Morning Markets
March E-Mini S&P 500 futures (ESH24) are up +0.06%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.11%.
Stock index futures this morning are slightly higher amid thin holiday-season trading. According to Bloomberg data, trading volume across U.S. exchange-traded funds was 35% lower than the 30-day average on Tuesday.
Lower global bond yields support stocks on optimism that the world’s central banks will begin cutting interest rates next year. The 10-year T-note yield today is just above last Thursday’s 5-month low, while the 10-year German bund yield tumbled to a 1-year low, and the 10-year UK gilt yield dropped to an 8-1/2 month low.
The markets are discounting the chances for a -25 bp rate cut at 14% at the next FOMC meeting on Jan 30-31 and 96% for the following meeting on March 19-20.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -5.8 bp at 3.839%. The 10-year German bund yield dropped to a 1-year low of 1.902% and is down -7.2 bp at 1.907%. The 10-year UK gilt yield fell to an 8-1/2 month low of 3.444% and is down -4.8 bp at 3.457%.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.31%. China’s Shanghai Composite Index closed up +0.54%. Japan’s Nikkei Stock Index closed up +1.13%.
The Euro Stoxx 50 is moderately higher as markets reopen from the Christmas holiday break. Gains in technology stocks are leading the overall market higher, following Tuesday’s rally in the Nasdaq 100 to a record high. Energy stocks are also climbing, led by a +6% jump in Vesta Wind Systems A/S. after it received large orders for projects in Australia and the U.S. Falling bond yields are also supportive for stocks, with the 10-year German bund yield dropping to a 1-year low and the 10-year UK gilt yield falling to an 8-1/2 month low. On the negative side, shipping stocks retreated, with AP Moller-Maersk falling more than -4% after saying it’s preparing to resume shipping through the Red Sea. Shipping stocks had rallied on expectations that the disruption caused by attacks on Red Sea commercial shipping would allow companies to raise prices.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 5% for its next meeting on Jan 25 and at 64% for the following meeting on March 7.
China’s Shanghai Composite Index today recovered from early losses and closed moderately higher. Chinese equities rebounded after economic news today showed a quickening speed of growth in China Nov industrial profits, which posted their largest increase in 19 months. Chinese gaming stocks such as Tencent Holdings and NetEase recouped some of last week’s sharp losses after the government issued a statement that they’ve taken feedback from stakeholders and will consider them, increasing the chances that the proposed gaming restrictions issued last week may not be implemented. Chinese technology stocks also gained after the government vowed to form an initial comprehensive computing power infrastructure system by the end of 2025.
China Nov industrial profits rose +29.5% y/y, the largest increase in 19 months.
Japan’s Nikkei Stock Index today closed moderately higher. Japanese technology stocks rallied today on positive carryover from Tuesday’s rally in the Nasdaq 100 to a record high. Also, a weaker yen today fueled a rally in exporter stocks. The yen retreated after a summary of the December 18-19 BOJ meeting showed that several BOJ members indicated that they see no rush in ending the BOJ’s negative rate policy. Softbank Group rallied more than +4% after announcing it would receive $7.6 billion worth of T-Mobile U.S. shares without additional costs. As a result, a $1.93 billion gain will be recorded in Softbank Group’s Q3 profits.
Japan Nov housing starts fell -8.6% y/y to a 7-month low of 775,000.
Pre-market U.S. Stock Movers
Tesla (TSLA) is up +0.4% in pre-market trading after Wedbush Securities said the company’s delivery trajectory for Q4 looks strong.
Cytokinetics (CYTK) surged more than +39% in pre-market trading after a trial of its heart drug aficamten showed a statistically significant and clinically meaningful increase in the primary efficacy endpoint.
Coherus Biosciences (CHRS) soared more than +30% in pre-market trading after the FDA approved the company’s Udenyca Onbody, a medication administered after chemotherapy to reduce infection risks.
Iovance Biotherapeutics (IOVA) slumped more than -20% in pre-market trading after it said the U.S FDA placed a clinical hold on its IOV-LUN-202 trial after a serious adverse event potentially related to the non-myeloablative lymphodepletion pre-conditioning regimen.
Gracell Biotechnologies (GRCL) fell nearly -1% in pre-market trading after Piper Sandler downgraded the ADRs to neutral from overweight.
Earnings Reports (12/27/2023)
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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.
