North American Morning Briefing: Stock Futures Rise; Chinese Stocks Surge on Stimulus Blitz

OPENING CALL

Stock futures were gaining early on Tuesday, after China's Cental Bank's raft of measures to support the economy added more fuel to the global stock rally.

The move lifted indexes in Asia, European luxury stocks, and U.S.-listed shares of Chinese companies such as Alibaba and Nio.

However, Jefferies said, while the measures were positive, they wouldn't "fundamentally change our outlook for China yet."

Premarket Movers

Deere stock was down. Donald Trump said that if he were elected president the company would face tariffs of 200% if it sold made-in-Mexico equipment previously made in the U.S.

Hawaiian Electric Industries plans to offer $500 million in common stock in a public offering. Proceeds are for its contribution to an expected Maui wildfire tort litigation settlement, as well as for general corporate purposes. Shares fell 11%.

Liberty Broadband said Monday it was considering an all-stock merger with Charter Communications. Liberty's class A shares rallied.

Tesla continued to rise after Monday's gains. A bullish report from analysts at Barclays estimated third-quarter deliveries at about 470,000 vehicles, higher than consensus forecasts of roughly 460,000.

Visa shares declined after Bloomberg reports said the Justice Department's antitrust division could file a lawsuit accusing it of illegally monopolizing the debit card market.

Postmarket Movers

Educational Development completed a sale and leaseback deal for its headquarters and distribution warehouse in Tulsa, Okla. Shares gained 24%.

Lifeway Foods received an acquisition offer from Danone. Shares rose 16%.

Watch For:

S&P CoreLogic Case-Shiller Home Prices Index for July; Conference Board - Consumer Confidence for September; Earnings from Autozone, KB Home

Today's Headlines/Must Reads:

- How Meta's Smart Ray-Ban Glasses Spawned a Silicon Valley Hit

- BOJ Governor's Cautious Comments Damp Speculation of October Hike

- Top Economist in China Vanishes After Private WeChat Comments

MARKET WRAPS

Forex:

The China measures are slightly negative for the dollar, ING said.

The measures, which include cuts to its benchmark interest rate and support for the stock market and property market, add to reflationary sentiment, according to ING.

"For the dollar itself, a reflationary environment is mildly negative as investors rotate into more pro-cyclical and emerging market currencies."

The euro rose against the dollar after China's announcement as the eurozone economy is more tightly linked to China than the U.S, MUFG said.

"It comes at a time when the eurozone economy appears to be slowing after the pick-up in growth in the first half of this year."

Sterling hit a near two-and-a-half-year low against the euro following purchasing managers' surveys on Monday that showed the U.K. economy outperforming the eurozone.

While the earlier drop in EUR/GBP was mostly driven by weak eurozone PMI data, the market is also looking at headlines from the U.K. Labour Party conference where finance chief Rachel Reeves hinted at loosening fiscal rules to allow for greater investment, ING said.

"Sterling has enough support at the moment without these potential investment plans."

EUR/GBP could fall toward 0.8300 while GBP/USD could rise to 1.35, it added.

Bonds:

There is some fear that the election could bring volatility roaring back to the bond market .

"Normally when the Fed eases it takes volatility down, but the election is a month and half away. You've got to get past that and have a clear result," Wells Fargo Securities said.

Energy:

Oil rose, and its positive momentum reflects elevated tensions in the Middle East, fresh hurricane threats in North America and China's supportive fiscal measures, ING said.

Angel One also said crude prices were likely to trade higher on fresh monetary stimulus from top importer China.

It sees WTI support at $66.30-$68.50/bbl and resistance at $72.50-$74.80/bbl and pegs technical support for Brent at $70.20-$72.00/bbl and resistance at $77.70-$79.60/bbl.

Metals:

Gold futures were flat, having reached a record early Tuesday trade on the back of soft Treasury yields and rising safe-haven demand.

The record of $2,664.6 an ounce reflects sliding yields after the Fed's jumbo rate cut, as well as rising geopolitical worries in the Middle East, Swissquote Bank said.

It added that the Relative Strength Index indicator points to gold being overbought, suggesting it has been bought too rapidly and that a downside correction would be healthy at the current levels.

Angel One projected support for spot prices at $2,565-$2,604 and resistance at $2,695-$2,738.

UBS said record prices , up more than 27% since the start of 2024, could still rise further.

Base Metals

China's new measures have provided a fresh boost for industrial metals and the wider commodities complex, with copper, aluminum, nickel and zinc gaining.

TODAY'S TOP HEADLINES

Boeing Makes New Offer to Union in Hopes of Ending Strike

Boeing on Monday made a new offer to its striking machinists union in hopes of ending a walkout that is costing the cash-strapped jet maker hundreds of millions of dollars a week.

The proposal comes 11 days after Boeing's biggest union rejected a tentative contract and overwhelmingly voted to go on strike.

Telegram Founder Ignored Warnings About App's Content

Pavel Durov's legal battle with French prosecutors took the Telegram founder by surprise. But some of the app's avid users have long warned him of the need for less-freewheeling management.

Among the warnings: More than two dozen organizations wrote a letter to Durov in late 2021, asking him to implement transparent content rules and policies, develop ways for people to communicate with his company and add an appeals process for frustrated parties. Durov didn't respond, the organizations said.

Italy's UniCredit Trades Blows With Berlin Over Commerzbank

The battle for Germany's Commerzbank heated up Monday, with German leader Olaf Scholz and his government rallying to the bank's defense after Italian suitor UniCredit moved to speed along a possible takeover.

UniCredit is seeking to create a banking champion with nearly $1.5 trillion in assets in a deal that, if successful, could help trigger a long-awaited wave of mergers and acquisitions in European finance.

California Sues Exxon, Alleges Plastics Deception

California's attorney general filed a lawsuit Monday against Exxon Mobil, accusing the oil giant of misleading consumers about the recyclability of plastic products and polluting the state.

Attorney General Rob Bonta alleged Exxon violated California's nuisance laws, as well as laws prohibiting state water pollution, false advertising and unfair competition. He began a probe two years ago into petrochemical companies' role in plastics pollution, subpoenaing Exxon. The state is seeking civil penalties.

Italy's UniCredit Trades Blows With Berlin Over Commerzbank

The battle for Germany's Commerzbank heated up Monday, with German leader Olaf Scholz and his government rallying to the bank's defense after Italian suitor UniCredit moved to speed along a possible takeover.

UniCredit is seeking to create a banking champion with nearly $1.5 trillion in assets in a deal that, if successful, could help trigger a long-awaited wave of mergers and acquisitions in European finance.

California Sues Exxon, Alleges Plastics Deception

California's attorney general filed a lawsuit Monday against Exxon Mobil, accusing the oil giant of misleading consumers about the recyclability of plastic products and polluting the state.

Attorney General Rob Bonta alleged Exxon violated California's nuisance laws, as well as laws prohibiting state water pollution, false advertising and unfair competition. He began a probe two years ago into petrochemical companies' role in plastics pollution, subpoenaing Exxon. The state is seeking civil penalties.

A Private-Equity Executive Pushes for Workers' Stake in U.S. Companies

A new coalition is pushing to expand employees' stock ownership of U.S. companies, saying it would help ease the country's wealth inequality.

The group was assembled by KKR executive Pete Stavros and will advocate to update a 1974 federal law to make it easier for workers to own a part of their public or private company. Stavros, the son of a construction worker who unsuccessfully sought profit-sharing, said the goal is to achieve Congress's original intent for the law.

German Recession Angst Mounts as Companies Grow More Pessimistic

German companies are feeling ever less confident, adding to concerns that a moribund manufacturing sector could pull Europe's most important economy back into recession.

The Ifo Institute's business-climate index slipped to 85.4 in September from 86.6 a month earlier, the think-tank said Tuesday. That marks a fourth straight month of worsening sentiment, and comes in below economists' expectations for a shallower decline, according to a poll compiled by The Wall Street Journal.

Lebanese Flee Homes as Israeli Strikes Targeting Hezbollah Intensify

Thousands of Lebanese are fleeing their homes in the country's south as Israel intensifies its military campaign against Hezbollah, raising fears of an all-out war a day after a barrage of strikes killed hundreds in the country.

In the early hours of Tuesday, the Israeli military launched dozens more airstrikes against Hezbollah after downing projectiles fired from Lebanon. The attacks followed roughly 1,600 Israeli strikes Monday against Hezbollah's military infrastructure and militants.

Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled.

Economic Indicators (ET):

Nothing major sheduled.

Stocks to Watch:

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September 24, 2024 06:24 ET (10:24 GMT)

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