OPENING CALL
The stock rebound hit pause ahead of a busy week for central bank watchers.
Stock futures wavered early on Monday as the Jackson Hole Symposium takes center stage this week.
Investors have renewed belief in a soft landing for the economy and scaled-back expectations for aggressive Fed cuts, SEB said.
The Fed's latest meeting minutes on Wednesday could also offer some insight into the central bank's future policy, along with coming data.
This week will also see the Treasury auction new 20-year bonds on Wednesday and will reopen 30-year TIPS on Thursday.
Overseas Markets
The Nikkei slipped 1.8%, dragged by a sharply stronger yen. Domestic stocks may also have been weighed by possible profit-taking, given the benchmark index's five-session winning streak.
Asian markets will also be dominated by central bank news this week, with announcements due from South Korea, China, Thailand and Indonesia after rate cuts from New Zealand and the Philippines set the stage for unwinding restrictive monetary policy in the region.
In Europe, stocks were muted ahead of a week when decisions by Sweden's and Turkey's central banks will also be in focus.
Premarket Movers
Fubo's shares soared, after rallying Friday when a judge blocked the launch of a rival sports-centric service from Warner Bros. Discovery, Fox and Disney.
Estée Lauder is set to report earnings Monday and Palo Alto Networks after the close.
Today's Headlines/Must Reads
- Inside Kamala Harris's Enormous Fundraising Drive
- Specter of Trump Tariffs Hangs Over Markets
- Pfizer Is Staking Its Turnaround on Cancer Drugs
MARKET WRAPS
Forex:
The dollar fell against a basket of currencies as the market bets on the Fed delivering signals about cutting interest rates this week.
"The dollar's decline looks to be part of an orderly adjustment cycle as the Fed prepares to cut rates," ING said.
EUR/USD rose to a seven-and-a-half-month high and the euro could extend the rise against the dollar if investors trim ECB rate-cut expectations--if the release of second-quarter eurozone negotiated wages data on Tuesday shows wages remain elevated--and U.S. economic data was weaker, ING said.
"Currently, another 68 basis points of rate cuts are priced this year, which we think is 18bp too much."
Potentially weaker upcoming U.S. data would support the case for Fed rate cuts, and EUR/USD could accelerate gains if it exceeds 1.11 given low realized volatility.
Sterling rose, supported by a weaker dollar but also potentially due to demand from merger and acquisition activity, according to ING.
The impact of M&A on foreign exchange is very cloudy as it's unclear what extent a cross-border deal is funded locally, but it could be one of the reasons why sterling is slightly stronger than ING expected.
"The U.K. this year is the target region for over $200 billion worth of deals."
ING had anticipated that prospects of the BOE cutting interest rates further would limit the currency's gains.
Energy:
The prospect of weak demand in China is offsetting any gains to oil prices from risks to supply, with apparent demand in the country falling 8% on year in July according to government data, ANZ said.
It added that the U.S. said potential Gaza ceasefire talks have been serious and constructive, though tensions remain high after Hezbollah launched rockets at Israel on Saturday.
Weather phenomenon La Nina also raises the risk of disruptions to supply in the U.S. Gulf.
Metals:
Gold futures reached a record of $2,549.9 a troy ounce in early Asian trading on persistent dollar weakness.
However, Swissbank said the market is pricing in greater rate cuts than what the Fed is set to deliver at the September meeting--with around a 30% probability given to a jumbo 50 basis point cut--so a dollar rebound is plausible.
TODAY'S TOP HEADLINES
AMD Buys AI Equipment Maker for Nearly $5 Billion, Escalating Battle With Nvidia
Advanced Micro Devices agreed to pay nearly $5 billion to buy ZT Systems, a designer of data-center equipment for cloud computing and artificial intelligence, bolstering the chip maker's attack on Nvidia's dominance in AI computation.
The deal, among AMD's largest, is part of a push to offer a broader menu of chips, software and system designs to big data-center customers such as Microsoft and Facebook owner Meta Platforms, promising better performance through tight linkages between those products.
Berkshire Hathaway Likes Ulta Beauty. Should You?
Berkshire Hathaway's Warren Buffett has famously advised investors to be greedy when others are fearful. This past week, the company scooped up shares of Ulta Beauty, which landed in the discount bin after spooking the market. The stock still looks cheap.
Ulta Beauty is an off-mall, large-format retail chain (a typical store is about 10,000 square feet) that sells everything from mass-market beauty products to luxury cosmetics and fragrances one might expect to see at department stores. Its shares have jumped 15% since Berkshire Hathaway disclosed in a filing post-market close on Wednesday that it held about $266 million worth of the retailer's shares at the end of June.
Stock market's 'fragile' bounce at stake as Powell prepares Jackson Hole speech
Market watchers widely expect Federal Reserve Chair Jerome Powell to set the tone for a September interest-rate cut in his speech at the Kansas City Fed's annual Jackson Hole Economic Symposium on Friday.
However, if the speech goes in a different direction, it could threaten the stock market's recent bounce.
Coming to a Cash-Strapped Company Near You: Creditor-on-Creditor Violence
Grand alliances. Secret pacts. Betrayal. It's all in a day's work in the booming market for low-rated corporate debt.
U.S. companies that struggle to repay their below-investment-grade bonds and loans have increasingly squeezed concessions from lenders by pitting them against one another. The private-equity firms and wealthy individuals who own most of the companies call the deals "liability management exercises," or LMEs. Debt investors call them "creditor-on-creditor violence."
Don't Kid Yourself. Picking Stocks Isn't Getting Any Easier.
Recent market turmoil has led many analysts to argue that we're entering a market environment in which stock selection is more likely to beat the market. That's because individual stocks' returns are becoming more widely dispersed-making the difference between winning stocks and losers more stark.
Unfortunately, a greater spread between the stock market's winners and losers doesn't necessarily make stockpickers' job any easier. It's important to understand what greater stock dispersion does and does not mean for investors-and whether we're entering a period when stock selection is more likely to beat an index fund.
Biden to Pass the Torch to Harris as Democratic Convention Begins
CHICAGO-President Biden will exit the stage at the Democratic National Convention Monday, pointing to his joint accomplishments with Vice President Kamala Harris and warning of the ramifications of a second term under former President Donald Trump.
Biden's withdrawal from the top of the ticket in July means the president will speak on the convention's opening night-not in prime time on Thursday night-and will use the event to affirm Harris and make the case for her agenda.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
Nothing major scheduled
Economic Indicators $(ET)$:
Nothing major scheduled
Stocks to Watch:
The Japanese operator of 7-Eleven convenience stores said it was considering a takeover offer from Alimentation Couche-Tard
Expected Major Events for Monday
14:00/US: Jul Leading Indicators
14:00/US: 2Q Quarterly Retail E-Commerce Sales
17:59/UK: Jul Adzuna UK Job Market Report
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Monday
3D Systems Corp $(DDD)$ is expected to report $-0.16 for 1Q.
Aberdeen International Inc (AAB.T,AABVF) is expected to report for 2Q.
Airship AI Holdings Inc (AISP) is expected to report $-0.02 for 2Q.
Americas Gold & Silver Corp (USA.T,USAS) is expected to report for 2Q.
Arena Group Holdings Inc $(AREN.AU)$ is expected to report for 2Q.
Aspira Women's Health Inc $(AWH)$ is expected to report $-0.31 for 2Q.
Avalon Advanced Materials Inc (AVL.T) is expected to report for 3Q.
California First Leasing Corp (CFNB) is expected to report for 3Q.
Cara Therapeutics Inc $(CARA)$ is expected to report $-0.29 for 2Q.
Cenntro Inc $(CENN)$ is expected to report for 1Q.
Cepton Inc $(CPTN)$ is expected to report for 2Q.
Chesswood Group (CHW.T) is expected to report $-0.21 for 2Q.
Chicken Soup for the Soul Entertainment Inc $(CSSE)$ is expected to report $0.02 for 2Q.
Cue Biopharma Inc $(CUE)$ is expected to report $-0.27 for 2Q.
DMK Pharmaceuticals Corp $(DMKPQ)$ is expected to report for 2Q.
DXI Capital Corp (DXI.H.V) is expected to report for 2Q.
Dawson Geophysical Co $(DWSN)$ is expected to report for 2Q.
Digital Media Solutions Inc (DMSL) is expected to report for 2Q.
Entrada Therapeutics Inc $(TRDA)$ is expected to report $-1.14 for 2Q.
Estee Lauder Cos - A Share $(EL)$ is expected to report $0.24 for 4Q.
Exela Technologies Inc $(XELA)$ is expected to report for 2Q.
First Acceptance Corp (FACO) is expected to report for 2Q.
GSE Systems Inc (GVP) is expected to report for 2Q.
Galera Therapeutics Inc (GRTX) is expected to report for 2Q.
Gamehost Inc (GH.T) is expected to report for 2Q.
Gossamer Bio Inc $(GOSS)$ is expected to report $0.53 for 2Q.
ImmunityBio Inc $(IBRX)$ is expected to report $-0.16 for 2Q.
Instil Bio Inc $(TIL)$ is expected to report for 2Q.
Ituran Location & Control Ltd (ITRN,ITRN-TV) is expected to report for 2Q.
Karnalyte Resources (KRLTF,KRN.T) is expected to report for 2Q.
Lyra Therapeutics Inc (LYRA) is expected to report $-0.27 for 2Q.
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August 19, 2024 06:15 ET (10:15 GMT)
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