North American Morning Briefing : Investors Await Price Inflation Data

OPENING CALL

Stock futures made modest gains on Tuesday and bond yields were a touch firmer as investors awaited the PPI inflation report.

The figures, along with Wednesday's CPI numbers, could feed into the Federal Reserve's thinking on interest rates.

"With the market desperate for relief - and the Fed anxious to provide it - it does appear that the onus is on the data to convince policy makers not to move come September," Sitfel said.

The AI trade which appeared to be making a comeback from last week's selloff has continued with Nvidia and Super Micro both gaining premarket.

Premarket Movers

BuzzFeed narrowed its second-quarter loss and touted new generative AI features. Shares jumped.

Rumble narrowed its quarterly loss, despite revenue declining. Shares rose around 7%.

Trump Media remained under pressure after Trump posted on X on Monday, for the first time in nearly a year, and gave an interview on the platform.

Postmarket Movers

FreightCar America raised its outlook for the year. Shares rose 15%

Pulse Bioscience named a new co-chairman, issued an update on its bioelectric systems, said it completed its first procedure to remove diseased soft tissues and its first two procedures to treat irregular heartbeats. Shares rose 9.1%.

Watch For:

PPI for July; Home Depot earnings

Today's Headlines/Must Reads:

- Market Volatility Is Back. Will It Last?

- Analysis: Wall Street's Trash Contains Buried Treasure

- Tim Walz's Immigration Record Mirrors Democratic Push to Embrace Migrant

MARKET WRAPS

Forex:

The dollar was steady as investors looked ahead to key economic data for clues on the Fed's interest-rate policy.

ING said the producer price index data will be a key test for the foreign-exchange market and the consumer price index data on Wednesday will undoubtedly generate higher forex volatility.

"We are generally optimistic that data will fall in line with consensus expectations and continue to endorse market pricing for 100 basis points of Fed [interest rate] cuts by year-end."

It reckons that the dollar faces an orderly decline over the coming weeks.

EUR/USD could rise above 1.10 going into a likely 50 basis points interest-rate cut by the Fed in September, ING said.

Sterling hit a one-week high against the dollar and the euro after data showed the U.K. unemployment rate unexpectedly fell in the three months to June.

Bonds:

The issuance of dollar-denominated investment-grade bonds increased last week, driven by a decline in IG yields, Bank of America said.

"While the volumes are heavy, we think they are unlikely to set new records."

Dollar investment-grade supply reached $45 billion, higher than the median $36 billion recorded for the first week of August over the past five years, it said, adding that "96% of supply has been from non-financial issuers, while financials are likely waiting for spreads to tighten to more attractive levels."

Lazard Asset Management said the time has come for investors to actively increase duration or interest-rate risks, adding the tide has changed and bonds should receive a tailwind from falling central bank interest rates.

Energy:

Oil prices were weaker as demand concerns, following OPEC's forecast cuts, outweighed fears of growing tensions in the Middle East.

Macquarie said oil might see a correction in the fourth quarter, partly due to accelerating U.S. supply growth and the partial return of OPEC+ barrels, noting that futures were showing a decrease in speculative net length investment holds, with the liquidation of long positions exceeding the increase in shorts.

Metals:

Gold futures were flat ahead of the release of this week's U.S. price Inflation data which should provide clues on the Fed's pathway towards interest-rate cuts.

The Fed's rating cut cycle will attract strategic investment in gold, and should prove to be a catalyst for long-term investors, ANZ Research said.

Central bank purchases and physical demand also continue to provide a strong base for gold, as will political and economic uncertainty, ANZ said, and any price pullback will attract more investment demand, protecting the downside.

Axis Securities said spot gold prices were hovering near the record high of $2,483/oz but a breakout and weekly close above this level "will be a bullish signal, potentially driving prices towards $2,550/oz."

TODAY'S TOP HEADLINES

Huawei Readies New Chip to Challenge Nvidia, Surmounting U.S. Sanctions

China's Huawei Technologies is close to introducing a new chip for artificial intelligence use, overcoming U.S. sanctions to challenge Nvidia in the Chinese market.

Chinese internet companies and telecommunications operators have been testing Huawei's latest processor, called Ascend 910C, in recent weeks, according to people familiar with the matter. Huawei told potential clients that the new chip is comparable to Nvidia's H100, which was introduced last year and isn't directly available in China, the people said.

German Economic Expectations Nosedive as Global Slowdown Fears Bite

Economic sentiment in Germany slumped this month, as weakening views of the health of the global economy exacerbated an already gloomy outlook.

The ZEW Indicator of Economic Sentiment, which tracks analysts' economic expectations for the next six months, fell 22.6 points on month to 19.2 in August.

That was well behind a forecast of 29.0 from a consensus of economists polled by The Wall Street Journal, and ranks as the largest on-month fall since July 2022.

China's Oil-Demand Growth Slowdown Weighs on Global Outlook, IEA Says

Global oil-demand growth is still forecast to slow to under a million barrels a day this year and next, with a continued slowdown in Chinese consumption weighing on the outlook, the International Energy Agency said.

The Paris-based organization estimates that global demand will grow by 970,000 barrels a day this year and by 953,000 barrels a day the next-marginally lower than previous estimates of 974,000 and 979,000 barrels a day. Total demand is expected to average at 103.1 million and 104 million barrels a day this year and next, respectively.

Trump and Musk, on X, Discuss Immigration and Shared Vision for U.S.

For over two hours, Elon Musk and Donald Trump bantered on X about national security, energy policy, immigration and more, in a freewheeling conversation that gave the former president a forum to launch personal attacks on his political rivals as both men reveled in their largely shared vision for the country.

The discussion on the social-media platform's livestreaming service Spaces-which was delayed because of technical problems-began with Musk asking about the assassination attempt on Trump at a rally in Pennsylvania last month. Musk referred to security failures allowing the shooter to get on a nearby roof. "That does seem crazy," he said.

Israel Puts Military on High Alert as U.S. Sends Assets to Middle East

Israel put its military on high alert and the Pentagon said it is sending a guided-missile submarine to the region and speeding up the arrival of a second aircraft carrier, amid heightened concerns about a possible Iranian and Hezbollah response to the killing of militant leaders in Tehran and Beirut.

Israel set the high-alert level for its military for the first time this month after observing preparations by Iran and Hezbollah to carry out attacks, a person familiar with the matter said. Israel doesn't know whether attacks are imminent and is proceeding cautiously, the person said.

Write to [e-mail]

TODAY IN CANADA

Earnings:

AirBoss of America 2Q

Aris Mining 2Q

Ascot Resources 2Q

AutoCanada 2Q

Boat Rocker Media 2Q

Cardiol Therapeutics 2Q

Cargojet 2Q

Electrovaya 3Q

Element Fleet Management 2Q

Fennec Pharmaceuticals 2Q

Franco-Nevada 2Q

Hudbay Minerals 2Q

Hut 8 2Q

K92 Mining 2Q

KP Tissue 2Q

Lithium Americas 2Q

OrganiGram Holdings 3Q

Peyto Exploration & Development 2Q

Silvercorp Metals 1Q

Strathcona Resources 2Q

Superior Plus 2Q

Westport Fuel Systems 2Q

Economic Indicators (ET):

Nothing major scheduled

Stocks to Watch:

ACT Energy Technologies 2Q Rev C$130.3M; 2Q EPS C$0.14

Calibre Mining 2Q EPS 3c; 2Q Rev $137.3M >CXB.T

Global Atomic 2Q Rev C$304,55; 2Q EPS C$0.01; Dasa Uranium Project Remains on Schedule to Produce Yellowcake in Q126

GreenFirst Forest Products 2Q Loss/Shr C$0.08

High Arctic Announces Completion of Previously Announced Reorganization; Separating North American and Papua New Guinea Businesses; Retained Interests in Existing North American Energy Services Business,

High Arctic Remains Listed on Toronto Stock Exchange; Received Conditional Approval to List New High Arctic Common Shares on TSX; Conditional Approval to List the SpinCo Common Shares on TSXV; Intends to Release 2Q 2024 on August 14

I-80 Gold 2Q Rev $7.18M; 2Q Adj Loss/Shr 7c; Establishes At-The-Market Equity Program

Imperial Metals 2Q Rev C$131.7M

Lobe Sciences: Board Announces Resignations of CEO Philip Young and COO Baxter Phillips III

Magellan Aerospace Signs Long Term Agreements With Pratt & Whitney

Methanex Corp to Temporarily Idle New Zealand Ops to Assist in Improving Energy Balances; Arrangements Are Expected to Positively Impact Methanex's Q3 and Q4 2024 Earnings

Orla Mining 2Q Rev $84.6M; 2Q EPS 8C; 2Q Adj EPS 7C

Parkland Selling $500M of 6.625% Notes Due 2032

Titanium Transportation 2Q Rev C$115.1M; 2Q EPS C$0.00; Sees 2024 Rev C$440M-C$460M

Expected Major Events for Tuesday

06:00/JPN: Jul Preliminary Machine Tool Orders

06:00/UK: Jul UK monthly unemployment figures

08:00/FRA: Aug IEA Oil Market Report

09:05/GER: Aug ZEW Indicator of Economic Sentiment

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

12:30/US: Jul PPI

12:55/US: 08/10 Johnson Redbook Retail Sales Index

20:30/US: API Weekly Statistical Bulletin

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

(MORE TO FOLLOW) Dow Jones Newswires

08-13-24 0627ET