Morning Markets
June S&P 500 futures (ESM23) this morning are up +0.34% at a 3-1/2 week high, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.24% at a 7-1/4 month high.
U.S. stock index futures this morning are moderately higher after U.S. inflation in Feb rose less than expected and consumer spending moderated. The U.S. Feb PCE core deflator, the Fed's preferred inflation gauge, unexpectedly eased to 4.6% y/y, the slowest pace of increase in 16 months, and Feb personal spending rose less than expected.
U.S. Feb personal spending rose +0.2% m/m, weaker than expectations of +0.3% m/m. Feb personal income rose +0.3% m/m, stronger than expectations of +0.2% m/m.
The U.S. Feb PCE core deflator, the Fed's preferred inflation gauge, unexpectedly eased to 4.6% y/y from 4.7% y/y in Jan, the slowest pace of increase in 16 months.
Bank of America said EPFR Global data show investors in Q1 poured $508 billion into cash funds, the largest quarterly inflow in 3 years. In addition, according to data from the Investment Company Institute, assets in U.S. money-market funds have risen to a record $5.2 trillion, with more than $300 billion added in the three weeks to March 30.
Global bond yields this morning are mixed. The 10-year T-note yield is down -2.8 bp at 3.520% after the U.S. Feb core PCE deflator rose less than expected. The 10-year German bund yield fell from a 2-week high of 2.404% and is down -3.3 bp at 2.342%. The 10-year UK gilt yield rose to a 2-1/2 week high of 3.572%.
Overseas stock markets are higher. The Euro Stoxx 50 today is up +0.56%. China’s Shanghai Composite stock index closed up +0.36%, and Japan’s Nikkei Stock Index closed up +0.93%.
The Euro Stoxx 50 index today climbed to a 3-1/2 week high and is moderately higher. European airline stocks are moving higher today after Deutsche Bank AG and Barclays Plc upgraded several carriers, saying the airlines could see a quicker recovery in profit this year than previously thought. A sharper-than-expected decline in Eurozone Mar consumer prices also supported stocks, but the positive effect on stocks was contained after the Mar core CPI rose at a record pace. Also, technology stocks are outperforming financial stocks as investors rotate out of bank stocks and into tech and defensive stocks. On the negative side, German Feb retail sales unexpectedly declined, and German Mar unemployment rose more than expected.
ECB Governing Council member Kazaks said Eurozone "inflation still remains high and continued rate increases will be necessary in order to bring inflation down."
Eurozone Mar CPI eased to +6.9% y/y from +8.5% y/y, better than expectations of +7.1% y/y and the slowest pace of increase in 13 months. Mar core CPI rose to a record +5.7% y/y from +5.6% y/y in Feb, right on expectations.
German Mar unemployment rose +16,000, showing a weaker labor market than expectations of +1,000. Also, the Mar unemployment rate rose +0.1to 5.6%, showing a weaker labor market than expectations of no change at 5.5%.
German Feb retail sales unexpectedly fell -1.3% m/m, weaker than expectations of +0.5% m/m.
The German Feb import price index eased to +2.8% y/y from +6.6% y/y in Jan, weaker than expectations of +4.2% y/y and the slowest pace of increase n two years.
China’s Shanghai Composite today posted moderate gains. Stronger-than-expected Chinese economic news today on Mar manufacturing and Mar services improved market sentiment and supported stocks. Spinoff plans for JD.com and Alibaba Group Holding units also lifted sentiment for Chinese technology stocks. In addition, Chinese telecom stocks moved higher today, powered by the government’s dual focus on developing state firms and artificial intelligence.
The China Mar manufacturing PMI fell -0.7 to 51.9, stronger than expectations of 51.5. The Mar non-manufacturing PMI unexpectedly rose +1.9 to 58.2, stronger than expectations of a decline to 55.0 and the fastest pace of expansion in more than 11 years.
Japan’s Nikkei Stock Index today rallied to a 3-week high and closed moderately lower. Japanese brokerage stocks advanced today after the Nikkei reported that the companies plan to enhance shareholder returns in the coming years. Also, broadcaster and television companies rose after the Nikkei reported that the Tokyo Stock Exchange would call on the companies to draw up and disclose plans to raise their price-to-book ratios. Better-than-expected Japanese economic news today on Feb industrial production and Feb retail sales improved market sentiment and was bullish for equities.
Japan Feb industrial production rose +4.5% m/m, stronger than expectations of +2.7% m/m and the largest increase in 8 months.
Japan Feb retail sales rose +1.4% m/m, stronger than expectations of +0.3% m/m and the largest increase in 2-1/2 years.
The Japan Feb jobless rate rose +0.2 to 2.6%, showing a weaker labor market than expectations of no change at 2.4%.
The Mar Japan Tokyo CPI eased to +3.3% y/y from +3.4% y/y in Feb, higher than expectations of +3.2% y/y.
Pre-Market U.S. Stock Movers
Bank stocks are climbing in pre-market trading after financial institutions reduced their borrowings from two Federal Reserve backstop lending facilities in the most recent week, indicating that liquidity demand may be stabilizing. Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), and Wells Fargo (WFC) were up +0.5% or more.
Advanced Auto Parts (AAP) rose more than +1% in pre-market trading after Barclays upgraded the stock to equal weight from underperform.
Howmet Aerospace (HWM) is up more than +1% in pre-market trading after Benchmark Company upgraded the stock to buy from neutral.
Rumble (RUM) surged more than +14% in pre-market trading after reporting Q4 monthly active users rose to 80 million from 33 million in the same quarter a year earlier.
Generac (GNRC) dropped more than -3% in pre-market trading after Bank of America downgraded the stock to underperform from neutral.
Cintas (CTAS) fell more than -1% in pre-market trading after Jeffries downgraded the stock to hold from buy, saying the stock’s valuation looks “frothy” given the macro challenges ahead.
Today’s U.S. Earnings Reports (3/31/2023)
Bioventus Inc (BVS), Celularity Inc (CELU), Empire Petroleum Corp (EP), Fathom Digital Manufacturing C (FATH), Latch Inc (LTCH), Mitek Systems Inc (MITK), Stratus Properties Inc (STRS), Talaris Therapeutics Inc (TALS), Urban One Inc (UONEK), Wejo Group Ltd (WEJO).
