March S&P 500 E-Mini futures (ESH24) are trending up +0.03% this morning after three major U.S. benchmark indices ended the regular session higher amid ongoing optimism that the Federal Reserve might initiate rate cuts as early as March.
In Tuesday’s trading session, the benchmark S&P 500 notched a nearly 2-year high, and the tech-heavy Nasdaq 100 posted a record high. Intel Corporation (INTC) climbed over +5% and was the top percentage gainer on all three major Wall Street averages following Israel’s government approval of a $3.2 billion grant for the construction of its planned $25 billion chip plant in the southern part of the country. Also, energy stocks gained ground as the price of WTI crude rose over +2% to a 3-week high, with Marathon Oil Corporation (MRO) and Baker Hughes Co (BKR) rising about +2%. In addition, FedEx Corporation (FDX) advanced over +1% after the parcel delivery giant said it had entered into an accelerated share repurchase agreement with Mizuho Markets Americas to buy back $1 billion of its shares. On the bearish side, Bristol Myers Squibb (BMY) fell more than -1% after the healthcare major agreed to buy RayzeBio for approximately $4.1 billion.
“The focus will quickly pivot to whether the market will be able to sustain its momentum into the New Year, and that may depend on how long the good vibes surrounding potential Fed rate cuts last,” said Chris Larkin at E*Trade, citing Morgan Stanley.
Economic data on Tuesday showed that the U.S. S&P/CS HPI composite - 20 n.s.a. rose +4.9% y/y in October, the most in 11 months but weaker than expectations of +5.0% y/y.
Meanwhile, U.S. rate futures have priced in a 14.5% chance of a 25 basis point rate cut at January’s monetary policy meeting and a 72.7% probability of a 25 basis point rate cut at the March meeting.
On the economic data front, investors are likely to focus on the U.S. Richmond Manufacturing Index, due later in the day. Economists, on average, forecast that the December Richmond Manufacturing Index will come in at -7, compared to the previous number of -5.
In the bond markets, United States 10-year rates are at 3.876%, down -0.23%.
The Euro Stoxx 50 futures are up +0.26% this morning, buoyed by gains in Asia and on Wall Street as investors speculated that major central banks might implement interest rate cuts early next year. Technology stocks outperformed on Wednesday, tracking advances in U.S. peers overnight. Mining stocks also gained ground following improved data from top consumer China. Meanwhile, volumes are anticipated to be light as traders resume activity after an extended Christmas break, with only a few trading days remaining in 2023. In corporate news, Bayer Ag (BAYN.D.DX) rose over +2% following the German drugs-to-pesticides group’s announcement of a trial victory in a lawsuit filed by a California man who claimed to have developed cancer due to exposure to the company’s Roundup weedkiller.
The European economic data slate is mainly empty on Wednesday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.54%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.13%.
China’s Shanghai Composite closed higher today. Gains in semiconductor and energy stocks led the overall market higher. Hong Kong-listed tech giants also climbed, with Tencent Holdings Ltd rebounding by about +4% and NetEase Inc surging by more than +11%, following indications from authorities suggesting a willingness to dial back controversial new gaming restrictions. Meanwhile, official data showed Wednesday that profits of big industrial companies in China surged in November, attributed to a low comparison base from the previous year and recent economic stimulus measures implemented by Beijing. Industrial profits increased by 29.5% year-over-year in November, a notable acceleration from the 2.7% expansion seen in October, marking the fourth consecutive month of year-over-year growth, said the National Bureau of Statistics. In other news, foreign investors purchased a net 5.6 billion yuan ($783.97 million) of Chinese stocks through the Stock Connect on Wednesday, the largest daily inflow since December. Investors are now anticipating purchasing managers’ index readings for December, set to be released over the weekend, to gain further insights into the Chinese economy.
Japan’s Nikkei 225 Stock Index closed sharply higher today as investors discerned no signs of a policy shift from the Bank of Japan in a summary of opinions from this month’s meeting. All sectors of the Nikkei 225 ended in the green, with energy and utilities stocks experiencing the largest gains. Bank of Japan board members deliberated on the prospective timing of the country’s first interest rate hike since 2007 during their meeting last week, with several members expressing a lack of urgency in making such a move, a summary of opinions at the central bank’s Dec. 18th-19th meeting showed. “Looking ahead toward the future exit from current monetary policy, it is necessary to examine the positive effects and side effects of yield curve control and negative interest rate policy, and also consider their treatment,” one member was quoted as saying in the summary released on Wednesday. Meanwhile, the yen weakened, and yields on Japanese government bonds declined following the release of the summary. In corporate news, SoftBank Group Corp climbed over +4% after the Japanese conglomerate said it would receive $7.6 billion of T-Mobile US shares without additional costs. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.78% to 16.90.
The Japanese November Housing Starts arrived at -8.5% y/y, weaker than expectations of -4.3% y/y.
Pre-Market U.S. Stock Movers
Coherus BioSciences Inc (CHRS) surged about +35% in pre-market trading after the company announced the U.S. Food and Drug Administration had approved its on-body injector of cancer drug Udenyca.
Opthea Ltd (OPT) soared over +37% in pre-market trading following the announcement that it anticipates receiving the remaining $35 million committed funds under the Development Funding Agreement with Carlyle and Abingworth. Also, Opthea has entered into binding documentation with a new co-investor under an Amended DFA to secure an additional $50 million in funding.
Elicio Therapeutics Inc (ELTX) rose more than +2% in pre-market trading following the purchase of about $7 million worth of the company’s stock by its director and 10% owner, Yekaterina Chudnovsky.
Fisker Inc (FSR) gained over +2% in pre-market trading after announcing the first customer hand-over of a Fisker Ocean Sport electric SUV at the Fisker Lounge London location in the Westfield London mall.
Bit Digital Inc (BTBT) climbed more than +7% in pre-market trading following the announcement of plans to double its operating fleet in Bitcoin mining operations to approximately 6.0 ether per second during 2024.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - December 27th
Mesabi Trust (MSB), Citius Pharma (CTXR), PHX Minerals (PHX), Veru (VERU).
More Stock Market News from Barchart
- Nasdaq Posts a Record High on Strength in Chip Stocks
- Tesla Stock Still Has at Least 24% Upside Based on Its Free Cash Flow
- Will Affirm Stock Go Up in 2024, or Crash-Land After This Year's Stellar Rally?
- Will China’s Crackdown on Tech Continue?
