OPENING CALL
Stock futures were mixed on Monday and bond yields rose, as investors continued to scramble to adjust for the coming Trump administration.
Earnings season isn't quite done, either. This week's highlight will likely be Nvidia , which is due to report Wednesday. Walmart, Lowe's and Deere are also on deck this week.
As of Friday, 460 companies in the S&P 500 had already reported for this quarter, with 76% beating forecasts, a slightly lower ratio than in recent quarters.
Premarket Movers
Lifeway Foods received a new buyout offer from Danone at a higher price than a previous offer that was rejected. Shares rose 4%.
Netflix fell 0.2% after it said its airing of the boxing match between Jake Paul and Mike Tyson drew 60 million households worldwide, with a high of 65 million concurrent streams.
Nvidia is scheduled to report third-quarter earnings on Wednesday after the stock market closes. While investors will be focused on profit and revenue figures, they also will be primed to learn how quickly the company can ramp up sales of its Blackwell AI chips. Nvidia was down 2.7%.
The deadline for Super Micro Computer to get approval from Nasdaq on how it plans to regain compliance with listing requirements is Monday. A source familiar with the matter told Barron's that the server maker intends to submit a plan to regain compliance by the deadline. Shares rose 11%.
Tesla rose 8.1% following a report from Bloomberg that said Donald Trump will seek to create a federal framework for self-driving cars. A federal framework could make it easier to obtain self-driving licenses and allow autonomous cars to drive across state lines.
Watch For:
Canada Housing Starts
Today's Headlines/Must Reads:
-Investors Are Betting on a Market Melt-Up
-Trump Broadens Hunt for Top Treasury Job After Jostling Became Messy
-Trump Picks China Hawks for Top Posts. How They Could Help Upset Markets
-The Rural Areas Pushing for Divorce From Democratic Cities
MARKET WRAPS
Forex:
The dollar and Treasury yields could correct lower after recent gains following the election, Swissquote Bank said.
EUR/USD could recover from "oversold territory" and USD/JPY could form resistance near 155.000. Any falls will be limited, however.
The rising risk of Donald Trump's policies stoking inflation should limit the potential for major currencies to appreciate against the dollar.
The euro's recent weakness against the dollar hasn't stabilized, based on the weekly chart.
UOB Global Economics & Markets Research cites factors such as the pair's weekly moving average convergence indicator turning negative in early October and the pair's break below weekly trendline support earlier this month.
U.K. inflation data later this week could help sterling to recover some of its recent falls against the euro if services inflation accelerates, ING said.
Markets might focus "almost solely" on services inflation which could rise to 5% in October from 4.9% in September, ING said. That could prompt markets to stick to cautious pricing for Bank of England interest-rate cuts.
ING continues to expect EUR/GBP to fall modestly in the near term as the European Central Bank might deliver an "outsized" rate cut in December.
Bonds:
Morgan Stanley Research is bullish on G-10 duration. "We suggest an overweight duration stance towards most government bonds over the first six months of 2025."
It expects 10-year Treasury yields to fall to 3.75% by mid-2025 and to just above 3.50% by the end of next year.
"Our economists expect the Federal Reserve to cut rates by 75 basis points in the first half of 2025."
Relative to the market-implied path for Fed policy, Morgan Stanley forecasts a more dovish outcome.
It said potential downside risks to growth from trade and immigration reforms mean that the short end of the Treasury yield curve will likely be biased lower, driving a steepening of the curve.
Commerzbank Research said Bunds and Treasurys seem to be stuck in ranges for now and this week's data are unlikely to give a new direction, adding that both yield curves also lack a clear direction.
On a longer horizon, though, uncertainty about the U.S. economic and trade policy outlook should point to a steeper Treasury yield curve and underperformance.
Energy:
Oil prices ticked lower, extending Friday's retreat.
Higher global supply against a weak demand outlook is keeping bearish investors in charge of the energy market, Swissquote Bank said, adding that oil has made several attempts at prices rallies in recent weeks, but these gains just strengthen bearish positions in expectations of a deeper selloff.
It said Brent should find solid support for a price floor at the $70 a barrel level but bearish investors will likely dominate the field unless China begins to show signs of economic strength and oil output lowers.
Metals:
Gold futures rose, recouping some lost ground as the dollar's rally slows.
BMI said there are strong downside risks to gold in 2025 and significant volatility should be expected. In the longer term, however, prices should stay elevated compared with the prepandemic levels.
Base metals were mixed, with copper regaining ground after sliding to two-month lows on Thursday, but aluminum correcting lower, with investors taking profits after prices closed Friday's session up 5.3%.
Despite Monday's fall, aluminum should remain strong in the near term following China's move to end tax incentives on exports from Dec. 1, ING said.
Countries that rely heavily on Chinese aluminum may have to look for alternative supplies to fill the gap, it said.
TODAY'S TOP HEADLINES
Discount Airline Spirit Files for Bankruptcy
Spirit Airlines filed for bankruptcy as its ultralow discount model proved insufficient to satisfy its hefty debt obligations after its merger with JetBlue Airways was blocked.
Spirit filed a chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York seeking to restructure its debts to bondholders and survive more intense competition from larger airlines for value-minded fliers. The Wall Street Journal reported earlier this month that Spirit was preparing to file for bankruptcy.
How the Maker of Nerf Guns Will Navigate Trump's Tariffs on China
Nerf guns. Monopoly board games. G.I. Joes. Some of Hasbro's bestselling toys could get pricier if President-elect Donald Trump implements stiff tariffs on Chinese imports.
One of America's largest toy makers says it is negotiating with suppliers and considering design changes ahead of potential new levies. "We've been preparing for many months for any contingency," Chris Cocks, Hasbro's chief executive, said in an interview.
Eli Lilly and Novo Want to Shake off Ozempic Copycats. Are They Ready to Meet Demand?
Pharmaceutical companies are typically rewarded for their innovation with years of market exclusivity before cheaper generics enter the scene. But for diabetes and obesity drugs like Ozempic and Zepbound, known as GLP-1s, cheaper copycats emerged almost immediately.
This is due to a provision that permits drug compounders to produce copies during periods of shortage. For GLP-1s, supply constraints have persisted ever since Wegovy's approval for obesity in 2021, giving rise to a booming market for compounders.
The Fed May Slow Rate Cuts, Powell Suggested. That's No Reason for Investors to Panic.
Investors aren't happy with the message that Federal Reserve Chair Jerome Powell delivered in remarks on Thursday-namely, that the Fed could pause interest-rate cuts at a coming meeting. But some economists don't read Powell's comments as a negative sign for the markets.
Stocks fell as Powell spoke, and added to their losses Friday, with the S&P 500 giving up 1.3% to post its worst week since early September. Short-term bond yields moved higher, and traders pulled back on their near-term rate-cut bets, with futures markets reflecting on Friday 40% odds of no cut in December, up from around 20% before the release of inflation data on Nov. 13 and Powell's remarks.
Trump Tariffs Could Have Significant Impact On Inflation, Bundesbank's Nagel Says
U.S. President-elect Donald Trump's proposed tariffs on goods could upend international trade and threaten higher inflationary pressures, the president of Germany's central bank said Monday.
While a moderate reduction of globally integrated trade would have only a minor effect on inflation, a sudden and drastic increase in trade restrictions, like tariffs, might change the picture, Bundesbank president Joachim Nagel said in a speech in Tokyo.
Eurozone Trade Surplus Rises on Jump in Exports to U.S.
The eurozone's trade surplus climbed in September on year, with exports to the U.S. growing as the threat of tariffs proposed by U.S. President-elect Donald Trump looms large.
The eurozone trade surplus in goods with the rest of the world increased to 12.5 billion euros ($13.18 billion) in September, up from the 9.8 billion euros in September 2023, unadjusted figures from the European Union's data agency said Monday.
BOJ Governor Sticks to Stance on More Rate Hikes Despite U.S. Uncertainty
NAGOYA, Japan-The Bank of Japan's governor affirmed that the door remains open to more rate hikes, saying they could come before clarity emerges on U.S. economic policy, even as he carefully avoided giving any clear hints on the timing of the central bank's next move.
"There are countless uncertain and changing factors, including the U.S. economy. Rather than waiting for clarity on all of them, we will make appropriate policy decisions, looking at data and other information available by each policy meeting," Kazuo Ueda said at a news conference Monday after speaking to business leaders in Nagoya, central Japan.
Biden Approves Ukraine's Use of Long-Range Missiles Inside Russia
(MORE TO FOLLOW) Dow Jones Newswires
November 18, 2024 05:57 ET (10:57 GMT)
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