Morning Markets
December E-Mini S&P 500 futures (ESZ23) are up +0.02%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.08%.
Stock index futures are mixed. Weakness in technology stocks is keeping Nasdaq 100 futures in negative territory, with Nvidia down more than -1% in pre-market trading after Reuters reported that the company told customers in China it is delaying the launch of a new artificial intelligence chip into Q1 of next year. Also, Tesla is down more than -1% on concern of a price war after Chinese competitor BYD Co. announced price cuts for its Dynasty series model vehicles. An increase in the 10-year T-note yield to a 1-week high today is also weighing on stock index futures. U.S. equity markets will close early today at 1300 EST for the Thanksgiving holiday.
On the positive side, U.S. stock index futures have carryover support from today’s rally in the Euro Stoxx 50 to a 3-1/2 month high after ECB President Lagarde said ECB policymakers are in a position to pause their tightening campaign. The markets are awaiting the monthly report from S&P Global on U.S. manufacturing activity later this morning.
According to Investment Company Institute data, about $29.1 billion flowed into U.S. money-market funds in the week through Nov 21. Total assets in money-market funds increased to a record $5.763 trillion from $5.734 trillion the week prior.
The markets are discounting a 5% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and an 11% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 15% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 57% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields today are higher. The 10-year T-note yield rose to a 1-week high of 4.490% and is up +7.8 bp at 4.820%. The 10-year German bund yield rose to a 1-1/2 week high of 2.663% and is up +2.5 bp at 2.643%. The 10-year UK gilt yield rose to a 1-1/2 week high of 4.323% and is up +3.4 bp at 4.291%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.05%. China’s Shanghai Composite Index closed down -0.68%. Japan’s Nikkei Stock Index closed up +0.52%.
The Euro Stoxx 50 today rallied to a 3-1/2 month high and is moderately higher. An improvement in German business confidence for a third month lifted stocks today after the German Nov IFO business climate rose to a 4-month high. Also, BASF SE climbed more than +2% after Bloomberg News reported that Abu Dhabi National Oil is exploring acquiring BASF’s Wintershall Dea unit. In addition, dovish comments from ECB President Lagarde were positive for stocks when she said the ECB is now at a point where it can pause and assess the impact of its policy tightening. On the negative side, the 10-year German bund yield rose to a 1-1/2 week high following a report Thursday that Germany will suspend a constitutional limit on net new borrowing for a fourth consecutive year, adding to concerns that more borrowing will boost deficits and supply pressures.
ECB President Lagarde said, "we have already done a lot on rates," and the ECB is now at a point where it can pause and assess the impact of its policy tightening.
ECB Governing Council member Villeroy de Galhau said, "Excluding surprises, I don't think the ECB will raise interest rates again."
ECB Governing Council member Holzmann said there's an "equal probability" of an ECB rate hike or cut in the second quarter of 2024.
The German Nov IFO business climate rose +0.4 to a 4-month high of 87.3, weaker than expectations of 87.5.
China’s Shanghai Composite today closed moderately lower. Weakness in Chinese property stocks led the overall market lower following Thursday’s sharp rally after Bloomberg News reported that China may allow banks to offer unsecured short-term loans to qualified builders for the first time in the latest attempt to shore up the ailing housing market. Also, Chinese banks moved lower after JPMorgan Chase said the move by the government to allow banks to provide unsecured loans “would be a risky move. In addition, Chinese electric car makers retreated, led by a -5% fall in BYD Co after local Chinese car review website PCAuto cited dealers as saying the company will offer steeper price cuts for its Dynasty series models in a bid to boost year-end sales.
Japan’s Nikkei Stock Index today posted moderate gains in a catch-up play following Thursday’s holiday. Gains in Japan’s defense-related companies led the overall market higher after North Korea said it’s ending an agreement aimed at reducing military tensions with South Korea. Defense stocks also rose after Mitsubishi Heavy rallied more than +6% when it said it expects annual revenue from its defense business to double during the next three fiscal years due to Jaapn’s push to increase spending on national security. An easing of price pressures was also supportive for stocks after Japan’s Nov national CPI ex-fresh food and energy eased to+4.0% y/y, the slowest pace of increase in 7 months.
The Japan Sep leading index CI was revised upward by +0.2 to 108.9 from the previously reported 108.7.
Japan Nov national CPI rose +3.3% y/y, weaker than expectations of +3.4% y/y. Nov national CPI ex-fresh food and energy eased to +4.0 % y/y from +4.2% y/y in Oct, weaker than expectations of +4.1% y/y and the slowest pace of increase in 7 months.
The Japan Nov Jibun Bank manufacturing PMI fell -0.6 to 48.1, the steepest pace of contraction in 9 months.
Pre-Market U.S. Stock Movers
Nvidia (NVDA) is down more than -1% in pre-market trading after Reuters reported that the company told customers in China it is delaying the launch of a new artificial intelligence chip into Q1 of next year.
Tesla (TSLA) slid nearly -1% in pre-market trading on concern of a price war after Chinese competitor BYD Co announced price cuts for its Dynasty series model vehicles.
LyondellBasell (LYB) fell more than -1% in pre-market trading on signs of insider selling after an SEC filing showed EVP and General Counsel Kaplan sold $1.54 million of shares on Monday.
Palantir (PLTR) fell nearly -1% in pre-market trading on signs of insider selling after an SEC filing showed President and co-founder Cohen sold $7.11 million of shares on Monday and Tuesday.
Visa Outdoor (VSTO) jumped more than +7% in pre-market trading after the company received an unsolicited proposal from Colt CZ.
Crypto currency-related stocks are climbing in pre-market trading, with the price of Bitcoin up more than +1% at a 5-1/2 month high. As a result, CleanSpark (CLSK) is up more than +3%. Also, Marathon Digital (MARA) is up more than +2%, and Coinbase Global (COIN), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up more than +1%.
iRobot (IRBT) surged more than +30% in pre-market trading after Reuters reported that Amazon.com is set to win unconditional EU antitrust approval for its acquisition of the company.
Earnings Reports (11/24/2023)
Dakota Gold Corp (DC), Ingles Markets Inc (IMKTA), Inspired Entertainment Inc (INSE).
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.
