OPENING CALL
Stock futures pointed higher on Thursday and bond yields fell as the market continued to express relief that the Federal Reserve's latest monetary policy meeting passed without a shift to notably more hawkish rhetoric.
Apple rose 1.3% in premarket trading. Wall Street expects the company to report fiscal second-quarter earnings of $1.51 a share on revenue of $90.4 billion, down 4.5% from a year earlier. Wall Street calls for iPhone revenue to fall 9.8% from a year earlier to $46.3 billion, pressured in part by weak demand and competition in China
Other Premarket Movers
Carvana rose 33% after it reported a surprise first-quarter profit of 23 cents a share, well ahead of analysts' estimates that called for a loss of 64 cents.
Shares of DoorDash were down 14% after it reported a first-quarter loss that was wider than analysts' estimates. DoorDash said it expects gross order value of $19 billion to $19.4 billion in the second quarter, which at the midpoint was below estimates of $19.22 billion.
EBay reported solid first-quarter earnings but issued second-quarter guidance that was below Wall Street estimates. The stock was down 2.7%.
Etsy fell 12% after gross merchandise sales in the first quarter fell 3.7% from a year earlier to $2.99 billion. Earnings of 48 cents a share matched analysts' estimates while revenue came in slightly below.
Fastly was down 33% after it issued an outlook for the second quarter and year that were well below Wall Street estimates.
Freshworks declined 28% after it issued second-quarter and full-year guidance that was slightly shy of analysts' expectations.
U.S.-listed shares of Novo Nordisk were down 2.3%. The pharmaceutical giant boosted full-year guidance as sales of its Ozempic diabetes drug rose 42% in the first quarter from a year earlier and sales of obesity treatment Wegovy more than doubled.
Qualcomm reported fiscal second-quarter adjusted earnings ahead of analysts' estimates. The stock was up 4.1%.
Zillow stock was down 6.4% after the company forecast second-quarter sales below expectations.
Postmarket Movers
Murphy USA's slipping gas margins dented first-quarter results as both profit and revenue fell from the prior-year year. Shares fell 1.2%.
Watch For:
Trade for March; Weekly Jobless Claims; Preliminary Productivity for 1Q; Factory Orders for March; Canada Trade Balance for March; Apple earnings
Today's Headlines/Must Reads:
- Powell Projects Optimism Despite Stubborn Inflation
- Stalled Inflation Vexes the Fed. Is It Noise or a New Trend?
- Buffett Rules Out 'Eye-Popping' Returns. But Investors Aren't Listening
MARKET WRAPS
Forex:
The dollar fell after the Federal Reserve appeared to rule out the possibility of raising interest rates, instead reiterating that it would take longer to gain confidence that inflation has fallen sufficiently to be able to cut rates.
This leaves the focus firmly on Friday's U.S. monthly jobs data, ING said.
"There is a school of thought building that if the unemployment rate finally responds to slowing labour demand and pushes up to say 4.2% by September, the Fed can cut rates," ING said.
A rise in the yen has stirred talk of intervention again, Maybank said, noting a suspicious move down by the USD/JPY after the Fed's announcement.
Peak to trough, the magnitude of the move was about Y5, in line with previous suspected and confirmed episodes of intervention, Maybank said.
The move was suspicious given its timing, which could be strategic as it came when FX liquidity would be thinner than normal post-FOMC and as most major markets would be closed or yet to open, "allowing the use of less reserves to achieve a desired move."
Japan currency official Kanda has said intervention data will be disclosed at month's end, a hint that more intervention may come, Maybank added.
Bonds:
Eurozone government bond yields declined, tracking the fall in Treasury yields on Wednesday in the wake of the Federal Reserve's meeting.
"Expectations of a rate cut by the Fed strengthened slightly, with 35 basis points of cuts priced in for 2024," Natixis Research said.
This confirms a slightly dovish market perception of the FOMC meeting after numerous sessions with Treasury selloffs, when the U.S. economic resilience was the market mover, Natixis said.
MUFG said Bund yields are expected to decline only slowly in the coming quarters as numerous survey data point to increasing optimism over strong growth ahead in the eurozone.
That would likely mean the European Central Bank can be more cautious in cutting interest rates, especially if the U.S. resilience continues, it added.
MUFG expects the ECB to cut by 100 basis points by the end of March 2025, one cut per quarter, most likely at the forecast update meetings. It forecasts the Bund yield to ease to 2.45% in the second quarter, to 2.30% in the third, to 2.20% in the fourth and 2.10% in the first quarter of 2025.
Brandywine Global said the only surprise at the Federal Reserve's meeting came on the quantitative tightening side of policy by cutting the pace of reduction in Treasurys.
"This adjustment doesn't mean QT is ending anytime soon, only that a smoother ride is likely," it said.
At the Fed's June meeting, it will be important to see the projections for the longer-term equilibrium fed funds rate, since it has implications for where the 10-year Treasury rate ends up, Brandywine Global.
Energy:
Oil was close to 1% higher on a likely technical rebound and helped by a weaker dollar.
The timing of Fed rate cuts remains unclear, bringing some headwinds to the oil market as higher-for-longer rates dampen demand for the commodity.
Morningstar DBRS said global oil supply is expected to catch up with demand in the coming months.
"A combination of better-than-expected global consumption and prolonged OPEC+ production cuts has led to a modest global deficit of liquids thus far in 2024."
Yet, "The recent rise in the price of crude should incentivize non-OPEC+ producers to increase output."
Morningstar DBRS said it expects crude inventories to gradually return to an average level by the end of the year.
It raised its 2024 average WTI price forecast to $75 a barrel from $65 a barrel to reflect a more favorable supply-and-demand balance, as well as a greater geopolitical risk premium.
Metals:
Base metals and gold gained after the Fed comments came in softer than expected.
Gold is MUFG's most bullish call this year for commodities, and the year-end estimate of $2,350 an ounce now looks modest.
The precious metal stands to gain on a trifecta of eventual Fed rate cuts, supportive central-bank demand and bullion's role as hedge of last resort in times of geopolitical tension, MUFG said.
MUFG also said copper is central to decarbonization-and its time is now-given acute fundamental shortfalls reflecting a persistent green-transition demand strength and a cyclical recovery in manufacturing.
Uranium
A planned U.S. ban on Russian uranium is "a definite tailwind" for prices of the nuclear fuel, Citi said. The Senate passed legislation to ban low-enriched uranium from Russia this week.
Still, it is not clearly known how the ban will be implemented and waivers for enriched uranium products could create a loophole for imports, Citi added.
"Retaliation by Russia and a potential export ban would be more destabilizing for uranium prices, included in our bull case scenario with prices averaging $121/pound and $151/pound in 2024 and 2025, respectively."
Citi has a $95/pound estimate on prices for the second quarter.
TODAY'S TOP HEADLINES
Universal Music Artists to Return to TikTok After New Licensing Agreement
TikTok and Universal Music struck a new licensing deal that will return the record label's artists and their songs to the video-sharing app, ending months of disagreements over pay.
The world's largest music company said it had secured improved remuneration for its artists-including the likes of Billie Eilish and Ariana Grande-and that it was working with TikTok to bring their music back to the platform.
Shell Launches $3.5 Billion Buyback After Earnings Beat Forecasts
Shell's first-quarter adjusted earnings fell by less than expected, buoyed by strong margins from crude and oil trading, while the energy giant kicked off a $3.5 billion share buyback program as it hurries to close the valuation gap between it and its U.S. rivals.
The British energy major on Thursday reported adjusted earnings of $7.73 billion for the quarter, down from $9.65 billion in the same quarter a year ago, but ahead of market expectations provided by Vara Research of $6.46 billion.
Microsoft to Invest $2.2 Billion in AI Infrastructure in Malaysia
Microsoft will invest $2.2 billion in cloud and artificial-intelligence infrastructure in Malaysia, coming on the heels of fresh spending plans in Indonesia and Thailand as the U.S. tech giant gears up for rising AI computing demand in Southeast Asia.
Microsoft said Thursday that its investment over four years will build on previously announced plans to construct its first data center region in Malaysia, and mark its single biggest investment in the country.
Rio Tinto Declines Comment on Whether Considering Rival Anglo American Bid
The chair of Rio Tinto on Thursday declined to comment on whether the world's second-largest miner by market value is weighing a bid for Anglo American, the target of a recent $39 billion bid by BHP Group.
"We don't speculate or comment on M&A activity," Dominic Barton said in response to a question at a shareholder meeting on whether Rio Tinto is considering a takeover proposal for London-listed Anglo American.
Disaster Loans Provided a Lifeline. Now Small Businesses Owe Billions in Late Fees.
Ampac USA borrowed $500,000 to stay afloat during the pandemic. The skincare-products company defaulted on its loan last year. It has made $425,000 in loan payments and was told it still owes roughly $262,000.
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05-02-24 0607ET
