OPENING CALL
Stock futures were down slightly on Thursday after equities tumbled sharply following the hotter-than-expected inflation reading.
Another inflation indicator, the producer-price index, is due this morning, as is the European Central Bank's interest-rate decision.
"The ECB is quite clearly waiting for another round of data, so they're unlikely to do anything notable today. But there's a strong probability that they ease in June," Ninety One said.
Overseas Markets
Chinese stocks were little changed after a weaker price data reignited concerns about deflation.
Premarket Movers
Alpine Immune Sciences was rising 36% after agreeing to be acquired by Vertex Pharmaceuticals for $4.9 billion in cash. Vertex shares declined 2.2%.
Boeing gained slightly in premarket trading, after falling every session this month following a series of allegations regarding safety issues. The stock has lost 9.5% in April.
Costco Wholesale raised its quarterly cash dividend by about 14% to $1.16 a share. Same-store sales at Costco rose 7.7% in March, higher than the 5% increase in February. The stock was up 0.4%.
Regeneron Pharmaceuticals has been accused by the Justice Department of fraudulent practices related to the pricing of Eylea, the company's vision-impairment drug. Regeneron fell 2.3%.
Rent the Runway was rising 43% after the company said it expects to be free cash flow breakeven this year.
Vera Therapeutics rose 15%. Its lead drug candidate is similar to that of Alpine Immune's.
Watch For:
PPI for March; Weekly Jobless Claims; World Agricultural Supply & Demand Estimates; Earnings from Constellation Brands and Fastenal
Today's Top Headlines/Must Reads:
- Fed Rate Cuts Are Now a Matter of If, Not Just When
- Asia Economies to Keep Growing Despite China Slowdown, Other Headwinds
- X Received Inquiry From U.S. Lawmakers on Brazil Actions, Musk Says
MARKET WRAPS
Forex:
The dollar added to the gains it made on Wednesday following higher-than-expected inflation data, taking the DXY dollar indexto a five-month high of 105.318.
Wednesday's data--which prompted markets to sharply reduce bets on Fed interest-rate cut prospects this year--signal that inflation is potentially reaccelerating, capital.com said.
PPI data will be watched, where monthly growth is expected to decline to 0.3% growth in March from 0.6% in February, according to The Wall Street Journal's poll of analysts.
Any signals from the ECB that rates could be cut in June on Thursday have been brought into sharp focus for the euro after Wednesday's stronger-than-expected inflation data caused U.S. rate expectations to be trimmed back, MUFG said.
"We see good grounds for the ECB today communicating a clearer message on the increasing prospects of a rate cut at the meeting in June," MUFG added.
"We see scope for EUR/USD to extend further lower today toward the 1.0500 level."
Bonds:
The 10-year U.S.-German bond yield spread widened to a multi-month high of 210 basis points on Wednesday, prompted by above-forecast CPI data for March which also led to a significant repricing of market expectations of Fed rate cuts.
Should the PPI data also come in higher than expected, the selling momentum in bonds is likely to keep going.
The two-year Treasury yield has tested 5% in the wake of above-forecast March CPI data, and this could signal that the neutral policy rate is higher, and policy until this point has been looser than generally understood, Capital.com said.
"The lift in yields reflects the markets moving closer to conditions more consistent with tighter policy."
Energy:
Oil prices are likely to be supported by geopolitical risks and stronger demand in the near term, Citi said.
It noted that oil demand data has been a slightly better year-to-date in key regions, while longer shipping voyages due to the Red Sea diversions are also supportive. The majority of recent price moves are due to geopolitical risks that are likely to persist through 2Q, Citi said.
Metals:
Metal prices were mixed, with gold pulling ahead and base metals flat.
Gold futures rose 0.3%, rebounding from an initial dip after Wednesday's publication of U.S. consumer price index data.
Inflation figures, significantly above the 2% target, have damped the recent optimism among investors, raising concerns that the Fed might postpone interest rate cuts longer than initially anticipated and sending Treasury yields up, causing the initial dip, Sucden Financial said.
However, strong purchasing by central banks and sustained demand from individual investors--particularly in China and India--continue to provide solid support for gold, attracting speculative investors and maintaining high prices, Sucden Financial added.
TODAY'S TOP HEADLINES
Lufthansa Halts Tehran Flights Amid Concerns of Potential Iran Attacks
Lufthansa has halted flights to and from Tehran due to heightened security risks in the Middle East after the U.S. warned of possible Iranian attacks on Israel.
The German carrier group said Saturday that the flights will likely be suspended until Thursday, April 11.
Netflix Stock Deserves a Place in the Magnificent 7
Netflix is the forgotten tech giant-but its upcoming earnings report should help investors remember why they loved the stock in the first place.
The streaming-media leader was once part of the Nasdaq's FAANG club, an acronym traders used to describe Facebook parent Meta Platforms, Amazon.com, Apple, Netflix, and Google owner Alphabet. But FAANG has since been replaced by the Magnificent Seven, a group that includes the four largest FAANGs, as well as Microsoft, Nvidia, and Tesla...and excludes Netflix.
Buy the Stock Market's Inflation Freakouts
Inflation failed to come down in March, dealing a blow to stocks. But taking a step back, what is remarkable is actually how resilient equities have been to a changing inflation story.
At the start of this year, inflation appeared to be fading fast. The core consumer price excluding food and energy was up 3.9% from a year earlier in December, but that was down from a 5.7% pace in December 2022. Markets were pricing in six interest-rate cuts by the Federal Reserve in 2024.
Hamas May Not Have Enough Living Hostages for Cease-Fire Deal
Fears are rising over the fate of the remaining hostages held in Gaza after Hamas said it was unsure whether it could bring forth 40 Israeli civilian captives as part of a U.S.-backed cease-fire proposal, according to officials familiar with the negotiations.
The 40 hostages, including women, children, elderly men, and those in fragile health, would be released under a U.S.-supported plan for a six-week cease-fire in the war in Gaza. In exchange, Israel would release hundreds of Palestinian prisoners.
U.S. Warns of Imminent Attack on Israeli Assets by Iran or Proxies
WASHINGTON-U.S. intelligence reports show that an attack on Israeli assets by Iran or its proxies could be imminent, U.S. officials said Wednesday, as the top American military commander for the Middle East headed to Israel to coordinate a response.
Iran has publicly threatened to retaliate for a strike in Syria on an Iranian diplomatic building in Damascus last week, presumed to be the work of Israel, that killed top Iranian military officials, including a senior member of the Islamic Revolutionary Guard Corps' elite Quds Force.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Cogeco Communications 2Q
Economic Calendar:
Nothing scheduled
Expected Major Events for Thursday
08:00/ITA: Feb Industrial Production
08:30/UK: 1Q Bank of England's Bank Liabilities Survey
08:30/UK: 1Q Bank of England Credit Conditions Survey
12:30/US: Mar PPI
12:30/US: 04/06 Unemployment Insurance Weekly Claims Report - Initial Claims
12:30/US: U.S. Weekly Export Sales
13:00/RUS: Weekly International Reserves
14:30/US: 04/05 EIA Weekly Natural Gas Storage Report
16:00/US: Mar Monthly U.S. Retail Chain Store Sales Index
16:00/US: World Agricultural Supply & Demand Estimates (WASDE)
16:59/GER: Feb Balance of Payments
20:30/US: Foreign Central Bank Holdings
20:30/US: Federal Discount Window Borrowings
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Thursday
ADF Group (DRX.T) is expected to report $0.26 for 4Q.
Applied Digital Corp $(APLD)$ is expected to report $-0.08 for 3Q.
Argan Inc $(AGX)$ is expected to report $0.80 for 4Q.
Astra Space Inc (ASTR) is expected to report for 4Q.
Athersys Inc (ATHX) is expected to report for 4Q.
Ayala Pharmaceuticals Inc (ADXS) is expected to report $-1.95 for 4Q.
Bellerophon Therapeutics Inc (BLPH) is expected to report for 4Q.
CarMax Inc $(KMX)$ is expected to report $0.41 for 4Q.
Cidara Therapeutics Inc $(CDTX)$ is expected to report $-0.07 for 4Q.
Cogeco Inc (CGO.T) is expected to report for 2Q.
Conn's $(CONN)$ is expected to report $-1.57 for 4Q.
Constellation Brands Inc $(STZ)$ is expected to report $2.08 for 4Q.
DMK Pharmaceuticals Corp (DMKPQ) is expected to report for 4Q.
Eloxx Pharmaceuticals Inc (ELOX) is expected to report for 4Q.
Evelo Biosciences Inc (EVLO) is expected to report for 4Q.
Fastenal Co $(FAST)$ is expected to report $0.53 for 1Q.
Fastenal Co (FAST) is expected to report.
Firan Technology Group Corp (FTG.T) is expected to report for 1Q.
Franklin Resources Inc $(BEN)$ is expected to report.
Greenwich LifeSciences Inc $(GLSI)$ is expected to report for 4Q.
Hooker Furnishings Corp $(HOFT)$ is expected to report $0.07 for 4Q.
JOANN Inc (JOANQ) is expected to report for 4Q.
KORE Group Holdings Inc $(KORE)$ is expected to report $-0.16 for 4Q.
Lakeland Industries Inc $(LAKE)$ is expected to report $0.30 for 4Q.
Legacy IMBDS Inc - Class A $(IMBIQ)$ is expected to report for 4Q.
Lightning eMotors Inc (ZEVY) is expected to report for 4Q.
Lovesac Co $(LOVE)$ is expected to report $1.93 for 4Q.
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April 11, 2024 06:07 ET (10:07 GMT)
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