Morning Bid Americas: Thanksgiving starters of AI and oil

Remark Holdings

20/11/2023 11:08

A look at the day ahead in U.S. and global markets from Mike
Dolan.
    
Thanksgiving may make for a clipped U.S. markets week, but
there's plenty to chew on around the world before then - and a
feast of intrigue in the artificial intelligence space.
    Boardroom shenanigans at ChatGPT-developer OpenAI, where
former boss Sam Altman was ousted on Friday and then hired by
the firm's biggest backer Microsoft  MSFT.O , raises interesting
questions about the pace of AI development.
    A key catalyst for some of the outsize Big Tech share gains
this year, the craze around generative AI will also top the
agenda as chip giant Nvidia  NVDA.O  reports earnings on Tuesday
that will hold a light to a more than trebling of stock this
year.     
    The macro week is partly shaped by the OPEC+ meeting on Nov.
26 amid reports the cartel may consider more oil output cuts to
shore up recently plunging crude prices.
    The failure of OPEC+ to buoy oil prices this year shows how
much falling global demand is starting to shape prices and how
much booming U.S. production is dominating the picture.
    After plummeting almost 25% in six weeks, U.S. crude prices
 CLc1  have backed up a bit after the Reuters report on possible
cuts on Friday and held steady about $76 per barrel first thing.
    That's also drawn a line for now under the recent slide in
U.S. Treasury yields  US10YT-=RR , which also bounced on Friday
and were propped further by both Federal Reserve hawkishness and
unexpected housing starts data from last month.
    The S&P500  .SPX  eked out another small gain on Friday, its
fourth daily advance in a row and the highest close since Sept.
1. Futures were marginally higher ahead of Monday's bell - but
the VIX  .VIX  volatility gauge was also slightly higher than
Friday's two-month closing low.
    The dollar was a big loser first thing Monday  .DXY , also
hitting its lowest since Sept. 1.
    Softening U.S. debt yields have undermined the greenback but
 China's yuan  CNH=  led the way to three-month highs as the
central bank there left a key interest rate unchanged and guided
 CNY=PBOC  the renminbi higher, just as exporters rushed to
convert dollar receipts.
    Japan's yen  JPY=  also surged as Tokyo stocks briefly hit
their highest in 33 years  .N225 , while speculation about a
tightening of the Bank of Japan's monetary policy persisted and
centred around accelerated wage growth. 
    Currency markets were also in thrall to Argentina's weekend
election result, in which right-wing libertarian Javier Milei
become the new president on a radical ticket of how to fix an
economy battered by triple-digit inflation and rising poverty.
    Milei is pledging economic shock therapy. His plans include
shutting the central bank, ditching the peso and dollarizing the
economy and slashing spending with potentially painful reforms.
    In Europe, the debt markets started the week with relief
after Moody's late on Friday confirmed Italy's investment grade
sovereign credit rating and surprised markets by upping the
outlook to stable.
    The risk premium between German and Italian 10-year yields
 DE10IT10=RR  tightened to 170 bps - the lowest since Sept. 21.
    British stocks  .FTMC  and sterling  GBP=  were firmer as UK
finance minister Jeremy Hunt is due to present his Autumn
government budget statement on Wednesday amid reports he was
considering cutting income tax or national insurance and
tweaking savings vehicle incentives to encourage more stock
holdings.
    In single stock moves, however, German chemicals giant Bayer
  BAYGn.DE  lost 19% - on track for its worst day on record -
after it aborted a large late-stage trial testing a new
anti-clotting drug. 
        
Key developments that should provide more direction to U.S.
markets later on Monday:
* U.S. Oct leading indicator, Canada Oct inflation
* Federal Reserve  Bank of England Governor Andrew Bailey, Bank
of France Governor Francois Villeroy de Galhau and Bank of Spain
Governor Pablo Hernandez de Cos all speak 
* U.S. Treasury auctions 20-year bonds and 3-, 6-month bills
* U.S. corporate earnings: Zoom, Agilent Technologies, Keysight
Technologies, TechPrecision, Symbotic, Remark Holdings 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Nvidia's shares outperform Philadelphia SE Semiconductor Index  
 https://tmsnrt.rs/3MKwBrV
Argentina's plummeting FX reserves    https://tmsnrt.rs/3SUaXW9
Argentina is the IMF's top debtor    https://tmsnrt.rs/3SJdDWo
UK tax burden low by European standards    https://tmsnrt.rs/47G0cun
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (By Mike Dolan, editing by Ed Osmond,
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
 ((mike.dolan@thomsonreuters.com; +44 207 542 8488; Reuters
Messaging: mike.dolan.reuters.com@thomsonreuters.net))