June S&P 500 futures (ESM23) are trending down -0.71% this morning after three major U.S. benchmark indices closed higher in a volatile trading session on Thursday as market participants weighed the future path of interest rates and digested U.S. Treasury Secretary Janet Yellen’s remarks on banks.
In Thursday’s trading session, regional bank stocks resumed their selloff, with First Republic Bank (FRC) tumbling -6% even after Treasury Secretary Janet Yellen told lawmakers she was prepared to take “additional actions if necessary” to protect deposits. Energy stocks also weighed on the broader market as the price of WTI crude dropped over -1% after U.S. Energy Secretary Jennifer Granholm told lawmakers that refilling the country’s Strategic Petroleum Reserve would be “difficult” this year and “may take several years.” At the same time, technology stocks outperformed as Treasury yields plunged on bets that the Fed may be nearing the end of its rate hiking cycle.
Meanwhile, borrowing at the Federal Reserve’s discount window stood at $110.2 billion as of Wednesday. Also, lending from the Fed’s new Bank Term Funding Program rose to $53.7 billion, while loans to foreign central banks climbed to $60 billion.
The Labor Department’s report on Thursday showed claims for state unemployment benefits unexpectedly dropped -1K to 191K last week, stronger than expectations of 197K. Also, U.S. new home sales increased +1.1% m/m to a seasonally adjusted annual rate of 640K units in February but were weaker than expectations of 650K.
Today, all eyes are focused on the U.S. Core Durable Goods Orders data in a couple of hours. Economists, on average, forecast that February Core Durable Goods Orders will come in at +0.2% m/m, compared to the previous value of +0.8% m/m.
Also, investors will likely focus on the U.S. Durable Goods Orders data, which stood at -4.5% m/m in January. Economists foresee the new figure to be +0.6% m/m.
U.S. Manufacturing PMI preliminary reading will be reported today. Economists foresee this figure to stand at 47.0 in March, compared to the previous number of 47.3.
S&P Global will also release PMI preliminary data for March today. Economists expect Composite PMI to stand at 47.5, compared to the previous value of 50.1.
U.S. Services PMI preliminary reading will be reported today as well. Economists estimate this figure to come in at 50.5 in March, compared to the previous figure of 50.6.
In addition, investors are likely to focus on a speech from St. Louis Fed President James Bullard.
In the bond markets, United States 10-Year rates are at 3.337%, down -1.96%.
The Euro Stoxx 50 futures are down -1.62% this morning as investors digested a slew of important regional economic data and the latest news from the banking sector. European bank and financial services stocks extended losses on Friday as banking stability concerns persisted, with Deutsche Bank AG (DBK.D.DX) plunging over -8% as the cost of default insurance jumped. In addition, Credit Suisse AG (CSGN.Z.IX) and UBS Group AG (UBSG.Z.IX) fell over -5% after Bloomberg News reported that they are among the banks “under scrutiny in a U.S. Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions.” Meanwhile, U.K. Retail Sales unexpectedly rose +1.2% m/m in February, stronger than expectations of +0.2% m/m, returning to their pre-pandemic levels.
U.K.’s Retail Sales, U.K.’s Core Retail Sales, France’s Manufacturing PMI (preliminary), France’s Services PMI (preliminary), Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s S&P Global Composite PMI (preliminary), Eurozone’s Services PMI (preliminary), U.K.’s Composite PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), U.K.’s Services PMI (preliminary) data were released today.
U.K. February Retail Sales stood at +1.2% m/m and -3.5% y/y, stronger than expectations of +0.2% m/m and -4.7% y/y.
U.K. February Core Retail Sales came in at +1.5% m/m and -3.3% y/y, stronger than expectations of +0.1% m/m and -4.7% y/y.
The French March Manufacturing PMI has been reported at 47.7, weaker than expectations of 48.0.
The French March Services PMI was at 55.5, stronger than expectations of 52.5.
The German March Manufacturing PMI stood at 44.4, weaker than expectations of 47.0.
The German March Services PMI was at 53.9, stronger than expectations of 51.0.
Eurozone March Manufacturing PMI came in at 47.1, weaker than expectations of 49.0.
Eurozone March S&P Global Composite PMI stood at 54.1, stronger than expectations of 51.9.
Eurozone March Services PMI was at 55.6, stronger than expectations of 52.5.
U.K. March Composite PMI has been reported at 52.2, weaker than expectations of 52.7.
U.K. March Manufacturing PMI came in at 48.0, weaker than expectations of 50.0.
U.K. March Services PMI was at 52.8, weaker than expectations of 53.0.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.64% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.13%.
China’s Shanghai Composite today closed lower as elevated U.S.-China tensions weighed on investor sentiment. U.S. lawmakers on Thursday battered TikTok’s chief executive about Chinese influence over the platform and accused TikTok of serving harmful content. Also, the Biden administration recently demanded TikTok’s owners divest their stakes or face a ban amid concerns about the app’s data privacy. Meanwhile, sentiment also soured towards Chinese property stocks after China Evergrande Group’s debt restructuring plan failed to address investor concerns.
Japan’s Nikkei 225 Stock Index closed lower today, weighed down by a drop in financial stocks as concerns about the turmoil in the global banking sector continued to weigh on sentiment. At the same time, data on Friday showed the Japanese National Core CPI slowed for the first time in 13 months in February. However, a separate report showed Japan’s manufacturing activity contracted for a fifth consecutive month in March. Meanwhile, Toshiba Corp. climbed over +4% after it agreed to a $15 billion takeover proposal made by a group led by Japan Industrial Partners. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.25% to 19.61.
The Japanese February National Core CPI stood at +3.1% y/y, in line with expectations.
The Japanese March Manufacturing PMI came in at 48.6, stronger than expectations of 48.2.
Pre-Market U.S. Stock Movers
Torrid Holdings Inc (CURV) surged more than +14% in pre-market trading after the plus-sized retailer’s holiday quarter sales and adjusted EBITDA topped Wall Street expectations.
Heron Therapeutics (HRTX) climbed over +13% in pre-market trading after the company reported upbeat Q4 results.
Scholastic Corporation (SCHL) plunged more than -12% in pre-market trading after the company’s Q3 revenue declined on a year-over-year basis, and the company cut its FY23 revenue guidance.
Healthcare Services Group Inc (HCSG) rose over +1% in pre-market trading after Jefferies upgraded the stock to hold from underperform.
Block Inc (SQ) slid about -5% in pre-market trading after Atlantic Equities downgraded the stock to neutral from overweight.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - March 24th
Meituan (MPNGF), Smiths Group Plc (SMGZY), Luckin Coffee (LKNCY), POINT Biopharma Global (PNT), Virtus Equity Convertible (NIE), Humacyte (HUMA), Metalla Royalty Streaming (MTA), Western Copper Gold (WRN), Anton Oilfield Services Group (ATONY), Sunlands Tech (STG), Vaccitech (VACC).
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