Market Wraps
Watch For:
Chicago Fed National Activity Index for September
Today’s Top Headlines/Must Reads:
– Chevron to Buy Hess for $53 Billion
– Meta, Amazon Earnings Put Stock Market to the Test
– The Economy Was Supposed to Slow by Now. Instead It’s Revving Up
Opening Call:
Stock futures fell on Monday, on the heels of a rough week for equities, as the 10-year Treasury yield hit the psychologically important level of 5%.
Rising yields have also surrounded worries that another interest rate hike is en route, following comments from Jerome Powell last week.
The data calendar is empty for Monday, but the week will bring updates on the housing market, growth, and also the Fed’s preferred inflation gauge, the personal consumption expenditures price index, due Friday.
On the earnings front, an important batch of results are rolling out this week that could determine the course of the remaining third-quarter earnings season, with Microsoft and Alphabet reporting Tuesday, Meta reporting Wednesday and Amazon.com on Thursday.
Market optimism has wavered followed mixed bank earnings.
Premarket Movers
Okta shares rose slightly in premarket trading after falling 12% on Friday after the company said a hacker used a stolen credential to access its support system.
Roche agreed to buy Telavant Holdings from Roivant Sciences and Pfizer in a deal worth up to $7.25 billion. Roivant shares rose 14% in premarket trading. Pfizer was up 0.5%.
Royal Phillips raised its fiscal-year sales guidance but ADRs fell 2.4% after order intake during the third quarter declined 9% from a year earlier.
Textainer Group agreed to be acquired by Stonepeak for about $2.1 billion. Textainer shareholders will receive $50 a share in cash; the stock was rising 42% premarket.
Friday’s Post-Close Movers
Akumin said it had reached a deal with private-equity firm Stonepeak to go private, under which Stonepeak would convert its $470 million note to Akumin shares and invest $130 million in the company. The companies said shareholders of Akumin would receive $25 million in cash and some contingent value rights. Shares rose 58%.
Great Ajax said it wouldn’t be acquired by Ellington Financial after they agreed to terminate a previously announced combination. Ellington will pay Great Ajax $5 million in cash and acquire 1.67 million shares of common stock for $6.60 a share in connection with the canceled deal. Shares of Great Ajax fell 17%.
Forex:
The dollar traded relatively steady against major currencies as investors’ fears about Middle East tensions ebbed for now, and Monday’s light agenda could keep the currency hugging tight ranges, UniCredit Research said.
The rest of the week is busy, with a raft of data scheduled, which are likely to be “broadly firm but not sufficient to boost expectations of [the Federal Reserve] tightening even more,” UniCredit said.
Bonds:
Bunds and Treasurys still appear vulnerable ahead of the ECB’s policy meeting on Thursday and the Fed’s meeting next week as the pre-weekend safety bid wanes, Commerzbank Research said.
“Friday’s stabilization in bond markets proved to be another pre-weekend insurance against geopolitical risks,” Commerzbank said.
The ECB meeting is this week’s main risk event, it said, adding that the reaffirmation of last month’s guidance is likely to cement expectations of no change for some time to come.
Energy:
Oil prices fell around 1%, with investors keeping a close eye on the conflict in Israel and Gaza, as humanitarian aid started to filter into the Palestinian territory.
“Risk sentiment is improved compared to Friday as tensions in the Middle East didn’t escalate as much as feared during the weekend,” Swissquote Bank said.
However, upside risks remain for oil as “tensions remain extremely high and risk of serious escalation prevails as Israel stepped up air raids in Gaza and Hezbollah could drag Lebanon into war, and spread tensions through the region.”
Metals:
Gold prices pulled back in early morning trade in London, but upside remained strong for the precious metal amid the current conflict in Gaza.
Oanda said the precious metal faces risks of a minor pullback before a likely new uptrend, based on technical charts.
The uptrend since Oct. 6 has become “overstretched” and price movements have been negative at its ascending channel’s upper boundary, which is just below pivotal resistance at $2,006/oz, Oanda added.
There has also been a bearish divergence in the hourly relative strength index at the overbought area last Friday, it added.
As such, uptrend’s bullish momentum has abated and the metal may undergo a corrective retracement before a possible new uptrend, Oanda said, pegging near-term support at $1,947/oz.
Today’s Top Headlines
SpaceX Signs Deal to Launch Key European Satellites
PARIS-SpaceX has signed a deal to launch up to four of Europe’s flagship navigation and secure communications satellites into orbit, reinforcing the Elon Musk-led company’s growing foothold in the region as local rivals struggle to get rockets off the ground.
SpaceX and the European Space Agency recently signed an agreement for two launches next year, each carrying two Galileo satellites, said Javier Benedicto, the agency’s director of navigation. The European Commission, the European Union’s executive arm, along with EU member states, must still give final approval for the deal. That is likely to happen before the end of the year, officials said.
Tim Cook Can’t Make iPhones Without This Chinese Company and Its CEO
At a time when Apple is generally trying to depend less on China, the company is relying more on one Chinese firm whose skill at assembling the tech giant’s products has proven too valuable to dismiss.
Many Apple customers may not be familiar with Luxshare Precision or its leader Grace Wang, but they likely own its handiwork. Along with other Apple contractors, Luxshare manufactures AirPods, the Apple Watch and the recently released iPhone 15, including the top-of-the-line iPhone Pro Max. Luxshare is also the assembler of Apple’s first mixed-reality headset, due to reach consumers next year.
Big Shipping-Container Firm Strikes Deal
Infrastructure investor Stonepeak has struck a deal to purchase shipping-container lessor Textainer for more than $2 billion.
Textainer investors will receive $50 a share in cash, valuing the company at about $2.1 billion. Factoring in Textainer’s debt, the deal is worth about $7.4 billion.
Smaller Banks Look to Shrink Their Way Back to Health
Regional banks have shelled out more and more to depositors to get them to stick around. For many, that still hasn’t been enough.
After an ugly third quarter, banks rolled out plans last week to try to shrink themselves back to health. Profits dropped by double digits from a year earlier at a number of them, including 44% at KeyCorp, 32% at Citizens Financial and 28% at Truist Financial.
As U.S. Debt Surges, Europe Brings Its Own Under Control
Throughout the Covid-19 pandemic and then Russia’s invasion of Ukraine, both the U.S. and Europe borrowed heavily. Now with those emergencies in the rearview mirror, a divergence has emerged: Even as the U.S. continues to let deficits rip, Europe’s are on track to narrow significantly.
This is in contrast to a decade ago, when deficits in the wake of the global financial crisis pushed some members of the euro area to the brink of default. The lessons of that episode, coupled with eurozone rules, have served to impose discipline on European governments that for now is entirely absent in the U.S.
Israel Intensifies Bombing on Multiple Fronts, Prepares for Gaza Ground Operation
Israel ramped up its bombing of targets on three fronts, including a rare airstrike in the West Bank, as humanitarian aid trickled into the Gaza Strip in an international effort to ease the hardship the conflict has wrought on the two million civilians trapped there.
An Israeli soldier died during an operation in Gaza, and the Israeli military struck a mosque compound in the West Bank’s city of Jenin that it said was being used by militants to plan attacks. It also struck a target in southern Lebanon, where it said militants were attempting to launch antitank missiles at the Israeli side of the border.
Israel-Hamas War Revives Interest in U.S. Production of Iron Dome Missiles
Israel’s war with Hamas has revived dormant U.S. interest in producing munitions for Israel’s Iron Dome missile defense system, U.S. Army and industry officials said, a development that would help a U.S. regional ally resupply for future conflicts.
Any U.S. manufacturer of Tamir interceptors would take months to get moving. But with Hamas and Hezbollah firing hundreds of rockets at Israeli military sites and cities every day, Israel’s stockpile of interceptor missiles is dwindling.
Republican Hopefuls Crowd Into Speaker Race After Jordan’s Exit
WASHINGTON-Out of many, House Republicans are hoping for one.
GOP lawmakers heading into another week without a speaker will try to overcome deep divisions long enough to unify behind a new candidate, after colleagues soured on conservative firebrand Rep. Jim Jordan (R., Ohio) following a string of unsuccessful floor votes.
Source: Dow Jones Newswires