MARKET WRAPS
Watch For:
International Trade for September; Canada Trade for September; Earnings from Uber Technologies
Today's Top Headlines/Must Reads:
- Big Banks Cook Up New Way to Unload Risk
- China's Exports Tumble Again in Fresh Sign of Economic Trouble
- EV Makers Turn to Discounts to Combat Waning Demand
Opening Call:
Stock futures ticked lower on Tuesday, suggesting the recent winning streak on Wall Street could come to an end, while Treasurys rallied.
Implied borrowing costs have been the primary driver of stocks of late, and the 10-year Treasury yield was trading back around 4.6%.
"Bond yields remaining a key factor influencing market sentiment," but their moves have been disproportionate to the size of the actual economic surprises, SPI Asset Management said.
"Such exaggerated market moves can often be followed by a period of mean reversion, where prices may revert to more recent typical level."
Investors were right to be wary about expressing overconfidence that the Federal Reserve would soon pivot to a more dovish stance, according to Deutsche Bank.
"[T]his is at least the 7th time this cycle where markets have reacted notably in response to dovish speculation. Clearly rates aren't going to keep going up forever, but on the previous six occasions we saw hopes for near-term rate cuts dashed every time," it said.
This chimed with comments late Monday from the Fed's Kashkari, who said it is too early to declare victory on inflation ; a sign perhaps that the Fed is pushing back against some of the bond market's recent exuberance.
Earlier on Tuesday the Reserve Bank of Australia raised interest rates again amid sticky inflation , highlighting such concerns.
"The RBA hike came as a sour reminder that there is no rule that says that a bank can't hike rates after pausing for four meetings," Swissquote Bank said.
Premarket Movers
Alteryx was rising 18% after the company reported a narrower-than-expected third-quarter loss and sales of $232 million that beat analysts' estimates.
RingCentral posted third-quarter adjusted earnings and revenue that topped analysts' estimates and raised its forecast for the year. The stock was up 6.2%.
Sanmina was down 12% after saying it expected fiscal first-quarter adjusted profit of $1.20 to $1.30 a share, below analysts' estimates of $1.52, and revenue of $1.85 billion to $1.95 billion, below estimates of $2.19 billion.
Tripadvisor reported higher-than-expected quarterly sales and earnings per share. Tripadvisor stock rose 12%.
UBS posted a sizable net loss in its first full quarter combined with Credit Suisse, but said wealthy customers are flocking to it with new investments and deposits. Shares rose more than 3% in Zurich.
Vertex Pharmaceuticals reported third-quarter adjusted earnings of $4.08 a share, topping Wall Street expectations of $3.92. Revenue rose 6% to $2.48 billion but just missed forecasts. The stock fell 2.4%.
Monday's Post-Close Movers
International Flavors & Fragrances reached an agreement with Icahn Capital and its affiliates that continues a previous cooperation agreement with the activist investor. The firm run by Carl Icahn will be able to renominate one Icahn director and one mutually agreed director to the IFF board. Shares rose 5.3%.
TransMedics' revenue more than doubled in the third quarter as the organ transplant company saw greater use of its products. The company raised its full-year guidance above analysts' expectations. Shares rose 37%.
Vimeo logged a surprise profit in the third quarter, defying analysts' estimates following a year-ago loss. The company's revenue fell but surpassed estimates as the video sharing company posted bookings growth. Shares rose 16%.
Forex:
The dollar recovered after recent sharp losses, helped by weaker stocks and a sharp fall in the Australian dollar after the RBA raised interest rates but signaled less need for further increases.
"The external backdrop also remains challenging for the Australian dollar with global growth weak," MUFG said.
The euro edged lower as the dollar recovered, but sentiment towards the currency has been helped by Monday's better eurozone economic data, including some of the services purchasing managers indices and German factory orders, https://urldefense.com/v3/__http://XS.com__;!!F0Stn7g!FQ_dENqdJilpaEvRDdln107Vky_T15nwZ0y4dyw2IuziYuqINnm6MDgsXOl8Kl8Lp5y9ioM9j75QCS67ILLFqeZgYtKEpYi3viTQ1H6XU28$ said.
These "have helped restore a more optimistic atmosphere about the region's economy's ability to stabilize and restore growth, despite the tightening credit conditions."
Energy:
Oil prices moved lower as a stronger dollar and weak macro sentiment outweighed more positive data from China.
Chinese trade data showed that oil imports rose in October to 49 million metric tons, according to ANZ Research. "The risk of rising oil prices and additional import quotas for the year encouraged refiners to buy more oil."
Despite the positive data, the dollar was up 0.2%, with the market now pricing the chance of another rate hike from the Fed at 16%, up from 11% Friday, according to Deutsche Bank.
Metals:
Base metals and gold were weaker in early trading, with the macro environment having lost some bullish momentum at the start of a quiet data week, according to Peak Trading Research.
"Last week's dovish Fed and softer job numbers pushed interest rates lower and weakened the dollar but investors are now waiting to see more inflation and employment statistics before pushing macro indices in either direction," Peak added.
TODAY'S TOP HEADLINES
X CEO Linda Yaccarino Leans on TV Roots to Bring Back Jittery Advertisers
When X Corp. chief executive Linda Yaccarino gathered advertisers in September at the company's New York office, hoping to woo them back to the social-media platform, she invited a National Football League executive as a headline speaker.
Having heard plenty about the risks of the platform formerly known as Twitter, from hate speech to misinformation, Yaccarino and her team have been pitching advertisers on TV-style content such as NFL game highlights-safe zones within X that can give jittery marketers a place to spend their money.
WeWork Files for Bankruptcy
WeWork filed for bankruptcy, capping the flexible-office-space venture's remarkable collapse after once being the nation's most valuable startup.
The company filed for chapter 11 protection in the U.S. Bankruptcy Court in New Jersey.
Bond Selloff at Another China Property Giant Spurs Authorities to Action
China's housing slump is shaking the foundation of another giant property developer-and the government is trying to prevent the problems from spiraling out of control.
China Vanke, one of the oldest and largest real-estate companies in the country, is the latest Chinese developer to fall victim to a market selloff that has made investors worry about its liquidity. Prices of some of Vanke's U.S. dollar bonds tumbled to distressed levels after rival Country Garden failed to pay its offshore debt in mid-October. Vanke's Hong Kong-listed shares have also close to half their market value this year.
Citadel's Griffin says investors need to invest in China as IMF boosts growth forecast
Citadel founder Ken Griffin said on Tuesday that an investor has to be invested in China, which comes on the same day the International Monetary Fund upgraded its growth outlook for the country.
Speaking at the Hong Kong Monetary Authority's global financial leaders summit, Griffin said an investor could have been served for 100 years only investing in U.S. companies, but no longer.
German Recession Looms as Industry Continues to Slump
German industrial production slumped more than expected in September, dragged by the key automotive sector and pointing to an imminent recession in the eurozone powerhouse.
Production tumbled by 1.4% from a month earlier, according to seasonally and calendar-adjusted figures set out by German statistics office Destatis on Tuesday. This was a steeper decrease than the 0.4% fall expected by economists, according to a poll conducted by The Wall Street Journal.
Voters Head to Polls Tuesday for Big Races in Virginia, Kentucky
Voters in several states will give the country an early read on the electorate's mood heading into the 2024 presidential campaign, with a Democratic incumbent in Kentucky testing the party's strength in Trump Country and abortion front and center in Virginia's legislative races.
Tuesday's gubernatorial race in Kentucky is expected to be competitive, while the Mississippi governor's contest isn't seen as close. Virginia and New Jersey have no statewide races, but all of the seats in each state's legislatures are on the ballot. Control of Virginia's legislature is on the line, with the results offering hints about the strength of both parties' messages heading into 2024.
Ohio to Decide on Abortion Rights in Highest-Profile Ballot Vote
Ohio voters on Tuesday will decide whether to enshrine abortion rights in the Midwestern state's constitution, marking the highest-profile ballot question on a range of issues around the U.S.
The Ohio vote is the latest test of where voters stand on one of the most consequential issues heading into next year's presidential election. Since the U.S. Supreme Court overturned Roe v. Wade more than a year ago, voters have defeated ballot measures that would have restricted abortion rights in other red states such as Kansas and Kentucky.
Netanyahu Says Israel Will Control Gaza Security Indefinitely
Israeli Prime Minister Benjamin Netanyahu said Israel would seek to assume overall responsibility for security in Gaza, in an early indication that Israel plans to occupy the strip after the war, raising more questions about its exit strategy.
(MORE TO FOLLOW) Dow Jones Newswires
11-07-23 0616ET
