MARKET WRAPS

Watch For:

EU industrial production, flash estimate GDP; U.K. CPI and PPI; trading updates from Telecom Italia, ThyssenKrupp, Capgemini, EssilorLuxottica, ABN AMRO Bank, Heineken, Koninklijke Vopak, Finnair, Ahold Delhaize, Severn Trent, United Utilities Group

Opening Call:

Stock futures were tracking lower in tandem with Asian stock benchmarks after the hotter-than-expected U.S. CPI data; the dollar weakened; Treasury yields were broadly lower; oil futures and gold declined.

Equities:

Stock futures were lower early Wednesday with the rate cut outlook clouded by fresh U.S. CPI data.

A hotter-than-expected inflation report sent U.S. stocks tumbling Tuesday and sparked worries about just how soon the Fed would start cutting interest rates.

"I think the market is coming to the realization that it was overly enthusiastic over how many cuts we would get," said John Mowrey, chief investment officer at NFJ Investment Group.

"The Fed has been broadcasting three cuts," said Matt Orton, chief market strategist at Raymond James Investment Management. "I feel there's no reason not to take them at face value."

Forex:

The U.S. dollar edged lower but may remain supported by paring of Fed rate-cut expectations in the first half of the year.

The debate surrounding the possibility of a start to Federal Reserve policy easing in March is now "well and truly dead" following the January U.S. inflation report, said Matthew Ryan, head of market strategy at Ebury, adding that a move in May is now also in "serious jeopardy."

Bonds:

Treasury yields were broadly lower. On Tuesday the policy-sensitive 2-year rate jumped its most in nine months, after January's U.S. consumer-price index report threw financial markets into a tailspin.

"The 'January effect' where companies tend to raise prices at the turn of the year was likely one driver of the stronger print," said Josh Jamner, investment strategy analyst at ClearBridge Investments.

Markets are pricing in a 75.8% probability that the Fed will deliver at least a quarter-point rate cut in June, according to the CME FedWatch Tool. They also see an 81.2% chance of at least three rate cuts by December.

Energy:

Oil futures declined early Wednesday with OPEC's monthly report raising some concerns about the group's adherence to its recent production cuts, ANZ Research analysts said.

"Only Kuwait and Algeria have implemented their share of cuts, with Iraq's output well above the agreed quota," they noted.

Given the lack of a clear direction in Middle East tensions, the oil market is "operating like a yo-yo, bouncing around up and down, but not really going anywhere," said Manish Raj, managing director at Velandera Energy Partners.

Still, traders are betting that the risk is "all to the upside, since spare capacity is only in the hands of the guys who have vowed to not overproduce: OPEC," said Raj.

Metals:

Gold was lower and remained below the key psychological level of $2,000/oz after U.S. inflation data for January came in hotter than the market anticipated, ANZ Research analysts said.

Gold prices could continue to fall, with Fed rate cuts looking more unlikely, and if other economic data come in strong as well, the analysts added.

--

Copper fell, likely still being dragged by USD strength overnight.

There also seems to be some market uncertainty as traders look for more clarity on demand, Sam Crittenden, analyst at RBC Dominion Securities, said.

However, that isn't likely to happen until after the Lunar New Year holidays, Crittenden added.


TODAY'S TOP HEADLINES

Rate Cuts Might Be Delayed. That's No Reason to Panic.

How much does it matter if the Federal Reserve starts cutting rates in June instead of May?

Not much to the broader economy, or even to investors. But that sure isn't how they reacted to Tuesday's consumer-price-index report. The Dow was down as much as 750 points by midafternoon and it closed 525 points, or 1.4%, lower. The more rate-sensitive Russell 2000 index of small-capitalization stocks plunged 4%, and the yield on 10-year U.S. Treasury notes rose to its highest since November.


Why Inflation Is Holding Above 3%: Explaining the Latest CPI Report

Inflation defied economists' expectations, holding above 3%. The latest data in the January CPI report are likely to have a big impact on the stock market and the Fed's decisions on interest rates. WSJ's Dion Rabouin explains where it all stands.


A Tiny Hedge Fund Is Becoming a Thorn in the Side of Energy Giant BP

LONDON-Giuseppe Bivona and his partners run a tiny activist hedge fund from a small office here not far from Buckingham Palace. The single room has big windows, seven desks and little space for much else.

From this unlikely perch, the fund, called Bluebell Capital Partners, aims to punch far above its weight by launching campaigns against some of the world's biggest companies, most of them in Europe. Sometimes the punches land.


Kidnapped by Co-Workers: South African Labor Disputes Take a Violent Turn

SPRINGS, South Africa-Mmamiya Mayane was a few hours into her shift at a gold mine here when three colleagues emerged from an adjacent corridor. Pickaxes in hand, the men told Mayane and her team to follow.

"They said, 'Don't ask questions,'" said Mayane, 38, recalling the Dec. 7 incident at the Modder East gold mine operated by the Chinese-owned company Gold One.


Former Apple Executive Among CEO Candidates for New Sports-Streaming Venture

Disney's ESPN, Fox and Warner Bros. Discovery have begun reviewing potential CEO candidates to lead their new streaming venture, which will offer all their live-sports programming in one package.

Pete Distad, who was a top executive at Apple in charge of its video and sports businesses before leaving the tech giant last spring, is among the top candidates the companies are considering, according to people familiar with the situation. Distad earlier was a marketing and distribution executive for the streaming service Hulu.


Lyft Earnings Typo Sends Stock Soaring

Lyft shares soared over 60% in after-hours trading Tuesday after its earnings release accidentally added an extra zero to a key profitability metric.

Lyft's release said one of its profit margins was expected to expand by 500 basis points-or 5 percentage points-in 2024. That margin was only expected to expand by 50 basis points, the company's chief financial officer later clarified on a call with analysts.


Write to singaporeeditors@dowjones.com


Expected Major Events for Wednesday

07:00/ROM: Dec Industrial production

07:00/ROM: Jan CPI

07:00/ROM: 4Q Evolution of GDP (estimated data)

07:00/NOR: Dec Monthly GDP

07:00/UK: Jan UK producer prices

07:00/UK: Jan CPI

07:30/HUN: Dec Construction

07:30/HUN: 4Q Preliminary GDP

08:00/SVK: 4Q Flash estimate of total employment

08:00/SVK: 4Q Flash estimate of GDP

08:30/NED: 4Q GDP - 1st estimate

08:30/NED: Dec International trade

08:30/NED: Dec Consumer Spending

09:00/POL: 4Q Flash estimate GDP

09:00/BUL: 4Q Flash Estimate GDP

09:30/UK: Dec UK House Price Index

10:00/CYP: 4Q GDP (Flash Estimate)

10:00/EU: 4Q Flash Estimate GDP

10:00/EU: 4Q Flash estimate employment EU and euro area

10:00/EU: Dec Industrial Production

15:59/UKR: Dec Trade

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

02-14-24 0016ET