MARKET WRAPS
Watch For:
No major economic data expected; trading updates from Diploma, Vodacom
Opening Call:
Shares could open in mixed territory in Europe on Monday on caution over the Fed's policy outlook. In Asia, stock benchmarks were mixed; Treasury yields were barely changed; the dollar consolidated; while oil fell and gold was steady.
Equities:
European shares are set to open mixed on Monday amid lingering uncertainty about whether the U.S. Federal Reserve will cut interest rates this year.
Minneapolis Fed President Neel Kashkari on Friday expressed uncertainty about whether interest rates are high enough to bring inflation down to target.
U.S. inflation data for April due on Wednesday are likely to be the highlight of the week.
Markets will be looking to see whether inflation has started to turn lower after three straight months of higher-than-expected readings and whether investors are justified in pricing in a high chance that the Fed will cut interest rates in September.
Data from the eurozone, U.K., Sweden and Norway will also attract attention.
Forex:
The dollar consolidated in Asia, with focus on U.S. CPI due out later this week.
Elevated U.S. inflation expectations, a solid increase in employment costs and strong growth in job creation suggest that CPI inflation quickened strongly again, CBA's Global Economic & Markets Research team said.
A strong core CPI print would put at risk current market pricing for a September start of the Fed's rate-cut cycle, it said, adding that the USD Index could set a new year-to-date high this week.
Bonds:
Treasury yields were flat in Asia after earlier gains, as Minneapolis Fed President Kashkari expressed uncertainty on Friday about whether interest rates are high enough to bring inflation down to target.
Yields had been weak since Fed Chair Jerome Powell all but ruled out another rate increase last week, but Kashkari sounded more hawkish.
Wednesday, core annual April CPI is expected to slow a little to 3.6%, in a survey by The Wall Street Journal.
Energy:
Oil edged lower on demand concerns prompted by U.S. economic data released Friday.
A sharp fall in U.S. consumer confidence added to evidence that the economy is losing some momentum, said Westpac Group.
At the same time, however, an uptick in consumer inflation expectations complicated the picture, prompting suggestions for risks of stagflation, it added.
Metals:
Gold was trading steadily in Asia, supported by hopes of Fed rate cuts that would boost the allure of the non-interest-bearing precious metal.
Market participants now believe that the Fed won't deliver a hawkish decision for now, TD Securities said.
Once the U.S. economy shows weakness, there is likely more upside for the precious metal, it added.
---
Copper edged lower in early Asian trade in a possible technical correction after breaching the $10,000/ton mark amid a broader commodities rally fueled by hopes of U.S. Fed rate cuts.
Lower interest rates help buoy appetite for commodities like copper.
The metal could get some support from supply growth flatlining, the ANZ Research team said, as prices are still too low to justify new projects and incentivize new mines.
That can help support prices of the metal despite a tough economic backdrop, it said.
---
Iron-ore futures were lower on higher steel inventories, Nanhua Futures said.
After the latest round of destocking driven by steel mills' restoration of production, steel inventory is expected to accumulate again and weigh on prices of the steel-making material, it said.
Meanwhile, steel demand will likely turn lower after China's April steel export dropped 6.7% on month, it said, adding that iron ore is awaiting the next positive catalyst.
TODAY'S TOP HEADLINES
China Disinflationary Headwinds Continue as Consumers Hold Back
BEIJING-China's consumer prices edged up modestly in April while its factory-gate prices continued to fall, underscoring the challenges that policymakers face in shaking off disinflationary pressures despite stimulus measures aimed at delivering a jolt to the economy.
China's consumer-price index rose for a third straight month in April, increasing at a pace of 0.3% compared with a year earlier, according to official data released Saturday, edging up from March's 0.1% reading and surpassing the 0.2% growth expected by economists. Meanwhile, the producer-price index fell 2.5% in April from a year earlier for a 19th consecutive month of declines.
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.
Russia's Putin Replaces Defense Minister in Security Shake-Up
Russian President Vladimir Putin on Sunday replaced his defense minister Sergei Shoigu, a longtime ally, nominating an economist to take his place in the most substantial shake-up to the military's command structure since Moscow launched its war on Ukraine in February 2022.
In a decree published Sunday, Putin nominated Andrei Belousov, a former deputy prime minister who specializes in economics to replace Shoigu, who in turn was named as the new secretary of the Security Council, a post until now held by Nikolai Patrushev.
Inside Israel, It's a Very Different War
TEL AVIV-Every evening on TV news, Israelis get the latest on the Gaza war-cease-fire and hostage talks, Israeli military casualties, battlefield analysis and coverage of the Oct. 7 attacks by Islamist militant group Hamas that sparked the conflict.
One thing that is almost always missing: the people of Gaza.
U.S. Report Raises Questions About Israeli Steps to Protect Civilians in Gaza
WASHINGTON-A long-awaited Biden administration report on Israel's use of American weapons during its seven-month long offensive in Gaza paints a critical picture of the Israeli military's efforts to avoid harm to civilians.
But the assessment, which was provided to Congress on Friday, avoids sweeping conclusions on whether its operations have violated the laws of war.
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.
Write to singaporeeditors@dowjones.com
Expected Major Events for Monday
05:00/FIN: Mar Balance of Payments
07:00/SWI: Apr Consumer Sentiment Index
07:00/CZE: Apr CPI
07:00/CZE: Mar Import & export price indices
07:00/TUR: Mar Balance of Payments
07:00/SVK: Mar Turnover in selected branches of economy, incl Industry & Construction
07:00/SVK: Mar Employment and average monthly wage in selected branches
08:00/BUL: Feb Trade with EU Member States - preliminary data
08:00/BUL: Mar Trade with third countries - preliminary data
10:00/POR: Apr CPI
15:59/UKR: Apr CPI
16:59/GER: Mar Balance of Payments
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at newsletters@dowjones.com
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-13-24 0016ET
