September S&P 500 E-Mini futures (ESU24) are up +0.39%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.42% this morning, building on yesterday’s sharp gains after U.S. labor market data helped alleviate concerns about a significant economic slowdown, while investors awaited a new batch of U.S. economic data due next week to reinforce signs of resilience in the world’s largest economy.
In yesterday’s trading session, Wall Street’s main stock indexes ended in the green. Parker-Hannifin (PH) surged over +10% after the company posted upbeat Q4 results and provided a strong FY25 adjusted EPS forecast. Also, chip stocks gained ground, with Arm (ARM) climbing more than +10% to lead gainers in the Nasdaq 100 and ON Semiconductor (ON) rising over +8%. In addition, Eli Lilly (LLY) advanced more than +9% after the drugmaker reported stronger-than-expected Q2 results and raised its full-year guidance. On the bearish side, McKesson (MCK) plunged over -11% and was the top percentage loser on the S&P 500 after the drug distributor reported weaker-than-expected Q1 revenue. Also, Monster Beverage (MNST) slumped more than -10% and was the top percentage loser on the Nasdaq 100 after reporting weaker-than-expected Q2 results and warning of declining demand.
The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week fell by -17K to 233K, less than the 241K consensus and down from 250K in the prior week (revised from 249K). Also, U.S. wholesale inventories increased by +0.2% m/m in June, in line with expectations.
“[Thursday’s] jobless claims data may ease some of the concerns raised by last week’s soft jobs report,” said Chris Larkin at E*Trade from Morgan Stanley. “But with inflation data due out next week and the stock market still working through its biggest pullback of the year, it’s unclear how much this will move the sentiment needle.”
Kansas City Fed President Jeffrey Schmid indicated Thursday that he is not prepared to endorse a reduction in interest rates with inflation above target and the labor market remaining healthy, albeit showing some signs of cooling. “We are close, but we are still not quite there,” Schmid said.
U.S. rate futures have priced in a 45.5% probability of a 25 basis point rate cut and a 54.5% chance of a 50 basis point rate cut at September’s policy meeting.
The U.S. economic data slate is empty on Friday.
Meanwhile, attention will now shift to the U.S. consumer price inflation report and retail sales figures for July, scheduled for release next week, with investors looking for signs of a soft landing.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.959%, down -0.96%.
The Euro Stoxx 50 futures are up +0.75% this morning, gaining positive momentum from a strong performance on Wall Street as easing fears of a U.S. recession boosted market sentiment. Travel and leisure stocks led the gains on Friday, while mining stocks also advanced. Final data from the Federal Statistical Office showed Friday that Germany’s annual inflation rate edged up to 2.3% in July from 2.2% in June, confirming preliminary data. Separately, final data from the statistical office Istat revealed on Friday that Italy’s annual inflation rate stood at 1.3% in July, up from 0.8% in June, confirming the preliminary estimate. In corporate news, Leg Immobilien Se (LEG.D.DX) rose over +4% after the company reported a narrower-than-expected Q2 loss.
Germany’s CPI and Italy’s CPI data were released today.
The German July CPI has been reported at +0.3% m/m and +2.3% y/y, in line with expectations.
The Italian July CPI arrived at +0.4% m/m and +1.3% y/y, compared to expectations of +0.5% m/m and +1.3% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.27% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.56%.
China’s Shanghai Composite Index wiped out early gains and closed lower today as perceptions grew that a better-than-expected inflation reading primarily stemmed from seasonal factors such as weather. Losses in consumer products and services stocks led the overall market lower on Friday. At the same time, semiconductor and bank stocks gained ground. The National Bureau of Statistics reported Friday that China’s annual consumer inflation rate rose slightly more than anticipated in July, reaching the highest level since February, partly because of weather disruptions to food supplies. At the same time, data indicated that factory-gate prices remained in deflation in July, matching the decline observed in June. Meanwhile, China’s yuan edged higher against the dollar on Friday following stronger-than-expected inflation data from the country, while the official fixing was also set firmer. In other news, Reuters reported on Friday that China’s securities regulator has ordered some brokerages to review their bond trading activities in an effort to curb the frenzied purchasing of Chinese government bonds. In corporate news, SMIC climbed nearly +5% in Hong Kong after China’s largest chip maker reported better-than-expected quarterly results and gave upbeat guidance for the current quarter.
The Chinese July CPI came in at +0.5% m/m and +0.5% y/y, stronger than expectations of +0.3% m/m and +0.3% y/y.
The Chinese July PPI stood at -0.8% y/y, stronger than expectations of -0.9% y/y.
Japan’s Nikkei 225 Stock Index closed higher today, tracking gains on Wall Street overnight due to better-than-expected U.S. unemployment data that eased recession concerns, though the index trimmed its gain after the yen resumed its rise. Bank and trading house stocks led the gains on Friday. Meanwhile, the yen reversed losses to strengthen against the dollar on Friday after BNY stated that the unwinding of yen-funded carry trades still has room to continue and that the Japanese currency could eventually strengthen toward 100 per dollar. In other news, JPMorgan Chase & Co. strategists, following their counterparts at UBS Group AG, lowered year-end targets for Japan’s Topix to 2,700-2,800 from 2,950 and the Nikkei 225 Stock Average to around 39,000-40,000 from 42,000, citing the stronger yen. In corporate news, Tokyo Electron closed up +0.7%, relinquishing most of its initial +10% surge after reporting better-than-expected quarterly sales and raising its full-year profit forecast. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.87% to 45.28.
Pre-Market U.S. Stock Movers
Doximity (DOCS) soared about +29% in pre-market trading after the digital platform provider for medical professionals posted upbeat Q1 results and issued above-consensus Q2 and FY25 revenue guidance.
Five9 (FIVN) plunged over -16% in pre-market trading after the software firm lowered its full-year revenue forecast due to weak booking trends.
Array Technologies (ARRY) slumped more than -11% in pre-market trading after cutting its FY24 guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - August 9th
Evergy (EVRG), Legend Bio (LEGN), Algonquin Power (AQN), New Fortress Energy (NFE), Envestnet (ENV), Construction Partners (ROAD), Sylvamo (SLVM), Amneal Pharma (AMRX), Central Puerto (CEPU), Cadre Holdings (CDRE), Getty Images Holdings (GETY), Pagaya (PGY), Soho House (SHCO), Embecta (EMBC), American Axle&Manufacturing (AXL), Canopy Growth (CGC), Proficient Auto Logistics (PAL), Berry Petroleum (BRY), AMC Networks (AMCX), Telos (TLS).
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