December S&P 500 futures (ESZ23) are down -0.12%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.07% this morning as investors digested weak Chinese trade data and comments from a Federal Reserve policymaker that tempered expectations of speedy interest rate cuts by the U.S. central bank.
In Monday’s trading session, Wall Street’s major indices closed higher. Constellation Energy Corp (CEG) climbed over +6% after the company posted better-than-expected Q3 earnings and lifted its full-year adjusted EBITDA guidance. Also, Booking Holdings Inc (BKNG) rose more than +3% after DA Davidson upgraded the stock to Buy from Neutral. On the bearish side, DISH Network Corporation (DISH) tumbled over -37% after the company reported downbeat Q3 results and announced CEO Carlson would step down effective November 12th. Also, Paramount (PARA) slumped more than -7% after Bank of America downgraded the stock to Underperform from Buy.
The Federal Reserve’s Senior Loan Officer Opinion Survey released on Monday indicated that lending standards tightened for most types of loans in the past three months, and demand continued to weaken.
Minneapolis Fed President Neel Kashkari stated on Monday that it is premature to declare victory over inflation despite positive signs of diminishing inflationary pressures. He also said that over-tightening monetary policy is preferable to doing too little. “Before we declare that ‘we’re absolutely done, we’ve solved the problem,’ let’s get more data and see how the economy evolves,” Kashkari said.
Meanwhile, U.S. rate futures have priced in a 9.8% probability of a 25 basis point rate hike at the December FOMC meeting and a 14.8% chance of a 25 basis point rate increase at the January FOMC meeting.
Third-quarter earnings season continues, and investors anticipate new reports from notable companies today, including Gilead (GILD), Uber Tech (UBER), DR Horton (DHI), eBay (EBAY), and Rivian Automotive (RIVN).
On the economic data front, investors will likely focus on U.S. Trade Balance data due later in the day. Economists, on average, forecast that the September Trade Balance will stand at -$59.90B, compared to the previous value of -$58.30B.
In addition, market participants will be looking toward a batch of speeches from Fed officials Kashkari, Goolsbee, Waller, Williams, and Logan.
In the bond markets, United States 10-year rates are at 4.618%, down -1.03%.
The Euro Stoxx 50 futures are down -0.31% this morning as investors digested lackluster Chinese trade data and more corporate earnings results. Losses in energy stocks are leading the overall market lower. At the same time, financial stocks outperformed on Tuesday, with UBS Group Ag (UBSG.Z.IX) rising over +3% as better-than-expected client inflows overshadowed losses associated with absorbing Credit Suisse. Meanwhile, ECB vice president Luis de Guindos said on Tuesday that the Eurozone’s economy is expected to experience a slight contraction or, at best, remain stagnant in the fourth quarter. In other corporate news, Watches of Switzerland Group Plc (WOSG.LN) climbed more than +8% after the company kept its sales and profit forecast for 2024 unchanged and said it expects to more than double its annual profit by 2028.
U.K.’s Halifax House Price Index, Germany’s Industrial Production, and Eurozone’s PPI data were released today.
U.K. October Halifax House Price Index has been reported at +1.1% m/m, stronger than expectations of +0.2% m/m.
The German September Industrial Production stood at -1.4% m/m, weaker than expectations of -0.1% m/m.
Eurozone September PPI came in at +0.5% m/m and -12.4% y/y, compared to expectations of +0.5% m/m and -12.5% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.04%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.34%.
China’s Shanghai Composite today closed slightly lower after the country’s fresh trade data highlighted a continued slowdown in global trade and pointed to an uneven economic recovery. Customs data showed on Tuesday that Chinese exports in October dropped more than anticipated, while the country’s trade surplus narrowed to its worst level in 17 months. At the same time, China’s imports unexpectedly grew in October. Meanwhile, the International Monetary Fund on Tuesday raised its gross domestic product growth projection for China to 5.4% in 2023 and 4.6% in 2024. Insurance and tourism stocks lost ground on Tuesday, while artificial intelligence stocks outperformed. Tech giants and mainland developers listed in Hong Kong also retreated. In other news, foreign investors offloaded a net amount of 4.6 billion yuan in Chinese shares through the Stock Connect on Tuesday.
The Chinese October Trade Balance arrived at $56.53B, weaker than expectations of $82.00B.
The Chinese October Exports stood at -6.4% y/y, weaker than expectations of -3.3% y/y.
The Chinese October Imports came in at +3.0% y/y, stronger than expectations of -4.8% y/y.
Meanwhile, the Reserve Bank of Australia increased its cash rate to a 12-year high of 4.35% and made a slight upward adjustment to its inflation projection, estimating 3.5% by the end of 2024. It also lowered the predicted peak in unemployment to 4.25%, highlighting the overall economy’s resilience to the central bank’s tightening measures.
Japan’s Nikkei 225 Stock Index closed lower today as an overnight increase in U.S. Treasury yields led investors to sell stocks to lock in profits following a recent sharp rally. All sectors of the Nikkei 225 ended in the red, with utilities and real estate stocks experiencing the largest declines. Meanwhile, government data showed on Tuesday that Japan’s real wages declined in September for the 18th consecutive month, while consumer spending extended a months-long decrease. In corporate news, JSR Corp slid over -1% after the chip materials maker cut its operating profit forecast for the current financial year by 62%. On the positive side, Hitachi Zosen Corp climbed more than +4% after the machinery maker boosted its full-year profit guidance. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.09% to 19.94.
“A pause in declines in the U.S. Treasury yields became a cue for a sell-off for those who wanted to lock in profits,” said Jun Morita, general manager of the research department at Chibagin Asset Management.
The Japanese September Average Cash Earnings stood at +1.2% y/y, stronger than expectations of +1.0% y/y.
The Japanese September Household Spending came in at +0.3% m/m and -2.8% y/y, compared to expectations of -0.4% m/m and -2.7% y/y.
Pre-Market U.S. Stock Movers
Tripadvisor Inc (TRIP) climbed over +11% in pre-market trading after the company reported upbeat Q3 results.
TransMedics Group Inc (TMDX) surged about +38% in pre-market trading after the company posted better-than-expected Q3 revenue and raised its FY23 revenue guidance.
Alteryx Inc (AYX) soared more than +16% in pre-market trading after reporting stronger-than-expected Q3 results and providing above-consensus FY23 guidance.
Ventyx Biosciences Inc (VTYX) tumbled about -75% in pre-market trading after announcing it would discontinue two Phase 2 studies for its psoriasis drug VTX958 due to disappointing results.
DigitalOcean Holdings Inc (DOCN) gained over +5% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Sell.
Peloton Interactive Inc (PTON) plunged more than -5% in pre-market trading after Deutsche Bank downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - November 7th
Gilead (GILD), Uber Tech (UBER), UBS Group (UBS), Air Products (APD), Occidental (OXY), Emerson (EMR), KKR & Co (KKR), DR Horton (DHI), Fidelity National Info (FIS), Devon Energy (DVN), Coupang LLC (CPNG), Globalfoundries (GFS), Datadog (DDOG), Ecopetrol ADR (EC), Extra Space Storage (EXR), Zimmer Biomet (ZBH), eBay (EBAY), Rivian Automotive (RIVN), Expeditors Washington (EXPD), Akamai (AKAM), Axon Enterprise (AXON), Waters (WAT), Bentley (BSY), CNH Industrial NV (CNHI), Celsius (CELH), Ovintiv (OVV), Vistra Energy (VST), Evergy (EVRG), Fidelity Financial (FNF), Permian Resources (PR), Gen Digital (GEN), Viatris (VTRS), Mosaic (MOS), Jack Henry&Associates (JKHY), Lucid Group (LCID), Amdocs (DOX), Toast (TOST), TPG Inc (TPG), Coty Inc (COTY), Robinhood Markets (HOOD), Klaviyo (KVYO), Civitas Resources (CIVI), DaVita (DVA), Primerica (PRI), Darling Ingredients (DAR), Globus Medical (GMED), GXO Logistics (GXO), Ingredion (INGR), H&R Block (HRB), Choice Hotels (CHH), Pan American Silver NQ (PAAS), Dutch Bros (BROS), Ascendis Pharma AS (ASND), Valaris (VAL), Novanta (NOVT), Planet Fitness Inc (PLNT), Inspire Medical Systems (INSP), Masimo (MASI), Power Integrations (POWI), American Equity Inv. Life (AEL), F G Annuities Life (FG), Squarespace (SQSP), Powerschool Holdings (PWSC), CAVA Group (CAVA), Assured Guaranty (AGO), Melco Resorts & Entertainment (MLCO), Kyndryl Holdings (KD), Flywire (FLYW), Nelnet (NNI), Brinks (BCO), Brighthouse Financial (BHF), Tegna (TGNA), Surgery Partners Inc (SGRY), Progyny (PGNY), LCI Industries (LCII), Grocery Outlet (GO), Array (ARRY), Triple Flag Precious Metals (TFPM), Marqeta (MQ), Shoals Technologies Group (SHLS), Brp Gr (BRP), Global Business Travel (GBTG), Zai Lab (ZLAB), Innospec (IOSP), Bumble (BMBL), TransAlta Corp (TAC), Upstart (UPST), Intapp (INTA), International Seaways (INSW), Premier Inc (PINC), National Health Investors (NHI), Mercury (MRCY), RXO Inc (RXO), CarGurus (CARG), Delek Logistics Partners LP (DKL), Eve Holding (EVEX), Patria Investments (PAX), Sunstone Hotel Investors (SHO), Global Net Lease (GNL), LegalZoom.com (LZ), Tricon Capital Group Inc (TCN), Masonite Int (DOOR), Cricut (CRCT), Cymabay Therapeu (CBAY), The Andersons (ANDE), ePlus (PLUS), Veracyte Inc (VCYT), Ready Capital (RC), Maravai Lifesciences (MRVI), Delek US Energy (DK), Enovix (ENVX), Primoris (PRIM), Rhythm Pharma (RYTM), Goldman Sachs BDC Closed End Fund (GSBD), Oddity Tech (ODD), Custom Truck One Source (CTOS), Upwork (UPWK), MasterBrand (MBC), Bowlero (BOWL), Apollo Medical (AMEH).
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