MARKET WRAPS
Watch For:
Factory Orders for February; Federal Reserve's Collins and Cook speak at Exploring Careers in Economics event; Federal Reserve's Mester speaks at Money Marketeers event
Today's Top Headlines/Must Reads:
- Lithium Prices Are Down, Cheaper Batteries and EVs Could Follow
- Housing Is Turning Out to Be a Lousy Shelter for Investors
- After Credit Suisse, Chinese Banks Aren't a Great Safe Harbor
- Movie-Theater Industry Pain Intensifies Even as Pandemic Eases
- Australia's Central Bank Jumps Ahead of Fed by Holding Interest Rates Steady
- Signature Bank Insiders Sold $100 Million in Stock During Crypto Surge
Follow WSJ market coverage here
Opening Call:
Stock futures edged higher on Tuesday as calmer conditions in energy and bond markets, and the looming catalysts of jobs data and company earnings, were discouraging equity investors from making bold bets.
Encouraging investors to sit on their hands is a week shortened for the Good Friday holiday. The monthly nonfarm payrolls reports will still be published on that day and traders will be wary of being badly positioned and not able to immediately react.
Then next week sees the start of the first-quarter corporate earnings season, possibly another reason for caution.
"So the question is whether U.S. equities will soon lose momentum...the breadth of the market has been quite narrow with mega caps doing the major heavy lifting of indices. This is probably as good as it gets for now in equities as equity valuations are getting stretched as more and more signs are showing that the real estate sector is slowing down dramatically which will impact credit transmission in the economy," Saxo said.
Additionally, investors weighed the outlook for inflation and interest rates on weak economic data and higher oil prices.
Read Fed, ECB Expected to End Interest-Rate Rises Within Months
Read Rebound in Oil Prices Unlikely to Revive US Inflation
Stocks to Watch
AMC Entertainment said it had agreed to settle a lawsuit brought by shareholders. The move will allow the company to convert its preferred equity units, known as APEs, into common stock. AMC shares, which took off in the meme-stock craze, sank 24% premarket
Exela Technologies reported losses nearly tripled in its latest quarter amid lower contracted revenue and staffing shortages. Shares fell 5% in after-hours trading.
First Republic Bank fell 1% and was among the most heavily traded stocks in the S&P 500 premarket.
Histogen entered into an exclusive intellectual property license agreement with John Hopkins University. Shares rose 9% in after-hours trading.
Marathon Oil and ConocoPhillips gained the most on the S&P 500 on Monday, rising 10% and 9%, respectively, after the OPEC+ countries led by Saudi Arabia said they were voluntarily planning on reducing output. In premarket trading Tuesday, Marathon Oil was up a further 0.8%, while ConocoPhillips rose 0.3%.
Oncternal Therapeutics said it will close two studies of zilovertamab in combination with ibrutinib and reduce other expenses due to the changing therapeutic landscape. Shares fell 58% in after-hours trading.
Virgin Orbit filed for Chapter 11 bankruptcy protection after failing to raise enough money to continue operating. The stock declined 22% in premarket trading.
Walmart begins a two-day investor meeting on Tuesday. The world's largest retailer last month issued earnings guidance for fiscal 2024 below analysts' estimates. Wells Fargo analyst Edward Kelley said he expects to hear about a good start to the fiscal year from Walmart as "the first quarter looks to be shaping up as a good quarter."
Forex:
The dollar remained weak as market stresses gradually eased and investors focused on the possibility of the Fed cutting interest rates later this year, ING said.
Recent actions by the Fed to address money-market stress have allowed investors to conclude that "tighter credit conditions make a U.S. hard landing and a sharp Fed easing cycle more likely," which is a cleanly bearish story for the dollar.
A sharp decline in U.S. JOLTs job openings data would be "mildly bearish" for the dollar and support talk of Fed easing in 2H, ING said.
Read Euro Rises Vs Dollar as Traders Compare US-Europe Banking Sectors
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Sterling is the best performing major currency since the start of 2023 due to resilient U.K. economic data, the isolation of Britain's banking sector to external shocks and the Bank of England's restrictive policy stance, Ebury said.
"BOE governor Bailey warned last week that the recent banking turmoil would unlikely derail additional rate hikes, with another 25 basis points move appearing highly likely at the next meeting in May," Ebury said.
Every week the prospect of a U.K. recession grows less likely and sterling is reaping the benefits, it added.
Bonds:
The bond market remains attractive, in particular compared to the equity market, Aramea Asset Management said.
"This is primarily due to the low potential for yield increases in German and U.S. government bonds."
At the latest when the central banks end their interest-rate rising cycle, investors will almost inevitably start to look for more aggressive interest rate cuts, Aramea AM said.
"Whether these [rate cuts] become reality as early as this year will depend, however, on the extent to which central banks will be forced to focus on the issue of financial market stability."
Energy:
Oil prices edged higher in Europe, extending gains following a Saudi-led production cut that is expected to tighten the market further.
Metals:
Base metals prices were mixed in early London trading, while gold edged lower, as investors looked to Friday's nonfarm payroll figure for signals on how the Fed will approach monetary policy going forward.
"Investors feel optimistic about lower bank risks and dovish central bank 'pivots' over the coming months," Peak Trading Research said.
The rally in crude oil has "rippled" through commodity markets but isn't likely to raise inflation dramatically just yet, meaning all eyes will be on Friday's jobs number, it added.
Battery Storage
Battery storage prices are likely to remain high in the near term, but should ease over time due to falling prices for the metals used in the batteries, Fitch said.
The research firm believes battery metal prices are currently at its peak, but this is passing, which means risk for uptake still remains in the near term, with the average cost of battery storage projects in 2022 around $1,178 a kilowatt compared with $850 a kilowatt in 2021.
Over the next decade, battery storage prices should also fall due to improved production efficiencies and diversification of the supply chain as well as lithium and nickel demand being met by rising supply, Fitch said.
TODAY'S TOP HEADLINES
Signature Bank Insiders Sold $100 Million in Stock During Crypto Surge
Insiders at collapsed Signature Bank sold more than $100 million of shares in the years after the bank pivoted to attract cryptocurrency companies and became a stock-market darling, according to a Wall Street Journal analysis.
Sales over the past three years by the bank's chairman, its former chief executive officer and his successor accounted for about half of the amount sold, according to the Journal's analysis of company filings. All three served on the board committee tasked with overseeing the bank's risk profile over the past year.
AMC Tumbles After Meme Stock Agrees Settlement Over 'APE' Conversion
AMC Entertainment stock tumbled 25% early Tuesday but its preferred shares soared more than 30% as the movie-theater operator said it reached a settlement with shareholders over its planned stock conversion.
The settlement paves the way for the company to complete its plan to convert its AMC Preferred Equity, or APE, units into shares of common stock.
Richard Branson's Space Company Virgin Orbit Files for Bankruptcy
Richard Branson's Virgin Orbit Holdings Inc. has filed for bankruptcy, a few days after the satellite-launch venture cut the bulk of its workforce and said it wasn't able to secure sufficient funding.
The company on Tuesday said it was working to sell itself. Just three months ago, it was poised to make history delivering the first satellites into orbit from the billionaire's home country of the U.K.-before the high-profile launch ended in the destruction of its satellite payload.
L'Oréal to Buy Luxury Beauty Brand Aesop for $2.5 Billion
L'Oréal is freshening up its collection by buying Aesop, an Australian beauty brand, for an enterprise value of $2.5 billion.
Founded in 1987, Aesop sells personal-care products like body scrubs, facial cleansers and perfumes. It operates around 400 locations in the Americas, Europe, Australia, New Zealand and Asia.
Bank Deposits Are Holding Steady. 3 Stocks Worth a Look.
A relative calm has come over the banking industry after a tumultuous few weeks that saw the collapse of Silicon Valley Bank and Signature Bank.
While no one is expecting an easy time for the sector, signs that deposit outflows are stabilized coupled with relatively flat trading over the past week has some on Wall Street looking for buying opportunities.
Australia Bans TikTok From Government Devices Amid Security Concerns
SYDNEY-Australia said it will ban TikTok on all government-issued digital devices, following the U.S. and other intelligence-sharing allies in response to concerns about data security on the app.
The decision announced by Australia's attorney general means all members of the so-called Five Eyes intelligence alliance have restricted government access to the video-sharing app through full or partial bans. Lawmakers worry that the Chinese government could force TikTok parent ByteDance Ltd. to hand over user data, or to influence the videos they view.
Lithium Prices Are Down, Cheaper Batteries and EVs Could Follow
(MORE TO FOLLOW) Dow Jones Newswires
04-04-23 0629ET
