December S&P 500 futures (ESZ23) are up +0.07%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.20% this morning as market participants geared up for a key U.S. consumer inflation report that could provide additional insight into the Federal Reserve’s monetary policy outlook.
In Monday’s trading session, the blue-chip Dow outperformed major benchmarks, underpinned by an over +4% gain in Boeing Co (BA), driven by a $52 billion deal with Emirates and news that China is considering an end to a freeze on purchases of Boeing aircraft. Also, Monday.Com Ltd (MNDY) climbed more than +10% after the company reported upbeat Q3 results and raised its full-year revenue outlook. In addition, CrowdStrike Holdings Inc (CRWD) rose over +2% after Stifel upgraded the stock to Buy from Hold with a price target of $225. On the bearish side, Tyson Foods Inc (TSN) fell more than -2% after the meat processing company posted mixed Q4 results and said it expects 2024 revenue to be relatively flat compared to 2023.
“The big event of this week will be Tuesday’s U.S. CPI release. The consensus suggests that the Fed has pretty much won the battle on inflation, and markets have certainly got very excited about a potential dovish pivot. But this is far from the first time that hopes for a dovish pivot have caused excitement, and if the core is sticky around 3%, then there’s little doubt that the Fed will look to tighten policy again,” Deutsche Bank’s Jim Reid said.
Federal Reserve Vice Chair Philip Jefferson stated Tuesday that monetary policymakers might need to adopt more forceful measures than usual to keep inflation expectations anchored, particularly when the duration of high inflation remains uncertain. “The uncertainty around inflation persistence may warrant stronger policy response than otherwise,” he said. Jefferson did not detail his economic outlook or specify his preference for a particular policy path in his remarks, prepared for delivery to a research conference in Zurich, Switzerland.
Meanwhile, U.S. rate futures have priced in a 14.3% chance of a 25 basis point rate increase at the next central bank meeting in December and a 24.6% probability of a 25 basis point rate hike at the January FOMC meeting.
On the earnings front, notable companies like Home Depot (HD), Sea Limited (SE), and Vipshop (VIPS) are slated to release their quarterly results today.
Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that October U.S. CPI will come in at +0.1% m/m and +3.3% y/y, compared to the previous values of +0.4% m/m and +3.7% y/y.
Also, investors will likely focus on U.S. Core CPI data. Economists anticipate Core CPI to be +0.3% m/m and +4.1% y/y in October, compared to the previous figures of +0.3% m/m and +4.1% y/y.
In the bond markets, United States 10-year rates are at 4.627%, down -0.15%.
The Euro Stoxx 50 futures are up +0.24% this morning as investors digested a slew of important regional economic data and looked ahead to the release of key U.S. inflation data. Gains in automobile and materials stocks are leading the overall market higher. Eurostat reaffirmed its October 31st estimate, confirming that the Eurozone economy experienced a slight contraction quarter-on-quarter in the third quarter. Meanwhile, Goldman Sachs on Tuesday said it expects European equities to end at 480 points next year, indicating a 7.5% increase from current levels, backed by a better economic environment, reasonable valuations, and a “roughly flat” outlook for long-term bond yields. In corporate news, Delivery Hero Se (DHER.D.DX) climbed over +4% after the German online takeaway food company slightly lifted its annual guidance. Also, Glencore Plc (GLEN.LN) rose more than +3% after agreeing to buy a majority stake in Teck Resources Ltd.’s steelmaking coal business for $6.93 billion in cash.
U.K.’s Average Earnings Index +Bonus, U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Spain’s CPI, Germany’s ZEW Economic Sentiment, Eurozone’s GDP (preliminary) and Eurozone’s ZEW Economic Sentiment data were released today.
U.K. September Average Earnings Index +Bonus has been reported at 7.9%, stronger than expectations of 7.4%.
U.K. October Claimant Count Change stood at +17.8K, weaker than expectations of +15.0K.
U.K. September Employment Change 3M/3M came in at +54K, stronger than expectations of -198K.
U.K. September Unemployment Rate was at 4.2%, stronger than expectations of 4.3%.
The Spanish October CPI stood at +0.3% m/m and +3.5% y/y, in line with expectations.
The German November ZEW Economic Sentiment arrived at 9.8, stronger than expectations of 5.0.
Eurozone GDP came in at -0.1% q/q and +0.1% y/y in the third quarter, in line with expectations.
Eurozone November ZEW Economic Sentiment has been reported at 13.8, stronger than expectations of 6.1.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.31%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.34%.
China’s Shanghai Composite today closed higher as investors looked ahead to a summit between the leaders of the world’s two largest economies and more economic readings from the country, shrugging off weak lending activity data. Data released Monday showed that Chinese new loans fell sharply in October from the prior month, albeit exceeding analysts’ expectations. Meanwhile, market participants will closely watch the talks between U.S. President Joe Biden and Chinese President Xi Jinping on Wednesday to gauge sentiment between the world’s two biggest economies. In other news, Bloomberg News reported Tuesday that China intends to allocate a minimum of 1 trillion yuan in low-cost financing for the country’s urban village renovation and affordable housing programs. In corporate news, China International Capital Corp climbed over +8%, and China Galaxy Securities gained more than +4% after both companies refuted rumors of a planned reorganization or merger circulated the previous day. Investor attention is also on Chinese retail sales and industrial production data for October, due on Wednesday.
“Recent economic data showed more signs of renewed weakness. Export growth weakened again in October despite the lower base. CPI inflation dipped into negative territory again. Growth stabilization is not solid,” said Ting Lu, chief China economist at Nomura.
The Chinese October New Loans stood at 738.4B yuan, stronger than expectations of 665.0B yuan.
Japan’s Nikkei 225 Stock Index closed higher today, fueled by anticipation that domestic companies would continue posting strong outlooks, while investors also awaited a crucial U.S. inflation report. Gains in energy, financial, and consumer cyclical stocks led the overall market higher. Meanwhile, Japanese government bond yields declined Tuesday amid a strong 5-year auction. In other news, Bank of Japan deputy governor Shinichi Uchida said on Tuesday that the central bank would aim to raise prices and wages through increases in corporate profits and household incomes instead of cost-push inflation. On the earnings front, Mizuho Financial Group Inc. gained about +3% after raising its full-year profit forecast, attributed to a weaker yen and a more optimistic economic outlook. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.25% to 18.71.
“Japanese corporate earnings season has passed its peak, and investors confirmed many companies raised their outlook,” said Shigetoshi Kamada, a general manager at the research department at Tachibana Securities.
Pre-Market U.S. Stock Movers
Theseus Pharmaceuticals Inc (THRX) surged about +26% in pre-market trading after revealing plans to implement a 72% workforce reduction as it explored various strategic alternatives to maximize shareholder value.
Fisker Inc (FSR) plunged over -13% in pre-market trading after the company reported downbeat Q3 results and warned that it would delay its 10-Q filing after finding material weaknesses in internal controls.
Beauty Health Co (SKIN) tumbled more than -52% in pre-market trading after cutting its FY23 net sales forecast due to lower-than-anticipated U.S. revenue and restructuring charges for device upgrades.
ProKidney Corp (PROK) gained over +7% in pre-market trading after the company reported positive interim data from its RMCL-002 Phase 2 trial.
Kraft Heinz Co (KHC) rose more than +1% in pre-market trading after Bernstein upgraded the stock to Outperform from Market Perform.
Take-Two Interactive Software Inc (TTWO) climbed over +2% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - November 14th
Home Depot (HD), Nu Holdings (NU), Sea (SE), Tencent Music Entertainment Group (TME), Vipshop (VIPS), Aramark Holdings (ARMK), CAE Inc. (CAE), Energizer (ENR), Sigma Lithium Resources (SGML), IHS Holding (IHS), Cellebrite (CLBT), Canadian Solar Inc (CSIQ), CureVac NV (CVAC), Azul (AZUL), Dada Nexus (DADA), Ast Spacemobile (ASTS), Sally Beauty (SBH), WalkMe (WKME), HUYA (HUYA), Varex Imaging (VREX), Eagle Point Cred (ECC), Arcturus Therapeutics Holdings Inc (ARCT), International General Insurance (IGIC), Eneti (NETI), UroGen Pharma (URGN), Procaps (PROC).
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