N American Morning Briefing: Stocks to Open Higher as Trade Tensions Ease
DOW JONES & COMPANY, INC. 5:41 AM ET 1/18/2019
DJIA 24410.00 89.00 0.37%
S&P 500 2642.00 7.75 0.28%
Nasdaq 100 6742.50 22.75 0.32%
As of 5.34am
FTSE 100 6903.31 68.39 1.00%
Xetra DAX 11037.24 118.62 1.09%
CAC40 4851.88 57.51 1.20%
As of 5.25am
Nikkei 20666.07 263.80 1.29%
Shanghai 2596.01 36.37 1.42%
Hang Seng 27090.81 335.18 1.25%
As of 5.25am
Snapshot:
-Stock futures gain; EUR/USD 1.1397-400; 10-year Treasury yield 2.771%; Nymex $52.63; gold futures $1284.60
-Watch for: Industrial production & capacity utilization; University of Michigan survey of consumers; Fed's Williams and Harker speak; earnings from Schlumberger
Opening Call:
U.S. stock futures were pointing higher as expectations for easing trade tensions between the U.S. and China continued to buoy stock global markets on Friday, putting most major indexes on track to end the week higher.
The moves came after U.S. stocks rose for a third straight session Thursday thanks to optimism the U.S. would ratchet back tariffs on Chinese imports.
The Wall Street Journal reported that U.S. Treasury Secretary Steven Mnuchin proposed the idea of lifting some or all tariffs on Chinese imports to advance trade talks.
A Treasury spokesman said bargaining positions "are all at the discussion stage" and that "neither Secretary Mnuchin nor Ambassador Lighthizer have made any recommendations to anyone with respect to tariffs or other parts of the negotiation with China."
In equities, shares of Netflix fell in after-hours trading after the streaming-video giant said revenue grew less than analysts expected.
Shares of American Express also moved lower in after-hours trading despite posting its highest annual profit and revenue.
Overall, 77% of S&P 500 companies reported earnings above analysts' expectations through Thursday afternoon, compared with 64% in a typical quarter, according to data from Refinitiv.
That comes against a significantly lowered bar, however. "Analysts' [earnings] revision momentum has gone off a cliff," said David Bowers, who heads up research at Absolute Strategy Research. For stocks and the broader environment for risky assets "we think we're not out of the woods yet," he said.
Up ahead, the Federal Reserve publishes December industrial-production figures. In November, industrial output climbed by 0.6% from a month earlier. The rise was largely driven by cold weather-induced utility usage. Economists surveyed by The Wall Street Journal forecast a 0.2% rise in December.
The University of Michigan issues preliminary January consumer-sentiment data. Consumers' outlook on the U.S. economy improved in December, as strong growth and a robust job sector continued optimistic sentiment in the final weeks of the holiday season.
The University of Michigan said its final index of consumer sentiment for December was 98.3, up from the previous month's reading of 97.5. Economists surveyed by The Wall Street Journal forecast consumer sentiment clocked in at 97.1 in January.
Equities:
Malaysia's finance minister waved off an apology from Goldman Sachs Chief Executive David Solomon for the role of one its then-bankers in the scandal surrounding state investment fund 1Malaysia Development Bhd., saying it wasn't enough.
Lim Guan Eng said Friday that the only apology that would matter is one that comes with full reimbursement and reparations for the $6.5 billion the 1MDB fund raised with the investment bank's help. Prosecutors say much of the money was later siphoned off, with several hundred million dollars going to the personal accounts of then-leader Najib Razak.
---
Tesla is cutting its full-time workforce by 7% as part of an effort to lower costs so the company can sell the Model 3 sedan at a lower price, the auto maker's top executive told employees Friday.
"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," Chief Executive Elon Musk told employees in a memo reviewed by The Wall Street Journal. "Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company."
---
JPMorgan Chase & Co. Chief Executive James Dimon received a compensation package valued at $31 million in 2018, up 5% from $29.5 million in 2017, according to a Thursday securities filing.
The CEO earned a base salary of $1.5 million and $5 million in cash, the same as a year ago, and $24.5 million in restricted equity, according to a filing with the U.S. Securities and Exchange Commission. His pay exceeds his record compensation of $30 million in 2007 before the financial crisis.
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Netflix continued to expand its customer base at a rapid clip in the fourth quarter thanks to strong growth overseas, but increased spending on content weighed on the streaming-video giant's profit and it forecast slower revenue growth for the current quarter.
Netflix added 8.8 million paid subscribers in 2018's final period, up 34% from a year earlier and exceeding both its and analysts' expectations by more than a million.
---
American Express on Thursday reported solid financial results for the most recent period, capping a record year.
The results-and a strong forecast for 2019-mark a notable recovery for the financial-services company, which a year earlier was driven to the first quarterly loss in more than a quarter-century as it absorbed a hit from the U.S. tax overhaul.
On Thursday, Amex reported a fourth-quarter profit of $2.01 billion, or $2.32 a share, ending the year at a $6.92 billion profit, more than double the $2.75 billion profit for 2017.
Forex:
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was 0.1% higher at 89.37 in early European trade.
The dollar gave up earlier gains and edged lower on Thursday following a report that government officials are considering easing tariffs on China.
Elsewhere, the pound was down against the dollar by 0.3% on Friday, but remained relatively strong ahead of U.K. Prime Minister Theresa May's Brexit plan B announcement on Monday.
She is expected to come up with some changes to her Brexit withdrawal plan ahead of another parliamentary vote on Jan. 29, analysts said.
At 4.50am, USD/JPY was 109.57-58, EUR/USD was 1.1397-400 and GBP/USD was 1.2939-41.
Bonds:
Yields on 10-year Treasurys were at 2.771% compared to 2.747% on Thursday.
U.S. government-bond prices fell Thursday as traders responded to better-than-expected data on regional manufacturing activity and a report that U.S. officials are debating whether to scale back tariffs on Chinese imports.
Commodities:
U.S. sanctions are liable to be a 2019 key for oil, said ANZ, which doesn't expect America to renew current waivers involving Iranian crude exports. That as U.S. officials have been mulling harsher sanctions on Venezuela.
Meanwhile, the firm thinks growth in U.S. shale-oil output-key to America's surging production-may slow this year.
Oil futures remain up about 1% in early European trade amid the wide gains in other risk assets like stocks.
London spot-gold prices were down in Europe.
RBC believes that increasing investment interest will see gold gradually grind higher above resistance at $1,300/troy ounce and keep it on an upward path much of this year.
Top Stories Of The Day:
U.S. Debates Lifting China Tariffs to Hasten Trade Deal, Calm Markets
U.S. officials are debating ratcheting back tariffs on Chinese imports as a way to calm markets and give Beijing an incentive to make deeper concessions in a trade battle that has rattled global economies.
---
Be Careful What You Wish For: Wall Street Hit by Fourth-Quarter Volatility
Wall Street traders for years complained that they couldn't make money in calm markets. They haven't fared better in wild ones.
---
Trump Moves to Block Pelosi's Overseas Trip Until After Shutdown
President Trump denied House Speaker Nancy Pelosi the use of military aircraft for an overseas trip, a day after Mrs. Pelosi urged him to delay his State of the Union address.
---
Fed's Quarles Upbeat on U.S. Economy
The outlook for the U.S. economy remains very good, said Fed Vice Chairman Randal Quarles, although he refrained from commenting on what that might mean for the central bank's interest-rate decisions.
---
U.S. Economy Flying Blind as Engine Sputters
The shutdown is hitting the economy and constricting the flow of data by which to gauge how big the hit actually is. For investors and policy makers, forecasting has become like flying through a storm without instruments.
---
Chinese Slump Could Keep Auto Stocks Stuck in Lower Gear
China's auto sales recorded their first annual decline since 1990 last year. Even official help might not be able to get this market motoring again quickly.
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Ghosn Received $8.9 Million in 'Improper' Payments From Nissan-Mitsubishi Entity
Nissan Motor and Mitsubishi Motors said Carlos Ghosn received what they described as improper payments totaling $8.9 million from a Netherlands entity owned by the two companies.
Write to sarka.halas@wsj.com
Earnings scheduled:
- no major earnings expected
---
Economic Indicators (ET):
- 0830 Dec CPI
- 0830 Nov International transactions in securities
---
Headlines:
Katanga Mining Enters Management Services Agreement With Glencore Intl, Names New CEO and CFO
Katanga Mining Ltd. on Thursday said it entered into a management services agreement with Glencore International AG, and named a new chief executive and a new financial chief.
---
In Canada, Output Cuts Pay off as Oil Prices Rally
Canadian crude prices have surged to trade at the smallest discount to U.S. oil in a decade, marking an early success for provincial-government efforts to cap supply and boost the country's income.
China Envoy Worried Over Possible Canada Huawei Ban
China's ambassador to Canada said Thursday he is concerned Ottawa will heed the advice of the U.S. and ban equipment from Huawei Technologies Co. for use in the country's next-generation 5G telecommunications network.
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(END) Dow Jones Newswires
01-18-190541ET
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