Here are five things you must know for Tuesday, April 26:
1. -- Stock Futures Edge Lower Ahead Of Busy Earnings Slate
U.S. equity futures edge lower Tuesday, with the dollar holding gains against its global peers amid another pullback in Treasury bond yields, as investors prepped for a busy slate of tech and industrial earnings that could piece through concerns over Federal Reserve rate hikes and China's Covid lockdown.
Stocks got a solid boost late yesterday as safe-haven trading pulled bond yields -- which move in the opposite direction prices -- from multi-year highs while the tech sector found support for Elon Musk's successful $44 billion take-private deal to buy the social media group Twitter (TWTR).
That momentum found its way into Asia markets, which booked modest gains despite the ongoing surge in Covid infection in China that could trigger lockdown order in Beijing and is likely to keep supply chains disrupted across a number of business sectors -- while adding to inflation pressures -- over the coming months.
European stocks were marked 0.8% higher in early Frankfurt trading, boosted by a solid set of blue-chip earnings and softer regional currencies, while the region-wide MSCI ex-Japan index added 0.32% heading into the close of trading.
Stateside, benchmark 10-year note yields eased to 2.789% in overnight trading while the dollar index, which tracks the greenback against a basket of six global currencies, held onto its recent two-year highs to trade at 101.903 in overnight dealing.
A major batch of earnings is expected to both drive pre-market trading and keep investors cautious into the closing bell, with General Electric (GE), United Parcel Service (UPS), 3M (MMM) and PepsiCo (PEP) reporting before the bell and tech giants Microsoft (MSFT) and Google (GOOGL) updating investors at the end of the session.
On Wall Street, futures contacts tied to the Dow Jones Industrial Average are indicating an 85 point opening bell decline while those linked the S&P 500 are priced for a 6 point move to the downside. Futures linked to the tech-focused Nasdaq are looking at a modest 30 point opening bell dip.
2. -- Twitter Shares Edge Higher Amid Key Questions On Musk's Take-Private Future
Twitter shares edged higher in pre-market trading following Elon Musk's successful effort to purchase the social media group for $44 billion, although questions remain over the future of the popular social media website.
Musk, who convinced both key Twitter shareholders and the executive board to accept his $54.20 per share offer only yesterday, received a sterling endorsement from founder and former CEO Jack Dorsey, who called the Tesla CEO "the singular solution I trust" to marshal the company.
Amazon founder Jeff Bezos, who has found himself on the sharp end of Musk's criticism in the past, struck a different note, suggesting Tesla's reliance on China for both its growth and manufacturing could provide Beijing with a way to influence the social media platform.
Twitter shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $51.90 each. That's still 4% south of Musk's bid price but some 32.5% higher than when he first made his 'passive' stake in the company public on April 4.
3. -- HSBC Shares Tumble As Asia-Focused Bank Books Credit Losses, Pauses Buybacks
HSBC HSBC shares tumbled in pre-market trading after the global bank, which relies heavily on growth in Asia, booked $640 million in expected credit losses as risks linked to Russia's war on Ukraine, global inflation and China's Covid struggles continue to mount.
The bigger-than-expected charge, a $1 billion swing from the release of similar reserves over the same period last year, offset an otherwise solid set of first quarter earnings that included a pre-tax profit of $4.2 billion.
However, a key measure of the bank's financial strength, its core capital ratio, fell 170 basis points to 14.1%, and could slip further, with CFO Ewen Stevenson effectively suspending share buybacks until broader condition improve.
HSBC's London-listed shares were marked 3.5% lower in early trading to change hands at 484 pence each. Its U.S.-listed shares were marked 5.3% lower in pre-market trading to indicate an opening bell price of $30.67 each.
4. -- Microsoft Earnings To Highlight Azure Importance As PC Demand Wanes
Microsoft shares were little-changed in pre-market trading ahead of the tech giant's third quarter earnings after the close of trading.
Investors will likely focus once again on revenue growth rates for Azure, Microsoft's key cloud computing offering, as the broader division looks to offset slowing demand and chip shortages in the global market for personal computers. Analysts are looking for a bottom line of $2.19 per share, a 12.3% improvement from last year, on revenues of just under $50 billion, as cloud demand continues to drive growth.
A slowing PC market, however, could hit both Microsoft's hardware division as well as its Windows software unit, with demand likely to retreat from the pandemic era work-from-home boom that covered the past two years. The group's gaming division is also likely to retreat from pandemic levels, placing even more pressure on Azure and the broader cloud division.
Microsoft shares were marked 0.05% higher in pre-market trading to indicate an opening bell price of $280.76 each.
5. -- Google Earnings In Focus As Ad Market Competition Hots Up
Alphabet, the parent company of ad and search giant Google, bumped higher Tuesday ahead of the group's first quarter earnings after the close of trading.
Google, which is facing stiff competition from China-based upstart TikTok in the market for online video ads and engagement, is likely to fall back on both is broader search and cloud computing growth to bolster its top and bottom lines, with analysts looking for earnings of $26.11 per share on revenues of around $68 billion.
In doing so, however, Google will need to drive investment in its artificial intelligence amid an increasingly competitive market for global ad dollars, a move that will stress its capital expenditures and pressure profit margins. It's also facing the prospect of new rules on policing offensive and illegal content, recently passed by European lawmakers, that will add increased costs.
Investors may also look for further details on the group's previously-announced 20-for-1 stock split, which is expected to finalize in July.
Google shares were marked 0.05% lower in pre-market trading to indicate an opening bell price of $2,461.00 each.
