EMEA Morning Briefing: Shares Could Take a Breather After Recent Gains

MARKET WRAPS

Watch For:

No major economic data expected; trading updates from Kingfisher, MTN Group

Opening Call:

Shares in Europe could diverge in opening trade on Monday. In Asia, stocks were mixed; Treasury yields were flat; the dollar consolidated; while oil and gold advanced.

Equities:

European shares are poised to open on a mixed note on Monday, mirroring U.S. stocks' performance on Friday, and ahead of key U.S. economic indicators in the next few days.

This week brings the third U.S. fourth-quarter GDP estimate on Thursday and PCE inflation Friday.

Some investors said the stock market was due for a mild decline after a roaring rally in recent sessions. "It's more of a pause as opposed to game over," said FBB Capital Partners.

Markets had rushed to new heights in recent sessions, pushed by hopes that the era of high borrowing costs is coming to an end.

Forex:

The dollar consolidated in Asia amid a spillover effect from the People's Bank of China's setting a higher-than-expected yuan fixing earlier.

This fixing pushed back speculation that Chinese policymakers may allow another round of yuan depreciation, OCBC's Global Markets Research team said, noting that the dollar has fallen against most Asia ex-Japan currencies.

"After today's fix, my view that there has been no major change in PBOC policy regarding the renminbi has only been strengthened," Alvin T. Tan, head of Asia foreign-exchange strategy at RBC Capital Markets, said.

Bonds:

Treasury yields were barely changed after declines last week when the Fed reaffirmed the prospect of 75 basis points in interest rate cuts this year.

"The Fed was dovish, dismissing recent inflation surprises, upgrading growth forecasts embracing the supply-side narrative," Bank of America said.

On the CME's FedWatch tool, odds of an initial 25-bp cut in June rise to 67% from 55%.

This Friday brings the February reading of the Fed's preferred inflation gauge, known as the core PCE.

Energy:

Oil futures rose amid tight supply.

Disruptions to oil refineries in Russia have added pressure on fuel markets, leading to rising demand for available crude oil cargoes, ANZ said.

About 12% of Russia's total oil processing capacity has been affected, it added.

Metals:

Gold edged higher in Asia.

The precious metal may now test the $2,160/oz level after retreating following Atlanta Fed President Raphael Bostic's comment that he anticipated just one rate cut this year, Saxo Markets' APAC strategy team said.

Positions of speculators with bullish bets for the metal aren't matching the intensity of the latest price rally, it said, adding that continued divestment in gold-backed ETFs is also being seen.

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Copper was higher. Buying activity by commodity trading advisors has likely done most of the "heavy lifting" in supporting copper prices, TD Securities said.

The buying has been spurred by a recovery in demand sentiment, but this sentiment now seems overbought, TD Securities said, adding that there are signs of imminent "mean reversion" that could prompt large-scale selling activity ahead.

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Iron ore rose on possible seasonal buying interest, analysts said.

Weekly inventory data suggest some seasonal interest could be starting to return to iron-ore markets even if "Chinese mills are conducting more unscheduled maintenance in March due to widening losses and rising steel product inventories," said Westpac.

However, iron ore seems biased to consolidate above $100 a ton in the near term, it added.

TODAY'S TOP HEADLINES

What's Next for Gold? Look to China for Clues

Chinese investors are going all-in on gold.

The country's central bank has pushed its gold reserves to a record level. Consumers in the country are loading up on gold jewelry, in part because they are nervous about the shaky economy. Stock traders are buying the shares of gold miners, and rushing into exchange-traded funds that track the price of the metal.

This Startup Promised to Help Fashion Go Green. Brands Didn't Want to Pay for It.

When a Swedish startup launched a new material made from recycled textiles in late 2022, the fashion industry hailed it as a game changer in its efforts to lessen its environmental impact.

Last month, the company, Renewcell, filed for bankruptcy. While some big retailers, including H&M and Zara, were enthusiastic backers, not enough brands committed to buying its material. Having misjudged how quickly the fashion industry would switch to more sustainable sourcing, the company was left with a costly factory running far below capacity.

'A Ticking Time Bomb': In Syrian Camps, Fears of an Islamic State Revival

AL-HOL, Syria-A recent security sweep inside a sprawling fenced refugee camp holding 44,000 people turned up a raft of weapons, dozens of Islamic State militants and a Yazidi woman who had been held by the group for nearly 10 years.

For many, the horrors of Islamic State ended when a U.S.-led military campaign collapsed the group's self-styled caliphate in 2019. But five years later, tens of thousands of civilians are still being kept in camps including in Al-Hol, which are filled with the families of Islamic State militants and others inadvertently swept up in the chaos of northeast Syria.

Attack on Russian Concert Hall Threatens Putin's Strongman Image

Last week, Russian President Vladimir Putin dismissed American warnings of an imminent terrorist attack and urged leaders of the country's security services to focus on catching Ukrainian spies instead.

Three days later, Islamic State gunmen rampaged through a concert hall outside Moscow, killing more than 130 people in the deadliest episode of terrorism in Russia in decades.

Repeated Raids in Gaza Raise Prospect of Endless War

Israeli forces are fighting in a growing number of places in the Gaza Strip that they previously took and withdrew from, showing how Israel is struggling to eliminate Hamas and bring the Palestinian enclave under its control.

On Sunday, fighting between Israeli forces and Hamas militants intensified around Nasser Hospital in Khan Younis and Al-Shifa Hospital in Gaza City, with the Israeli military saying it struck dozens of targets. Israeli troops previously fought battles in the same places in recent months and said that Hamas's formations in those areas had been defeated and dismantled.

Ukraine's Battered Army Grapples With Growing Troop Shortage

KYIV-Ukraine's armed forces desperately need fresh troops to hold back massed Russian offensives. But political dithering is leaving front-line units threadbare.

A bill aimed at expanding the draft in Ukraine is stuck in Ukraine's parliament, the Verkhovna Rada, after months of debate.

China Evergrande to Withdraw Offshore Debt-Restructuring Applications

China Evergrande Group is withdrawing its applications for Chapter 15 offshore debt restructuring filed in the U.S.

The heavily-indebted Chinese property developer said that it, along with SJ and Tianji Holdings, had submitted documents to pull their applications for offshore debt restructuring on March 22, according to a filing on the Hong Kong Stock Exchange late Sunday.

Big Tech's Latest Obsession Is Finding Enough Energy

HOUSTON-Every March, thousands of executives take over a downtown hotel here to reach oil and gas deals and haggle over plans to tackle climate change. This year, the dominant theme of the energy industry's flagship conference was a new one: artificial intelligence.

Tech companies roamed the hotel's halls in search of utility executives and other power providers. More than 20 executives from Amazon and Microsoft spoke on panels. The inescapable topic-and the cause of equal parts anxiety and excitement-was AI's insatiable appetite for electricity.

Elon Musk's X Needs Creators, but They Don't Need X

Two months after Elon Musk acquired Twitter, the billionaire hopped on a video call with a handful of creators, seeking advice about how to make his platform better for them and asking how YouTube attracts creators.

Podcaster Samir Chaudry told Musk that YouTube had a well-established system for creators to make money through advertising revenue.

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Expected Major Events for Monday

05:30/NED: 4Q GDP - 2nd estimate

06:00/FIN: Feb PPI

08:00/CZE: Jan Import & export price indices

08:00/CZE: Mar Business cycle survey (consumer/business confidence)

08:00/SPN: Feb PPI

09:00/POL: Feb Unemployment

11:00/UK: Mar CBI Distributive Trades Survey

15:59/UKR: 4Q Unemployment

15:59/UKR: Feb PPI

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(END) Dow Jones Newswires

March 25, 2024 01:16 ET (05:16 GMT)

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