North American Morning Briefing: Tech in Focus on Reports of China Restrictions

OPENING CALL

Stock futures pointed lower on Monday ahead of a week filled with economic data, including the personal consumption expenditures price index, the Federal Reserve's preferred inflation measure.

Excluding food and energy components, the core PCE is forecast to have climbed 2.8% year over year. That would match the January reading.

Other economic data to watch this week will include the Census Bureau's durable goods report for February and the Conference Board's Consumer Confidence Index for March.

Earnings releases this week will come from GameStop and McCormick on Tuesday, then Carnival and Cintas on Wednesday. Walgreens Boots Alliance will report on Thursday.

Stock and bond markets will be closed on Friday in observance of Good Friday.

Premarket Movers

Intel was down 2.2% and AMD declined 2.2% following a report from the Financial Times that said China has begun implementing guidelines that will have microprocessors made by the chip makers phased out of government PCs and servers.

FAA officials recently have become concerned by a high rate of safety problems at United Airlines in recent weeks and are stepping up scrutiny of the carrier, The Wall Street Journal reported. United shares were down 1.1%.

Post-Close Movers

Invivyd said before the market closed that it had received emergency approval for its monoclonal antibody treatment. Shares were up 2.3% in after-hours trading, following a 41% rise at Friday's close.

Masimo said it would separate its consumer business, which sells baby monitors and smart watches. The company expects the split to boost profitability in its remaining healthcare business. Shares rose 12%.

Separately, the Wall Street Journal reported that activist investor Politan Capital Management , which holds two seats on the board of Masimo, is planning a proxy fight for two more.

Watch For:

New Home Sales for February; Raphael Bostic speech

Today's Headlines/Must Reads:

- Fed Rate Outlook Looks Just Right for Banks

- The Short Vol Trade Is Back: Why Some Investors Think It's Driving Tranquility in Markets

- The $27 Trillion Treasury Market Is Only Getting Bigger

- Are Chinese Tech Stocks Value Plays Now?

MARKET WRAPS

Forex:

The dollar rose in Europe and could stay high for now, helped by a surging U.S. stock market and a solid U.S. economy, although the prospects of forthcoming Fed rate cuts should cause the currency to fall in the second quarter, ING said.

"A surging U.S. stock market and the implications for U.S. confidence and consumption make it hard to argue with the dollar right now, warning that DXY can push up to the 105.00 area. But we continue to expect this strength to be temporary and would prefer to position for a second-quarter downtrend."

UBS Global Wealth Management said major currencies could continue to stick within recent ranges as central banks look set to cut interest rates roughly in tandem.

However, there could be some opportunities for currency investors as the dollar could fluctuate as it stays "caught between decent U.S. growth and the prospect of Fed rate cuts."

Goldman Sachs Research said the yen may weaken versus the dollar more than it previously expected, raising its USD/JPY forecasts to 155 from 145 for three months, to 150 from 142 for six months and to 145 from 140 for 12 months given the recent adjustments to its prediction for Fed funds rate, revisions to its U.S. fixed-income projections, and 'careful' BOJ policy communication.

Although Goldman Sachs expects Japan's policies to remain sensitive to the exchange rate, the case remains that benign macroeconomic risk environment should weigh on JPY over time.

Swissquote Bank said comments from Japanese officials warning against speculative FX moves could curb sellers' appetite but are unlikely to bring the yen bulls back.

Bonds:

Treasurys continue to trade not far from fair value, RBC BlueBay Asset Management said.

"Although data may continue to push against lower rates, we think that market participants will accept the idea that rate cuts can be pushed back, just as long as they continue to maintain confidence that a substantive easing cycle will follow."

This latter facet is something that BlueBay remains "inclined to question."

UBS Global Wealth Management continues to see an attractive risk-reward outlook for quality bonds, including government and investment grade corporate bonds.

"The high level of outright interest rates on the asset class will be a key source of total return."

As short-end policy rates look set to fall and downside risks to growth are nonnegligible, UBS GWM also sees potential for capital gains.

Energy:

Oil futures were higher in European trade, on signs of tightness in the market and growing geopolitical concerns and despite a stronger dollar.

The United Nations Security Council is set to vote later on Monday on a new draft resolution for an immediate ceasefire in Gaza amid increasing calls for a truce from the international community.

Metals:

Base metals and gold rose in Europe.

Bullion gained on lingering inflation concerns while copper made fresh advances on signs of strong buyer interest.

XTB said gold's position as an inflation hedge has supported its rally so far this year as central banks get ready for interest rate cuts, and residual concerns about lingering inflation should keep the price supported.

XTB said copper could make further fresh gains after the number of outstanding contracts soared about 300,000 last week, the highest level in 2.5 years and a sign of strong buyer demand.

TODAY'S TOP HEADLINES

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.

Netflix's Co-CEOs Are Nothing Alike. That's a Good Thing.

When Netflix announced last year that Greg Peters and Ted Sarandos would become co-CEOs of the streaming giant, some executives inside the company worried the arrangement was doomed to fail.

Internal meetings over the years meant to stress-test each man's leadership potential had highlighted how different they were. Peters, the product guru, was told he was too rigidly focused on data. Sarandos, the Hollywood czar who relishes working with talent, was told he doesn't focus on data enough, people familiar with those discussions said.

Why a Fed rate cut in June is not yet a done deal

An interest-rate cut at the Federal Reserve's June meeting, though now widely expected, should not be viewed as decision that has already been made, Fed watchers say.

When Fed Chair Jerome Powell's press conference ended last Wednesday, expectations that the Fed would cut rates in June shot higher, ending the week at a 67% chance in futures markets, up from just above 50% earlier in the week, according to the CME Group.

The Wacky Negative Interest-Rate Experiment Ends With a Thud

The most generous thing you can say about pushing interest rates below zero is that it was an idea ahead of its time.

The experiment that turned the world of finance upside down ended this past week in Japan without having accomplished much of anything. At times it felt like 12 years in a strange new world-sort of like going south of the South Pole.

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.

Tammy Murphy Suspends Run for New Jersey Senate Seat

New Jersey's first lady Tammy Murphy suspended her bid Sunday for the U.S. Senate seat held by Democrat Robert Menendez, who faces a public-corruption trial.

In a short video shared on social media, Murphy said that staying in the Democratic primary race would require "a very divisive and negative campaign," which she isn't willing to do.

Trump Kicks Off General Election With Dark Rhetoric, Vows to Help Jan. 6 'Hostages'

WASHINGTON-Donald Trump spent the first breaths of his first rally as a general election candidate delivering a highly-charged promise: To help the "hostages" detained for their roles in the Jan. 6, 2021, assault on the U.S. Capitol "the first day we get into office."

"They were unbelievable patriots," he said, after raising his hand in a salute as a recording played of Jan. 6 defendants singing the national anthem from jail.

Why Mike Johnson Can't Run the House Without Democrats' Help

WASHINGTON-When Republicans won control of the House in November 2022, the big question was whether they would be able to govern with one of the smallest majorities in history. The answer so far is no, at least not by themselves-and that has put their leaders in a perilous bind.

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March 25, 2024 06:04 ET (10:04 GMT)

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