Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.16%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.17%.
Stock index futures this morning are slightly higher on positive carryover from last Friday when the weaker-than-expected U.S. October payrolls report and Oct ISM services report showed a slowing in the economy that may keep the Fed from raising interest rates and even begin cutting them by the middle of next year. Higher T-note yields this morning are limiting the upside in stock index futures.
On the positive side, Tesla is up more than +2% in pre-market trading on a report the company will manufacture a new affordable electric car in Germany. Also, Bluegreen Vacations Holdings surged more than +100% after Hilton Grand Vacations agreed to buy the company for $75 per share.
On the negative side, Dish Network is down more than -12% in pre-market trading after reporting Q3 revenue below the consensus. Also, Paramount Global is down more than -4% after Bank of America double-downgraded the stock to underperform from buy.
The markets are discounting a 10% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 16% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then expecting the FOMC to begin cutting rates later in 2024 in response to an expected slowdown in the U.S. economy.
U.S. and European government bond yields today are higher. The 10-year T-note yield is up by +4.4 bp at 4.616%. The 10-year German bund yield is up +0.7 bp at 2.716%. The 10-year UK gilt yield is up +6.4 bp at 4.352%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.34%. China’s Shanghai Composite Index today closed up +0.91%. Japan’s stock market today closed up +2.37%.
The Euro Stoxx 50 today is moderately lower. An increase in European government bond yields is weighing on stocks. However, losses in stocks are limited after the Eurozone Nov Sentix investor confidence index unexpectedly rose to a 5-month high and after German Sep factory orders unexpectedly increased. Also, energy stocks were higher, with the price of crude oil up more than +1%.
The Eurozone Nov Sentix investor confidence index unexpectedly rose +3.3 to a 5-month high of -18.6, stronger than expectations of a decline to -22.2.
German Sep factory orders unexpectedly rose +0.2% m/m, stronger than expectations of a decline of -1.5% m/m.
China’s Shanghai Composite today rose to a 2-1/2 week high and closed moderately higher. Market sentiment improved and gave equities a lift after Chinese Premier Li Qiang promised further support for the economy, including boosting imports and protecting the “rights and interest of foreign investors.” Brokerage stocks rallied today after Chinese authorities proposed to relax capital requirements for companies and signaled support for more mergers and acquisitions. Also, Chinese property developers moved higher following a report that Chian Vanke, the country’s second-largest developer by contracted sales, received support from a local regulator and its biggest shareholder.
Japan’s Nikkei Stock Index rallied to a 1-1/2 month high today and closed sharply higher as it reopened following last Friday’s holiday. Japanese stocks had carryover support from last Friday’s rally in U.S. equity markets after the weaker-than-expected U.S. Oct payrolls report bolstered speculation the Fed is finished with its rake-hike regime. An upward revision to the Japan Oct Jibun Bank services PMI was also supportive for equities. A decline in the 10-year JGB bond yield today to a 1-1/2 week low was bullish for stocks after BOJ Governor Ueda said it’s “unlikely” the BOJ will have the data needed to end negative interest rates by year-end.
The Japan Oct Jibun Bank services PMI was revised upward by +0.5 to 51.6 from the previously reported 51.1.
Pre-Market U.S. Stock Movers
Tesla (TSLA) is up more than +2% in pre-market trading on a report the company will manufacture a new EV model costing only 25,000 euros ($26,863) at a factory in Berlin.
Bluegreen Vacations Holdings (BVH) surged over +100% in pre-market trading after Hilton Grand Vacations agreed to buy the company for $75 per share in a deal valued at $1.5 billion.
Energy producers and energy service providers are climbing in pre-market trading, with the price of WTI crude up more than +1%. ConocoPhillips (COP), Devon Energy (DVN), Exxon Mobil (XOM), Haliburton (HAL), Occidental Petroleum (OXY), Phillips 66 (PSX), and Valero Energy (VLO) are up more than +1%.
Constellation Energy (CEG) climbed more than +2% in pre-market trading after reporting Q3 adjusted Ebitda of $1.20 billion, above the consensus of $1.03 billion, and raising its full-year adjusted Ebitda forecast to $3.8 billion-$4 billion from a previous forecast of $3.30 billion-$3.70 billion, stronger than the consensus of $3.58 billion.
Freshpet (FRPT) jumped more than +7% in pre-market trading after reporting Q3 net sales of $200.6 million, better than the consensus of $194.6 million, and raising its full-year net sales forecast to about $755 million from a previous estimate of about $750 million, stronger than the consensus of $750.9 million.
Mirate Therapeutics (MRTX) rose nearly +1% in pre-market trading after reporting a Q3 loss per share of -$2.49, narrower than the consensus of -$2.84.
Dish Network (DISH) sank -12% in pre-market trading after reporting Q3 revenue of $3.70 billion, well below the consensus of $3.82 billion, and saying CEO Carlson will resign effective November 12.
Bumble Inc (BMBL) tumbled more than -6% in pre-market trading after the Wall Street Journal reported that CEO Herd is stepping down.
Albemarle (ALB) slid more than -1% in pre-market trading after UBS downgraded the stock to neutral from buy.
Paramount Global (PARA) tumbled more than -4% in pre-market trading after Bank of America double-downgraded the stock to underperform from buy with a price target of $9.
Fortinet (FTNT) slipped more than -1% in pre-market trading after HSBC downgraded the stock to hold from buy.
Earnings Reports (11/6/2023)
Celanese Corp (CE), Constellation Energy Corp (CEG), Coterra Energy Inc (CTRA), Diamondback Energy Inc (FANG), International Flavors & Fragrance (IFF), NXP Semiconductors NV (NXPI), Realty Income Corp (O), Vertex Pharmaceuticals Inc (VRTX).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
