OPENING CALL
Stock futures rose modestly and bond yields stabilized on Thursday ahead of more bank earnings.
Stocks and bonds rallied on Wednesday after new inflation data revived hopes of interest-rate cuts and a first round of big-bank earnings set a strong tone, with Goldman Sachs more than doubling its profit.
Bank of America and Morgan Stanley are due to report this morning, following yesterday's rip-roaring session.
Overseas Markets
The Hang Seng Index rose, and the Nikkei 225 closed slightly higher. Europe's Stoxx 600 edged up.
European luxury stocks were rocketing after a strong sales update from Cartier owner Richemont.
Premarket Movers
Bank of America was rising 0.6% ahead of its report scheduled for before market open. Shares of Morgan Stanley rose 1.5%.
BigBear.ai rose 13% after President Kevin McAleenan was named as chief executive.
Tesla fell 0.7% after shares rose 8% on Wednesday and finished as the top stock in the S&P 500 during the session.
TSMC reported another record quarter on AI-driven demand and said it expected continued growth. Its Taiwan-listed shares rose above 3%. The report was boosting shares of other semiconductor companies. Applied Materials gained 3%, KLA rose 3%, Lam Research rose 2.8%, Nvidia was up 1.8%, and Advanced Micro Devices gained 1.2%.
Postmarket Movers
Powell Max said it has commenced activities to pursue acquisitions as part of its business strategy. Shares rose 84%.
Serina Therapeutics sold its UniverXome subsidiary in a deal finalized on Dec. 23. Shares rose 21%.
Silexion Therapeutics released what the company called promising preclinical data for its treatment of pancreatic cancer. Shares soar 66%.
Watch For:
Retail Sales for December; Import Prices for December; Weekly Jobless Claims; NAHB Housing Market Index for January; Business Inventories for November; Canada Housing Starts for December; Earnings from Bank of America, Morgan Stanley and UnitedHealth Group
Today's Top Headlines/Must Reads:
- Biden Issues 11th-Hour Cyber Executive Order
- It's Trump vs. the Budget Hawks. How the GOP Spending Fight Could Spread to Wall Street.
- Google Thinks It Has the Best AI Tech. Now It Needs More Users.
MARKET WRAPS
Forex:
The dollar traded flat as it recovered some ground after falling on Wednesday's core inflation data.
Investors remain prudent about aggressively selling the dollar even though markets have brought forward expectations for the next Federal Reserve interest-rate cut, Unicredit Research said.
"Indeed, the DXY dollar index remains slightly above 109, while the euro failed to extend its rebound above $1.03."
Treasury Secretary nominee Scott Bessent is likely to maintain the strong dollar theme at his confirmation hearing later, ING said.
If tariffs are highlighted as a key tool in balancing government finances at Thursday's hearing, the dollar could rise, ING added.
The euro struggled to recover materially as concerns about a weaker eurozone economic outlook and political headwinds weighed, ING said.
The U.S. core inflation data on Wednesday offered a good opportunity for the euro to rally as two-year rate spreads narrowed but gains were modest.
This perhaps "represents a conviction view that the eurozone and the euro will underperform this year on weak growth and weak leadership in the region."
The outlook for sterling remains negative after the weaker-than-expected economic growth data , Swissquote Bank said.
The data keep pressure on sterling after recent falls on fiscal concerns following a sharp selloff in U.K. government bonds which took yields higher, it said.
Lower-than-expected U.K. inflation data Wednesday gave some brief respite to gilts and sterling, Swissquote added.
Bonds:
Even if the market is becoming more sceptical of U.S. government debt, an unbridled selloff of Treasurys is unlikely, DZ Bank Research said.
"The simple fact is that there is no real alternative to the U.S. bond market for international investors."
However, market participants will demand compensation for the increased credit risk, it said.
DZ Bank expects the 10-year Treasury yield to decline to 4.40% on a three-month horizon, before rising to 4.65% in six months' time and to 5% in 12 months' time.
Energy:
Oil prices edged lower, but remained supported by concerns over the effect of U.S. sanctions on Russian flows and a larger-than-expected drawdown in U.S. stockpiles.
"The market shrugged off a cease-fire agreement between Israel and Hamas, " ANZ Research said.
"The conflict has ultimately had little impact on the physical market, although the deal does suggest a wider conflict in the region involving oil producer Iran is less likely."
MUFG said oil prices are unlikely to hold on to current levels due to Russia's aggressive crude discounting, OPEC+'s spare capacity and a projected global surplus this year.
Russia has a strong track record of aggressively discounting its oil to attract price-sensitive customers, while OPEC+ sit on around 6 million barrels a day of spare capacity that could withstand any supply tightening threat.
Plus, global oil markets are still expected to swing into a supply surplus as non-OPEC+ production returns to growth. "We have not changed our base case for oil prices with Brent in the $65-$80/b range, averaging $73/b in 2025," MUFG said.
"Although, these new sanctions skew price risks to the upside in the near-term."
Metals:
Gold futures rose, and the precious metal's strong start to the year is set to climb much further in the short-term, given the incoming administration of Donald Trump, MUFG said.
Trump's administration coming into power will drive up safe-haven demand and play into the fear-related dimension of MUFG's bullish expectations for gold in 2025.
Commodities act as a critical inflation hedge, and MUFG expects a number of Trump-policy-induced inflation shocks.
Alongside gold's position as a first resort for a hedge against geopolitical instability, emerging market central banks continue to purchase bullion, MUFG added.
Comex gold futures' bullish momentum is reaccelerating, RHB Retail Research said.
The futures' latest long bullish candlestick reflects gold bulls returning to the "driver's seat."
TODAY'S TOP HEADLINES
Jeff Bezos' Space Ambitions Take Flight as New Rocket Blasts Off
Jeff Bezos' space company launched its massive new rocket for the first time, aiming to advance the Amazon founder's lifelong space-exploration ambitions.
Blue Origin's New Glenn rocket blasted off from a launchpad Thursday, with flames pouring out from its booster. Liftoff marked a years-in-the-making milestone for Bezos and a step toward catching up to rival space entrepreneur Elon Musk.
Amazon Says Its Green Plans Won't Change Because of Trump
Amazon will keep increasing its purchases of renewable energy even if the Trump administration cuts support for the industry, the tech giant's director of sustainability policy said.
Amazon's commitments are important because it is the largest corporate buyer of renewable energy in the world. If Trump ends renewables subsidies and relaxes environmental regulations-actions he has talked about-then "net zero" commitments by corporations will become a more important driver of renewable adoption. Corporations accounted for about one-sixth of clean power purchases in the U.S. as of 2022, enough to power 5.9 million homes, according to industry group American Clean Power Association.
Ackman's Pershing Square Moves to Kick Off Universal Music U.S. Listing Plan
Universal Music Group plans to launch a U.S. offering of some shares owned by Bill Ackman's Pershing Square, as the hedge-fund billionaire pushes for the record label behind Taylor Swift to list in the U.S.
An agreement between the world's largest music company and Ackman's firm gives Pershing the right to request a listing of Universal in the U.S. if it sells at least $500 million in stock as part of the offering.
Wall Street Thinks U.S. Homes Are Overpriced
House hunters don't need to be told that property is too expensive right now. But Wall Street has an idea by just how much.
The stock market is pricing portfolios of American homes at a hefty discount to what houses are changing hands for in the open market. Shares of single-family landlords Invitation Homes and American Homes 4 Rent are trading at 35% and 20% discounts to their net asset values, respectively, according to real-estate analytics firm Green Street. Invitation Homes' stock has traded at a particularly large discount to NAV since interest rates began to rise in early 2022, but the gap has widened by 10 percentage points in the past year.
Bank of Japan Chief Again Signals Chance of Rate Hike Next Week
TOKYO-Bank of Japan Gov. Kazuo Ueda repeated his pledge to discuss an interest-rate increase next week, echoing recent comments that have revived market expectations for imminent policy action.
"If improvements in the economy and prices continue this year, we will adjust the degree of monetary easing by raising interest rates," Ueda said at a gathering of regional bank executives on Thursday.
Israel, Hamas Quarrel Over Final Details of Gaza Cease-Fire
Israeli and Hamas officials quarreled over the final details of a cease-fire deal that would pause the war in Gaza, underscoring the agreement's fragility as mediators worked to ensure that it would go into effect on schedule on Sunday.
President Biden and the prime minister of Qatar announced Wednesday both Israel and Hamas had accepted the truce, the result of a year of painstaking diplomacy that reached a conclusion in the days before Donald Trump's inauguration as president.
Treasury Secretary Pick Scott Bessent Says Trump Could Bring 'New Economic Golden Age'
(MORE TO FOLLOW) Dow Jones Newswires
01-16-25 0616ET