North American Morning Briefing: Stock Futures Edge Up as Investors Digest China News; PepsiCo Disappoints

OPENING CALL

Stock futures posted modest gains early Tuesday and bond yields fell slightly, as a lack of fresh stimulus measures from China dented global economic growth hopes.

A risk-off mood weighed on European and most Asian bourses after Beijing failed to deliver additional stimulus measures following the return from a week's holiday.

U.S.-listed shares of Chinese e-commerce companies tumbled premarket as China's stock-market rally showed signs of faltering.

Premarket Movers

PepsiCo stock fell around 1% after it reported third-quarter earnings that beat analysts' expectations but revenue that missed forecasts.

Other Movers

DocuSign will replace MDU Resources Group in the S&P MidCap 400 on Friday. DocuSign's shares jumped; MDU's shares were little changed.

Super Micro Computer stock rose 4%, after surging 16% Monday. The company said Monday that it recently deployed more than 100,000 graphics processing units with liquid-cooling solution to large AI factories.

Postmarket Movers

Installed Building Products acquired Wholesale Insulation Supply. Shares rose 5%.

RLI expects to post pretax net catastrophe losses from Hurricanes Beryl and Helene of between $35 million and $40 million. Shares rose 5%.

Cannae Holdings bought a majority stake in The Watkins Company for an undisclosed amount. Shares fall 1.9%.

Watch For:

Trade Data for August; Canada Trade Data for August; Fed's Bostic, Collins speak; PepsiCo earnings

Today's Headlines/Must Reads:

- Honeywell Plans to Spin Off Advanced Materials Business

- Paltry IPO Proceeds Spell More Trouble for Venture Investors

- Analysis: A Tale of Two Inflation Indexes and What They Say

- Samsung's Chip Tech Falls Behind in Early Innings of AI Game

MARKET WRAPS

Forex:

The dollar eased, albeit only marginally, after earlier gains driven by a scaling back of Fed rate-cut expectations following Friday's stronger-than-expected nonfarm payrolls report.

The market has ruled out the prospect of another 50 basis-point rate cut by the Fed following the jobs data while the probability of no rate cut in November has risen, Swissquote Bank said.

If inflation data on Thursday aren't soft enough, expectations for unchanged rates in November could rise further, boosting yields and the dollar, it added.

The euro risks weakening as money markets are nearly fully pricing in an interest-rate cut in October, even as the decision could be a closer call than markets suggest, ING said.

Data continues to show sticky services inflation and higher oil prices mean the ECB could raise its inflation forecasts, it said, however, markets are unlikely to give up bets for an October cut easily and the wide USD-EUR rate gap "still points to some pressure on EUR/USD in the near term."

Bonds:

Prospects of a soft landing for the economy and further rate cuts suggest it's a good time to buy fixed income, UBS said, suggesting investors to position for lower rates and favors 1-10-year bonds and an average 5-year portfolio duration.

"The U.S. data is not so strong that the Federal Reserve's contribution to the global rate-cutting cycle looks set to end."

UniCredit Research said bond markets are likely to tread water on a light data agenda before the U.S. CPI release, with the 2-10-year Treasury yield curve steepening modestly, having inverted briefly on Monday.

Energy:

Oil prices eased after rallying in the previous session, as traders await new developments in the Middle East.

"We have noted a diminishing in the impact of geopolitical events on oil supply," ANZ said, as any impact loss of supply can be covered by OPEC's 7 million barrels a day of spare capacity.

Gains are also capped by persistent concerns over the global demand outlook, despite disruption risks to U.S. supplies due to Hurricane Milton.

Metals:

Gold futures slipped, seeing some slight pullback but otherwise trading in a narrow range, hovering close to the $2,708.70 record set on Sept. 26.

Traders appear to be sitting on their hands and waiting for a clear steer before pushing the precious metal's price out of the consolidation mode seen since September, Pepperstone said.

Gold's daily consolidation since late September is increasing the potential for an explosive price change in either direction, and that powerful move should shape the trading bias--with the subsequent trend well worth chasing, it added.

Base Metals Outlook

The period just before the election could prove a soft patch for base-metal prices , according to Citi.

"We expect to see risk taken off the table ahead of a very finely balanced U.S. election in early November."

Iron Ore Prospects

A rebound in iron-ore prices likely has further to run, according to Morgan Stanley as it trades at its highest since July, benefiting from China stimulus plans.

"While the impacts on physical demand are less clear, we think the shift in policy, particularly towards property, added to seasonality, suggests further upside is in store."

TODAY'S TOP HEADLINES

Uber Will Now Take You From Manhattan to LaGuardia for $18

Uber can take you to New York's LaGuardia Airport for $18, starting Tuesday.

The catch? The rides are in 14-passenger vans, and they only pick up and drop off at three spots in Manhattan. One Uber Shuttle route will go between Port Authority, Grand Central Terminal and the airport, while the second runs between Penn Station and the airport.

Vodafone, Google Expand Partnership With Billion-Plus Dollar Deal

Vodafone Group and Google expanded an existing partnership to add artificial-intelligence features across a range of products and services in a 10-year, billion-plus dollar deal.

The partnership between the U.S. tech giant and the U.K. telecommunications group aims to extend the use of devices powered by generative AI, through Google's Gemini models, to Vodafone's customers in Europe and Africa, the companies said.

Boeing Strike Drags On. What It Means for the Troubled Stock.

The machinist's labor strike against Boeing is nearing a month old. The longer it goes on the more investors will start to worry about the aerospace giant's liquidity.

A month or so shouldn't pressure Boeing's balance sheet too much. Longer than that, the company, and its investors, will feel more significant pain.

Fed's Musalem Sees Gradual Interest Rate Cuts Ahead

Federal Reserve Bank of St. Louis President Alberto Musalem sees a soft landing ahead, aided by the central bank easing off high interest rates and strong productivity growth from the U.S. economy. Cooling inflation should clear the way for continued interest rate cuts ahead.

"I believe it will likely be appropriate to further reduce the target range for the federal-funds rate over time toward a neutral posture," Musalem said in prepared remarks for an event hosted by the Money Marketeers of New York University on Monday evening. He was referring to the theoretical interest rate which neither stimulates nor restricts economic growth.

The Economy Is on Track. These Sectors Are Gliding.

The market has stocks tied to economic growth. And when the good news just keeps coming-strong jobs numbers, no real signs that inflation is flaring again-investors should expect good times ahead.

22V Research's Dennis DeBusschere, for example, thinks the U.S. might be in a Goldilocks scenario, allowing both rate cuts and growth. Consensus gross domestic product forecasts of 1.8% for 2025 and 2% for 2026 are most likely headed higher, he writes, providing positive support for earnings per share estimates.

Kamala Harris Struggling to Break Through With Working Class, Democrats Fear

GRAND RAPIDS, Mich.-Democrats have privately grown worried about Kamala Harris's standing among working-class voters in the crucial "blue wall" states-particularly in Michigan.

Donald Trump has assiduously courted union members and non-college-educated white voters with a message focused on high costs, manufacturing and the threat of China to the U.S. economy. Senior Democrats, including Michigan Gov. Gretchen Whitmer, want a sharper economic appeal from Harris and have conveyed those concerns to her campaign, according to people familiar with the conversations. They also want Harris to spend more time campaigning in the state.

Harris Wants Medicare to Cover Home Care for More Seniors

Vice President Kamala Harris is proposing a new Medicare benefit for in-home eldercare, part of a pitch to middle-aged voters who are grappling with the dual cost of raising children and attending to their aging parents.

The proposal would cover long-term home care services, including health aides, according to Harris campaign officials, allowing many seniors to get the support they need without going to a nursing home. The officials said the benefit, which would require congressional approval, would be paid for from the savings from a series of proposals Harris has made to lower prescription drug costs. The plan builds on a proposal pitched by President Biden that didn't win enough support to pass Congress.

Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled.

Economic Indicators (ET):

0830 International merchandise trade

Stocks to Watch:

Aris Mining 3Q Gold Production 53,608 Ounces

Hammond Power Solutions Completes Asset Purchase of Micron Industries Corp; HPS Will Continue to Operate Micron Industries Assets and Continue to Market Branded Pdt Offerings

Patriot Battery Metals Price Target Cut 17% to A$0.75/Share by Bell Potter

Expected Major Events for Tuesday

04:30/JPN: Sep Corporate Insolvencies

05:00/JPN: Sep Economy Watchers Survey

06:00/GER: Aug Industrial Production Index

06:45/FRA: Aug Foreign trade

06:45/FRA: Aug Balance of payments

10:00/US: Sep NFIB Index of Small Business Optimism

12:30/CAN: Aug International merchandise trade

12:30/US: Aug U.S. International Trade in Goods & Services

12:55/US: 10/05 Johnson Redbook Retail Sales Index

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October 08, 2024 06:44 ET (10:44 GMT)

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