North American Morning Briefing: Traders Await Inflation Data This Week

OPENING CALL

Stock futures wobbled on Monday, as investors awaited more signals on the economy and inflation this week.

Data on consumer confidence is due Tuesday. The personal consumption expenditures price index, closely watched by the Federal Reserve, is scheduled for Thursday.

The inflation data could advance the narrative of when the Fed could begin cutting interest rates this year, and by how much.

Overseas Markets

Japanese stocks notched another record high, lifted by merger talks between two drugstore operators and praise from Buffett in his annual letter.

Chinese stocks slipped, weighed down by continued concerns over the country's economy. The Shanghai Composite Index declined nearly 1%.

Europe's Stoxx 600 also declined moderately.

Stocks to Watch

Over the weekend, Alcoa made a $2.2 billion offer to buy Australia's Alumina, its joint-venture partner in a global mining operation.

Premarket Movers

Berkshire Hathaway reported strong earnings over the weekend, while Warren Buffett's annual letter divulged $8 billion of gains from bets on Japanese stocks. Shares climbed roughly 5% in premarket trading.

Broadcom is nearing a $3.8 billion deal to sell its business end-user computing unit, which allows users to access desktops and applications from any device, to private-equity firm KKR, Reuters reported. The deal could be announced as early as Monday, sources told Reuters. Broadcom shares rose about 1%.

Intuitive Machines was falling 29% after the company's Odysseus lunar lander tipped over when it landed on the moon's surface.

Nvidia edged higher, looking to extend their climb after blockbuster earnings last week. Options traders were also piling into bets on the artificial-intelligence chip maker.

Watch For:

New Home Sales for January; Earnings from Workday, Li Auto, Heico, Zoom Video Communications, Domino's Pizza, Unity Software.

Today's Top Headlines/Must Reads:

- Treasury Markets Are Losing Their Shock Absorber

- Surging Nvidia Stock Keeps Drawing In More Believers

- Wall Street's Latest Pitch Is a Contradiction: Private IPOs

MARKET WRAPS

Forex:

The dollar could be set for a good week as PCE inflation data on Thursday encourage less aggressive bets on interest-rate cuts by the Federal Reserve, ING said.

"We see dollar rates receiving one - potentially final - round of support on the back of strong PCE figures and the dollar to have a good week."

However, beyond the short term, ING expects the dollar to fall.

Meanwhile, Barclays Research said the fundamental backdrop for the dollar remained positive and the currency could gain momentum as inflation data point to Federal Reserve interest-rate cuts being delayed.

If CPI data for February repeat January's strong number there could be a broader reevaluation of the Fed's stance, it added.

"The scope for dovish surprises by the Fed is smaller than for other G10 central banks, which should keep the dollar supported for longer."

Low volatility has likely prevented markets' repricing of Fed interest rates from translating into larger dollar gains so far but if this were to change, "larger dollar gains" could be in store.

Barclays Research also said the current gap of around 15 basis points between the market's pricing of interest-rate cuts by the ECB and the Fed still looks low, which leaves the euro at risk of weakening further .

The combination of high gilt yields and cheap valuation should lift sterling throughout this year, BNP Paribas Markets 360 said as it upgraded forecasts on sterling against the euro .

It now forecast EUR/GBP to end the year at 0.83.

Energy:

Oil prices slipped, extending the sell-off seen at the end of the last week amid slowing demand and rising ex-OPEC supply.

Weekly data from Baker Hughes showed the number of U.S. oil rigs rose by six last week, while the Wafa oil field in Western Libya has resumed operations following a short halt over the weekend, ING said.

Looking further ahead, comments from the International Energy Week scheduled from Tuesday will be closely watched to gauge the market balance, ING added.

Metals:

Base metals and gold prices fell in early London trade, though declines were limited as prices traded in a narrow band.

Aluminum slipped as the metal continued to fluctuate within its recent trading range, and investors should expect prices to continue to trade sideways in the near term, Sucden Financial said.

Elsewhere, copper stock builds in China were larger than average over the Lunar New Year, though aluminum and zinc continued to lag, JPMorgan said.

TODAY'S TOP HEADLINES

Boeing MAX Delays to Cause Airfare Hike, Airline Warns. It's Bad for Summer Travel Plans.

Boeing's problems may soon start being felt by travelers in their wallets.

Delays to deliveries of Boeing MAX aircraft could lead to higher airfares for passengers and some flights being cut this summer, according to Ryanair's CEO Michael O'Leary.

BYD Chairman Proposes Doubling Share Buyback

BYD's chairman has proposed that the electric-vehicle giant buy back twice as many shares to help boost its stock price as the EV price war intensifies and concerns about the Chinese economy persist.

The Chinese carmaker said Sunday in an exchange filing that its chairman and chief executive, Wang Chuanfu, has suggested doubling the amount of A-shares under a proposed buyback to 400 million yuan ($55.6 million).

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.

Biden's Biggest 2024 Challenge to Date: 'Uncommitted' in Michigan

WASHINGTON-Democrats are warning President Biden to take Tuesday's Michigan primary results seriously, as activists push him to change course on the war between Israel and Hamas.

The election is shaping up as Biden's most significant voting test yet, as Arab-American and young voters attempt to use the primary as a vehicle to protest the president's policies. While Biden is all but assured victory, the outcome could augur general election troubles in the battleground state where polls show the president is currently trailing former President Donald Trump, his expected Republican challenger.

Trump Tightens Hold on GOP, Crowding Out Even Popular Rivals

Donald Trump's 20-point victory over Nikki Haley in South Carolina's Republican primary not only shows the powerful hold that Trump commands over his party's voters, but also the inability of any GOP leader to rally support against him as he moves to the brink of securing the presidential nomination.

The primary results have shown resistance to the former president among voters he likely would need in November, particularly among professional-class, suburban voters. But Trump has now won the first five nominating contests in convincing fashion, a performance that has all but wiped out opposition within the GOP's leadership ranks.

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.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings [4Q unless stated otherwise]:

Cargojet

Emera

Ivanhoe Mines

Secure Energy Services

Economic Calendar (ET):

Nothing scheduled

Expected Major Events for Monday

01:00/JPN: Jan Steel Imports & Exports Statistics

11:00/UK: Feb CBI Distributive Trades Survey

15:00/US: Jan New Residential Sales

15:30/US: Feb Texas Manufacturing Outlook Survey

23:30/JPN: Jan CPI (Nation), CPI ex-food (Nation)

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

Expected Earnings for Monday

ADTRAN Holdings Inc (ADTN) is expected to report for 4Q.

Albany International Corp - Class A (AIN) is expected to report $0.72 for 4Q.

Algoma Central Corp (ALC.T) is expected to report for 4Q.

Alpha Metallurgical Resources Inc (AMR) is expected to report for 4Q.

Biglari Holdings Inc - B Share (BH) is expected to report $-1.65 for 4Q.

BioCryst Pharmaceuticals (BCRX) is expected to report $-0.25 for 4Q.

Cargojet Inc (CJT.T) is expected to report for 4Q.

Clear Channel Outdoor Holdings Inc (CCO) is expected to report for 4Q.

Daseke Inc (DSKE) is expected to report $-0.23 for 4Q.

Domino's Pizza Inc (DPZ) is expected to report $4.40 for 4Q.

Douglas Dynamics Inc (PLOW) is expected to report $-0.22 for 4Q.

Eco (Atlantic) Oil & Gas Ltd (EOG.V) is expected to report for 3Q.

Elanco Animal Health Inc (ELAN) is expected to report $-0.19 for 4Q.

Emera Inc (EMA.T) is expected to report $0.69 for 4Q.

Emerson Radio (MSN) is expected to report for 3Q.

Everbridge Inc (EVBG) is expected to report $-0.15 for 4Q.

Fidelity National Information Services (FIS) is expected to report $0.80 for 4Q.

Freshpet Inc (FRPT) is expected to report $0.04 for 4Q.

Helix Energy Solutions (HLX) is expected to report $0.14 for 4Q.

Itron Inc (ITRI) is expected to report $0.65 for 4Q.

Ivanhoe Mines (IVN.T) is expected to report $0.06 for 4Q.

Krystal Biotech Inc (KRYS) is expected to report $-0.32 for 4Q.

Li-Cycle Holdings Corp (LICY) is expected to report for 4Q.

Lincoln Educational (LINC) is expected to report $0.29 for 4Q.

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February 26, 2024 06:28 ET (11:28 GMT)

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