MARKET WRAPS
Watch For:
Germany GDP, Ifo business climate index; trading updates from Allianz, BASF, Deutsche Telekom
Opening Call:
European stock futures edged higher early Friday. Asian stock benchmarks built on the Nvidia-driven rally in the U.S. overnight; the dollar steadied; oil futures fell and gold rose slightly.
Equities:
Stock futures mostly edged higher early Friday, as an AI-driven rally continues to cheer global markets, though the FTSE 100 may continue to lag eurozone peers. U.S. indexes surged Thursday after Nvidia's bumper earnings unleashed a wave of optimism.
"It's clear there's a silicon tailwind, with everything in the semiconductor supply chain gaining," said Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co.
Some investors said they were more cautious about the frenzy.
"I certainly wouldn't go to the casino and put all my money on the number at the roulette table," said Rich Weiss, chief investment officer of the multiasset strategies group at American Century Investments. Weiss said he finds other markets around the world more attractive right now.
JJ Kinahan, chief executive of IG North America and president of its brokerage tastytrade, said fortunes will be won and lost on Nvidia's stock and equity options in the weeks ahead.
With the exceptionally high potential for volatility, Kinahan said people should take on risk in a particularly calculating fashion. "You want to be the guy throwing the knife, not the guy with the apple on his head," Kinahan said.
Forex:
The dollar may get a boost from fading Federal Reserve rate-cut prospects.
U.S. initial jobless claims released overnight were lower than expected, said Matt Simpson, market analyst at FOREX.com and City Index. This underscores a strong American economy and further undermines bets of Fed rate cuts, Simpson added.
Bonds:
Treasurys didn't trade in Asia due to a holiday in Japan.
Markets ditched hopes of an early start to U.S. interest-rate cuts to drive Treasury yields higher Thursday. On the CME's FedWatch tool, odds that rates will be kept at current levels two FOMC meetings from now, in May, reached 70%, up from 62% a week ago.
A first cut remains the main bet for June, although the probability of another hold rose to 35% from 18% a week ago. No major data point is due Friday, while next week will bring key activity and inflation data.
Energy:
Oil futures retreated early Friday after settling higher overnight. Official data showed a smaller-than-expected weekly rise in U.S. crude supplies.
Demand could get a boost as run rates at refineries have ended a streak of weekly declines and may increase in coming weeks as facilities restart following maintenance shutdowns, ANZ said. Rising tensions in the Middle East may also support prices, it added.
Metals:
Gold rose slightly in Asia, aided by mild weakness of the dollar. Gold's longer-term outlook remains positive, said Fawad Razaqzada, market analyst at City Index and FOREX.com. The precious metal is often perceived as a hedge against inflation and a safe-haven asset, he said, noting that inflation continues to be sticky.
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Copper edged higher on strong fundamentals. Despite pressure from tighter monetary policies and weaker economic growth, demand for copper has remained strong amid increased focus on electrification and decarbonization, ANZ said.
Growth in demand from China, the U.S. and India, three of the top five consumers, is expected to reach 4.3% in 2024, it said. The robust demand comes amid increasing supply-side issues, such as unplanned disruptions, which further lift the red metal's prices.
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Iron ore prices rose in a likely technical rebound after falling for three consecutive sessions. However, demand for the steelmaking material remains soft after the Lunar New Year as Chinese steel mills prioritize digesting inventories, Xinhu Futures said. Poor profitability is also restricting them from a large-scale resumption of production, it added.
TODAY'S TOP HEADLINES
As Trading Frenzies Grip Penny Stocks, Criticism of Nasdaq Grows
Nasdaq touts itself as the stock exchange for many of the world's most iconic and successful companies. It is also the home of Bit Brother.
The China-based company focused on selling tea products until it pivoted to cryptocurrencies in 2021. Its shares have fallen more than 99% since the beginning of 2020, after accounting for the three reverse stock splits it has done.
China Home Prices Slide, Increasing Pressure on Beijing
China's real-estate downturn is getting worse.
The latest bad news: A sharp drop in the average price of a home in 70 big cities in mainland China, a proxy for the national market.
Fed Gov. Waller Urges Caution on Lowering Interest Rates
Federal Reserve Gov. Christopher Waller urged a slow and cautious approach to easing monetary policy this year, given a still-uncertain outlook for inflation and recent strong economic data. His comments on Thursday evening were the latest in a string of Fed officials talking down the likelihood of near-term interest-rate cuts.
"The data that we have received...has reinforced my view that we need to verify that the progress on inflation we saw in the last half of 2023 will continue and this means there is no rush to begin cutting interest rates to normalize monetary policy," Waller said in prepared remarks for a Thursday evening event in Minneapolis, Minn. organized by the Notre Dame Club of Minnesota and University of St. Thomas. His speech was titled "What's the Rush?"
Fed's Cook wants 'greater confidence' inflation is slowing before backing interest-rate cuts
Federal Reserve Gov. Lisa Cook said Thursday that inflation has slowed faster than expected, but central bank officials need "greater confidence" that price pressures are returning to low pre-pandemic norms before cutting interest rates.
Cook and a parade of Fed officials in the past few weeks have stressed that the battle against inflation is not over. Rates cut will have to wait a bit longer, she said, until victory is all but assured.
Fed's Harker: Don't look for any interest-rate cuts 'right now and right away'
The Federal Reserve is getting close to cutting interest rates but a move in the near-term is unlikely, said Philadelphia Fed President Patrick Harker on Thursday.
"I would caution anyone from looking for [a rate cut] right now and right away," Harker said in a speech at the University of Delaware.
Standard Chartered Posts Stronger-Than-Expected Quarterly Profit
Standard Chartered PLC posted higher-than-expected fourth-quarter profit, supported by higher net interest income and sharply lower credit impairments.
The London-based lender, which earns most of its revenue in Asia, on Friday said its underlying pretax profit was $1.06 billion, beating the consensus of $957 million, according to estimates compiled by the company. The company reported pretax profit of $1.14 billion, sharply higher than $123 million in the year-earlier period.
FTX Drops Demand for $323 Million Over Europe Deal, Agrees to Sell EU Assets
The FTX estate has agreed to drop a lawsuit that sought to claw back at least $323.5 million from the original owners of the bankrupt cryptocurrency exchange's European unit.
Under a proposed settlement, the two main targets of the lawsuit-FTX Europe co-founders Patrick Gruhn and Robin Matzke-agreed to buy back the unit's assets for $32.7 million.
U.K. Consumer Confidence Ticks Down on Weaker View of Economy
U.K. consumers are a little less upbeat in February, with concerns over the state of the economy growing ahead of a likely election this year, a monthly survey published Friday said.
Research group GfK's Consumer Confidence Barometer dipped two points on month to minus 21 in February, flipping expectations that the index would improve a little, to minus 18, according to a consensus of economists polled by The Wall Street Journal.
Head of Russia's VTB Bank Charged in U.S. With Sanctions Violations
Andrey Kostin, the head of Russia's state-owned VTB Bank, faces U.S. charges for allegedly violating sanctions.
Prosecutors on Thursday unsealed charges in a federal court in New York against Kostin and two others for allegedly participating in schemes to violate sanctions the U.S. imposed on Kostin in 2018.
The Biggest Ever Sanctions Have Failed to Halt Russia's War Machine
Two years after Russia's invasion of Ukraine, Western sanctions have failed in their most important task-stopping the Kremlin's war machine.
Western officials and experts say the financial, economic, military and energy sanctions imposed on Russia since February 2022 have damaged Russia's economy and arms-production capacity, and will create serious problems for the Kremlin in the coming years. But they acknowledge the restrictions have hit more slowly than they hoped.
Meta Staff Found Instagram Subscription Tool Enabled Child Exploitation. The Company Pressed Ahead Anyway.
Meta Platforms safety staff warned last year that new paid subscription tools on Facebook and Instagram were being misused by adults seeking to profit from exploiting their own children.
Two teams inside Meta raised alarms in internal reports, after finding that hundreds of what the company calls "parent-managed minor accounts" were using the subscription feature to sell exclusive content not available to nonpaying followers. The content, often featuring young girls in bikinis and leotards, was sold to an audience that was overwhelmingly male and often overt about sexual interest in the children in comments on posts or when they communicated with the parents, according to people familiar with the investigations, which determined that the payments feature was launched without basic child-safety protections.
Nvidia Nears $2 Trillion Valuation on Insatiable AI Chip Demand
(MORE TO FOLLOW) Dow Jones Newswires
02-23-24 0024ET
