OPENING CALL

Stock futures were modestly higher on Monday ahead of a key inflation reading later in the week which investors will scrutinize as expectations have shifted over when and by how much the Federal Reserve may cut interest rates this year.

"Much hinges on the U.S. April inflation report, with a lower reading boosting odds of a Fed rate cut as soon as July, while a higher print could push a rate cut out past September," IG said.

There are also some big earnings this week, including from Home Depot and Alibaba on Tuesday, Cisco Systems on Wednesday and Walmart on Thursday.

Overseas Markets

Overseas stocks were mixed. Japan's Nikkei 225 closed slightly down, while Hong Kong's Hang Seng Index edged up. Europe's Stoxx 600 was flat.

Stocks to Watch

Apple workers at a unionized store near Baltimore voted to authorize a strike as contract talks with the iPhone maker continue. If they do strike, it would be the first walkout by Apple employees in the U.S.

Premarket Movers

U.S.-listed shares of Arm Holdings were rising 1.5% following a report that said the chip designer was seeking to launch its first artificial-intelligence chips next year. Nikkei Asia said U.K.-based Arm planned to set up an AI chip division, with aims to build a prototype by spring 2025.

Bristol Myers Squibb's trial of a combination of cancer treatments missed its primary endpoint of progression-free survival, the company said. The stock declined 1.3% in premarket trading.

GameStop was rising 17% in premarket trading as Keith Gill, the investor who posts on Reddit, X, YouTube, and other social media networks as Roaring Kitty, made his first social media post on the X platform in three years.

Tesla has launched a below-market financing rate for new Model Y electric-vehicle purchases. Shares were up 0.4% in premarket trading.

ADRs in Zeekr Intelligent Technology rose close to 35% on its first trading day Friday. They rose a further 2% premarket.

Post Close Movers

The SEC filed fraud charges against FAT Brands on Friday before the market closed, sending shares down sharply. Shares rebounded post-market, rising about 6.6%.

Xponential Fitness said Friday afternoon that it had removed its founder as CEO and disclosed it was under investigation by federal prosecutors. The news sent shares diving over 30% by the close, but the stock took back some of its losses in the late trading session. Shares rose 5.7%.

Watch For:

Canada Building Permits for March; Earnings from BuzzFeed, Citigroup 1Q fixed income investor review conference call/webcast

Today's Top Headlines/Must Reads:

- Investors Crowd Into Soft-Landing Trade Ahead of Crucial Inflation Data

- China Kicks off Ultralong Bond Sale Friday to Support Economy

- What's So Bad About Fixing Oil Prices?

MARKET WRAPS

Forex:

The dollar is showing signs of fatigue amid weaker U.S. economic activity, buoyant risk appetite, and China and Japan's FX policies inhibiting local currency weakness, HSBC said.

Through most of the past year, USD has tracked changes in Fed rate expectations closely but the ability to price out additional cuts could be difficult unless the surprise scenario of the Fed needing to hike comes to fruition, it said.

U.S. inflation, retail sales and industrial production data are points to watch this week, HSBC added.

If these surprise to the downside, that could put USD in a more challenging position by bringing more Fed easing back into play.

The sterling was steady as investors awaited the U.K. labor market report due Tuesday.

Both average weekly earnings and weekly earnings excluding bonuses are expected to decline slightly, Monex Europe said, citing consensus estimates.

There is a risk the data could be stronger than forecast due to the recent rise in the National Living Wage, Monex added.

"In our view either an in line print or an upside beat on wages should be sterling positive."

Energy:

Oil prices edged higher as traders assessed China's inflation data and ahead of key U.S. readings this week.

China's consumer-price index rose for a third straight month in April, signaling a recovery in domestic demand in the top oil consumer.

Investors now await the U.S. PPI reading for April and the closely watched CPI report for more cues on the interest-rate outlook.

Meanwhile, OPEC and the IEA are set to release their monthly oil market reports this week, offering a snapshot of global demand and supply expectations for this year and next.

OPEC+

OPEC+ risks losing market share to other oil producers if it doesn't start raising production, Capital Economics said.

The cartel and its allies extended their voluntary output curbs earlier this year in a bid to avert a surplus and prop up prices, and are now set to decide on their next policy move at their upcoming meeting in June.

Yet, Brent crude's recent fall below $84 a barrel suggests the oil market isn't as constrained as OPEC+ would hope it to be, Capital Economics said.

"Members may not feel now is the right time to start increasing production," it said.

"However, by not doing so the group runs the risk of ceding further market share as non-members scale up production."

Metals:

Gold futures fell, giving way to a stronger dollar ahead of key U.S. inflation data this week.

If inflation proves sticky, the Fed may keep interest rates higher for longer, a headwind for the noninterest-bearing bullion.


TODAY'S TOP HEADLINES


Country Garden Avoids Further Default With Payments on Onshore Bonds

Chinese property developer Country Garden made payments on two onshore bonds within a grace period, avoiding default days after the company had said it might turn to a state guarantor for help.

The heavily indebted property developer said Saturday that it made interest payments totaling about 65.95 billion yuan ($9.13 billion) on two onshore bonds that had been due last week.


Tesla Just Offered a New Deal on Its Model Y

Tesla is offering another classic incentive to move metal. It's an attractive, below-market, financing rate available for new Model Y electric vehicle purchases.

Tesla is offering 0.99% annual percentage rate on qualifying new Model Y purchases, according to its website. That deal wasn't available a week ago. Then, the quoted rate was 6.49% APR. The Model 3 rate is still 6.49%.


Airlines Want to Use AI to Reduce Environmental Impact of Contrails

Everyone has looked up and seen white streaks across the sky where a jet has just flown. These condensation trails, or "contrails," which form when water vapor condenses around jet-engine pollutants, have been contributing to climate change since at least 1999, experts say. A report published in 2021 by the Intergovernmental Panel on Climate Change said that clouds formed from contrails account for about 35% of aviation's global-warming impact.

Now, airlines, tech companies and other researchers have been looking at possible ways of predicting when and where contrails form, in hopes of reducing their environmental impact.


Big retailers report as Q1 earnings wind down. This company has been the biggest drag on the S&P 500's results.

Groceries and houses are still way more expensive than they were before the pandemic. This week, two of the nation's largest retailers - Walmart Inc. and Home Depot Inc. - will probably have more to say about it.

Home Depot HD reports Tuesday. Walmart WMT reports Thursday. The results will set the stage for the rest of the retailers reporting in the weeks ahead, as shoppers try to adjust to a new normal of much higher prices for basics and Wall Street searches for signs of a bigger rebound for just about everything else.


China Kicks off Ultralong Bond Sale Friday to Support Economy

China will start selling the first batch of a planned 1 trillion yuan ($138.37 billion) ultralong bond issuance this week, as Beijing looks to provide more support to the economy.

The sale will run from May to November, with an unspecified amount of special 30-year treasurys to be issued Friday, according to a post on Chinese finance ministry's website. Bonds in 20- and 50-year tenors will be sold starting May 24 and June 14 respectively.


Wealth Managers, Charities Defend Fees From Donor-Advised Funds

WASHINGTON-Investment managers, community foundations and House lawmakers from both parties are teaming up against a Biden administration proposal that would penalize certain payments from charitable funds to wealth advisers who steer the investments.

The fight puts a spotlight on fast-growing entities known as donor-advised funds, which are increasingly attractive to affluent Americans seeking tax breaks and flexible charitable giving. Contributions to DAFs topped $85 billion in 2022, more than double the 2018 figure, and DAF assets nearly doubled during that time, according to the National Philanthropic Trust.


There's Not Enough Power for America's High-Tech Ambitions

ATLANTA-Bill Thomson needs power fast. The problem is that many of the other businesspeople racing into Georgia do too.

Thomson heads marketing and product management at DC Blox, which in recent years built a string of data centers in midsize cities across the fast-growing Southeast. The company more recently set its sights on Atlanta-the would-be capital of the region-joining a slew of tech and industrial firms piling into the state.


Russia's Bombardment of Ukraine Is More Lethal Than Ever

Ukraine is shooting down a far smaller proportion of Russian missile attacks than it was earlier in the war.

The worsening performance of Ukraine's air defenses comes as Russia increases drone and missile attacks, and fires more harder-to-hit weapons, such as ballistic missiles. Kyiv is also running low on ammunition for the Western-supplied Patriot systems that have been its best defense against such attacks.


In Rafah, Israel Reaches for a Knockout Punch That's Proved Elusive

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05-13-24 0621ET