MARKET WRAPS
Watch For:
S&P CoreLogic Case-Shiller Home Px Index for December; Conference Board Consumer Confidence for February; earnings from Bank of Montreal, Target, AMC Entertainment, Norwegian Cruise Line, AutoZone, Advance Auto Parts, J.M. Smucker; Goldman Sachs investor day
Today's Headlines/Must Reads
- Russia Turns to China's Yuan in Effort to Ditch the Dollar
- U.S. Wants Allies to Squeeze China on Chips. Progress Is Slow
- Pentagon to Reap Rewards From $53 Billion Chips Act
- South Korea's L&F Signs $2.9 Billion Supply Deal With Tesla
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Opening Call:
Stock futures slipped back on Tuesday as more evidence that high inflation is proving sticky in developed economies was forcing bond yields higher.
Data from France and Spain showed consumer price increases accelerating this month, raising the prospects that the main eurozone inflation numbers for February, due on Thursday, will come in hotter than forecast.
Furthermore, U.K. grocery inflation hit 17.1% in the four weeks to mid February, another record high, Reuters reported.
This follows last Friday's PCE reading, which also pointed to inflation proving more stubborn than hoped.
Together they raise the chances that central banks may need to raise interest rates by more than expected.
"Sentiment has buckled sharply in the last two weeks, with most investors firmly in the hawkish Fed camp, expecting higher rates for longer," Fundstrat said.
Stocks to Watch
Aptinyx said the results from a Phase 2 study of NYX-458 in cognitive impairment associated with Parkinson's disease and dementia with Lewy Bodies didn't support further development. Shares dropped 63% in after-hours trading.
Fisker stock rose 30% on Monday after it said deliveries for its first vehicle would start in the spring. Shares were little changed premarket.
Hims & Hers Health gained 9% after fourth-quarter revenue at the company nearly doubled to $167.2 million and subscribers topped 1 million. It also issued revenue forecast for the fiscal first quarter and fiscal year above analysts' estimates.
Occidental Petroleum was down 1% in premarket trading after the company posted fourth-quarter earnings and revenue below analysts' expectations.
Progyny reported higher fourth-quarter revenue that beat Wall Street views. The company also provided full-year guidance for revenue between $1 billion and $1.03 billion. Shares rallied 13% in after-hours trading.
Workday reported better-than-expected fiscal fourth-quarter adjusted earnings, but the stock was down 2% in premarket trading after the company maintained a conservative forecast for fiscal 2024.
Zoom Video rose 7% after reporting fourth-quarter adjusted earnings better than Wall Street estimates.
Forex:
The dollar edged higher after suffering a downward correction on Monday that was likely due to some month-end flows and reduced demand for safe havens as global equities rebounded, ING said.
"We have recently highlighted how the narrative for the [dollar] has turned more structurally supportive, meaning that a return to a USD downtrend will take time and may only be very gradual," ING said.
That is unless incoming data start showing a weaker U.S. economic outlook and cooling inflation, which would force some unwinding of market bets on the Fed raising interest rates further, ING added.
MUFG Bank said higher interest-rate expectations outside the U.S. have limited the dollar's appreciation in February.
The dollar has received support this month from a jump in Treasury yields as the market prices in more rise rates by the Fed, but this has been partially offset by higher rate bets outside the U.S., MUFG said.
"The U.S. two-year government bond yield has increased sharply this month by 60 basis points compared to similar 43bps increases in the eurozone and 48bps in the U.K."
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Sterling remains vulnerable even after the U.K. and EU agreed to deal to overhaul post-Brexit Northern Ireland trading arrangements, Commerzbank said.
Market expectations for additional interest-rate rises from the Bank of England may need to be corrected as the BOE remains hesitant about further monetary policy tightening and recently signalled it could soon end rate rises, Commerzbank added.
"As long as it sticks to that view, while the data publications do not signal an improvement on the inflation front sterling is likely to remain under depreciation pressure."
Read Euro Trims Losses Slightly After French, Spanish Inflation Data
Energy:
Oil prices climbed almost 1% early in the European session, as traders hoped Chinese data due later this week will show the nation's economy picking up steam.
PMI data on China's manufacturing sector due Wednesday will be closely watched for signs that the nation's reopening is lifting its economy and with it, demand for oil.
"Most continue to hold the view that pent-up demand in 2Q amid more normalized Chinese consumer operating conditions will hold sway," SPI Asset Management said.
Metals:
Copper prices weakened slightly in London as the dollar firmed, and few signs have emerged of extra demand from China, the world's largest consumer of raw materials.
Commodity Supply Gaps
Miners and investors are cognizant of a widening supply shortfall expected for some metals vital to the energy transition, U.K. wealth-management firm Quilter Cheviot said.
"Mindful of the opportunity that pivoting to more energy transition-oriented metals might bring, investors are becoming slightly more open to the idea of potential deals that have robust and defendable financial returns under conservative commodity price assumptions."
Still, memories of a deep industry downturn in the middle of the last decade remain fresh for company executives and investors, which could influence the speed miners respond to rising demand, Quilter Cheviot said.
There's also a shortage of large and profitable projects in places that are relatively low risk to operate to fill projected supply gaps.
TODAY'S TOP HEADLINES
In Deposition, Rupert Murdoch Says Fox News Hosts Endorsed False 2020 Election Claims
Rupert Murdoch said some Fox News hosts and commentators endorsed the false narrative that the 2020 election was stolen, according to testimony in an ongoing defamation lawsuit.
Voting-machine company Dominion Voting Systems is suing Fox News and Fox Corp. for defamation, over false on-air claims that its technology enabled widespread fraud in the election. The new details emerged in briefs in which the companies laid out evidence they plan to present to a Delaware state court.
South Korea's L&F Signs $2.9 Billion Supply Deal With Tesla
South Korean battery-materials maker L & F Co. signed a $2.91 billion supply contract with Tesla Inc.
L&F said in a regulatory filing Tuesday that it would provide high-nickel cathode materials worth 3.835 trillion won to the U.S. electric-vehicle giant.
Zoom Revenue Up on Growth From Big Customers
Zoom Video Communications Inc. posted higher sales in the fourth quarter on strong growth from enterprise customers and forecast profit ahead of Wall Street expectations.
The videoconferencing company on Monday said sales grew 4% to $1.12 billion, just ahead of the $1.1 billion expected by analysts recently polled by FactSet. Enterprise revenue rose 18% compared with last year, while online revenue, which measures individual customers, fell 10%.
Canada Follows U.S., Europe With TikTok Ban on Government Devices
OTTAWA-Canada on Monday followed the lead of the U.S. and European Commission and banned the TikTok app from government-issued devices, citing an "unacceptable" level of risk to privacy and security.
The prohibition in Canada, effective Tuesday, would add to a patchwork of bans affecting government employees in the U.S. and Europe, based over national-security concerns about TikTok's owner, Beijing-based ByteDance Ltd. Some U.S. and European lawmakers and officials have expressed concern that Beijing could force TikTok to hand over data on its users, or to influence the videos they view.
Facebook Parent, Snap Embrace AI Technology That Powers ChatGPT Chatbot
Facebook parent Meta Platforms Inc. and Snap Inc. are embracing the much talked-about artificial-intelligence technology popularized by OpenAI's viral ChatGPT chatbot.
Meta is establishing a group aimed at accelerating adoption of the so-called generative AI technology across the company, Chief Executive Mark Zuckerberg said Monday. Meta, which also owns Instagram and messaging app WhatsApp, is centralizing staff who are working on the AI technology from across the company to achieve faster breakthroughs it can apply to different products, Mr. Zuckerberg said.
Credit Suisse 'seriously breached' its supervisory obligations in dealings with financier Lex Greensill, Swiss regulator finds
Credit Suisse seriously breached its supervisory obligations in its dealings with the financier Lex Greensill, whose $10 billion of funds distributed by the Swiss bank were frozen in 2021, the Swiss regulator said Tuesday after a two-year investigation.
Greensill offered what are called supply-chain funds via Credit Suisse CS. The financing is meant to be low risk, where a financing company immediately pays out a seller's claim, at a discount, and then collects on the claim from the buyer. Greensill, who was advised by former British Prime Minister David Cameron, securitized these claims and passed them onto four Credit Suisse funds.
Moderna's Covid Boom Is Ending. Why the Outlook Isn't All Grim.
Last week was a bad one for Moderna shareholders.
The biotech company's shares tumbled 6.7% on Thursday, and another 5.6% on Friday, after its earnings report gave investors a glimpse into how it expects its post-pandemic financials to look.
Exxon and 6 Other Energy Picks With Earnings Upside
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02-28-23 0616ET
