North American Morning Briefing : Investors Weigh Higher-For-Longer Rates

MARKET WRAPS

Watch For:

University of Michigan Preliminary Consumer Survey for November

Today's Headlines/Must Reads

- Meta Strikes Deal to Return to China After 14 Years

- Hackers Hit U.S. Arm of Chinese Bank

- Dark Mood Besets Housing as Fed Looks at Higher-for-Longer Rates

- Why Third-Party Candidates Threaten Biden in 2024

Opening Call:

Stock futures struggled on Friday, in the aftermath of a poor bond auction and fresh signs that interest rates may stay higher for longer that halted winning streaks for major indexes.

Bond yields were slightly easier on Friday, with the yield on the 30-year Treasury note down 2 basis points to 4.739%, from 4.777% on Thursday.

It was unclear whether the Treasury auction had been affected by a ransomware attack against the U.S. unit of the Industrial & Commercial Bank of China that disrupted the U.S. Treasury market.

Investors were also rethinking the recent rally fueled by hopes that the Federal Reserve's interest-rate hiking cycle was finishing.

"This sudden hawkish tone contrasts with the dovish hints provided during the last FOMC meeting, leaving investors with a blurry feeling about the outlook on monetary policies," ActivTrades said.

"Investors are likely to now wait for clear direction and action from central banks rather than relying on rumors and semantics. That said, equity markets may consolidate in a lower volatility environment as investors will wait for next week's data [US/EU/UK CPI] before bringing significant adjustments to their risk exposure," ActivTrades added.

Investors will be looking out for more Fed comments on Friday, with Lorie Logan speaking at 7:30 a.m., Raphael Bostic at 9 a.m., then Mary Daly at 1 p.m.

Overseas

Stocks weakened. Hong Kong's Hang Seng Index fell almost 2%, while shares in Europe also declined.

Share Movers

U.S.-listed shares of Diageo were down 13% after it said it expects growth to slow in the first half of its fiscal year on weaker performance in Latin America and the Caribbean.

Doximity raised its full-year outlook and said its board authorized the repurchase of up to $70 million of common stock over the next 12 months. Shares rose 20%.

Groupon was down 32% after interim CEO Dusan Senkypl said company's "business continues to be challenged."

Illumina said it expects revenue to fall between 2% and 3% in 2023, compared with previous projections for growth of about 1%, and sees adjusted earnings of 60 cents to 70 cents a share, lower than prior expectations of 75 cents to 90 cents. The stock declined 9%.

Plug Power reported a third-quarter loss wider than a year earlier and revenue that missed analysts' expectations. The stock fell 29%.

Shares of Trade Desk fell 28% after its outlook for the fourth quarter missed analysts' expectations.

Wynn Resorts reported third-quarter adjusted earnings of 99 cents a share, beating estimates of 74 cents. The stock was down 5.5%.

Forex:

The dollar hit a one-week high against a basket of currencies and the euro after Powell's warning on inflation.

"After sounding increasingly dovish at the press conference following last week's meeting and the market adjusting its expectations accordingly, he [Powell] sounded much more hawkish again," Commerzbank said.

The tide could "turn quickly" if U.S. inflation data next week are lower than expected but for now there is little on the data calendar.

Energy:

Crude oil futures held firm after having seen sharp losses this week, as tight fundamentals have provided a floor to prices.

Markets for now seem to have sold off their risk premium for the Israel-Hamas war, with the conflict staying regional.

"We believe that the scale of the selloff in oil is exaggerated given that fundamentals are still tight at least in the short term," ING said.

"However, fundamentals are not as bullish as originally anticipated with Russian oil exports edging higher, whilst refinery margins have also been weakening."

Metals:

Base metals and gold were flat to lower in early trading, with uncertainty around demand and the global economy weighing on prices.

"Industrial metals continue to face headwinds from weak activity in Mainland China, with the country's manufacturing PMI falling back into a slight contraction in October," BMI said.

"That being said, we have seen price support in the past week on the back of additional stimulus measures introduced by the Mainland Chinese government," BMI added.

TODAY'S TOP HEADLINES

Microsoft Temporarily Blocked Internal Access to ChatGPT, Citing Data Concerns

Microsoft temporarily blocked employee access to ChatGPT on company devices, with a notice to employees citing security concerns, according to an internal blog post.

Employees who tried to go to the site on Thursday afternoon were briefly redirected to an internal notice that said the website was blocked by their organization, people familiar with the matter said. After more than an hour, access was restored, they said.

SoftBank Group Shares Slump After Second-Quarter Net Loss

SoftBank Group shares fell sharply after the Japanese technology and investment company posted a second-quarter net loss due to weak tech investment results.

The company's shares were recently 6.0% lower at 5,924 yen after falling as much as 7.6% earlier Friday morning.

Wegovy Maker Novo Nordisk to Spend $6 Billion Boosting Production Capacity

Novo Nordisk, the Danish pharmaceutical giant that makes the blockbuster Wegovy obesity drug, said it will invest more than $6 billion to boost production capacity.

RBA Revises Up Near-Term Inflation Forecasts, Warns Inflation More Persistent

SYDNEY-The Reserve Bank of Australia sharply revised up its forecasts for core inflation in the near term and warned that inflation pressures are cooling at a slower pace than anticipated against the backdrop of an economy that is proving more resilient than expected.

Trimmed mean inflation, which is central to policy decisions at the RBA, is now expected to be running at 4.0% on-year by mid-2024, up from a forecast of 3.25% on-year in August.

UK Economy Slows, But Inflation Likely to Remain High

The U.K. economy stagnated in the third quarter for the first time this year, avoiding an expected decline.

Gross domestic product was flat between July and September compared with the previous three-month period, when the economy grew slightly, as it had in the first quarter, figures from the Office for National Statistics showed Friday.

Write to [e-mail] TODAY IN CANADA

Earnings [3Q Unless Stated Otherwise]:

Algonquin Power

Boyd Group

Emera

Filo

Heroux-Devtek [2Q]

Karora Resources

MAG Silver

Neo Performance

Skeena Resources

SNC-Lavalin

Economic Calendar:

Nothing scheduled

Stocks to Watch:

Andrew Peller 2Q Sales C$100.2M; 2Q Net C$0.13 Per Class A Share

Cathedral Energy Services 3Q EPS C$0.02; 3Q Rev C$145.6M; 3Q Rev Rose 26% on Year to a Record; See Significant Opportunity for Margin Expansion in U.S. Business; Continue to Target Deployment of Up to 30 Newly Developed Rime MWD Packages by End of 1H 2024

Cathedral Energy Services: Board Approves C$15M Preliminary Capital Budget to Allow for Delivery of Items With Longer Lead Times, Timely Buildout of Own MWD Tech; James R. Boyles Resigns as Director, Effective Nov. 10; Boyles to Rejoin Management Team of Subsidiary Altitude; Conducting North American-Wide Search for New Board of Director Candidates

Chartwell Retirement Residences 3Q Rev C$173.4M; 3Q Net C$158.2M

Crown Capital Partners 3Q Loss/Shr C$0.32; 3Q Rev C$8.9M

Dream Office REIT 3Q Net C$13.6M

Electrameccanica Vehicles: U.S. District Court Dismisses Tevva Motors Complaint; Arizona District Court Dismisses Complaint Due to Lack of Subject-Matter Jurisdiction; Tevva Subsequently Filed Substantially Similar Complaint in Maricopa County, Ariz., Superior Court on Nov. 7

Exro Technologies 3Q Rev C$2.0M; 9-Mos Rev C$4.8M; 9-Mos Loss/Shr C$0.20

Frontera Energy 3Q EPS $0.37 Vs. Loss $0.30; Sales $240.6M Vs. $276.1M; Production 40,802 BOE/d Vs 41,033 BOE/d; Continued to Cut Costs, Reducing G&A by 4%; Board of Directors Approved Restructuring Plan in 3Q to Improve Organizational and Operational Efficiencies

Glacier Media 3Q Loss/Shr C$0.03; 3Q Rev C$42.7M

Headwater Exploration 3Q EPS 21c; Jason Jaskela Will Transition From Pres and Chief Operating Officer to Pres and CEO on Jan. 1; Neil Roszell, the Current Chmn and CEO, Will Stay on as Headwater's Executive Chmn; Brad Christman Will Assume the Role of Oper Chief From His Current Role of Vice Pres, Production

Liberty Gold 3Q Loss/Shr 2c

Mountain Province 3Q Loss/Shr C$0.06; 3Q Sales C$60.3M

Northland Power 3Q Sales C$513M Vs. C$556M; 3Q EPS C$0.14 Vs. EPS C$0.33; 9-Mos Sales C$1.61B Vs. C$1.81B; 9-Mos EPS C$0.42 Vs. EPS C$2.32; Reiterates 2023 Financial Outlook; Sees 2023 Adj Ebitda at Low End of Guidance of C$1.2B-C$1.3B; Also Sees 2023 Adj Free Cash Flow, FCF Per Shr at Low End of Guidance Ranges

Questerre 3Q Loss C$400,000

Star Diamond 3Q EPS C$0.00

Victoria Gold 3Q EPS C$0.08; Rev C$105.1M

Vitalhub 3Q Rev C$13.2M; Vitalhub Names Francis Shen as Chairman; Shen to Succeed Chris Schnarr; Schnarr to Depart Dec. 31

Expected Major Events for Friday

07:00/UK: Sep Index of production

07:00/UK: Sep UK trade

07:00/UK: Sep Index of services

07:00/UK: 3Q Business investment in the UK: provisional results

07:00/UK: 3Q First quarterly estimate of GDP

07:00/UK: Sep Monthly GDP estimates

09:00/ITA: Sep Industrial Production

12:30/UK: Oct NIESR Monthly GDP Tracker

13:00/RUS: Weekly International Reserves

15:00/US: Nov University of Michigan Survey of Consumers - preliminary

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

Expected Earnings for Friday

Airsculpt Technologies Inc (AIRS) is expected to report for 3Q.

Algonquin Power & Utilities Corp (AQN,AQN.T) is expected to report $0.11 for 3Q.

(MORE TO FOLLOW) Dow Jones Newswires

11-10-23 0611ET