MARKET WRAPS
Stocks:
European stocks struggled for direction on Monday, at the start of a week that includes some important economic data releases.
Energy shares lagged on weaker crude prices while miners beneffited from the precious metals outperformance, with gold hitting a fresh six-month high earlier.
Stocks to Watch
Barclays shares should look appealing if management can convince on efficiencies, give clarity on capital returns and dial up its return on tangible equity targets at its 2023 results, Jefferies said, as it trimmed its target price to 230 pence from 300 pence.
"Whilst BARC's low...valuation has seemed like a persistent curse, we regard it as more of a gift into February's update," Jefferies said.
It expects the lender to pay back a fourth-quarter GBP750 million restructuring charge over three years, pencil in an annual GBP2.2 billion in buybacks over 2024 and 2025 and forecast a group ROTE at 11% for each year.
Jefferies has kept its buy rating on the stock.
While BP's disappointing earnings and lack of clarity on management have weighed on its shares, the recent reaction looks overdone and the current price posits an opportunity to buy, RBC Capital Markets said, as it lifted its price target to 625 pence from 550 pence.
Despite lackluster results in the two latest quarters, 2024 consensus revisions look similar to peers as most analysts and investors usually don't capitalize strong trading, RBC said.
"with the CEO [appointment] confirmation due soon, and the credit upgrade seeming imminent, we believe risk-reward is set up more positively," RBC said.
U.S. Markets:
Stock futures were slightly lower ahead of this week's release of October inflation data, while Treasurys were little changed, with the benchmark 10-year yield hovering after ending last week at 4.483%.
Major indexes are up between 7% and 11% so far this month, putting the benchmarks on track for their strongest monthly performances in more than a year.
On Thursday, the Bureau of Labor Statistics will release personal income and expenditures data, including the core personal-consumption expenditures price index for October, which is the Fed's preferred inflation measure.
Forex:
The dollar extended its retreat on a growing conviction the Federal Reserve has finished raising interest rates and as losses gather pace after the DXY dollar index on Friday dropped below its 200-day moving average, a key technical support.
"The DXY dollar index is down around 3.5% from its highs seen in October. The drop looks largely down to the view that the Fed's tightening cycle is over and that portfolio capital can now be put back to work in bonds, equities, and emerging markets," ING said.
Last week's announcement of moderate U.K. fiscal stimulus plus improved PMI data showing a slight expansion in services activity have helped lift sterling, ING said, adding that investors now look for only around 50 basis points of BOE rate cuts, "clearly less" than for the Fed or ECB.
CHF/JPY's medium-term bullish momentum from the Oct. 3 low has begun to dissipate, based on technical analysis, Oanda said. Its daily relative strength index momentum indicator staged a bearish breakdown on Nov. 20 and retested support at the 60 level, Oanda noted.
Energy:
Oil futures weakened with all eyes on Thursday's OPEC+ meeting.
"With the meeting delay tied to reports that Nigeria and Angola wanted higher production quotas for next year, markets have justifiably reduced their expectation that the group will deliver deeper production cuts," Commonwealth Bank of Australia said.
ING said the expectations are that Saudi Arabia will at least roll over its additional voluntary production cut of one million barrels/day into 2024.
There is also a growing possibility of a deeper output reduction from the broader group, which would offer good support to the market going into 2024, ING added.
Metals:
Gold prices pushed to a six-month high, with a weaker dollar providing support, while base metals were mixed.
"Gold's shine is returning," Goldman Sachs said, adding its 12-month price target was $2,050 an ounce.
"The potential upside in gold prices will be closely tied to U.S. real rates and dollar moves," but it also expected "persistent strong consumer demand from China and India, alongside central bank buying to offset downward pressures from upside growth surprises and rate cut repricing."
UBS said a stabilizing Chinese property market would be supportive for steel ingredient iron ore , which is trading around $135 a metric ton. That means there could be some upside to UBS's forecasts, which are for $100-ton iron ore in 2024 and $90-ton iron ore in 2025.
UBS also said that with lithium supplies rising and demand less than previously anticipated , the market is facing surpluses in the near term that could lead prices to undershoot expectations.
Jefferies thinks uranium prices, having hit 15-year highs above $80/lb, are likely to stay strong. That view reflects financial buyers becoming increasingly active in the market with the Sprott Physical Uranium Trust buying 300,000 lbs in October and 400,000 lbs this month so far.
Jefferies also said i nvestor sentiment toward the mining sector is improving, attributing the shift to a combination of the weakening dollar, a potential end to rate increases by the Fed and Chinese property market stimulus.
EMEA HEADLINES
Uniper Year-End Result Affected by $600M Arbitration Award Against Subsidiary
Uniper said that an arbitration award of an estimated 550 million euros ($602.1 million) against a subsidiary will have an impact on its year-end result.
The German utility said that the award against its subsidiary stems from arbitration proceedings which began in early 2021 between it and an European energy company and relates to the pricing provisions of a long-term agreement for the supply of liquified natural gas, which has since expired, the company said Sunday evening.
Casino Confirms It Has Received Expressions of Interest for the Sale of Stores
Casino Guichard-Perrachon said that it has received preliminary expressions of interest for the acquisition of hypermarket and supermarket stores.
The company and a consortium led by EP Equity Investment will analyze these expressions of interest in the coming weeks, the French supermarkets owner said on Monday, as any disposal is subject to the approval of the consortium according to the lock-up agreement of Oct. 5.
Behind Credit Suisse's Fall: A Chairman's Lasting Mark on the Culture
When Credit Suisse's board met to approve the bank's forced sale to UBS in March, paintings of every bank chairman since 1856 lined the boardroom.
A lawyer from Zurich, Urs Rohner, was the last to get a portrait. Chairman between 2011 and 2021, he wasn't there in person that day. But his tenure loomed over the proceedings. He had helped turn one of Switzerland's most solid institutions into a tinderbox.
GLOBAL NEWS
Stock market heads into year's end with serious momentum. What that means for December and beyond.
Barring a sudden bout of post-Thanksgiving indigestion, the U.S. stock market looks poised to log a healthy November rally. And while there are certainly no guarantees, history says momentum is likely to beget momentum into year-end.
"I think the market is set up for a strong final six weeks of 2023 and I would expect the market to build on that momentum into year-end," said Michael Arone, chief investment strategist at State Street, in a phone interview.
Beijing Pledges More Financial Support to Aid Private Economy
Chinese authorities rolled out a new set of measures to pump more financial resources to help the country's struggling private sector, the latest effort by Beijing to revive weakening business confidence amid economic headwinds.
Ministries led by the People's Bank of China said they would ask Chinese banks to set annual targets for services to private businesses and raise the weight of such services in lenders' performance reviews, according to a notice on the central bank's website Monday.
China Industrial Profit Continued to Improve in October
Profits at China's big industrial companies continued to improve in October, thanks to Beijing's efforts to stimulate domestic demand.
Industrial profits rose 2.7% from a year earlier in October, marking the third month of on-year increase, the National Bureau of Statistics said Monday.
Hamas Releases More Hostages as Negotiators Work to Extend Truce With Israel
Hamas released 17 Israeli and foreign hostages on Sunday, including a 4-year-old-girl with dual U.S.-Israeli citizenship, as negotiators remained locked in talks over a possible extension to the four-day deal that halted fighting.
Israeli authorities said that 14 Israelis were freed Sunday afternoon and left the Gaza Strip. Egyptian and Qatari officials involved in the negotiations to free the hostages said that three Thai citizens were also released. Among them is a dual U.S.-Israeli citizen, four-year-old Abigail Mor Idan, whose parents were killed on Oct. 7.
Russia Targets Ukrainian Cities With Waves of Explosive Drones
KYIV-Russia sent waves of explosive drones to strike cities across Ukraine in the largest attack since last winter that likely marks the start of a fresh campaign aimed at demoralizing and dislocating Ukrainians.
Ukraine's military said it intercepted all but one of 75 Shahed drones overnight, most of which were targeted at Kyiv. Authorities in the capital said five people were slightly injured, including an 11-year-old child, and several buildings damaged.
As Migration to Europe Rises, a Backlash Grows
Rising migration across Europe, including the biggest surge in asylum seekers since a 2015-2016 migrant crisis, is fueling support for far-right and anti-immigration parties, potentially reshaping European politics for years.
(MORE TO FOLLOW) Dow Jones Newswires
11-27-23 0536ET
