MARKET WRAPS
Watch For:
No major economic data expected; trading updates from Siemens Energy, Sasol, Bunzl
Opening Call:
Shares could stumble in Europe on Monday. In Asia, stock benchmarks were mostly lower; Treasury yields slipped; the dollar was flat; while oil and gold lost ground.
Equities:
European shares seem set to retreat on Monday, as the boost from AI giant Nvidia's bumper earnings loses steam.
Looking ahead, the U.S. economic calendar for this week includes an estimate of gross-domestic-product growth in the fourth quarter of 2023, and a reading on inflation in January from the personal-consumption expenditures price index.
So far, "the economy is really not slowing down all that much," said Russell Price, chief economist at Ameriprise. "Overall, I think that the economy is doing fine. That's good for corporate profits."
Forex:
The dollar was barely changed in Asia, although losses in U.S. stock-index futures may spur risk appetite to falter and demand for the greenback to strengthen.
The dollar could rebound modestly this week, said CBA's global economic & markets research team.
The U.S. January PCE inflation data due out later this week might be stronger than consensus expectations, which would support U.S. interest rates and the dollar, it said.
Bonds:
Treasury yields weakened in Asia as investors recalibrated their trades on U.S. interest rate cuts.
On the CME's FedWatch tool, investors now price 56% odds that the first Fed rate cut will come in June.
Earlier this year, most bets were on a first cut in March. Markets are also forecasting less cuts this year than they were expecting before this month's higher-than-expected inflation and labor data.
Next week brings January durable-goods orders, GDP estimate and PCE inflation.
Energy:
Oil prices fell in Asia amid a lack of fresh drivers, and as investors weighed the timing of rate cuts.
Strong data "provides the Fed with greater leeway to sustain its restrictive monetary policy for an extended period. This dynamic constrains economic growth and suggests reduced future oil demand, contributing to the price decline," ActivTrades said.
"Nonetheless, the downside for the barrel's price remains limited by supply-side concerns stemming from ongoing geopolitical turbulence in the Middle East," it said.
Metals:
Gold edged lower in a possible technical correction.
However, ANZ Research has a long-term positive view for gold, with prices averaging above $2,000/oz this year.
Reasons such as geopolitical tensions could spur strong demand for the precious metal as a safe-haven asset, it said.
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Iron ore prices were lower amid continued demand concerns, dragged by China's sluggish property market, ANZ Research said.
Some weakness may be offset by strength in social housing projects planned by the Chinese government, it added.
Some iron ore project pipelines have dried up as Chinese developers face weak demand prospects, ANZ said.
Nevertheless, meager growth in supply is likely to keep the iron ore market tight and prices well-supported, it added.
TODAY'S TOP HEADLINES
Warren Buffett Was There for the Japanese Market Rally
Warren Buffett was into Japanese stocks before their recent comeback.
Buffett's company, Berkshire Hathaway, revealed in August 2020 that it had built stakes of about 5% in five Japanese trading companies. Berkshire has since added to its positions in Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, themselves conglomerates with wide ranges of businesses and investments.
Natural Gas Hasn't Been This Cheap in Decades
An unusually warm winter and roaring U.S. output have pushed natural-gas prices to some of the lowest levels of the shale era.
Adjusted for inflation, natural-gas futures recently hit their cheapest prices since trading began on the New York Mercantile Exchange in 1990.
Surging Nvidia Stock Keeps Drawing In More Believers
Nvidia's historic run is minting profits for investors big and small. Many are betting the boom is just beginning.
They are piling into trades that the chipmaker's shares, which have more than tripled over the past year, are headed still higher. Some have turned to the options market to look for ways to turbocharge their bets on artificial intelligence after a blockbuster earnings report sent the stock up 17% over the past two days.
Inflation should slow enough to spur interest-rate cuts 'later this year, ' Fed's Williams says
Inflation is likely to slow toward 2% and pave the way for reductions in U.S. interest rates "later this year," the president of the New York Federal Reserve Bank said this week.
John Williams said the hot inflation readings in January are likely just a "bump" - a word being used by most Fed officials - and that price pressures are subsiding.
Zelensky Says 31,000 Ukrainian Troops Killed in Two Years of War
KYIV-Around 31,000 Ukrainian soldiers have been killed since Russia launched its invasion two years ago, President Volodymyr Zelensky said, highlighting the scale of Ukraine's sacrifice ahead of a decisive vote in the U.S. Congress on military aid to Ukraine.
"Every such loss is a great loss to us," he said in a press conference Sunday. It was the first time Zelensky had offered a figure for Ukraine's war losses, but he declined to name the number of wounded troops because he said doing so would help Russia understand how many were out of action.
Israel's Netanyahu Won't Agree to Hostage Deal Until Hamas Backs Down on Demands
TEL AVIV-Israeli Prime Minister Benjamin Netanyahu on Sunday said he won't agree to a deal to free the remaining hostages held in Gaza until Hamas yields on its demands, and that Israel will press ahead with a campaign to defeat the militant group's remaining battalions in the southernmost reaches of the strip.
Speaking on CBS's "Face the Nation," Netanyahu said Israel's military would have to invade Rafah, on Gaza's southern border with Egypt, regardless of any deal to free some of the 130 remaining hostages who were seized from Israel during the Hamas-led attacks on Oct. 7. Israel's total victory over the group was in reach, he said, and once the operation there begins, the most intense phase of the war "would be weeks away from completion."
U.S. Conducts More Strikes Against Houthi Targets in Yemen
WASHINGTON-The U.S. and the United Kingdom conducted a series of strikes at 18 Houthi targets at eight different locations inside Yemen Saturday, part of a continuing effort to fight back against the Iran-backed group that has continued to attack commercial and military vessels in the Red Sea.
The strikes Saturday hit a number of Houthi targets, including underground weapons storage facilities, other missile storage facilities, one-way attack drones, air-defense systems, radars and a helicopter, according to a statement issued by the Pentagon. The U.S. and U.K. conducted the strikes with assistance from Australia, Bahrain, Canada, Denmark, the Netherlands and New Zealand.
Russia Hands Over Alexei Navalny's Body to His Mother
Russia authorities have handed over the body of Alexei Navalny to his mother, his team said, after days of wrangling over who should oversee the burial of the opposition leader's remains following his death in an Arctic prison camp just over a week ago.
"Alexei's body was given to his mother," his spokeswoman, Kira Yarmysh, posted on X Saturday. "The funeral is yet to come. We don't know whether the authorities will interfere with carrying it out the way the family wants and as Alexei deserves."
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Expected Major Events for Monday
07:00/NOR: Dec Labour force survey SA, incl unemployment
08:00/SPN: Jan PPI
09:00/ICE: Jan Harmonized CPI
11:00/UK: Feb CBI Distributive Trades Survey
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(END) Dow Jones Newswires
02-26-24 0017ET
