EMEA Morning Briefing: Investors May Remain Cautious Ahead of U.S. Econ Data

MARKET WRAPS

Watch For:

EU Monetary developments in the euro area; U.K. GDP, Business investment revised results, Balance of Payments; Germany unemployment; trading updates from UBS, JD Sports Fashion

Opening Call:

European stock futures were higher early Thursday. In Asia, stock benchmarks mostly gained; Treasury yields edged higher; the dollar weakened; while oil and gold futures advanced.

Equities:

European stock futures were tracking higher on the last trading day of a holiday-shortened week.

Major U.S. stock indexes rose Wednesday.

Bullish investors have cheered the combination of a resilient economy, slowing inflation, and the Fed's signal that it still expects to cut interest rates three times the rest of the year.

"It's healthy that we're seeing the market move more or less sideways right now," said Steve Sosnick, chief strategist at Interactive Brokers. "If the broad market is just shooting higher all the time without pause, that's a runaway train."

There will be fresh data on the inflation front with the release of February's PCE gauge, the Fed's preferred inflation index on Friday. Investors will also focus on Fed Chair Powell's remarks at an economics and monetary policy conference to be held at the San Francisco Fed.

Forex:

The U.S. dollar was slightly lower early Thursday but may remain supported.

Global central banks seem increasingly likely to cut rates, keeping the U.S. dollar strong, Bank of America's Alex Cohen said.

"The post-FOMC USD selloff was short-lived...as the perceived dovish aspects of the market were matched or exceeded by actions/communications of other G10 central banks," Cohen said.

"Incoming inflation data will be key for how this plays out in the coming months."

Bonds:

Yields on U.S. Treasurys were higher as traders remain wary of taking bold positions ahead of Friday's PCE inflation data.

"The Treasury market is heading into the month- and quarter-end with little to trade on since last week's Fed meeting," said Will Compernolle, macro strategist at FHN Financial in New York.

The Treasury market closes earlier than usual on Thursday. Markets will be closed for the Good Friday holiday when the February data on the personal consumption expenditures price index is released.

Energy:

Oil futures were higher, rebounding after settling lower overnight. Sentiment may be getting a lift from the Energy Information Administration inventory report on Wednesday, which showed a smaller weekly rise in U.S. crude stockpiles than the build reported by the American Petroleum Institute.

Supply-side issues also remain in focus ahead of a meeting by the OPEC Joint Monitoring Ministerial Committee next week, ANZ analysts said.

Metals:

Gold advanced after settling at a record high overnight.

Overall, gold continues to defy the normal negative impact of the dollar and yield strength, both of which have risen this year, Saxo Markets said.

The metal has been supported by safe demand related to several geopolitical risks, continued support from central banks, and retail buying, especially from India and China, it said.

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Iron ore fell in early Asian trade, extending declines amid ongoing concerns over weak steel demand, Westpac analysts said in a commentary.

Demand has been hurt by the prolonged Chinese residential property slump, and data from the China Iron and Steel Association for mid-March shows steel inventories are at their highest since May 2022, coupled with low steel production, Westpac adds.

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Nickel edged lower along with most base metals, as Chinese consumption continues to disappoint markets, ANZ Research said.

The usual springtime pick-up in consumption hasn't materialized, while investors also seem deterred by recent price gains in base metals, it said.

TODAY'S TOP HEADLINES

The S&P 500 Is Poised for Best Start to Year Since 2019

Many investors had high hopes going into 2024. The market's robust first-quarter rally still managed to surprise them.

Everything from stocks to bitcoin to gold marched to new records. With one trading session to go, the S&P 500 is up 10% in the first quarter, set for its best start to the year since 2019. Any weakness in the stock market hasn't lasted more than a few sessions, with investors buying the dip and sending the index to 21 all-time closing highs.

Why the Fed Is Delaying Interest-Rate Cuts: Waller

A stretch of stronger-than-expected economic and inflation data so far this year argues for delaying cutting the federal-funds rate, according to Federal Reserve Gov. Christopher Waller.

"I see economic output and the labor market showing continued strength, while progress in reducing inflation has slowed," Waller said at a Wednesday evening event in New York organized by the Economic Club of New York. "Because of these signs, I see no rush in taking the step of beginning to ease monetary policy."

U.S. Publishes Draft Federal Rules for Cyber Incident Reporting

The U.S. Cybersecurity and Infrastructure Security Agency on Wednesday published long-awaited draft rules on how critical-infrastructure companies must report cyberattacks to the government.

CISA developed the rules after President Biden signed the Cyber Incident Reporting for Critical Infrastructure Act into law on March 15, 2022. Officials hope reports from companies in a range of industries will allow them to better spot attack patterns and determine tactics used by cybercriminals and nation-states to help improve defenses.

Schlumberger to Invest Nearly $400 Million in Carbon-Capture Venture

Schlumberger will pay almost $400 million to acquire 80% of carbon-capture company Aker Carbon Capture, creating a combined carbon-capture-focused venture.

Oil-field-services company Schlumberger said late Wednesday that it would pay 4.12 billion Norwegian krone ($381.5 million) for the stake in the company and would contribute its own carbon-capture business to the combined venture. Schlumberger may also make 1.36 billion Norwegian krone in performance-based added payments in the next three years.

Amazon Invests $2.75 Billion More in AI Startup Anthropic

Amazon.com said it has invested $2.75 billion more in the artificial-intelligence startup Anthropic, a major investment from a tech giant looking to compete with Microsoft, Google and others in the AI arms race.

Amazon has now invested a total of $4 billion in Anthropic after making a $1.25 billion initial investment in the company in September. The company said at the time that it could invest up to $4 billion. Amazon said it has a minority ownership position in Anthropic.

Fisker Slashes Prices on 2023 EV Models in Affordability Bid

Struggling electric-vehicle maker Fisker is cutting the suggested prices for some of its 2023 model-year vehicles, a bid to drum up demand for its cars as the startup struggles for cash.

The Los Angeles-based company said late Wednesday that its would reduce its Manufacturer's Suggested Retail Price on 2023 Ocean models, including the Extreme, Ultra and Sport trims.

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Expected Major Events for Thursday

00:01/UK: Feb UK monthly automotive manufacturing figures

00:01/UK: Feb Zoopla House Price Index

06:00/FIN: Feb Retail sales

07:00/SWE: Feb Retail sales

07:00/UK: 4Q Business investment revised results

07:00/UK: 4Q Balance of Payments

07:00/UK: 4Q UK quarterly national accounts

07:00/GER: Feb Retail Trade

07:45/FRA: Feb Housing starts

08:00/SVK: Feb PPI

08:00/SWI: Mar KOF economic barometer

08:55/GER: Mar Labour market statistics (incl unemployment)

09:00/EU: Feb Monetary developments in the euro area (M3)

09:00/ITA: Mar Consumer Confidence Survey

09:00/ITA: Mar Business Confidence Survey

10:00/ITA: Feb Foreign Trade non-EU

10:00/MLT: Feb PPI

10:00/CYP: Jan Industrial Production Index

10:00/BEL: 4Q Balance of Payments

10:30/BEL: Mar CPI

11:00/IRL: Feb Retail Sales Index

11:00/ITA: Feb PPI

17:59/UK: REC JobsOutlook survey

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(END) Dow Jones Newswires

March 28, 2024 01:15 ET (05:15 GMT)

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