North American Morning Briefing: Index Futures Tick Lower as Earnings Take Center Stage

OPENING CALL

Stock futures moved lower early Monday as the third-quarter earnings season comes into view this week,

First to report will be PepsiCo on Tuesday followed by a deluge of financial earnings Friday, from JPMorgan, BlackRock, Wells Fargo and others.

On Wednesday, the Federal Reserve will release the minutes of the September meeting and after the latest jobs report made it clear the economy is ticking along nicely, and that future rate cuts won't be that rapid, investors will be looking to the release of the September consumer price index on Thursday to reinforce their view about where the economy is headed.

Premarket Movers

Arcadium Lithium : Rio Tinto is in talks to buy Arcadium, marking the global miner's latest attempt to establish a foothold in the fast-growing lithium market. Arcadium shares soared ahead of the opening bell.

Pfizer : Activist investor Starboard Value has taken a roughly $1 billion stake in Pfizer and wants the drugmaker to turn its performance around. Pfizer shares rose more than 2%.

Watch For:

Fed speakers include Lisa Cook and Michelle Bowman

Today's Headlines/Must Reads:

- What Trading Volume Is Telling Investors About the Stock Market

- Big Oil Urges Trump Not to Gut Biden's Climate Law

- Old Drug Repurposed for Schizophrenia Could Reap Alzheimer's Windfall

- Microsoft's AI Story Is Getting Complicated

MARKET WRAPS

Forex:

The dollar traded steady and remained at stronger levels after Friday's better-than-anticipated nonfarm payrolls.

"Looking at the next three weeks, we cannot identify a clear catalyst that can reverse the course for the dollar, and a consolidation of recent dollar gains looks more likely," ING said.

The euro could recover marginally against the dollar in coming days as the repricing of ECB and Fed rate-cut expectations has run its course for now, ING said.

"We struggle to see rate expectations move much before the [ECB's] October 17 meeting-- and barring a U.S. data tumble, the USD-EUR two-year swap rate gap will not retighten materially from the current 125 basis points."

However, the euro could fall after the ECB's October meeting, when it's likely to cut rates and markets could favor further cuts, it added.

ING said separately that sterling could fall to $1.3000 in the near-term, given that markets may be more inclined to price in BOE cuts after Bailey's comments last week, adding that it sees a few more upside risks for the dollar.

Energy:

Oil rose as the market awaits new developments in the Middle East, where geopolitical tensions are boiling over, ING said.

Joe Biden is reportedly discouraging Israel from planning a strike on Iran's crude oil facilities in response to Iran's missile attack last week.

According to OPEC's latest market report, Iran has produced around 3.3 million barrels of oil a day, and shortages in the oil market could result from any disruption to this supply, ING added.

Metals:

Gold futures were broadly flat, holding their ground after gains Friday.

The Chinese central bank opted against adding gold to its reserves for a fifth consecutive month in September, having broken an 18-month buying streak in May that had helped drive gold prices to record highs, ING said.

China has experienced a slowdown in gold purchases over recent months, with high prices likely deterring further buying for now, it added.

TODAY'S TOP HEADLINES

Chinese Semiconductor Stocks Extend Rally on China's Stimulus Measures

Chinese semiconductor stocks continued to rally in Hong Kong, buoyed by China's recent aggressive economic stimulus package as well as hopes for even more measures.

Investor sentiment has been boosted by Beijing's recent package of stimulus measures across multiple policy fronts as well as strong fund inflows into Chinese and Hong Kong equity markets, benefiting the chip sector, analysts said.

Why Tesla's Wall Street Valuations Are All Over the Place

Even some begrudging bears will admit Tesla is more than a car company.

It makes electric vehicles, has a fast-growing energy storage business, and invests in artificial intelligence for applications such as self-driving cars and humanoid robots.

U.S. Wiretap Systems Targeted in China-Linked Hack

A cyberattack tied to the Chinese government penetrated the networks of a swath of U.S. broadband providers, potentially accessing information from systems the federal government uses for court-authorized network wiretapping requests.

For months or longer, the hackers might have held access to network infrastructure used to cooperate with lawful U.S. requests for communications data, according to people familiar with the matter, which amounts to a major national security risk. The attackers also had access to other tranches of more generic internet traffic, they said.

Trump's Plan Boosts Budget Deficits by $7.5 Trillion, Double Harris's Proposal

WASHINGTON-Donald Trump's flurry of recent tax-cut promises pushed his fiscal plan deep into red ink, and he would increase budget deficits by more than twice as much as Democratic rival Kamala Harris would, according to a new study that is among the most comprehensive estimates to date of the candidates' proposals.

Trump's combination of tax cuts, tariff increases, military expansion and mass deportations would widen budget deficits by an estimated $7.5 trillion over the next decade, according to the Committee for a Responsible Federal Budget, or CRFB, a nonpartisan group that favors lower deficits. Meanwhile, Vice President Harris's plans-social-policy spending, middle-class tax cuts and tax increases on corporations and high-income households-would increase deficits by $3.5 trillion.

German Factories Fall Further Behind as Orders Sink

German manufacturing orders plunged more than expected in August, adding further gloom to the struggling sector that offers little sign of a recovery.

Orders fell 5.8% on month in August, according to data published Monday by Germany's statistics agency Destatis. That was weaker than economists' expectations for a 2.0% drop, according to a Wall Street Journal poll, and contrasts with an upwardly revised 3.9% increase in July orders.

Japan to Closely Watch Impact of Yen Moves on Corporate, Household Activity

TOKYO-Japan's new finance minister pledged to consider policy responses against sharp currency moves based on how they affect the real economy, a comment that comes as growing global economic uncertainties spur volatility in foreign-exchange markets.

"We need to take necessary measures while closely watching the effects [of currency moves] on people's lives and economic activities, rather than responding to the foreign-exchange market itself," Katsunobu Kato said in an interview with Dow Jones Newswires and other media on Monday.

Corporate Insiders Are Sitting Out the 2024 Stock-Market Rally

Stock investors could hardly be more enthusiastic: The S&P 500 has raced higher, notching its best first nine months of a year since 1997.

Yet some of the best-informed investors don't seem to share the optimism.

Nobel Prize in Medicine Awarded to microRNA Pioneers

The Nobel Prize in medicine was awarded to Victor Ambros and Gary Ruvkun for the discovery of microRNA, tiny molecules that play an important role in gene regulation.

Updates to follow as news develops.

Inside Mexico's New Plan to Take On Cartel Violence

MEXICO CITY-Mexico's new President Claudia Sheinbaum is using her first 100 days in office to try to lower homicides and loosen the grip of organized crime groups that control swaths of the country, extort businesses, smuggle drugs and kill with impunity.

Among Sheinbaum's top efforts to "pacify the country" will be a push to slash killings in the country's 10 deadliest cities, including Tijuana and Ciudad Juárez on the U.S. border, according to a presentation of the strategy seen by The Wall Street Journal. She is also planning new efforts to combat the smuggling of the deadly drug fentanyl, which kills tens of thousands of Americans a year, the presentation says.

Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled.

Economic Indicators (ET):

Nothing major sheduled.

Stocks to Watch:

Ero Copper Reports Temporary Power Disruption at Tucuma Operation in Brazil Following Severe Windstorm

Lucara Announces Sale of 100% Interest in Clara Rough Diamond Sales Platform to Its Original Founders; Consideration Comprises Around $3.0M in Cash at Closing, Return of Around 10M Lucara Shares Issued for Original Acquisition; Lucara: To Retain 3% Net Profit Interest on Clara's Net Earnings

Expected Major Events for Monday

05:00/JPN: Aug Indexes of Business Conditions - Preliminary Release

06:00/GER: Aug Manufacturing orders

06:00/GER: Aug Manufacturing turnover

06:00/UK: Sep Halifax House Price Index

06:00/UK: 3Q Halifax House Price Index: UK Regional Breakdown quarterly release

14:00/US: Sep Employment Trends Index

19:00/US: Aug Consumer Credit

23:01/UK: Sep BRC-KPMG Retail Sales Monitor

23:01/UK: Sep Scottish Retail Sales Monitor

23:30/JPN: Aug Provisional Labour Survey - Earnings, Employment & Hours Worked

23:30/JPN: Aug Household Spending

23:50/JPN: Sep Provisional Trade Statistics for 1st 20 days of Month

23:50/JPN: Sep International Transactions in Securities

23:50/JPN: Aug Balance of Payments

23:50/JPN: 2Q Revised Balance of Payments

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

Expected Earnings for Monday

Duckhorn Portfolio Inc (NAPA) is expected to report $0.09 for 4Q.

Franklin Resources Inc (BEN) is expected to report.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Azek Cut to Hold From Buy by Loop Capital

BlackSky Technology Raised to Buy From Hold by Craig-Hallum

CH Robinson Worldwide Raised to Buy From Neutral by UBS

CVS Health Raised to Buy From Hold by TD Cowen

(MORE TO FOLLOW) Dow Jones Newswires

October 07, 2024 06:36 ET (10:36 GMT)

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