September S&P 500 E-Mini futures (ESU24) are trending down -0.40% this morning after the CPI report was released. Consumer prices rose slightly in August, but the annual inflation rate continued its downward trend, reaching the lowest point since early 2021. This suggests that the Federal Reserve may be poised to lower interest rates soon. While overall inflation eased, core inflation, excluding volatile food and energy prices, remained relatively steady. This could influence the Fed's decision on the extent of any rate cut.
In yesterday’s trading session, Wall Street’s main stock indexes ended mixed. Oracle (ORCL) surged over +11% and was the top percentage gainer on the S&P 500 after the IT giant reported stronger-than-expected Q1 results. Also, Broadcom (AVGO) climbed more than +5% and was the top percentage gainer on the Nasdaq 100 after KeyBanc Capital Markets stated that Apple’s iPhone 16 launch is favorable for the semiconductor and software giant due to all models being upgraded to Wi-Fi 7. In addition, Tesla (TSLA) gained over +4% after Deutsche Bank named the stock a “Top Pick” with a Buy rating and a price target of $295. On the bearish side, Hewlett Packard Enterprise (HPE) plunged more than -8% and was the top percentage loser on the S&P 500 after announcing a $1.35 billion offering of Series C mandatory convertible preferred stock in an underwritten registered public offering. Also, JPMorgan Chase (JPM) slid over -5% and was the top percentage loser on the Dow after the bank’s president indicated that analysts’ projections for next year’s expenses and net interest income might be overly optimistic.
The debate between Vice President Kamala Harris and former President Donald Trump was also in the spotlight, covering topics such as their economic plans, U.S.-China relations, and immigration, though market responses were limited. As the debate concluded, Harris’ chances of winning the election rose to 56% on the betting site PredictIt, up from 53% before the debate.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be 0.900M, compared to last week’s value of -6.873M.
“A 25-basis point interest rate cut seems perfectly reasonable ... there might be a little bit of a risk of overreaction if the Fed were to go 50 bps,” said Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.
U.S. rate futures have priced in a 67.0% chance of a 25 basis point rate cut and a 33.0% probability of a 50 basis point rate cut at the September FOMC meeting.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.610%, down -0.95%.
The Euro Stoxx 50 futures are up +0.27% this morning, recovering from yesterday’s losses, while investors looked ahead to a crucial U.S. inflation reading later today. Retail and mining stocks led the gains on Wednesday, while healthcare stocks lost ground. Data from the Office for National Statistics released on Wednesday showed that Britain’s economy stagnated for the second consecutive month in July as manufacturing output experienced a sharp decline. Meanwhile, investors are gearing up for the U.S. inflation report set to be released later today and the European Central Bank’s monetary policy decision tomorrow. Investors will also be keeping an eye on remarks from ECB board member Elizabeth McCaul and the central bank’s supervisor Claudia Buch, scheduled for later today. In corporate news, Commerzbank Ag (CBK.D.DX) soared over +15% after Italian bank UniCredit acquired a 4.5% stake in the lender from the German government. Also, Industria DE Diseno Textil Sa (ITX.E.DX) rose more than +4% after the Zara owner reported strong sales between August and September.
U.K.’s GDP, U.K.’s Industrial Production, U.K.’s Manufacturing Production, and U.K.’s Monthly GDP 3M/3M Change data were released today.
U.K. July GDP has been reported at 0.0% m/m and +1.2% y/y, weaker than expectations of +0.2% m/m and +1.4% y/y.
U.K. July Industrial Production came in at -0.8% m/m and -1.2% y/y, weaker than expectations of +0.3% m/m and -0.2% y/y.
U.K. July Manufacturing Production arrived at -1.0% m/m and -1.3% y/y, weaker than expectations of +0.2% m/m and -0.1% y/y.
U.K. July Monthly GDP 3M/3M Change was at +0.5%, weaker than expectations of +0.6%.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.82% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.49%.
China’s Shanghai Composite Index ended lower today as ongoing economic and policy uncertainties in the country continued to dampen sentiment. Bank and energy stocks led the declines on Wednesday. At the same time, lithium stocks surged following an unconfirmed report that battery maker CATL had suspended some mining activities, with Jinzhou Yongshan Lithium climbing +10%. Meanwhile, the offshore yuan edged higher against the dollar on Wednesday, partly as investors reduced the perceived likelihood of Donald Trump winning the U.S. presidency, thereby decreasing the chances of further tariffs on Chinese goods. In other news, Canada said Tuesday that it is considering surtaxes on additional Chinese goods, including critical minerals, batteries, and semiconductors. In corporate news, BYD Company gained more than +3% after setting a higher sales target for this year. Investors are now focusing on Chinese retail sales and industrial production data, set for release later this week.
Japan’s Nikkei 225 Stock Index closed lower today, marking its seventh consecutive session of decline, as the yen surged sharply in response to hawkish remarks from a Bank of Japan official. Energy and utility stocks led the declines on Wednesday. Export-oriented stocks also lost ground. The latest Reuters Tankan survey, published on Wednesday, showed that the sentiment index for Japanese manufacturers dropped to +4 in September from +10 in August, reaching a 7-month low due to worries over weak Chinese demand. Meanwhile, the yen rose to its highest level against the greenback since December on Wednesday after BOJ policy member Junko Nakagawa stated that the central bank would keep raising interest rates if the economy and inflation evolve according to its forecasts. Most economists surveyed anticipated that the central bank would hold off on raising rates again until December or January, with the next decision set for next week. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +0.71% to 28.33.
Pre-Market U.S. Stock Movers
Dave & Buster’s Entertainment (PLAY) surged over +11% in pre-market trading after the company reported better-than-expected Q2 adjusted EPS.
GameStop (GME) plunged more than -10% in pre-market trading after reporting weaker-than-expected Q2 revenue.
Morgan Stanley (MS) fell over -1% in pre-market trading after Goldman Sachs downgraded the stock to Neutral from Buy.
Williams-Sonoma (WSM) gained more than +2% in pre-market trading after Jefferies upgraded the stock to Buy from Hold with a price target of $156.
Salesforce (CRM) fell about -0.5% in pre-market trading after Erste Group downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - September 11th
Oxford Industries (OXM), Tsakos Energy (TEN), Lesaka Tech (LSAK), Vera Bradley (VRA), Champions Oncology (CSBR).
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