North American Morning Briefing: Muted Open Seen for Stocks At Start of Data-Packed Week

OPENING CALL

Stock futures were looking for direction early Monday at the start of a the week that will deliver a series of important economic data points, including the latest readout of the Federal Reserve's preferred inflation gauge, due Friday.

Thursday's weekly jobless claims figures will likely also attract attention, given the Fed's sharp focus on the jobs market.

However the earnings calendar looks relatively quiet, with a few notables such as Costco, Jefferies and Micron due to report results.

Several Fed officials are slated to speak this week, and investors will be listening to any clues they offer on their outlook for the remainder of the year.

AAR is set to report on after close on Monday and S&P Global will report both its Manufacturing and Services Purchasing Managers' Indexes for September at 9:45 a.m. ET.

Premarket Movers

Intel Shares rose after Bloomberg reported that Apollo had offered to make a multi-billion investment in the company.

News Corp's Australian real-estate website REA Group raised its offer for U.K. counterpart Rightmove to around $8 billion. News Corp also owns Dow Jones.

TSMC and Samsung Electronics are in talks to build giant factories in the United Arab Emirates that could transform the industry, The Wall Street Journal reported.

Watch For:

Canada New Housing Price Index for August; Fed's Kashkari to participate in Kansas event, Bostic also slated to give a speech.

Today's Headlines/Must Reads:

- The Rate Cut Won't Save These Real-Estate Owners

- Amazon Fell Behind in AI. An Alexa Creator Is Leading Its Push to Catch Up.

- Boar's Head Shutdown Deals a Hard Blow to a Battered Corner of Virginia

MARKET WRAPS

Forex:

The dollar edged higher after last week's Fed rate cut sparked a brief selloff in the currency.

"FX markets are starting the week in a consolidative mood," ING said.

The euro extended its earlier losses on weaker-than-expected German and French PMIs after eurozone PMI data trailed expectations.

Sterling rose to its strongest level in nearly two and a half years against the euro after U.K. purchasing managers' index data missed expectations but still showed an expansion in activity and contrasted with very weak equivalent eurozone figures.

Bonds:

Aegon Asset Management has a strong view that the Treasury yield curve is too flat and is set to steepen.

In anticipation, it is overweight on 5-year Treasurys and underweight 30-year Treasurys, it said.

Deutsche Bank Research lowered its forecast for Treasury yields following the Fed's meeting to reflect a more rapid interest-rate cutting cycle.

The updated forecast puts 2-year and 10-year Treasury yields in the middle of next year at 3.50% and 4.05% respectively, versus 3.95% and 4.25% previously.

Yields across the curve are projected to be 30-50 basis points above forwards in the middle of next year, driven by a higher expected fed funds rate path and term premia compared to market pricing, it added.

Energy:

Oil prices rose on geopolitical tensions and dovish monetary policy in China, though demand concerns linger.

Brent is enjoying a limited rebound after falling below $70 a barrel earlier in September as escalating tensions in the Middle East brought back risk premiums, though concerns around the level of global demand are still pressing, ING said.

Israel and Lebanon-based militant group Hezbollah accelerated cross-border attacks overnight into Sunday, raising the possibility of all-out war.

Meanwhile, Chinese sentiment appears to be improving after the central bank lowered the reverse repurchase rate by 10 basis points and injected more liquidity into financial systems, and hinted at the possibility of other measures to support economic growth, benefiting oil, ING added.

Metals:

Gold futures slipped, returning some gains from Friday's rally but hovering near all-time highs.

Citi reiterated its bullish stance on gold, with baseline average price projections of $2,800-$3,000 per ounce in 2025.

A sharp rebound in bullion ETF inflows and healthy central bank demand--excluding China--should drive prices higher sequentially over the medium-term, it said, although a steep third quarter decline in Chinese retail gold imports is likely to be a cap on investor enthusiasm and a bearish tailwind to monitor, it added.

Iron Ore

Chinese iron-ore capital investment rose just 4.3% on year in the first half of 2024, despite strong prices.

Citi expects 2024 capex growth will be similar to 1H levels, keeping annual iron-ore investment more than 40% below a 2014 peak.

TODAY'S TOP HEADLINES

Google Emails Show Unease Over Advertising Dominance

ALEXANDRIA, Va.-Trial proceedings in the U.S. government's antitrust case against Google's advertising business have provided a rare window into internal company anxieties about its central role in the buying and selling of ad space online.

The Alphabet unit is on trial over its software used to place display ads, those ubiquitous digital billboards served in fixed boxes on millions of websites every day.

Elliott Hill Loved Nike and Left It. Now He's Back as CEO

Nike's incoming chief executive is known for welling up with tears when he speaks about the company because he cares so much about it.

Elliott Hill started working at the sneaker giant in 1988 as an intern, taking calls from customers and moving boxes in a warehouse. Over more than three decades, he climbed to be one of its top executives before he was passed over for CEO and retired in 2020.

South Korea Can Go Only So Far Copying Japan's Market Reforms

South Korea is taking a page from Japan to boost its stock market. There are certainly some low-hanging fruits to pick, but the country's large family-controlled corporate empires, known as chaebols, could be an obstacle to more meaningful structural change.

The country's stock exchange is set to unveil a stock index that will take into account factors such as profitability and shareholder returns. That is modeled after a similar move taken in 2014 by Japan, which uses its new index to essentially name and shame companies that failed to make the grade.

Israel Calls On Civilians in Lebanon Near Hezbollah Targets to Evacuate

TEL AVIV-Israel warned residents of Lebanon to evacuate from places near where Hezbollah stores its weapons as its military intensifies attacks against the militant group.

The Israeli military launched a series of airstrikes in Lebanon on Monday morning in what it said was a pre-emptive assault targeting Hezbollah's military infrastructure. Dozens of airstrikes hit Lebanon, according to the country's state news agency. Israeli military spokesman Daniel Hagari said the airstrikes would continue in the near term and told residents of southern Lebanon to stay away from areas that would be targeted.

Bipartisan Spending Deal Would Avert Shutdown, Aid Secret Service

WASHINGTON-Congressional leaders on Sunday backed a bipartisan spending deal that would avoid a government shutdown before the election while also giving the Secret Service an extra $231 million to help protect presidential candidates during the final hectic weeks of campaigning.

The proposal, backed by top Republicans and Democrats, would extend government funding until Dec. 20, giving Congress more time to figure out how much money to allocate each federal agency for the next fiscal year. The government faces a partial closure at the end of this month if lawmakers don't pass an extension.

Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled.

Economic Indicators (ET):

0830 Aug New Housing Price Index

Expected Major Events for Monday

07:15/FRA: Sep France Flash PMI

07:30/GER: Sep Germany Flash PMI

08:30/UK: Sep Flash UK PMI

10:00/UK: Sep CBI Industrial Trends Survey

12:30/CAN: Aug New Housing Price Index

12:30/US: Aug Chicago Fed National Activity Index (CFNAI)

13:45/US: Sep US Flash Manufacturing PMI

13:45/US: Sep US Flash Services PMI

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Monday

AAR Corp (AIR) is expected to report $0.74 for 1Q.

Ennis Inc (EBF) is expected to report for 2Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

AGNC Investment Raised to Overweight From Equal-Weight by Wells Fargo

Annaly Capital Raised to Overweight From Equal-Weight by Wells Fargo

Aptiv Raised to Overweight From Equal-Weight by Wells Fargo

Ares Commercial Real Est Cut to Underweight From Equal-Weight by Wells Fargo

Assembly Biosciences Raised to Buy From Hold by Jefferies

BOK Financial Raised to Buy From Hold by Truist Securities

Campbell Soup Raised to Buy From Hold by Argus Research

Claros Mortgage Trust Cut to Underweight From Equal-Weight by Wells Fargo

Dana Cut to Underweight From Equal-Weight by Wells Fargo

Darden Restaurants Cut to Market Perform From Outperform by Bernstein

Darden Restaurants Raised to Outperform From In-Line by Evercore ISI Group

FedEx Cut to Hold From Buy by HSBC

FedEx Cut to Underweight From Equal-Weight by Morgan Stanley

FirstEnergy Raised to Buy From Hold by Argus Research

Nike Investors Glad Donahoe Is Out, but Hill Has Long Road Ahead -- Analysis

Notable Labs Cut to Market Perform From Market Outperform by JMP Securities

Par Pacific Holdings Cut to Neutral From Overweight by Piper Sandler

PBF Energy Cut to Underweight From Neutral by Piper Sandler

PepsiCo Cut to Equal-Weight From Overweight by Morgan Stanley

Prosperity Bancshares Cut to Hold From Buy by Truist Securities

Rapid7 Cut to Sector Perform From Outperform by RBC Capital

Valero Energy Cut to Neutral From Overweight by Piper Sandler

Velocity Financial Cut to Underweight From Overweight by Wells Fargo

Visteon Raised to Overweight From Equal-Weight by Wells Fargo

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

September 23, 2024 06:18 ET (10:18 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.