North American Morning Briefing: Stock Futures Rise After TSMC Earnings

OPENING CALL

Stock futures traded modestly higher on Thursday, with Nasdaq leading the gains, after strong results from TSMC rippled across the market.

Advanced Micro Devices, Nvidia and Micron Technology rose premarket after TSMC reported its first profit rise in a year , underscoring how the AI boom has fueled demand for advanced chips.

Investor focus was also on Netflix earnings report scheduled for after the closing bell.

"Netflix becomes the first of the big tech companies to post earnings, with the stock having held up well amid the latest bout of market turmoil," IG said.

Premarket Movers

23andMe was little changed premarket after CEO Anne Wojcicki was looking to take the company private, a filing showed late Wednesday.

Alcoa reported an adjusted loss in the first quarter of 81 cents a share, wider than estimates that called for a loss of 64 cents. Shares were rising 3.1%.

CSX first-quarter earnings fell to 46 cents a share from 48 cents a year earlier but topped analysts' expectations. The stock rose 2.9%.

Duolingo said it will be added to the S&P MidCap 400 on April 22. It replaces Cable One, which will be moved to the S&P SmallCap 600. Duolingo shares were up 7.3%.

Las Vegas Sands posted a first-quarter profit of 66 cents a share, up from 19 cents a year earlier. Shares declined 1.5%.

Netflix was up 0.6% in premarket trading ahead of its first-quarter report.

Trump Media & Technology Group was up 1.5% in premarket trading.

Post Close Movers

Equifax offered a disappointing second-quarter outlook after posting first-quarter revenue and adjusted earnings that missed analyst estimates. Shares fell 10%.

Triumph Financial reported first-quarter earnings that took a hit from an ongoing slowdown in the freight industry. Shares fell 7.6%.

Watch For:

Existing Home Sales; Weekly Jobless Claims; EIA Weekly Natural Gas Storage Report; Earnings from Netflix, Intuitive Surgical, Blackstone, Elevance Health, D.R. Horton, PPG Industries, Genuine Parts, KeyCorp, Ally Financial, Alaska Air.

Today's Top Headlines/Must Reads:

- Pension Funds Are Pulling $325 Billion From Stocks

- Fed's Mester Says Recent Inflation Means Longer Wait for Rate Cuts

- Grayscale's Once-Mighty Fund Is Bleeding Bitcoin

MARKET WRAPS

Forex:

Morgan Stanley Research expects the dollar's resilience to endure, building on gains versus the euro and the Chinese yuan in the short term due to the U.S. business cycle. The market consensus is too negative on the dollar currently, it said.

The dollar's dominant reserve currency status--which is expected to endure despite "an increasingly multipolar world"--should provide long-term support for the currency. This backs Morgan Stanley's current preference for the dollar, although periods of weakness are to be expected due to cyclical factors and valuations.

The dollar and Treasury yields dropped, but the trend of dollar strength should continue, Brown Brothers Harriman said.

Late Wednesday, finance ministers from Japan and South Korea expressed concerns about their currencies' recent depreciation against the dollar; earlier this week Bank Indonesia intervened to stabilize the rupiah; and overnight the People's Bank of China warned against one-sided yuan moves, it said.

"As long as U.S. economic activity remains solid and monetary policy divergence persists; the cyclical dollar uptrend is intact."

Bonds:

The 10-year Treasury yield is likely to continue rising, with key resistance at October's peak of 5.021%, UOB said.

However, the daily relative strength index is approaching the most overbought since October 2023, so it's less clear whether there's sufficient momentum for the 10-year yield to reach 5.021%, UOB added.

Taking into account other technical indicators and weekly time horizon, the odds of the 10-year yield reaching October's peak in the next couple of months seems low, UOB said.

Edmond de Rothschild Asset Management said there are opportunities on bond markets despite tighter spreads.

"Rates are now high in absolute terms so they offer some protection against any economic accident," it said. "Lower rates would offset any spread widening."

Edmond de Rothschild AM sees subordinated financial debt relatively more appealing than corporate bonds and it is overweight emerging country bonds as they are expected to benefit from an interest-rate cut cycle by the Federal Reserve and China's economic recovery.

Energy:

Oil prices edged lower as traders discounted risks of a broader war in the Middle East, while a fourth straight weekly build in U.S. crude inventories and prospects of higher-for-longer interest rates weighed on sentiment.

"The lack of an immediate response by Israel to Iran's weekend attack has seen the market reduce its geopolitical risk premium," ANZ Research said.

Fears of a widening conflict continued to keep markets on edge, but the fact that no physical barrels have been taken off the market and OPEC+ has significant spare capacity reassured investors.

Meanwhile, "a bearish EIA inventory report appears to have been the perfect opportunity for investors to lock in profits after the recent gains," ANZ added.

Metals:

Metals prices rose, with gold futures gaining 0.2% and base metals gaining on Russian sanctions.

MUFG reiterated its 2024 commodities views that gold is its most bullish call this year on a trifecta of Fed cuts, supportive central bank demand and bullion's role as the geopolitical hedge of last resort.

TODAY'S TOP HEADLINES

Nokia Expects Demand in Mobile Networks to Pick Up

Nokia said the first quarter marked the low point in mobile networks demand, with activity expected to progressively pick up through the remainder of 2024.

The Finnish telecommunications company's first-quarter earnings beat expectations, with lower sales of its gear offset by a one-off bump from catch-up payments related to delayed licensing deals with cell phone manufacturers.

BP to Simplify Organization, Reduce Size of Leadership Team

BP said it will simplify its organizational structure and cut the size of its leadership team as it seeks to reduce duplication and complexity in management reporting lines.

The changes are part of a plan to turn the British energy giant into an integrated energy company and move away from its image as an oil major and invest more in low-carbon activities.

TikTok Ban Measure Attached to House Foreign Aid Bill, Boosting Odds of Passage

WASHINGTON-House Republicans revised their proposal to ban or force the sale of TikTok in the U.S. and tied it to a sweeping package of aid for Ukraine and Israel, potentially putting the bipartisan effort to crack down on the popular Chinese-controlled app on a fast track to becoming law.

Last month, the House voted overwhelmingly to approve a bill that would force Chinese parent company ByteDance to sell TikTok's U.S. operations within six months of the legislation becoming law or face a ban. That measure then moved to the Senate, where its fate was uncertain as lawmakers contemplated potential changes to the bill.

China Pledges to Steady Yuan as Asian Currencies Come Under Pressure

China's central bank reiterated its commitment to a stable yuan, joining the chorus of Asian officials concerned about weakening regional currencies.

The People's Bank of China said it is steadfast in its aim of keeping the yuan steady at a reasonable and balanced level, according to a post on its account on social-media platform WeChat on Thursday.

Biden Tries to Build on Small Gains in Polls as Trump Stands Trial

SCRANTON, Pa.-Former President Donald Trump will be sitting in a courtroom for much of the next several weeks, giving President Biden a window of opportunity to play offense and build support-if he can take advantage of it.

Biden embarked on a multiday tour of Pennsylvania this week as jury selection began in Trump's criminal hush-money trial in New York, opening a presidential split-screen that voters will see this spring.

Germany Detains Two Dual German-Russian Nationals Over Latest Alleged Spy Plot

BERLIN-Germany detained two dual German-Russian nationals on suspicion of spying for Moscow and seeking to disrupt Western military aid to Ukraine in the latest espionage affair to shake the country.

The two men, identified only as Dieter S. and Alexander J., are suspected of gathering intelligence about military and industrial installations in the country, Germany's federal prosecutor's office said Wednesday. Dieter S. was also believed to have planned sabotage operations on those targets, the prosecutor added.

China Denounces U.S. Probe Into Shipbuilding Sector

Beijing said it opposes a U.S. probe into China's shipbuilding industry, calling the investigation a politically driven move full of "false accusations" and threatening to take further action.

The U.S. Trade Representative said Wednesday that it will open an investigation into China's policies and practices in the maritime, logistics and shipbuilding sectors, a move that came after five national labor unions filed a petition to Katherine Tai's office.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

Nothing scheduled

Economic Indicators (ET):

0830 Feb Employment Insurance

Stocks to Watch:

Lithium Americas Prices US$275M Public Offering of 55M Shares at US$5 Each; Plans to Use Proceeds to Advance Construction of Thacker Pass Lithium Project; Offering Is Expected to Close April 22

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Royal Bank of Canada Offers $1B NVCC AT1 Limited Recourse Cap Notes; Notes Will Bear Interest of 7.5% Annually Until May 2, 2029; In 2029, Interest Rate on Notes Will Reset Every Five Years at a Rate Equal to the U.S. Treasury Rate Plus 2.887%

Expected Major Events for Thursday

04:30/JPN: Feb Tertiary Industry Index

09:00/ITA: Feb Balance of Payments

12:30/US: Apr Philadelphia Fed Business Outlook Survey

12:30/CAN: Feb Employment Insurance

(MORE TO FOLLOW) Dow Jones Newswires

April 18, 2024 06:28 ET (10:28 GMT)

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