North American Morning Briefing:Stock Futures Steady Ahead of GDP Report; More Earnings in Focus Too

MARKET WRAPS

Forex/Bonds:

German government bond yields and the euro showed little reaction to weaker-than-expected German Ifo business sentiment index , remaining slightly higher on the day.

Energy:

Oil prices traded higher after data showed a significant drop in U.S. crude stockpiles last week and China cut reserve requirements for banks in order to spur growth, bolstering sentiment around the country's economic recovery.

Middle East tensions have continued to support prices, but analysts don't expect to see strong gains unless supply gets materially disrupted.

Metals:

Base metals and gold were little changed as investors weighed broad market concerns over supply disruptions and China's move to boost liquidity in the banking sector in an effort to prop up economic growth.

"While these announcements might offer some short-term incentives for base metals, we maintain the view that with a lack of sustainable improvements across the nation's [China's] performance, prices will come back to their averages in due course," Sucden Financial said.

TODAY'S TOP HEADLINES

Red Sea Attacks Push BHP to Divert Shipping

Mining giant BHP Group is diverting almost all of its shipments from Asia to Europe away from the Red Sea, according to people familiar with the matter, the latest sign of how Houthi attacks in the region have upended global trade.

The decision follows similar moves by companies including Shell, BP and Qatar Energy. These companies have responded to a sharp rise in drone and missile attacks by the Houthis, a Yemen-based rebel group.

Chinese EV Maker Stocks Fall as Tesla Outlook Weighs

Shares of Chinese electric-vehicle markers were lower at midday on Thursday after industry leader Tesla's latest results and its outlook for 2024 reaffirmed investor worries about slowing demand in China.

NIO led declines in Hong Kong trade, dropping 5.3%, while Xpeng fell 4.4% and Li Auto lost 1.7%. BYD dropped 1.3% and Great Wall Motor was down 2.9%.

The Fed Risks Getting Caught Up in Politics, Whatever It Does

The problem with being independent of politics is that appearances matter. You don't have to just be independent, you must also appear to be independent-even if that changes what you might otherwise do.

Many investors think the Federal Reserve might be pushed to do exactly that, lowering interest rates in March to get the rate-cutting cycle started before the election campaigns really get going.

The U.S. Economy Could Surprise Again. Watch the GDP Numbers.

The U.S. economy grew at a slower but solid clip in the final three months of 2023, capping a robust year if economists are correct in their predictions.

Forecasters across the board expect the seasonally adjusted annual rate of gross domestic product in the fourth quarter to come in lower than the third quarter's 4.9% final reading. That growth marked a steep acceleration from the second quarter's 2.1% increase and took many by surprise.

China's RRR Cut Doesn't Solve Long-Term Economic Concerns

The timing and scale of the People's Bank of China's policy easing this week may have surprised investors and given stock markets a much-needed lift, but the move does little to resolve long-term economic concerns.

The fact that the China central bank governor announced the cut in banks' reserve requirement ratio at a press conference for the first time indicates that authorities "are very serious about easing monetary policy," said Raymond Yeung, chief economist of Greater China at ANZ Research.

Trump Rivals Were Hoping for a Courtroom Knockout. Time Is Running Out.

WASHINGTON-Donald Trump's political opponents had hoped his legal difficulties would torpedo his third run for the presidency. But a knockout blow before the election is looking increasingly unlikely.

The former president, who looks poised to sew up the Republican presidential nomination after his win Tuesday in New Hampshire, is proving less vulnerable on the legal front than many of his critics predicted.

Nikki Haley Pushes Forward With Longshot Effort to Dethrone Trump in GOP Race

CONCORD, N.H.-Nikki Haley isn't standing down in her longshot bid to halt Donald Trump's fast-building momentum toward the Republican nomination.

Israel Builds Buffer Zone Along Gaza Border, Risking New Rift With U.S.

TEL AVIV-Beginning last November, an Israeli soldier and members of his reserve unit worked day after day in a northern section of the Gaza Strip to create a wasteland.

Their orders were to clear a 1-kilometer-wide area along the border, the soldier said, as part of an Israeli plan to construct a security zone just inside Gaza-to which Palestinians would be barred entry.

Write to [e-mail] TODAY IN CANADA

Earnings:

None scheduled

Economic Calendar (ET):

0830 Nov Payroll employment, earnings and hours, and job vacancies

Stocks to Watch:

BlackBerry Prices Private Offering of $175M of 3.00% Convertible Senior Notes Due 2029; Offering Upsized From $160M Announced Previously; BlackBerry Also Grants Initial Purchasers Option for Additional $25M of Notes; Estimates Net Proceeds of About $169.6M From Offering; Expects Offering to Close Jan. 29

Expected Major Events for Thursday

00:01/UK: Dec UK monthly automotive manufacturing figures

05:30/JPN: Dec Tokyo area department store sales

05:30/JPN: Dec Nationwide department store sales

06:00/JPN: Dec Revised Machine Tool Orders

07:45/FRA: Jan Monthly business survey (goods-producing industries)

08:59/JPN: Jan Monthly Economic Report

09:00/GER: Jan Ifo Business Climate Index

11:00/FRA: 4Q Claimant count and job advertisements collected by Pole emploi

11:00/UK: Jan CBI Distributive Trades Survey

13:00/RUS: Weekly International Reserves

13:30/US: Dec Chicago Fed National Activity Index (CFNAI)

13:30/US: Dec Advance Economic Indicators Report

13:30/US: Dec Advance Report on Durable Goods

13:30/CAN: Nov Payroll employment, earnings and hours, and job vacancies

13:30/US: 4Q Advance estimate GDP

13:30/US: 01/20 Unemployment Insurance Weekly Claims Report - Initial Claims

13:30/US: U.S. Weekly Export Sales

15:00/US: Dec New Residential Sales

15:30/US: 01/19 EIA Weekly Natural Gas Storage Report

16:00/US: Jan Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing

17:59/UK: REC JobsOutlook survey

21:30/US: Foreign Central Bank Holdings

21:30/US: Federal Discount Window Borrowings

23:30/JPN: Jan CPI (Tokyo), CPI ex-Food (Tokyo)

23:50/JPN: Dec Services Producer Price Index

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

Alaska Air Group Inc (ALK) is expected to report $0.17 for 4Q.

American Airlines Group Inc (AAL) is expected to report $0.05 for 4Q.

Applied Industrial Technologies Inc (AIT) is expected to report $2.11 for 2Q.

Archer Daniels Midland (ADM) is expected to report $1.51 for 4Q.

Banc of California Inc (BANC) is expected to report $-0.28 for 4Q.

Berkshire Hills Bancorp (BHLB) is expected to report $0.49 for 4Q.

Blackstone Inc (BX) is expected to report for 4Q.

Bread Financial Holdings Inc (BFH) is expected to report $-0.78 for 4Q.

CNX Resources Corp (CNX) is expected to report $0.32 for 4Q.

Comcast Corp (CMCSA) is expected to report $0.70 for 4Q.

ConnectOne Bancorp Inc (CNOB) is expected to report $0.45 for 4Q.

Cullen/Frost Bankers Inc (CFR) is expected to report $1.98 for 4Q.

Dow Inc (DOW) is expected to report $0.38 for 4Q.

Eagle Materials Inc (EXP) is expected to report $3.50 for 3Q.

First Financial Northwest Inc (FFNW) is expected to report $0.14 for 4Q.

First Foundation Inc (FFWM) is expected to report $0.03 for 4Q.

First Merchants Corp (FRME) is expected to report $0.86 for 4Q.

First Mid Bancshares Inc (FMBH) is expected to report $0.80 for 4Q.

First of Long Island (FLIC) is expected to report $0.25 for 4Q.

Heritage Financial Corp (HFWA) is expected to report $0.45 for 4Q.

Independent Bank MI (IBCP) is expected to report $0.72 for 4Q.

Kearny Financial (KRNY) is expected to report $0.05 for 2Q.

Lakeland Financial Corp (LKFN) is expected to report $0.89 for 4Q.

Marine Products (MPX) is expected to report $0.19 for 4Q.

Marsh & McLennan Cos (MMC) is expected to report $1.51 for 4Q.

Murphy Oil (MUR) is expected to report $1.01 for 4Q.

NetScout Systems (NTCT) is expected to report $0.03 for 3Q.

NextEra Energy Inc (NEE) is expected to report $0.49 for 4Q.

Northrop Grumman Corp (NOC) is expected to report $5.86 for 4Q.

Old Republic International Corp (ORI) is expected to report $0.75 for 4Q.

Popular Inc (BPOP) is expected to report $1.19 for 4Q.

RPC Inc (RES) is expected to report $0.21 for 4Q.

S&T Bancorp Inc (STBA) is expected to report $0.86 for 4Q.

Sherwin-Williams Co (SHW) is expected to report $1.70 for 4Q.

Summit Financial Group Inc (SMMF) is expected to report $1.10 for 4Q.

Union Pacific Corp (UNP) is expected to report $2.60 for 4Q.

Valero Energy Corp (VLO) is expected to report $2.92 for 4Q.

Virtu Financial Inc (VIRT) is expected to report $0.33 for 4Q.

West Bancorporation Inc (WTBA) is expected to report $0.31 for 4Q.

Xcel Energy Inc (XEL) is expected to report $0.84 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

ACADIA Pharmaceuticals Raised to Buy From Hold by Needham

Advanced Micro Devices Raised to Buy From Neutral by New Street Research

Biogen Cut to Neutral From Buy by UBS

Brilliant Earth Cut to Market Perform From Outperform by TD Cowen

Capital City Bank Group Raised to Buy From Neutral by Janney Montgomery Scott

CrossFirst Bankshares Raised to Overweight From Equal-Weight by Stephens & Co.

Cytokinetics Cut to Neutral From Buy by UBS

Danaher Cut to Equal-Weight From Overweight by Barclays

DuPont de Nemours Cut to Equal-Weight From Overweight by Wells Fargo

DuPont de Nemours Cut to Market Perform From Outperform by BMO Capital

DXC Technology Cut to Underweight From Neutral by JP Morgan

EPAM Systems Cut to Underweight From Equal-Weight by Morgan Stanley

FIGS Raised to Equal-Weight From Underweight by Barclays

First Horizon Raised to Buy From Neutral by UBS

Home Bancorp Cut to Neutral From Overweight by Piper Sandler

Mosaic Cut to Neutral From Buy by Mizuho

Netflix Cut to Hold From Buy by Deutsche Bank

Netflix Raised to Outperform From Neutral by Macquarie

NuSTAR Energy Cut to Hold From Buy by Stifel

PagerDuty Cut to Equal-Weight From Overweight by Morgan Stanley

Plug Power Cut to Underperform From Market Perform by BMO Capital

Squarespace Raised to Market Outperform From Market Perform by JMP Securities

Sunoco Raised to Buy From Neutral by Citigroup

Thermo Fisher Cut to Equal-Weight From Overweight by Barclays

Tilly's Cut to Neutral From Buy by B. Riley Securities

Uber Technologies Cut to Hold From Buy by Gordon Haskett

Verizon Raised to Outperform From Neutral by Daiwa Capital

Vertex Energy Cut to Market Perform From Outperform by Northland Capital Markets

Vertex Pharmaceuticals Cut to Sell From Hold by Canaccord Genuity

Webster Raised to Overweight From Neutral by JP Morgan

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

(END) Dow Jones Newswires

January 25, 2024 06:20 ET (11:20 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.