MARKET WRAPS

Stocks:

European stocks traded higher on Wednesday as investor attention turned to upcoming U.S. inflation data and the Federal Reserve's latest meeting minutes.

"Markets are waiting for the latest U.S. inflation data for clues into the Fed's next move with hopes that the central bank could be close to the peak of the current rate hiking cycle," Interactive Investor said.

Stocks to Watch

International oil-and-gas exploration and production stock performance isn't just driven by simple oil price leverage, but by fundamental asset quality and balance street strength too, Jefferies said, as it made a raft of changes to its ratings.

The U.S. bank cut 2023 Brent oil price forecasts 4% to $93.75 a barrel, and rolled forward net asset value pricing a year, supportive for stocks with organic growth development assets, it said.

"Softer near-term commodity price assumptions, rolled forward NAV dates and our usual detailed bottom-up asset analysis leads to some stark stock choices."

Jefferies raised Aker BP to buy from hold, reinstated Serica Energy at buy, downgraded Energean, Diversified Energy and EnQuest to hold and downgraded Tullow Oil to underperform.

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First-quarter events aren't expected to have threatened specialty reinsurers' fundamentals, RBC Capital Markets said.

"Capital levels are still strong and the hard reinsurance market continues to underpin a favorable outlook from here."

Asset exposures are expected to be more insulated from the broader market turmoil, but investors will still look for reassurances from companies, RBC added.

Beazley and Lancashire Holdings look to have been overly discounted and now provide an attractive entry point, it said.

RBC's top pick is Beazley for its strong growth outlook despite lower amounts of deployable capital to support a higher target solvency.

It retained outperform ratings--in order of preference order after the FTSE 100-listed group--on Lancashire Holdings, Conduit Holdings, France's Scor and Germany's Hannover Reuck.

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U.S. Markets:

Stock futures were muted as investors held their breath ahead of the inflation reading that may influence how soon the Fed stops raising interest rates.

"It is generally expected that if the inflation figure remains persistent, the American equities market would suffer a major fall today, " Zaye Capital Markets said.

Stocks to Watch

ClearPoint Neuro said it extended a software and license agreement with Koninklijke Philips NV to add subnuclei segmentation applied to MRI, and potentially CT scans, in the operating room. Shares climbed 5% in after-hours trading.

Emerson Electric is in advanced talks to acquire National Instruments, the testing-equipment maker, Bloomberg reported, citing people familiar with the matter.

Emerson has discussed paying around $60 a share, Bloomberg reported, adding that an announcement could be made as soon as this week. National Instruments was up 4% in premarket trading to $54.68. Emerson had made a hostile bid for National Instruments back in January, but National Instruments said it wanted to seek alternatives. Emerson Electric declined 0.5%.

HeartCore Enterprises said it signed an agreement with rYojbaba for its tenth initial public offering consulting service. Shares surged 116% in after-hours trading.

Horizon Acquisition said Tuesday that it and the subscription-based private aviation company Flexjet agreed to terminate their previously announced business combination. Shares dropped 99% in after-hours trading.

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Forex:

Sterling's strong performance in recent weeks reflects a series of better-than-expected U.K. economic data but this move has probably run its course, Rabobank said.

"While the economic outlook for the U.K. in 2023 is better than it was, it is far from strong and the recent adjustment in positioning means that GBP may now be more vulnerable to disappointments."

Sterling is likely to slowly grind lower versus the euro, although Rabobank recently pushed out its EUR/GBP 0.90 forecast to nine months reflecting the less bad U.K. economic backdrop, it said.

Read BOE's Bailey Could Signal Pause, Weighing on Pound

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The dollar could turn higher if U.S. CPI data at 1230 GMT show core inflation accelerated in March, Unicredit Research said.

Data revealing that underlying price pressure "is not declining as rapidly as markets hope" will "probably prove dollar positive," Unicredit said.

However, markets have already scaled back interest rate cut expectations for this year, which may limit any dollar rise if the data exceed expectations, it added.

Bonds:

Landesbank Baden-Wuerttemberg said it expects the cyclical high in 10-year eurozone government bond yields to be reached in the second quarter when the ECB will have reached its peak deposit rate.

LBBW said the ECB will probably raise its deposit rate, which is currently 3.0%, to 3.75%, while an interest-rate cut isn't expected before the first half of 2024.

Read Banking Sector Stress Won't Stop ECB Raising Deposit Rate to 4%

Read Economic Stabilization Might Add to ECB's Wage-Pressure Concerns

Energy:

Oil prices edged higher, with gains limited, as investors looked ahead to the latest CPI print and the Fed minutes.

Read Barron's OPEC's Production Cut Will Test Russian Oil Price Caps

Metals:

Base metals were mixed, with gold higher, ahead of inflation data that is likely to impact the Fed's interest-rate decision making.

A selloff in sovereign bonds on Tuesday indicated the market thinks the Fed is likely to hike again at its next meeting, Deutsche Bank said.

"Inflation has continued to run at a rapid clip."

Metals Outlook

Tight inventories and growing demand from China are likely to push metal prices this year, Goldman Sachs said.

So far this year metal prices have been broadly flat with an economic slowdown in the U.S. and China's slow postpandemic recovery acting as headwinds, GS added.

However, "With China's activity acceleration now driving expansionary metals demand into an environment of faltering supply dynamics, already low global visible inventories are now falling across all industrial metals."

Unless there is a contraction in OECD growth of at least 2%, the U.S. bank forecasts full-year supply deficits for both copper and aluminum. Goldman's base case is for OECD growth of at least of 1%.

Iron Ore

The iron-ore market "is likely to trade nervously" until it becomes clearer how Tropical Cyclone Ilsa may impact production and exports from Australia's Pilbara region, the world's top source of the steelmaking ingredient, UBS said.

Australia's Bureau of Meteorology said Ilsa is intensifying and is expected to become a severe cyclone on Wednesday, before making landfall between Port Hedland and Broome late on Thursday or early Friday. Port Hedland is the world's biggest iron-ore export hub. The port authority there has ordered vessels be cleared.

"Potential impacts will depend on 1) how long Port Hedland is closed, impacting shipments, 2) potential wind damage to port and other infrastructure [usually closer to the coast], 3) flooding/washout damage to stockyards, rail and mine infrastructure, and 4) damage to communities and limitations on staff access," UBS said.

DOW JONES NEWSPLUS


EMEA HEADLINES

Merck KGaA Shares Fall After US Puts Hold on New Patients in MS Drug Trial

Shares in Germany's Merck KGaA slipped Wednesday after the company said U.S. authorities have enforced a pause on initiating new patients in a drug trial.

The study will continue with its current participants as planned, the drugmaker said.


Volvo Preliminary 1Q Sales Beats Expectations

STOCKHOLM-Volvo AB said late Tuesday that preliminary first-quarter net sales rose 25% on year to 131.4 billion Swedish kronor ($12.57 billion), beating the SEK118.4 billion expected in a FactSet poll.

In a statement ahead of its full-earnings report due on April 20, the Swedish truck maker said preliminary first-quarter adjusted operating income rose to SEK18.4 billion from SEK12.7 billion, with its adjusted operating margin rising to 14.0% from 12.0%.


Glencore Revises Bid for Teck Resources to Allay Coal Concerns

Glencore PLC said it would add a cash component to its roughly $23-billion merger proposal for Teck Resources Ltd., as the commodities company seeks to win over the Canadian miner's shareholders for a deal that would create a copper giant.

Glencore last week detailed a bid to combine with Teck and create two separate companies for their merged metals and coal businesses. Teck said it had rejected that all-share offer in part because it would expose its shareholders to Glencore's large thermal coal business.


Global oil production growth will soon 'shift' away from OPEC, says EIA

The Energy Information Administration on Tuesday raised its U.S. and global oil-price forecasts for this year and next, following a plan by the Organization of the Petroleum Exporting Countries and their allies to reduce production even further this year.

The government agency, however, also pointed out that growth in the production of liquid fuels, which include oil and products of petroleum refining, is poised to "shift" away from OPEC-member countries.


Increasing Export Restrictions on Critical Minerals Threaten Energy Transition, OECD Says

Rising export restrictions on lithium, cobalt and other raw materials critical to the energy transition threaten to slow the move to a greener economy, according to the Organization for Economic Cooperation and Development.

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