8% or even more.
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The bar is high for the European Central Bank's meeting on Thursday to impact credit markets, analysts at BNP Paribas Markets 360 said and expect the ECB to leave rates on hold this week but to deliver 100 basis points of interest-rate cuts during this year, starting from June.
Credit isn't sensitive to the precise number of rate cuts for as long as rate cuts are coming, they said.
Energy:
Oil futures rose as traders continue to monitor risks to crude supplies in the Middle East.
"Geopolitical risks have certainly grown, particularly when it comes to Israel and Iran, which has left the market nervous. However, any premium priced into the market will eventually erode in the absence of any escalation," said Ewa Manthey and Warren Patterson, commodity strategists at ING.
Metals:
Gold gained but prices may run into roadblocks due to wavering interest rate-cut expectations.
"We expect gold prices to remain volatile in the coming months as the market reacts to macro drivers, tracking geopolitical events and Fed rate policy." ING Economics said.
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Copper prices rose, trading at their highest levels since January 2023. The recent rally is fuelled by tightening supply risks and an improving economic backdrop, ANZ Research team said.
Major copper smelters in China were likely considering a 10% production cut amid the slump in copper treatment charges, they add, but a bigger cut is unlikely as long-term contract fees remain profitable.
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Iron ore prices were higher on expectations of a recovery in demand for the steel-making material.
Investors are also cheering signs that Chinese steel mills are slowly restarting furnaces after profits improved, Westpac IQ said.
TODAY'S TOP HEADLINES
Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks
A surge in prices for the raw materials that power manufacturing and transportation shows investors betting on a prolonged expansion-and a potential rebound in inflation.
An index of global commodities prices, the S&P GSCI, has advanced 12% this year, outpacing the S&P 500's 9.1% climb. Copper and oil have gained more than 10% and 17%, respectively. Even gold is posting fresh records, rising 13% to $2,332 a troy ounce.
U.S. Set for Job Gains Ahead, Conference Board Says
U.S. employment is expected to strengthen in the short term, according to an index that gauges U.S. employment trends, a further signal of the robustness of the labor market that in March added more jobs than anticipated.
The Conference Board's employment trends index ticked up to 112.84 in March from a downwardly revised 111.85 in February, the private-research group said Monday.
The Fed's Rate Cut Plans Are in Doubt. Inflation Data Won't Bring Certainty.
Here's a proposed game for anyone looking to spice up the job of tracking Federal Reserve officials' public remarks in 2024: Put away a dollar every time a policymaker says "data dependent" or an approximate synonym. Even casual Fed watchers might soon find themselves rich.
A data-driven approach to setting monetary policy sounds reasonable, and suggests a transparent decision-making process that anyone can follow and understand. But the data haven't been sending a clear message lately, and the decision makers at the Fed have differing opinions about what the numbers mean.
Esprit's Belgium Unit Files for Insolvency
Fashion retailer Esprit's Belgium subsidiary has filed for insolvency due to rising costs and cash flow difficulties.
Esprit Belgie Retail filed for the commencement of insolvency proceedings over its assets at the insolvency court of Belgium on April 8, Esprit said late Monday in a filing to the Hong Kong stock exchange.
Elon Musk stands his ground on EV adoption, but admits threat of Chinese competition
Tesla Inc. Chief Executive Elon Musk insisted that electric-vehicle adoption is continuing "quite fast," but admitted that competition from China in EVs and the wider auto sector remains on his radar.
In addition to factors influencing Tesla's TSLA business, the billionaire also spoke about artificial intelligence, opportunities in India and other topics in an interview with Norges Bank Chief Executive Nicolai Tangen published Monday on X, the Musk-owned social-media platform formerly known as Twitter.
Blackstone Making $10 Billion Multifamily Purchase, Going on the Real Estate Offensive
Blackstone has agreed to acquire an owner of upscale apartment buildings for about $10 billion, signaling that one of the world's largest real-estate investors is ramping up investments again after a period of moving more cautiously.
Blackstone is taking private Apartment Income REIT, known as AIR Communities, which owns 76 rental housing communities that are primarily in coastal markets, including Miami, Los Angeles, and Boston, the companies confirmed Monday. Blackstone plans to invest another $400 million to improve the properties, the firm said.
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Expected Major Events for Tuesday
04:30/NED: Feb Consumer Spending
06:00/DEN: Feb External trade (provisional figures)
06:00/DEN: Feb Balance of payments (provisional figures)
06:00/ROM: Feb International trade
06:45/FRA: Feb Foreign trade
06:45/FRA: Feb Balance of payments
07:00/SVK: Feb Foreign trade
07:00/CZE: Mar Unemployment data
09:00/EU: 4Q Quarterly sectoral accounts
09:00/EU: 4Q Quarterly Balance of Payments
09:00/CRO: Feb Foreign Trade
09:00/MLT: Feb International Trade
09:00/CYP: Feb Foreign Trade (provisional)
10:00/IRL: Feb Industrial Production and Turnover
10:00/POR: Feb International trade statistics
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(END) Dow Jones Newswires
04-09-24 0015ET
