OPENING CALL

Stock futures fell on Thursday after shares staged a rally in the previous session and ahead of the producer price index report.

There wasn't one clear reason for the turnaround, but rather a mixture of many.

One is the upcoming budget fight to prevent a government shutdown that has a critical deadline this weekend.

Investors were also still digesting Wednesday's CPI data, and while it was slightly softer than expected, the readthrough into the core personal consumption expenditure price index is somewhat less benign, according to Capital Economics.

"As such, the details in PPI will be heavily scrutinized."

"With respect to the near-term outlook, the biggest risk remains tariff policy. The textbook response to prices level effects is to 'look through' it, though discerning in real time how much of any price increases are a function of tariffs and how much are organic price pressures will be difficult, especially with some evidence that inflation expectations may not be reliably anchored."

Stocks to Watch:

Adobe reported adjusted earnings and revenue that topped analysts' estimates but shares declined 4.6% after fiscal guidance disappointed.

American Eagle Outfitters was down 11% after a slower start than expected because of weaker demand and colder weather.

Intel named Lip-Bu Tan, the former chief executive of Cadence Design Systems, as its new CEO and shares rose 10%.

SentinelOne earnings beat Wall Street estimates but revenue guidance was below expectations. Shares fell 14%.

UiPath earnings were better than expected but shares fell 17% after revenue guidance missed forecasts.

Watch For:

PPI for February; Weekly Jobless Claims; Canada Building Permits for January; Earnings from Ulta Beauty, D-Wave Quantum, DocuSign, Dollar General, Rubrik, ServiceTitan, Semtech and PagerDuty

Today's Headlines/Must Reads:

- The Painting That Explains Trump's Foreign Policy

- Shoppers Are Skimping on Cigarettes, Doritos and Twinkies

- Senate GOP's Tax-Cut Wishlist Heads North of $5 Trillion

MARKET WRAPS

Forex:

The dollar was steady as its recent selloff led by concerns about a slowing economy was paused.

"I'd still be a dollar seller here with the U.S. exceptionalism narrative now dead in the water," Pepperstone said.

The dollar isn't acting like a safe haven given its huge susceptibility to tariff headlines that market participants are trying to hedge against, it added.

Nevertheless, the extent of the dollar's recent falls means a pause for breath can't be ruled out in the short term.

ING said the risk of a government shutdown could weaken the dollar given the currency's sensitivity to the economic outlook.

"That risk does not emerge very clearly in an FX market that is still readjusting after very wide moves."

However, it's still a negative development for the dollar after recent declines on growth concerns, it added.

The euro fell after Trump said he would respond to the EU's plans for counter tariffs against a 25% U.S. levy on all steel and aluminum imports.

In a meeting with Irish Prime Minister Micheal Martin, Trump said "whatever they charge us with, we're charging them."

The yen strengthened against G-10 and Asian currencies on the prospect of narrowing interest-rate gaps between Japan and most other countries.

Bonds:

Russell Investments estimates the fair value for the 10-year Treasury yield at 4.1%.

"The market narrative has pivoted away from higher-for-longer and back toward our long-held view of measured Federal Reserve rate cuts."

This suggests yields are likely to be more range bound and volatile from here, it added.

Treasurys remain attractive as a strategic exposure in portfolios, it reckons.

"However, the sharp decline in yields makes the case for a tactical overweight far less compelling than what was on offer in mid-January."

Energy:

Oil prices were broadly flat.

Brent gained in Wednesday's session before paring some gains, as traders weighed near-term demand strength against broader economic uncertainties, Exness said.

A larger-than-expected drawdown in inventories reflected firm seasonal demand, while geopolitical risks should provide further support, it added.

On the other hand, fresh trade tensions between the U.S and the EU over tariffs have raised fears of a potential economic slowdown, which would hit oil consumption.

Planned production increases from OPEC+ and weakening jet fuel demand add to supply-demand imbalance concerns, it added.

Metals:

Gold futures rose, nearing records, ahead of budget uncertainty.

The metal was surging without clear signs of being overvalued, Macquarie said.

The upcoming budget process should highlight the deficit and boost demand further.

Should the budget deficit fail to improve, gold could challenge its all-time inflation-adjusted high of $3,500, it added.

Conversely, building gold inventories reflect increasing demand for importable material ahead of potential tariffs.

This is bringing demand forward and--upon tariff clarity--additional buying should stop, and there is likely to be excess inventory at that point.

If tariffs are imposed, increased consumer prices should hit demand.

Gold chart

Comex gold futures' positive close above the 20-day simple moving average on Wednesday signaled bulls have returned , RHB Retail Research said.

Riding on this renewed momentum, the precious metal was likely to test immediate resistance at $3,000, with potential to extend gains toward subsequent resistance at $3,100.

Copper Outlook

Citi analysts think prices could remain strong into the second quarter amid physical market tightness, excluding the U.S.

Copper raw-material tightness will likely persist amid weak global mine-supply growth and a likely reduction in U.S. copper scrap exports, it said.

"Price risks appear more balanced from April as re-emerging tariff headwinds offset continued higher U.S. copper import demand, which we think can extend for much of 2Q."

TODAY'S TOP HEADLINES

Generali Operating Profit Rises on Higher Premiums

Assicurazioni Generali said its operating profit rose on the performance of all its units over 2024 gross written premiums that increased more than expected.

The Italian insurer said Thursday that its net profit for the year ended Dec. 31 edged down slightly to 3.72 billion euros ($4.05 billion) from 3.74 billion euros a year earlier. On an adjusted basis, net profit rose 5.4% on-year to 3.77 billion euros.

Consumer Angst Is Striking All Income Levels

American consumers have had a lot to fret about so far this year, between never-ending tariff headlines, stubborn inflation and most recently, fresh fears about a recession. These concerns seem to be hitting spending by both rich and poor, across necessities and luxuries, all at once.

Take low-income consumers: At an interview at the Economic Club of Chicago in late February, Walmart Chief Executive Doug McMillon said "budget-pressured" customers are showing stressed behaviors: They are buying smaller pack sizes at the end of the month because their "money runs out before the month is gone." McDonald's said in its most recent earnings call that the fast-food industry has had a "sluggish start" to the year, in part because of weak demand from low-income consumers. Across the U.S. fast-food industry, sales to low-income guests were down by a double-digit percentage in the fourth quarter compared with a year earlier, according to McDonald's.

IEA Says Trade Tensions Weigh on Oil Demand, Warns of Supply Surplus

The International Energy Agency said the macroeconomic conditions underpinning its oil-demand projections have worsened over the past month due to global trade tensions, and that it sees a bigger-than-anticipated supply surplus if OPEC+ raises output beyond April.

"New U.S. tariffs will clearly act as barriers to global trade and economic growth," the Paris-based agency said. "The lack of clarity due to their on-again off-again nature, combined with the potential for retaliation and escalation, has caused uncertainty to soar."

Gavin Newsom Makes Pitch to Conservatives With an Eye Toward 2028

As Gavin Newsom prepared to launch his new podcast, the governor reached out to Kimberly Guilfoyle, his ex-wife and President Trump's pick to be ambassador to Greece, asking to be connected with two conservatives reviled by Democrats: Charlie Kirk, a 31-year-old conservative activist, and Steve Bannon, 71, a longtime Trump adviser.

Last week, with Kirk on his podcast, Newsom broke with many in his party on the issue of transgender women in sports and played down the notion that Democrats had overly focused on how people use pronouns. Then in a podcast that aired Wednesday, the governor sat down with Bannon, who made false statements-such as claiming that Trump won the 2020 election-that Newsom let go unchecked.

Immigration Props Up Big City Metro Areas, New Census Data Shows

It turns out, America's biggest metro areas aren't shrinking-at least for now.

New Census Bureau estimates released Thursday show that the New York and Chicago metro areas grew in each of the past two years ended in June. The Los Angeles area expanded in the 12 months ended in June. These regions are all still smaller than before the Covid-19 pandemic, but not by as much as previously thought.

Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

ADENTRA 4Q

AtkinsRealis Group 4Q

Ballard Power 4Q

Empire Co Ltd 3Q

HLS Therapeutics 4Q

Mattr Corp 4Q

NFI Group 4Q

North West Co. 4Q

Sagicor Financial Co. 4Q

Sylogist 4Q

Tidewater Midstream & Infrastructure 4Q

Transat A.T. 1Q

Wheaton Precious Metals Corp 4Q

Economic Indicators $(ET)$:

0830 Jan Building permits

0830 Jan New motor vehicle sales

G7 Foreign Ministers Meeting continues

Stocks to Watch:

Algoma Steel 4Q Loss/Shr C$0.6; 4Q Rev C$590.3M

Aris Mining 4Q EPS 13c; 4Q Adj EPS 14c

(MORE TO FOLLOW) Dow Jones Newswires

March 13, 2025 05:57 ET (09:57 GMT)

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