OPENING CALL
Stock futures edged higher Tuesday as the Federal Reserve prepares to start its two-day meeting. with markets pricing in a 67% probability the central bank will cut interest rates by 50bp.
However, there remains more ambiguity about the Fed's likely move than in recent years.
"Recent history shows how 50 basis point cuts are often associated with far more challenging economic environments than today's," Capital Economics said.
Standard Chartered Bank NY Branch said cutting by 50 bps and being wrong would likely be worse than cutting by 25 bps and being wrong.
U.S. bond prices were little changed, with 2 and 10-year Treasury yields trading near cycle lows early.
Premarket Movers
Camden Property Trust shares fell about 3% after it announced its third-quarter dividend.
Intel 's CEO said it would cut more costs and further separate its chip-manufacturing and design operations. It has also struck a multibillion-dollar agreement with Amazon.com $(AMZN)$'s cloud-computing arm. Intel shares rose about 6.5%.
Microsoft raised its dividend and said it would buy back up to $60 billion in stock. Shares rose 1.8% premarket.
Postmarket Movers
Netcapital widened its loss and posted a steep decline in revenue. Shares fell 27%.
Watch For:
Retail Sales for August; Industrial Production and Capacity Utilization for August; Canada Housing Starts for August; Canada CPI for August; FOMC meeting
Today's Headlines/Must Reads:
- Boeing Stock Faces Risks Beyond the Strike. Shareholders Beware This Threat
- Berkshire Hathaway's Cash Could Hit $300 Billion This Quarter
- Retail Sales Are the Last Big Economic News Before Fed Rate Decision
- U.S. Officials Jet to Beijing Amid Flood of Cheap Chinese Exports
- Meta Bans Russia's RT From Facebook, Instagram for 'Foreign Interference'dash in front
MARKET WRAPS
Forex:
The dollar fell as markets priced in higher odds of a 50bp Fed cut.
And ING said it will struggle to recover unless retail sales are strong enough to discourage aggressive rate-cut bets.
ING also said investors might be attempting the influence the Fed's decision by pricing in higher odds of a 50bp cut, and this is negative for the dollar.
Former Fed member Bill Dudley last week said the Fed doesn't like to surprise markets as he made the case for a 50bp cut.
"In other words, if markets price in 50 basis points, the Fed will be more likely to deliver 50 basis points."
The euro edged lower but remained above the key $1.11 level ahead of the Fed's decision, and was unlikely to be challenged by better-than-expected retail sales data or a rebound in industrial production, UniCredit said.
However it might face some profit-taking if the Fed cuts rates by 25bp, but this might only prevent more dollar weakness rather than trigger a complete reversal in the euro, it added.
Bonds:
The Treasury yield curve has continued to steepen, Pepperstone said.
Central banks are increasingly moving to target an inflation range of 2-3%, as opposed to an explicit return to the 2% target outright, "so long as inflation expectations remain well-anchored, as they appear to be doing so at present."
Energy:
Oil prices extended the gains of the previous session, driven by rate-cut expectations, prolonged supply disruptions in the Gulf of Mexico and a substantial decline in Libyan exports as rival political factions failed to reach a deal to break an impasse over control of the country's central bank.
Estimates from the Bureau of Safety and Environmental Enforcement show that more than 12% of oil production and 16% of natural gas production remained offline in the aftermath of Hurricane Francine.
Metals:
Gold prices held steady near record highs, supported by a softer dollar and rising bets for a half-point rate cut by the Fed.
ING said that "The gold market will likely be disappointed with only a 25 bp cut."
Phillip Nova said gold enjoys a positive outlook but a further upswing may need a powerful catalyst.
Expectations for a Fed rate cut, central bank buying, and ongoing geopolitical stress in the Middle East have supported positive sentiment but new catalysts will be needed for the price to rise further, it said, although disappointing China macro data has added to concerns about a slowdown in the world's second-largest economy.
Meanwhile, three-month copper was up amid signs of a recovery in the physical market and the possibility that weaker Chinese economic data would prompt the government to introduce further stimulus measures.
Aluminum also rose due to stronger demand and supply disruption concerns in India.
TODAY'S TOP HEADLINES
Shein's Path to a U.S. IPO Looks Blocked. What That Means for Other China-Founded Companies.
Shein, the China-founded e-commerce apparel company, has a large and loyal U.S. customer base. The company would also like a U.S. investor base, and reportedly filed confidential paperwork for an initial public offering with the Securities and Exchange Commission late last year.
Yet, any effort to list shares here so far has come to naught. Several members of Congress have called for the SEC to block the IPO, raising concerns about Shein's sustainability practices, labor issues, shipping protocols, and ties to China. The latest blow came last Friday, when the Biden administration released a new rule proposal aimed at curbing the "de minimis" tariff benefit enjoyed by "China-founded e-commerce platforms"-namely, Shein and Temu, a division of PDD Holdings-that ship a large volume of low-value packages to the U.S.
Flutter Entertainment Buys Snaitech From Playtech for $2.6 Billion
Flutter Entertainment said it is buying Italian gambling company Snaitech from Playtech in a cash deal valued at 2.3 billion euros ($2.56 billion).
The parent company of FanDuel and other gaming and gambling brands said Tuesday that the acquisition was in line with its strategy to invest in international markets. The deal is expected to be complete by the second quarter of next year, and boost earnings per share immediately.
Fed Prepares to Lower Rates, With Size of First Cut in Doubt
The Federal Reserve is set to cut borrowing costs at its two-day meeting that ends Wednesday. The goal: preserve a solid job market now that price pressures have cooled.
The decision over whether to cut the Fed's benchmark interest rate, currently at a two-decade high between 5.25% and 5.5%, by either a larger half percentage point or by a traditional quarter point will come down to how Chair Jerome Powell leads his colleagues through a finely balanced set of considerations.
Federal Debt Is Soaring. Here's Why Trump and Harris Aren't Talking About It.
The U.S. isn't fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were.
This year's budget deficit is on track to top $1.9 trillion, or more than 6% of economic output, a threshold reached only around World War II, the 2008 financial crisis and the Covid-19 pandemic. Publicly held federal debt-the sum of all deficits-just passed $28 trillion or almost 100% of GDP.
Blinken Heads to Middle East in Bid to Revive Cease-Fire Negotiations
WASHINGTON-Secretary of State Antony Blinken is headed back to the Middle East on Tuesday to push cease-fire negotiations forward, though this time he is skipping Israel and going to Egypt to hold frank discussions about one of the deal's most contentious issues: the Philadelphi corridor.
Blinken's planned stop in Cairo, and not Tel Aviv or Jerusalem, is the latest sign a breakthrough is weeks away, at best. "I would not say a deal is imminent," a senior administration official said.
Write to clare.kinloch@wsj.com
TODAY IN CANADA
Earnings:
Earnings:
WildBrain 4Q
Economic Calendar $(ET)$:
0815 Aug Housing Starts
0830 Aug CPI
Stocks to Watch:
CN Announces $750M Debt Offering
Greenfire Resources: Allard, Annapurna, Modro Agree to Sell Nearly 30M Greenfire Shares to WEF for C$327.8M;
Allard, Annapurna, Modro Collectively Hold 43.3% Stake in Greenfire and Will Cease to Be Shareholders After Deal's Completion; Disposal Follows Private Share-Purchase Agreement Between WEF and Each Seller
Heroux-Devtek Gets Final Court Approval of Plan of Arrangement Providing for Acquisition by Platinum Equity
Expected Major Events for Tuesday
04:30/JPN: Jul Tertiary Industry Index
04:30/JPN: Jul Revised Retail Sales
08:30/UK: Jun Card Spending statistics
09:05/GER: Sep ZEW Indicator of Economic Sentiment
12:15/CAN: Aug Housing Starts
12:30/US: Aug Advance Monthly Sales for Retail & Food Services
12:30/CAN: Aug CPI
12:55/US: 09/14 Johnson Redbook Retail Sales Index
13:15/US: Aug Industrial Production and Capacity Utilization
14:00/US: Jul Manufacturing & Trade: Inventories & Sales
14:00/US: Sep NAHB Housing Market Index
20:30/US: API Weekly Statistical Bulletin
23:50/JPN: Jul Orders Received for Machinery
23:50/JPN: Aug Provisional Trade Statistics for the Month
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Tuesday
ASA Gold & Precious Metals Ltd $(ASA)$ is expected to report for 2Q.
Amrep Corp $(AXR)$ is expected to report for 1Q.
Apogee Enterprises Inc (APOG) is expected to report $1.18 for 2Q.
Kentucky First Federal Bancorp $(KFFB)$ is expected to report for 4Q.
WildBrain Ltd (WILD.T) is expected to report for 4Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Acrivon Therapeutics Raised to Buy From Neutral by Ladenburg Thalmann
Ally Financial Inc Cut to Neutral From Buy by BTIG
Ameren Raised to Outperform From Neutral by Mizuho
Builders FirstSource Raised to Buy From Hold by Truist Securities
Chart Industries Raised to Overweight From Equal-Weight by Morgan Stanley
Colgate-Palmolive Cut to Underweight From Equal-Weight by Wells Fargo
Community Healthcare Tr Raised to In-Line From Underperform by Evercore ISI Group
(MORE TO FOLLOW) Dow Jones Newswires
September 17, 2024 06:13 ET (10:13 GMT)
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