June S&P 500 E-Mini futures (ESM24) are down -0.02%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.07% this morning as market participants geared up for a new round of U.S. economic data while also awaiting the European Central Bank’s key interest rate decision.
In yesterday’s trading session, Wall Street’s major indices ended higher, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching new all-time highs and the blue-chip Dow rising to a 1-week high. Hewlett Packard Enterprise (HPE) climbed over +10% and was the top percentage gainer on the S&P 500 after the company posted upbeat Q2 results and raised its full-year revenue outlook. Also, CrowdStrike Holdings (CRWD) surged about +12% and was the top percentage gainer on the Nasdaq 100 after the cybersecurity software company reported better-than-expected Q1 results and lifted its FY25 adjusted EPS guidance. In addition, ASML Holding NV (ASML) gained over +9% after announcing it will ship its latest chipmaking machine to Taiwan Semiconductor Manufacturing Co. and Intel by the end of this year. On the bearish side, Dollar Tree (DLTR) slumped more than -4% and was the top percentage loser on the Nasdaq 100 after the discount retailer said it was exploring options for its struggling Family Dollar business, including a potential sale or spinoff.
The ADP National Employment report on Wednesday showed private payrolls rose by 152K jobs in May, weaker than expectations of 173K. At the same time, the U.S. May ISM services index rose to 53.8, stronger than expectations of 51.0 and the highest level in 9 months. Also, the U.S. ISM services prices paid sub-index fell to 58.1 in May, trailing the 59.0 consensus. Finally, the U.S. S&P Global Composite PMI came in at 54.5 in May, stronger than expectations of 54.4.
“The labor market should not be seen as a risk for inflation any longer. It is also supportive of the Fed beginning to ease policy in September if inflation continues to gradually normalize as we expect by then,” said analysts at TD Securities.
Meanwhile, U.S. rate futures have priced in a 0% chance of a 25 basis point rate cut at the June FOMC meeting and a 16.5% probability of a 25 basis point rate cut at the July FOMC meeting. Also, U.S. rate futures have priced in a 56.7% chance of a 25 basis point rate cut at September’s monetary policy meeting.
On the economic data front, investors will focus on U.S. Initial Jobless Claims data due later in the day. Economists estimate this figure to come in at 220K, compared to last week’s number of 219K.
U.S. Unit Labor Costs and Nonfarm Productivity data will also be closely watched today. Economists forecast Q1 Unit Labor Costs to be at +4.7% q/q and Q1 Nonfarm Productivity to stand at +0.3% q/q, compared to the fourth-quarter numbers of +0.4% q/q and +3.2% q/q, respectively.
U.S. Trade Balance data will be reported today as well. Economists foresee this figure to stand at -$76.20B in April, compared to the previous figure of -$69.40B.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.298%, up +0.31%.
The Euro Stoxx 50 futures are up +0.75% this morning ahead of a widely anticipated interest rate cut by the European Central Bank. Technology stocks led the gains on Thursday, while utilities stocks underperformed. German statistics office Destatis said Thursday that the country’s factory orders unexpectedly declined in April compared to the previous month. Separately, Eurostat data released Thursday indicated that the euro area’s monthly retail sales fell more than expected in April, reflecting ongoing challenges in consumer demand recovery amid high prices and a cost-of-living crisis. Meanwhile, the focus now shifts to the interest rate decision from the ECB, due later in the session. The ECB is widely anticipated to reduce its deposit rate to 3.75% from a record high of 4.00%, marking its first interest rate cut since the onset of the COVID-19 pandemic, which triggered a surge in inflation. However, uncertainty lingers regarding the future trajectory of Eurozone rates in the wake of data indicating stronger-than-expected economic growth, inflation, and wage increases. In corporate news, Remy Cointreau (RCO.FP) climbed over +4% after the French cognac maker posted a smaller-than-anticipated decline in its full-year profit and projected a recovery in the coming year.
Germany’s Factory Orders and Eurozone’s Retail Sales data were released today.
The German April Factory Orders arrived at -0.2% m/m, weaker than expectations of +0.6% m/m.
Eurozone April Retail Sales stood at -0.5% m/m and 0.0% y/y, weaker than expectations of -0.2% m/m and +0.1% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.54% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.55%.
China’s Shanghai Composite Index closed lower today. Retail and software stocks led the declines on Thursday. Property stocks also retreated as uncertainties lingered regarding Beijing’s efforts to support the sector. Meanwhile, investor confidence remained weak even after the People’s Bank of China infused 2 billion yuan in liquidity into the banking system on Thursday via seven-day reverse repo operations, with the interest rate unchanged at 1.8%. In corporate news, Dongrui Food Group slid over -3% despite reporting a year-on-year increase in pig sales revenue for May, reaching 125 million yuan. At the same time, Semiconductor Manufacturing International Corporation surged more than +5% in Hong Kong amid a global chip stocks’ frenzy. Investor focus is now on Chinese trade data for May, due on Friday, for clues about the strength of the world’s second-largest economy.
Japan’s Nikkei 225 Stock Index closed higher today, tracking overnight gains on Wall Street as signs of economic weakness in the U.S. bolstered expectations for potential Fed rate cuts later this year. Gains in technology stocks led the overall market higher on Thursday, following a record-high close for the tech-heavy Nasdaq index. Meanwhile, Japanese government bond yields dropped to multi-week lows on Thursday as strong demand at a sale of 30-year bonds added to buying momentum driven by a continued decline in Treasury yields. The yen pared earlier gains after Bank of Japan policy board member Toyoaki Nakamura stated it’s appropriate to maintain current policy for the time being. Separately, Bank of Japan Governor Kazuo Ueda said the central bank should scale back its extensive bond purchases as it transitions towards an exit from its massive monetary stimulus. Speaking in parliament, Ueda also emphasized that the BOJ will proceed “cautiously” in deciding when and by how much it raises short-term interest rates “to avoid making any big mistakes.” In corporate news, SoftBank Group rose over +1%, extending yesterday’s gains following a report from the Financial Times indicating that Elliott Management rebuilt a stake worth more than $2 billion in the technology investor and called for a $15 billion share buyback. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.17% to 17.74.
Pre-Market U.S. Stock Movers
Smartsheet (SMAR) surged about +12% in pre-market trading after the company reported stronger-than-expected Q1 results and lifted its FY25 forecast.
Lululemon Athletica (LULU) climbed over +9% in pre-market trading after the athleisure clothing company reported upbeat Q1 results, raised its full-year EPS guidance, and authorized a $1 billion increase in its stock repurchase program.
Semtech Corporation (SMTC) advanced more than +8% in pre-market trading after the company reported better-than-expected Q1 results and offered solid Q2 net sales guidance.
Sprinklr (CXM) tumbled over -21% in pre-market trading after the company lowered its FY25 revenue guidance.
Five Below (FIVE) plunged more than -15% in pre-market trading after the retailer posted downbeat Q1 results and slashed its annual guidance.
ZIM Integrated (ZIM) slid over -5% in pre-market trading after Citi downgraded the stock to Sell from Neutral with a $13 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - June 6th
Samsara (IOT), JM Smucker (SJM), DocuSign (DOCU), Nio (NIO), Toro (TTC), Vail Resorts (MTN), Ciena Corp (CIEN), Braze (BRZE), ABM Industries (ABM), G-III Apparel (GIII), Duckhorn Portfolio (NAPA), Quanex Building Products (NX), Argan (AGX), Mission Produce (AVO), NGL Energy Partners LP (NGL), Secureworks (SCWX), Concrete Pumping A (BBCP), Zumiez (ZUMZ), Limoneira (LMNR), Hooker Furniture (HOFT), Tillys (TLYS), AstroNova (ALOT), Big Lots (BIG).
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