North American Morning Briefing: Markets Steady as Traders Eye Next Inflation Gauge

OPENING CALL

Stock futures were higher on Tuesday and bond yields were mildly mixed in cautious trading as investors eyed important inflation data at the end of the week.

Moves were meager across markets ahead of the release on Friday of the personal consumption expenditure price data for February, the Federal Reserve's favored inflation measure.

Many markets will be closed for the Easter break on that day, so traders are perhaps extra wary of taking bold positions lest they get caught out by the PCE report, according to analysts.

"Investors may be taking a hiatus and possibly enjoying the spring break, while others are adopting a wait-and-see approach for the next bullish catalyst, such as a favorable outcome from the Fed's preferred inflation gauge," SPI Asset Management said.

The PCE report has the power to shift the market's thinking on when the Fed may feel able to start reducing interest rates.

"In this context, an 'all-clear' signal would entail the inflation data meeting consensus expectations or coming in lower than anticipated," SPI added.

Premarket Movers

GameStop was up 1.5% ahead of its report scheduled for after the stock market closes Tuesday. Its shares jumped 15% on Monday.

Super Micro Computer was up 2.4%. The stock jumped 7.2% on Monday after analysts at J.P. Morgan initiated coverage with an Overweight rating and a price target of $1,150.

UPS will be meeting with analysts and investors Tuesday. The meeting is an important one for shares of the shipping giant, which have declined 17% over the past 12 months.

Post-Close Movers

Ampco-Pittsburgh posted a wider loss in the fourth quarter, partially because of charges related to asbestos. Shares fall 8%.

Stoke Therapeutics said studies of its treatment for Dravet syndrome found clinically meaningful effects, with a substantial reduction in frequency of seizures. The company said it plans to meet with regulators to discuss a registrational study under recently approved dosage regiments. Shares rose 87%.

Westport Fuel Systems' loss in the fourth quarter came in wider than expected, despite revenue being up 12%. Shares fell 12%.

Economic Insight

The world's path back to lower interest rates could be unpredictable, HSBC said.

Switzerland and Mexico became the first major economies to begin cutting rates last week after a period of sustained rate hikes aimed at curbing rapid inflation.

But most of the world's largest central banks--including the Federal Reserve, European Central Bank and Bank of England--are keeping rates on hold for the moment, HSBC noted, as they wait for further data to confirm a cooling of price rises.

"With growth in many economies proving more resilient than feared, they seemingly have time on their side. The easing cycle...could be just as unusual as the economic expansion and tightening cycle that preceded it."

Watch For:

Durable Goods for February; S&P CoreLogic Case-Shiller Home Prices Index for January; Conference Board - Consumer Confidence for March

Today's Headlines/Must Reads:

- Boeing's Next CEO Will Have 'Massive Job' at Company in Crisis

- Why Treasury Yields Are Rising Despite Rate-Cut Expectations

- A Way for Energy Investors to Ride the AI Boom

- Trump-Friendly Truth Social Board to Decide When He Can Cash In

MARKET WRAPS

Forex:

The dollar edged lower and Danske Bank Research said declining global real rates, fewer economic surprises from the U.S. and a sharp increase in aggregate long dollar positioning all point to a weaker currency, potentially lifting EUR/USD towards 1.10 in the next 1-2 months.

MUFG said the Federal Reserve, European Central Bank and the Bank of England are currently expected to start cutting interest rates around the same time, but there's a risk the Fed could delay rate cuts for longer and this would lift the dollar.

"Current market expectations for a synchronized start to rate cut cycles from major central banks appear reasonable and favor further consolidation for the major FX pairs of EUR/USD, GBP/USD and EUR/GBP in the near-term."

Bonds:

The current yield levels in the Treasury market offer an attractive re-entry to duration positions, Candriam said.

After having taken profit on long duration exposure at the end of 2023 following the strong rates rally, Candriam was awaiting a retracement for a more attractive entry point.

"Following the selloff in the first two months of the year, we decided to reinitiate a small long preference in U.S. rates."

Candriam believes the market is more realistic about Federal Reserve interest-rate cuts this year.

It also said that s elloffs on a number of rates markets globally has led it to upgrade its view of rates generally, and is now overweight on most major markets except Japan.

In the eurozone, Candriam decided to move to a positive view on EUR duration overall, implemented via the 10-year tenor.

"We also see positive signals for our fair value models, as inflation trends continue to decelerate together with a stagnating eurozone economy."

Energy:

Oil prices inched lower after the United Nations passed a resolution calling for an immediate ceasefire in Gaza and OPEC+ delegates reportedly said they see no need to change supply policy at a review meeting next week.

Market watchers are now awaiting the release of U.S. inflation data later this week for more clues on the timing of rate cuts.

Metals:

Base metals and gold traded in narrow ranges as investors shifted their attention to the next release of U.S. inflation data.

Aluminum edged up after China's Yunnan province cut electrolytic aluminum output, ING said.

TODAY'S TOP HEADLINES

Nvidia Partner Plans $4 Billion Investment in Indiana

South Korea's SK Hynix plans to invest roughly $4 billion to build an advanced chip-packaging facility in West Lafayette, Ind., according to people familiar with the matter, a boost to the Biden administration's ambitions to restore America's standing as a semiconductor power.

The SK Hynix facility, with nearby access to Purdue University, home to one of the U.S.'s biggest semiconductor and microelectronics-engineering programs, is expected to create around 800 to 1,000 new jobs, the people said. A mix of state and federal tax incentives and other forms of support are expected to be made available to help finance the project, the people said.

Adam Neumann Bids to Buy Back WeWork for More Than $500 Million

Adam Neumann, the former chief executive and co-founder of WeWork, recently submitted an offer to buy the bankrupt co-working company for more than $500 million, according to people familiar with the matter.

It wasn't immediately clear how Neumann would finance the acquisition, the people familiar with the matter said.

Premier to Pursue Smiggle Spin Off, Explore Peter Alexander Demerger

SYDNEY-Premier Investments said it would work toward a demerger of its stationery store Smiggle by the end of January 2025, offering an update on its strategic review alongside its half-year earnings.

Premier also said that it would explore a demerger of sleepwear business Peter Alexander during calendar year 2025. The company said any demergers will be subject to further review and board approval, as well as regulatory and shareholder approvals.

Rachel Maddow Joins Growing Mutiny at MSNBC Over Hiring of Ronna McDaniel

An on-air mutiny by MSNBC talent against NBC's hiring of former Republican National Committee Chairwoman Ronna McDaniel gathered momentum Monday, as several high-profile anchors including Rachel Maddow and Joe Scarborough condemned the move.

The talent used their shows to voice concerns about McDaniel's hiring, pointing to what they said was her role in advancing former President Donald Trump's campaign to overturn the 2020 presidential election. Jen Psaki, Joy Reid and Mika Brzezinski were among other MSNBC personalities who criticized the move, while NBC's Chuck Todd blasted the network on Sunday.

China Signals More Property Support, But Substance to Be Key for Turnaround

China's premier and its central bank chief have sought to calm the country's embattled property sector in recent days, but investors are waiting on something slightly more elusive: concrete steps.

People's Bank of China Gov. Pan Gongsheng on Monday offered up a mildly upbeat assessment of China's real-estate market, saying the sector is showing some "positive signals," according to a statement on the PBOC's website.

German Consumer Confidence Improves Marginally, Defying Fragile Economy

German consumer confidence edged up slightly, as expectations for the economy and incomes improved, despite still strong unease surrounding the outlook.

The forward-looking consumer-climate index for Germany, published on Tuesday by research group GfK and the Nuremberg Institute for Market Decisions, forecasts confidence to rise slightly to minus 27.4 in April from minus 28.8 this month.

Baltimore Bridge Collapses After Being Hit by Ship, Sending Vehicles Into River

A bridge in Baltimore collapsed into the Patapsco River early Tuesday after being hit by a large containership, sending vehicles and people into the water, authorities said.

Several cars have fallen into the river, a spokesperson for the Fire Department said, after the Francis Scott Key Bridge, a big steel crossway that carries Interstate 695, was struck by a boxship.

Supreme Court to Hear Arguments Over Access to Abortion Pill

WASHINGTON-Two years after the Supreme Court permitted states to outlaw abortion, the justices on Tuesday will hear a case that could restrict the procedure throughout the U.S., including in states that strongly protect abortion rights.

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March 26, 2024 06:07 ET (10:07 GMT)

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