September S&P 500 E-Mini futures (ESU24) are down -0.07%, and September Nasdaq 100 E-Mini futures (NQU24) are down -0.27% this morning as investors looked ahead to the U.S. presidential debate between Donald Trump and Kamala Harris, while also awaiting Wednesday’s release of a key U.S. inflation report.
In yesterday’s trading session, Wall Street’s major indexes closed higher. Super Micro Computer (SMCI) climbed over +6% and was the top percentage gainer on the S&P 500 after GlassHouse Research revealed a long position in the artificial intelligence server company, citing a “highly favorable” risk-reward at current levels. Also, Boeing (BA) advanced more than +3% on optimism that a labor agreement with its largest union will prevent a strike at its Seattle-area factories. In addition, Palantir Technologies (PLTR) surged over +14%, and Dell Technologies (DELL) rose more than +3% after S&P Global announced the inclusion of both companies in the benchmark S&P 500 index, effective before the opening of trading on September 23rd. On the bearish side, shares of health insurers offering Medicare Advantage plans retreated after Leerink Partners released a report indicating that these plans might struggle to achieve high-quality “star ratings” necessary for bonus payments, with Humana (HUM) sliding over -3% and CVS Health (CVS) falling more than -2%.
“We’re seeing mostly technical dip-buying,” said Tom Essaye at The Sevens Report. “Economic growth is undoubtedly and clearly losing momentum, but a soft landing remains more likely than a hard landing. This week focus turns back to inflation.”
Economic data released on Monday showed that U.S. consumer credit increased by +$25.45B in July, stronger than expectations of +$12.30B. Also, U.S. July wholesale inventories came in at +0.2% m/m, compared to the preliminary estimate of +0.3% m/m and the +0.2% m/m rise recorded in June.
Meanwhile, U.S. political risk has returned to the spotlight, with former President Donald Trump set to face off in a debate with Vice President Kamala Harris later today.
Investors are awaiting the U.S. consumer inflation report for August, scheduled for release on Wednesday, for indications on the size of the Federal Reserve’s upcoming interest rate cut. The CPI is expected to ease to +2.6% y/y from +2.9% y/y in July, marking the smallest increase since 2021, while the core CPI is projected to remain unchanged from July at +3.2% y/y.
“With the Fed now in its media blackout period ahead of next Wednesday’s almost certain first cut in the cycle, it looks to us that 25bps is just the more likely based on what the Fed has been telling us,” Deutsche Bank’s Jim Reid said.
U.S. rate futures have priced in a 73.0% chance of a 25 basis point rate cut and a 27.0% probability of a 50 basis point rate cut at the conclusion of the Fed’s September meeting.
The U.S. economic data slate is mainly empty on Tuesday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.710%, up +0.33%.
The Euro Stoxx 50 futures are up +0.10% this morning as investors digested a fresh batch of economic data and looked ahead to the U.S. inflation report and the European Central Bank’s monetary policy decision later in the week. Real estate and technology stocks led the gains on Tuesday, while healthcare stocks slumped. Data released Tuesday by the Office for National Statistics showed that U.K. wage growth slowed again in the three months to July, providing the latest indication that high interest rates are helping to curb inflation. Separately, final data from the Federal Statistical Office confirmed that Germany’s annual inflation rate stood at 1.9% in August, the lowest level since March 2021. Meanwhile, the ECB is set to announce its interest rate decision on Thursday, with the central bank widely expected to cut its deposit rate by 25 basis points to 3.50%. In corporate news, Amplifon Spa (AMP.M.DX) slumped more than -6% after Apple announced that its new AirPods can function as hearing aids.
U.K.’s Average Earnings ex Bonus, U.K.’s Unemployment Rate, and Germany’s CPI data were released today.
U.K. Average Earnings ex Bonus has been reported at 5.1% in the three months to July, in line with expectations.
U.K. Unemployment Rate was at 4.1% in the quarter to July, in line with expectations.
The German August CPI arrived at -0.1% m/m and +1.9% y/y, in line with expectations.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.28%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.16%.
China’s Shanghai Composite Index closed higher today, reversing earlier losses as investors cheered stronger-than-expected export data from the country. Software and hardware stocks led the gains on Tuesday. Customs data released on Tuesday revealed that China’s exports in August grew at their quickest rate since March 2023, despite rising trade barriers, while imports fell short of expectations due to weak domestic demand. On the negative side, the U.S. government proposed new sanctions on Chinese biotech firms. WuXi AppTec tumbled more than -10% in Hong Kong after the U.S. House of Representatives passed a bill on Monday aimed at restricting business with several Chinese biotech companies, including WuXi AppTec and BGI Genomics, on national security grounds. Also, mainland developers listed in Hong Kong plummeted after several property companies were removed from the Stock Connect program. In other corporate news, Alibaba Group climbed over +4% after being added to the Stock Connect program, which provides mainland investors with easier access to investing in the Chinese tech giant.
The Chinese August Trade Balance stood at $91.02B, stronger than expectations of $81.40B.
The Chinese August Exports came in at +8.7% y/y, stronger than expectations of +6.5% y/y.
The Chinese August Imports arrived at +0.5% y/y, weaker than expectations of +2.0% y/y.
Japan’s Nikkei 225 Stock Index ended lower today, wiping out earlier gains and declining for the sixth straight session. Japanese shares were broadly lower due to position adjustments before major events this week, including U.S. inflation data, the first presidential debate between Kamala Harris and Donald Trump, and the ECB’s interest rate decision. Meanwhile, solid growth, increasing wages, and persistent inflationary pressures continued to bolster expectations that the Bank of Japan would raise interest rates again before the year’s end. In other news, Katsunobu Kato, Japan’s former health minister and a candidate in the ruling party’s leadership race, on Tuesday, urged the creation of a stimulus package to fund spending aimed at boosting domestic investment and revitalizing regional economies. In corporate news, Daiichi Sankyo plunged over -8% after trials revealed that an experimental drug, jointly developed with U.K.-based AstraZeneca, failed to significantly improve overall survival in lung cancer patients during a late-stage trial. At the same time, Joban Kosan climbed more than +8% after announcing that Fortress Investment Group would acquire the company for approximately 14 billion yen ($98 million) in a public tender offer at 1,650 yen per share. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.05% to 28.13.
Pre-Market U.S. Stock Movers
Oracle (ORCL) climbed over +8% in pre-market trading after the IT giant reported stronger-than-expected Q1 results.
Hewlett Packard Enterprise (HPE) slumped more than -6% in pre-market trading after commencing a $1.35 billion offering of Series C mandatory convertible preferred stock in an underwritten registered public offering.
Apple (AAPL) fell over -1% in pre-market trading as Huawei’s tri-fold smartphone overshadowed the launch of the company’s new iPhone series and other products.
Equity Residential (EQR) rose more than +1% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with an $83 price target.
Johnson Controls (JCI) gained over +2% in pre-market trading after BofA upgraded the stock to Buy from Neutral with an $80 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - September 10th
GameStop Corp (GME), Academy Sports (ASO), Dave & Buster’s Entertainment (PLAY), InnovAge Holding (INNV), Petco Health and Wellness (WOOF), Bioceres Crop (BIOX), Cognyte Software (CGNT), Cantaloupe (CTLP), Mama’s Creations (MAMA), Evolution Petroleum (EPM), Dynagas LNG (DLNG).
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