MARKET WRAPS
Watch For:
Housing Starts; Canadian CPI; Earnings from FedEx
Today's Top Headlines/Must Reads:
- These Bull Markets Could Keep Charging Ahead
- The Office Market Had It Hard in 2023. Next Year Looks
Worse.
- Bank of Japan Chief, Bucking Expectations, Avoids Talk of Rate
Increase
Opening Call:
Stock futures hovered on Tuesday as investors continued to revel
in an expected loosening of monetary policy in 2024 amid a 'soft
landing' for the economy.
Some Fed officials in recent days appeared to push back against
the market's hopes for lower borrowing costs as early as March, but
equity investors seem to have shrugged off those comments, for
now.
Meanwhile, the Bank of Japan reminded traders that an important
spigot of cheap money still remains open.
The BOJ left its main interest rate at minus 0.1%, and in the
accompanying news conference, Governor Ueda provided little
evidence he was minded to exit the central bank's ultra-loose
monetary policy anytime soon, despite inflation running above its
2% target for 19 consecutive months.
Traders were also warily eyeing the oil market, after benchmark
Brent crude jumped on Monday following BP's statement it was
halting shipments through the Red Sea , and thus the Suez Canal,
because of attack's by the Houthi in Yemen.
Many of the world's biggest shipping companies have said they
also will steer clear of the region, prompting concerns about
rising costs that may build inflationary pressures.
"An extended period of disruption in global trade ways should
not only sustain energy prices, but also put a renewed pressure on
global supply chains and shipping prices," Swissquote Bank
said.
"The latter is a threat to inflation. Remember, the
pandemic-related supply chain disruptions were the major reason
that sent inflation to almost 10% in the U.S.," it added.
Premarket Movers
Alphabet agreed to pay $700 million and make certain changes to
its app store in a settlement with a group of states that claimed
Google operated its app store, Google Play, as an illegal monopoly.
Shares rose slightly.
Bluebird Bio was falling 13% after the company said it would
sell $150 million of common stock in a public offering.
Ebix fell nearly 68% Monday after the software services company
filed for bankruptcy. Shares fell another 9% premarket.
Heico said fiscal fourth-quarter profit rose from a year earlier
as revenue jumped 54% to $936.4 million and topped analysts'
estimates. The stock was up 3.4%.
Nikola rose about 5% in premarket trading, after falling nearly
10% in the previous session. A judge sentenced the electric-truck
company's founder Trevor Milton on Monday to four years in prison
for defrauding investors.
Plug Power was downgraded to Underweight from Neutral at Piper
Sandler and the price target on shares of the clean energy company
was reduced to $2.30 from $6.50, the Fly reported. Plug Power fell
4.3%.
Forex:
The yen fell after the BOJ kept its ultra-loose policy unchanged
and offered no hints of a possible switch in direction, but losses
were limited, suggesting investors still expect the central bank to
tighten next year, UniCredit Research said.
"This relatively moderate reaction... suggests that investors
are still confident that a change in the BOJ monetary policy might
occur next year although the Japanese central bank refrained from
indicating any timeframe yet."
The dollar's gains against the yen were also insufficient to
lift the DXY dollar index, with the U.S. currency remaining
"sluggish."
Energy:
Oil prices were mixed on concerns over global trade disruptions
after major shipping and oil-and-gas companies paused transit in
the Red Sea due to escalating attacks from Yemen's Houthi
rebels.
The U.S. and other nations have set up a naval force to protect
vessels in the area, while an increasing number of companies were
rerouting ships via southern Africa's Cape of Good Hope.
"Investors and consumers haven't forgotten the impact snarled up
supply chains had on prices following the pandemic," AJ Bell
said.
"News that shipping firms will cease using the Red Sea route
after a number of attacks on shipments will be unsettling."
Metals:
Copper prices edged higher despite broad concerns over weak
demand in top metals consumer China, and as investors continued to
keep a close eye on the path of interest rates.
According to analysts, markets continue to price in a 25
basis-point interest rate cut by the Fed as early as March.
"The communication and timing of these cuts will be an important
driver for risk assets, the dollar, and our commodity markets next
year," Peak Trading Research said.
Saxo Bank has kept a bullish outlook for gold into 2024 "in the
firm belief that rates have peaked, and that Fed funds and real
yields will start to trend lower."
Central banks' demand for gold is also potentially heading for
another record year, with more than 1000 tons being removed from
the market for a second year running, Saxo Bank said, adding that
this is one of the main reasons the yellow metal has managed to
rally despite surging real yields.
TODAY'S TOP HEADLINES
Why UBS Wants to Be the No. 6 Investment Bank in the U.S. (Yes,
No. 6)
More than a decade after throwing in the towel on its hopes of
being a major player in the lucrative U.S. investment-banking
market, UBS is making another push, but this time the Swiss
financial giant's ambitions are a bit more measured.
The takeover of local rival Credit Suisse and turmoil at other
global peers has opened a door of opportunity to build back up a
business that has been lagging behind rivals, UBS executives say.
They have been on a hiring spree for senior deal makers, expanded
research coverage and are ramping up pitches to potential
clients.
End of Adobe's Takeover Bid for Figma Spells New Challenges for
Venture Deals, Startups
The collapse of Adobe's effort to acquire collaboration-software
startup Figma for about $20 billion amid pushback from regulators
in the U.K. and Europe could be one more sobering influence on
venture capital.
Higher interest rates have already depressed the startup
ecosystem at both ends of the spectrum, including private funding
of early-stage startups and the ability of late-stage startups to
enter the public markets via an initial public offering. The demise
of the Figma deal reflects the increasing difficulty that some
startups will face as they pursue an acquisition by another
company.
Russia Tried to Weaken Democrats Ahead of 2022 Midterm Vote,
U.S. Spy Agencies Say
WASHINGTON-The Russian government and its proxies attempted to
denigrate the Democratic Party and undermine voter confidence ahead
of the 2022 midterm elections, an operation that most likely sought
to weaken U.S. support for Ukraine, U.S. intelligence agencies
said.
China also tacitly approved efforts to try to influence a
handful of unidentified midterm races, though it refrained from
favoring one party, as Beijing exhibited a greater willingness to
target the U.S. with election influence activities than it has
previously, according to a newly released intelligence community
assessment. Iran also was blamed for trying to undermine confidence
in U.S. democracy, while other foreign governments, including Cuba,
were said to have experimented with small-scale U.S. influence
pushes.
U.S. Military Struggles to Stop Osprey Crashes After Decades of
Flaws
In late November, Amber Sax awoke to learn that eight more
families were facing her nightmare. A deluge of messages told her
that a U.S. military Osprey aircraft had crashed into the ocean
near a Japanese island with eight crew on board.
Sax lost her husband, a 33-year-old Marine Corps pilot, in June
2022. The MV-22 Osprey co-piloted by Capt. John J. Sax reported a
problem with an overheating gearbox and, moments later, plunged
into the Southern California desert, killing all five aboard.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Calendar (ET):
0830 Nov Industrial product and raw materials price indexes
0830 Nov CPI
Stocks to Watch:
LOGISTEC CORPORATION PROVIDES UPDATE ON PROPOSED PLAN OF
ARRANGEMENT TO BE ACQUIRED BY BLUE WOLF CAPITAL PARTNERS; 99.9% of
Hldrs Approve Arrangement
Expected Major Events for Tuesday
08:59/JPN: Japan Monetary Policy Meeting decision
11:00/UK: Dec CBI Industrial Trends Survey
13:30/CAN: Nov Industrial product and raw materials price
indexes
13:30/US: Nov New Residential Construction - Housing Starts and
Building Permits
13:30/CAN: Nov CPI
13:55/US: 12/16 Johnson Redbook Retail Sales Index
21:00/US: Oct Treasury International Capital Data
21:30/US: 12/15 API Weekly Statistical Bulletin
23:50/JPN: Nov Provisional Trade Statistics for the Month
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
Accenture PLC (ACN) is expected to report $3.01 for 1Q.
Axcella Health Inc (AXLA) is expected to report for 3Q.
Broadway Financial Corp (BYFC) is expected to report for 3Q.
CalAmp (CAMP) is expected to report $-0.15 for 3Q.
Cohbar Inc (CWBR) is expected to report for 3Q.
Conn's (CONN) is expected to report $-1.48 for 3Q.
Enerpac Tool Group Corp (EPAC) is expected to report for 1Q.
Factset Research Systems (FDS) is expected to report $3.74 for
1Q.
FedEx Corp (FDX) is expected to report $3.96 for 2Q.
FuelCell Energy Inc (FCEL) is expected to report for 4Q.
Greenlane Holdings Inc (GNLN) is expected to report for 3Q.
Helix BioPharma (HBP.T,HBPCF) is expected to report for 1Q.
Home Capital (HCG-T) is expected to report $0.49 for 3Q.
NeuBase Therapeutics Inc (NBSE) is expected to report for
4Q.
OrganiGram Holdings Inc (OGI,OGI.T) is expected to report for
4Q.
Pure Bioscience (PURE) is expected to report for 1Q.
Rafael Holdings Inc (RFL) is expected to report for 1Q.
Spark Networks SE - ADR (LOVLQ) is expected to report for
3Q.
Steelcase Inc (SCS) is expected to report $0.19 for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
AbbVie Cut to Hold From Buy by HSBC
Adobe Raised to Overweight From Equal-Weight by Barclays
Affirm Holdings Cut to Underweight From Equal-Weight by Morgan
Stanley
Allakos Raised to Outperform From Market Perform by William
Blair
Alteryx Cut to Hold From Buy by Needham
Anywhere Real Estate Cut to Underweight From Neutral by JP
Morgan
Archer Daniels Midland Cut to Market Perform From Outperform by
BMO Capital
AVROBIO Cut to Neutral From Buy by Mizuho
Bank of New York Mellon Raised to Overweight From Neutral by JP
Morgan
Bread Financial Cut to Neutral From Overweight by JP Morgan
Broadstone Net Lease Raised to Overweight From Neutral by JP
Morgan
Century Communities Cut to Neutral From Outperform by
Wedbush
Cingulate Cut to Hold From Buy by Maxim Group
CompoSecure Cut to Neutral From Overweight by JP Morgan
Cousins Properties Raised to Overweight From Neutral by JP
Morgan
Elme Communities Raised to Overweight From Neutral by JP
Morgan
EPR Properties Raised to Overweight From Neutral by JP
Morgan
Equifax Raised to Buy From Hold by Jefferies
Exelon Cut to Equal-Weight From Overweight by Morgan Stanley
First Internet Bancorp Raised to Buy From Hold by
Craig-Hallum
Flywire Cut to Neutral From Overweight by JP Morgan
Illumina Raised to Sector Outperform From Sector Perform by
Scotiabank
JPMorgan Chase Raised to Buy From Outperform by Daiwa
Capital
Kyndryl Holdings Raised to Overweight From Neutral by JP
Morgan
M&T Bank Cut to Hold From Buy by Deutsche Bank
M/I Homes Cut to Neutral From Outperform by Wedbush
Meritage Cut to Neutral From Outperform by Wedbush
Palo Alto Networks Cut to Market Perform From Outperform by
Raymond James
Plymouth Industrial REIT Cut to Underweight From Neutral by JP
Morgan
Progressive Raised to Overweight From Equal-Weight by Wells
Fargo
Prologis Raised to Overweight From Neutral by JP Morgan
RE/MAX Holdings Cut to Underweight From Neutral by JP Morgan
Ready Capital Cut to Market Perform From Outperform by Raymond
James
Salesforce Raised to Outperform From Peer Perform by Wolfe
Research
SiteOne Landscape Supply Cut to Hold From Buy by Stifel
Skyline Champion Cut to Neutral From Outperform by Wedbush
Snap Raised to Buy From Neutral by Guggenheim
Sunnova Energy Intl Raised to Buy From Neutral by Goldman
Sachs
SunPower Cut to Sell From Neutral by Goldman Sachs
Tanger Factory Outlet Raised to Overweight From Neutral by JP
Morgan
Taylor Morrison Home Cut to Neutral From Outperform by
Wedbush
Tri Pointe Homes Cut to Neutral From Outperform by Wedbush
UnitedHealth Cut to Reduce From Hold by HSBC
Universal Display Raised to Buy From Neutral by B of A
Securities
Vertex Energy Cut to Hold From Buy by Stifel
Welltower Raised to Overweight From Neutral by JP Morgan
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
December 19, 2023 06:15 ET (11:15 GMT)
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