North American Morning Briefing: More Tech Earnings in Focus With GDP Data Adding to the Uncertainty

OPENING CALL

Stock futures traded lower on Thursday and technology shares sank after Meta Platforms issued a disappointing outlook. It shares were down 13%.

"All eyes turn towards Microsoft and Alphabet whose numbers are released after the close," Scope Markets said.

First-quarter GDP data due at 8:30 a.m. and is expected to show a 2.2% rate of growth.

The GDP report also contains quarterly personal consumption expenditure inflation data, which economists can use to get a guide to the March numbers that are due out Friday.

"Traders should be well aware of the risks associated with higher-than-expected GDP and core PCE figures, which could provide a fresh bout of selling pressure for U.S. markets," Scope Markets said.

Other Premarket Movers

Ford's first-quarter adjusted earnings of 49 cents a share beat analysts' estimates and shares of the auto maker were up 3.1%.

IBM reached a deal to buy HashiCorp for $35 a share in cash, or about $6.4 billion. It also reported first-quarter revenue of $14.47 billion, up 1% or 3% adjusted for currency, but just below Wall Street estimates of $14.53 billion. IBM shares were down 8.6%. HashiCorp rose 4.8%.

ServiceNow posted first-quarter earnings and revenue that topped Wall Street estimates. The stock was down 4.9%, however, after the company said it expects second-quarter operating margin at 25%, slightly below Wall Street expectations of 25.9%.

Post-Close Movers

Cidara Therapeutics said it would re-acquire the license to its potential influenza-prevention treatment from Johnson & Johnson. The company also said it was divesting its candidiasis treatment, which it expects will save the company about $128 million over the life of the drug's patent. Shares rose 37%.

O'Reilly Automotive's profit and revenue both fell short of analysts' expectations in the first quarter. Comparable sales were up 3.4%, flat sequentially from the fourth quarter and shy of Wall Street estimates. Shares fell 4%.

Watch For:

Weekly Jobless Claims; Advance estimate GDP for 1Q; earnings from Alphabet, Caterpillar, Comcast, Intel, Merck, Microsoft

Today's Headlines/Must Reads:

- Meta's License to Spend on AI Gets Checked

- What the End of Negative Rates Means for Japan

- America's Economy Is No. 1. That Means Trouble

- New EPA Emissions Rules Squeeze Coal Plants

MARKET WRAPS

Forex:

USD/JPY is in focus as it trades above the 155 level many thought would trigger intervention, ING said. Intervention need has to come from market conditions, "and one can argue we are not there yet."

USD/JPY's one-month implied volatility was 12%-15% when BOJ entered the market to sell $20 billion on a single day in September 2022, and the 20-day rate of change was 5%-8%, ING said.

The one-month volatility is now below 10% and the 20-day rate near 3% which makes it hard for officials to say they're responding to disorderly FX moves. USD/JPY at 156-157 may bring intervention closer, but those that see it happening closer to 160 also have a point, ING added.

MUFG said verbal intervention by Japanese officials is becoming less effective at slowing yen weakness.

"After Japanese officials chose not to intervene to defend the 152.00 and 155.00 levels, it has raised doubts over their willingness to intervene directly in the foreign exchange market...when U.S. yields and the dollar are continuing to adjust higher," MUFG said. Even direct intervention could prove ineffective beyond an initial yen boost, it added.

Bonds:

Treasury yields remain elevated, which means the demand for Treasurys is likely to remain robust, MFS Investment Management said.

However, "in terms of the potential for yields to go down, thereby helping the total return of fixed income, we see a stronger potential in the eurozone," it said.

MFS expects the European Central Bank to be more proactive with its easing cycle than the Federal Reserve. "In other words, our duration conviction is higher in Europe."

Energy:

Oil prices edged higher on positive demand signs after U.S. crude inventories fell for the first time in five weeks. Traders now await key U.S. economic and inflation data later this week for more cues on the Federal Reserve's monetary policy outlook.

Metals:

Base metals were mixed and gold lower before the latest U.S. GDP data.

BHP could cement its industry-leading position in copper, should the proposed takeover of Anglo American come to fruition, RBC Capital Markets said.

"The most coveted assets in Anglo's portfolio will be its Peruvian and Chilean copper assets," RBC said, citing the Collahuasi and Los Bronces mines as top-ten producing operations globally.

A merger would elevate Australian heavyweight BHP to be the largest copper producer globally, RBC said.

"In our view, the copper assets are the primary driver of a proposed transaction."

TODAY'S TOP HEADLINES

Micron Gets $6.1 Billion to Build Three New Facilities

Micron Technology is receiving up to $6.1 billion from the federal government to build three chip-making facilities, the latest award from legislation meant to boost chip production in the U.S.

The government grant will fuel up to $125 billion in investment by Micron in New York and Idaho over the next 20 years, U.S. officials said Thursday. About $50 billion of that will come by 2030.

What Is TikTok Worth? Guesses Range From $20 Billion to Over $100 Billion

SINGAPORE-Now that President Biden has signed legislation forcing the sale of TikTok's U.S. operations, any potential deal raises a big question: How much is the popular video-sharing app worth?

Those asking have some huge-and widely varying-numbers to consider. One suitor has suggested $20 billion as a starting price for the U.S. operations. Executives at TikTok parent ByteDance have previously considered TikTok's global operations to be worth about half of the Chinese company's overall value, which would put it above $100 billion, according to people familiar with the matter.

Mercer Raises $3.9 Billion for Multi-Asset Private Capital Fund

Consultant and asset manager Mercer has wrapped up fundraising for its seventh fund designed to give less well-resourced investors access to a range of private markets.

The New York-based firm raised $3.9 billion for Mercer Private Investment Partners VII, which it plans to invest across private equity, private credit, infrastructure, real estate and sustainability-driven investments, the firm said. Fund VII has a mandate to make commitments to other investment vehicles, acquire positions on the secondary market and invest directly in businesses alongside other private investment managers.

The Tricky Logistics Behind Direct-to-Consumer Sales Strategies

Apparel makers including Levi Strauss, Skechers and Canada Goose are trying to get closer to their customers. Doing that will require nailing the nuts and bolts of retail logistics.

The stalwarts of department-store sales are taking the strategic step into direct-to-consumer sales, reasoning that the investment is needed to kick growth into a higher gear and potentially reset the future of their businesses. The strategy includes mastering difficult operations like home delivery as well as taking on the broader business of stocking more of their own bricks-and-mortar stores.

Supreme Court Stage Is Set for Trump's Immunity Claims

WASHINGTON-Donald Trump's last-ditch bid to avoid trial on charges he attempted to steal the 2020 election from President Biden comes Thursday to the Supreme Court, where the justices will confront Trump's novel claim that the Constitution forbids prosecuting former presidents for crimes they allegedly committed while in office.

The Supreme Court has given Trump the time and space to make his best case. The court turned down requests from special counsel Jack Smith to hear the matter sooner. To accommodate Trump's appeal, the court extended its calendar by a day, making this Thursday the final argument of the current term.

Trump Advisers, Including Giuliani and Meadows, Indicted in Arizona

Several of former President Donald Trump's closest advisers, including Rudy Giuliani and Mark Meadows, were indicted in Arizona following a yearlong criminal investigation into their alleged efforts to overturn Trump's November 2020 election defeat in the state.

Arizona Attorney General Kris Mayes, a Democrat, said Wednesday that a state grand jury approved criminal charges against 11 Republicans who submitted a document to Congress falsely declaring Trump carried the battleground state.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings [1Q Unless Stated]:

Agnico Eagle Mines

Bombardier

Eldorado Gold

Mullen Group

Newmont

Precision Drilling

Secure Energy

Teck Resources

TFI International

Economic Calendar (ET):

0830 Feb Payroll Employment, Earnings, Job Vacancies

Stocks to Watch:

Celestica 1Q EPS 85c; Rev $2.21B; Adj EPS 86c; Raises 2024 View To Rev $9.1B

TransAlta Declares Dividend of C$0.06 Per Common Share

Expected Major Events for Thursday

05:00/JPN: Feb Indexes of Business Conditions - Revision

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

05:30/JPN: Mar Nationwide department store sales

06:00/JPN: Mar Revised Machine Tool Orders

06:00/GER: May GfK consumer climate survey

06:45/FRA: Apr Monthly business survey (goods-producing industries)

10:00/UK: Apr CBI Distributive Trades Survey

10:00/FRA: 1Q Claimant count and job advertisements collected by Pole emploi

12:30/US: Mar Advance Economic Indicators Report

12:30/US: 04/20 Unemployment Insurance Weekly Claims Report - Initial Claims

12:30/CAN: Feb Payroll employment, earnings and hours, and job vacancies

12:30/US: U.S. Weekly Export Sales

12:30/US: 1Q Advance estimate GDP

13:00/RUS: Weekly International Reserves

14:00/US: Mar Pending Home Sales Index

14:30/US: 04/19 EIA Weekly Natural Gas Storage Report

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April 25, 2024 06:06 ET (10:06 GMT)

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