June S&P 500 futures (ESM23) are up +0.91%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.93% this morning after three major U.S. benchmark indices finished the regular session lower, while U.S. Treasury yields climbed as market participants mulled the likely Fed’s interest rate trajectory amid easing bank jitters.
In Tuesday’s trading session, Wall Street’s main averages closed lower as higher bond yields continued to pressure rate-sensitive tech and other growth stocks, with the Nasdaq 100 dropping to a 1-week low. At the same time, energy stocks gained ground to lead gains among the major S&P sectors as the prices of WTI crude oil rose to a 2-week high on Kurdistan supply risks and banking optimism. Also, AMC Entertainment Holdings Inc (AMC) jumped over +13% following a report that e-commerce giant Amazon.com Inc (AMZN) was looking to acquire the theater chain. In addition, McCormick & Company (MKC) surged over +9% after reporting upbeat Q1 earnings results and reaffirming FY23 guidance.
Fed Vice Chair for Supervision, Michael Barr, told a Senate Banking Committee hearing on Tuesday that the U.S. banking system is “sound and resilient” and blamed the collapse of Silicon Valley Bank on a “textbook case of mismanagement.”
Data on Tuesday showed that the U.S. CB consumer confidence index unexpectedly rose to 104.2 in March, stronger than expectations of 101.0. Also, U.S. Richmond Manufacturing Index came in at -5 in March, stronger than expectations of -10. In addition, the U.S. S&P/CS HPI Composite - 20 n.s.a. stood at +2.5% y/y in January, in line with expectations.
“The confidence data suggest that the Fed needs to continue to push forward with the hawkish policy guidance that they have been delivering for the last few months,” Jefferies said in a note.
U.S. rate futures have priced in a 42.5% chance of a 25 basis point rate increase and a 57.5% chance of no hike at the next central bank meeting in May.
Meanwhile, U.S.-listed shares of Alibaba Group Holdings (BABA) surged over +14% after the e-commerce firm said Tuesday it was planning to split into six units and explore fundraisings or listings for most of them, fuelling optimism that Beijing’s crackdown on the tech sector may be ending.
Today, all eyes are focused on the U.S. Pending Home Sales data in a couple of hours. Economists, on average, forecast that February Pending Home Sales will stand at -2.3% m/m, compared to the previous value of +8.1% m/m.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be +0.092M, compared to last week’s value of +1.117M.
In the bond markets, United States 10-Year rates are at 3.556%, down -0.33%.
The Euro Stoxx 50 futures are up +1.02% this morning, with tech and consumer stocks gaining the most. European stocks have received a positive handover from Asia after most main indexes climbed on Chinese tech giant Alibaba’s split-up plans. In addition, shares of UBS Group Ag (UBSG.Z.IX) rose about +2% after the Swiss banking giant reappointed Sergio Ermotti as CEO to steer Credit Suisse’s takeover. In other news, Infineon Technologies Ag (IFX.D.DX) climbed over +7% after the chipmaker raised its full-year outlook amid strength in automotive and industrial divisions.
Germany’s GfK Consumer Climate and France’s Consumer Confidence data were released today.
The German April GfK Consumer Climate stood at -29.5, weaker than expectations of -29.2.
The French March Consumer Confidence came in at 81, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.33%.
China’s Shanghai Composite lagged its Asian peers and closed slightly lower today as investors awaited more data to assess the country’s economic rebound after it dropped severe COVID-19 restrictions. Geopolitical tensions also weighed on sentiment after China threatened to retaliate if U.S. House Speaker Kevin McCarthy meets Taiwan President Tsai Ing-wen during her planned transit of the United States. At the same time, Alibaba Group’s plans to split into six sub-divisions boosted investor confidence in the wider Chinese tech sector. Investor attention is now on Chinese PMI data due later in the week.
Japan’s Nikkei 225 Stock Index closed higher as worries over the banking sector eased. Meanwhile, SoftBank Group Corp climbed over +6% after Chinese e-commerce conglomerate Alibaba Group, in which the Japanese technology investor has a 13.7 % stake, announced its intentions to split into six units. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.89% to 18.08.
“The lack of any substantive developments in the banking backdrop has seen markets relatively calm by the standards of recent weeks,” said Taylor Nugent, an economist at National Australia Bank.
Pre-Market U.S. Stock Movers
Lululemon Athletica Inc (LULU) surged over +14% in pre-market trading after the company reported better-than-expected Q4 results and posted upbeat FY23 guidance.
N-Able Inc (NABL) climbed more than +13% in pre-market trading after being named to join the S&P SmallCap 600.
Arcturus Therapeutics Holdings Inc (ARCT) soared about +28% in pre-market trading after the company reported upbeat Q4 results.
Somalogic Inc (SLGC) plunged over -14% in pre-market trading after the company reported mixed Q4 results and issued weaker-than-expected FY23 revenue guidance.
Marathon Petroleum Corp (MPC) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - March 29th
Cintas (CTAS), Paychex (PAYX), Concentrix (CNXC), RH (RH), H B Fuller (FUL), Unifirst (UNF), Verint (VRNT), Semtech (SMTC), Kingsoft Cloud (KC), Sharecare (SHCR), Nexters (GDEV), Franklin Covey (FC), Aerovate Therapeutics (AVTE), Up Fintech (TIGR), Bluebird (BLUE), Sportsmans (SPWH), Vizsla (VZLA), ProQR Therapeutics NV (PRQR), Icosavax (ICVX), Jiayin (JFIN), Redwire (RDW), Beam Global (BEEM), Conns (CONN), View (VIEW), Bit Digital (BTBT), Pieris Pharmaceuticals Inc (PIRS).
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