MARKET WRAPS
Stocks:
European stocks dipped into the red on Tuesday in a cautious opening session and despite a surprisingly aggressive cut to a key lending rate in China .
In London, the FTSE 100 was steady, as solid gains for Barclays , following its announcement of a three-year plan to boost returns, lifted other bank shares and offset losses for heavyweight miners.
Stocks to Watch
BMW looks poised to meet its EBIT margin target for last year, but not at the top of the range, which is a slight disappointment, Bernstein said.
The car maker should post a fourth-quarter EBIT margin of 8.6%--89 basis points lower than Bernstein had forecast--on higher supplier costs. Weaker pricing from currency effects also aid the lower estimate despite an estimated sales growth rate of 6% in the fourth quarter, Bernstein said.
Heineken's unwillingness to increase marketing spending is damaging its brand equity, particularly when combined with price increases, RBC Capital Markets said, as it downgrades the stock to underperform from sector perform and cuts its price target to EUR75 from EUR85.
Mercedes could finish 2024 with an EBIT margin for its cars division under 10%, but its guidance will be more optimistic, Citi said.
The car maker's falling margins throughout 2023--from 14.8% to 13.5% to 12.4% in quarters one through three--mean the scope of surprise for 2024 is broad, Citi said.
Forex:
The dollar should stay strong in the near term, helped by solid U.S. economic data, keeping the DXY within its current higher range of 104-105, ING said. "We favor a strong dollar in the near term as U.S. data remains supportive."
Gains should be limited, however, due to the prevailing view that U.S. data will turn weaker at some point, prompting interest-rate cuts by the Federal Reserve and causing the dollar to fall, ING said.
Bonds:
The Bund yield is expected to move sideways around the current level of 2.4% over a three-month horizon, before edging lower to reach 2.2% toward the end of 2024, DZ Bank Research said.
"In general, despite the initiation of the rate cutting cycle, we expect only a fairly moderate decline in 10-year yields," DZ said.
The European Central Bank is likely to scale back its balance sheet over the rest of this year, which will tend to limit the decline in yields, DZ added.
DZ also said 10-year government bond yields on both sides of the Atlantic are likely to tend downward in 2024.
Energy:
Oil prices were lower as concerns over a weakening demand outlook outweighed fears of supply disruptions due to flaring tensions in the Middle East.
The latest Houthi attacks in the Red Sea continue to disrupt shipping and sustain prices, but concerns over demand persist following the IEA report last week and tempering U.S. rate-cut bets, with traders waiting for cues from the latest Fed minutes due on Wednesday.
Metals:
Gold prices moved higher in anticipation of the latest Fed minutes, while base metals continued to trade mixed.
"We believe Fed policy will remain key to the outlook for gold prices in the months ahead. Higher borrowing costs are typically negative for gold, " ING said.
EMEA HEADLINES
Fresenius Medical Care Net Profit Rises on Cost Savings
Fresenius Medical Care net profit for the fourth quarter rose after cost savings offset flat revenue, and forecast sales and earnings to increase this year.
The German dialysis company said Tuesday that it made a net profit of 188 million euros ($202.7 million) for the quarter, up from EUR139 million in the same period a year before.
Air Liquide Net Profit Rises But Misses Expectations
Air Liquide said its net profit rose but missed analysts' expectations while its operating margin increased despite a decline in sales.
The French industrial-gases company said net profit for 2023 was 3.08 billion euros ($3.32 billion) compared with EUR2.76 billion a year earlier
GLOBAL NEWS
China's New Securities Chief Meets With Market Participants to Address Concerns
The Chinese securities regulator's newly appointed head has assured market participants that the regulator will respond to market concerns in a timely manner to strengthen the country's capital markets that have been battered by weak investor confidence.
In a two-day seminar that began Saturday, the new chairman of the China Securities Regulatory Commission, Wu Qing, met several market participants, including institutional and retail investors, foreign-funded institutions and private-equity firms, to solicit views on policies that could support the long-term development of the capital market, according to a statement by the CSRC late Monday.
Data Show the Economy Is Booming. Wall Street Thinks Otherwise.
Data suggesting the U.S. economy is too hot for comfort are getting a cool reception in some corners of Wall Street.
A handful of high-profile economic reports, covering the big topics of inflation, economic growth and the labor market, have leaned decidedly on the too-warm side. But many economists have minimized these surprises, pointing to other data that are less alarming and measurement challenges that are unique to the start of the year.
Israel Sets Deadline for Rafah Ground Offensive Within Weeks
Israel gave Hamas a Ramadan deadline to return the hostages held in Gaza or face a ground offensive in Rafah, the first timeline it has provided for looming operations in the city that have become a source of tension with the U.S.
"The world must know and Hamas leaders must know if our hostages are not home by Ramadan the fighting will continue and expand to Rafah," Israeli war-cabinet member Benny Gantz said Sunday.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
02-20-24 0523ET
