Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.16%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.26%.
Stock index futures this morning are mildly lower on some position squaring ahead of comments later today from Fed Chair Powell that may provide clues as to the future direction of Fed policy.
On the negative side for stocks, Dell Technologies is down more than -6% in pre-market trading after reporting Q3 total net revenue below consensus and forecasting weaker-than-expected Q4 revenue. Also, Marvell Technology is down more than -4% after forecasting Q4 net revenue below consensus. In addition, Pfizer is down more than -3% after it dropped the development of its experimental weight loss drug danuglipron after a high rate of side effects appeared in a mid-stage study.
On the positive side, Ulta Beauty jumped more than +11% in pre-market trading after reporting stronger-than-expected Q3 net sales. Also, cryptocurrency-linked stocks are climbing today, with the price of Bitcoin up more than +1% at a 19-month high. UiPath is up more than +13% after reporting Q3 adjusted EPS above consensus.
U.S. equity markets also have carryover support from today’s rally in the Euro Stoxx 50 to a 4-month high. Today’s jump in copper prices to a 3-month high has fueled a rally in mining stocks to lead European equities higher. Copper is moving higher after today’s news showed an unexpected expansion in Chinese manufacturing activity last month.
The markets are discounting a 0% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 0% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 56% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 115% 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 mixed. The 10-year T-note yield is down -0.6 bp at 4.320%. The 10-year German bund yield is down -1.8 bp at 2.429%. The 10-year UK gilt yield is up +0.7 bp at 4.183%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.56%. China’s Shanghai Composite Index closed up +0.06%. Japan’s Nikkei Stock Index closed down -0.17%.
The Euro Stoxx 50 today rallied to a 4-month high and is moderately higher. Gains in mining stocks are leading the overall market higher as copper prices climbed to a 3-month high after a gauge of Chinese manufacturing activity unexpectedly expanded last month. Also, UBS and Liberum upgraded mining companies Anglo American and Rio Tinto to a buy. European stocks also garnered support today from an upward revision to the Eurozone Nov S&P manufacturing PMI.
Swaps tied to ECB meeting dates have now priced in a 57% chance that the ECB will reduce its benchmark rate by -25 bp at the March 7 meeting and have more than priced in (+122%) a -25 bp rate cut at the April 11 ECB meeting.
The Eurozone Nov S&P manufacturing PMI was revised upward by +0.4 to 44.2 from the initially reported 43.8.
China’s Shanghai Composite today recovered from a 4-week low and closed slightly higher. Short covering in Chinese stocks emerged late in the session to lift the Shanghai Composite into positive territory following a report from the China Securities Journal that a state institution bought exchange-traded funds (ETFs) with underlying assets mostly including A-shares issued by central state-owned enterprises. Chinese stocks also found support today after a gauge of Chinese manufacturing activity unexpectedly expanded last month. Stocks today initially moved lower on concerns about China’s property sector after a decline in China’s home sales accelerated last month as home buyers remained wary.
The China Nov Caixin manufacturing PMI rose +1.2 to 50.7, stronger than expectations of 49.6.
Preliminary data from the China Real Estate Information Corp showed the value of new home sales among the 100 biggest Chinese real estate companies fell -29.6% y/y in Nov, accelerating from a -27.5% y/y decline in Oct.
Japan’s Nikkei Stock Index today posted modest losses. Weakness in capital spending weighed on stocks after Japan’s Q3 capital spending ex-software rose less than expected. Also, the yen today moved higher against the dollar, which weighed on Japanese exporter stocks. Losses in the overall market were limited after the Japan Nov Jibun Bank manufacturing PMI was revised upward, and the Japan Oct jobless rate unexpectedly fell. Also, strength in Japanese retailers supported the overall market as Seven & I Holdings rose more than +5% after Japan’s largest retailer said it would buy back up to 110 billion yen of shares and conduct a 3-for-1 stock split.
The Japan Nov Jibun Bank manufacturing PMI was revised upward by +0.2 to 48.3 from the previously reported 48.1.
Japan's Q3 capital spending ex-software rose +1.7% y/y, weaker than expectations of +3.4% y/y.
The Japan Oct jobless rate unexpectedly fell -.1 to 2.5%, showing a stronger labor market than expectations of no change at 2.6%.
Pre-Market U.S. Stock Movers
Pfizer (PFE) tumbled more than -3% in pre-market trading after it dropped development of its experimental weight loss drug danuglipron after a high rate of side effects appeared in a mid-stage study.
Dell Technologies (DELL) dropped more than -6% in pre-market trading after reporting Q3 total net revenue of $22.25 billion, below the consensus of $22.98 billion, and forecasting Q4 revenue of $21.5 billion-$22.5 billion, weaker than the consensus of $23.79 billion.
Marvell Technology (MRVL) fell more than-4% in pre-market trading after forecasting Q4 net revenue of $1.42 billion, below the consensus of $1.46 billion.
Tesla (TSLA) slid more than-2% in pre-market trading after RBC Capital Market said the company’s new Cybertruck pickup was priced at the higher end of expectations, which may hurt demand.
Ulta Beauty (ULTA) jumped more than +11% in pre-market trading after reporting Q3 net sales of $2.49 billion, stronger than the consensus of $2.47 billion.
UiPath (PATH) surged more than +13% in pre-market trading after reporting Q3 adjusted EPS of 12 cents, stronger than the consensus of 7 cents.
Samsara (IOT) soared more than +17% in pre-market trading after reporting Q3 revenue of $237.5 million, better than the consensus of $224.7 million, and raised its 2024 revenue forecast to $918 million-$920 million from a previous forecast of $896 million-$900 million, stronger than the consensus of $898.9 million.
Cryptocurrency-linked stocks are climbing today, with the price of Bitcoin up more than +1% at a 19-month high. As a result, Marathon Digital Holdings (MARA) is up more than +4%. Also, Coinbase Global (COIN), Riot Platforms (RIOT), and MicroStrategy (MSTR) are up more than +2%.
Johnson & Johnson (JNJ) is up more than +1% in pre-market trading after UBS upgraded the stock to buy from neutral with a price target of $1.80 billion.
Earnings Reports (12/1/2023)
Genesco Inc (GCO).
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.
