September S&P 500 futures (ESU23) are up +0.42%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.55% this morning as remarks from Treasury Secretary Janet Yellen bolstered hopes that the U.S. economy is headed toward a soft landing, while investors looked ahead to the latest U.S. inflation reading due later this week.
U.S. Treasury Secretary Janet Yellen said Sunday she’s increasingly confident that the U.S. will manage to contain inflation without significant harm to the job market. “Every measure of inflation is on the road down,” Yellen said.
In Friday’s trading session, Wall Street’s major averages closed higher. Smith & Wesson Brands Inc (SWBI) climbed over +10% after the company posted better-than-expected Q1 results. Also, Kroger Company (KR) rose more than +3% after it announced it would sell more than 400 stores for $1.9 billion to C&S Wholesalers in a bid to help win U.S. antitrust approval for the $25 billion purchase of Albertsons. In addition, energy stocks gained ground due to the rise in crude oil prices. On the bearish side, Boeing Co (BA) fell over -2% and was the top percentage loser on the blue-chip Dow following the company’s announcement that deliveries of its best-selling 737 jet this year would be at the low end of its goal of 400 to 450 planes due to a recently discovered problem at a supplier.
In the coming week, U.S. CPI data for August will be the main highlight. Also, investors will be eyeing a spate of economic data, including U.S. Core CPI, Crude Oil Inventories, PPI, Core PPI, Core Retail Sales, Initial Jobless Claims, Retail Sales, Business Inventories, Export Price Index, Import Price Index, NY Empire State Manufacturing Index, Industrial Production, Manufacturing Production, and Michigan Consumer Sentiment (preliminary).
“My expectation is that the CPI print could come in higher than expected with the price of oil pushing higher. We have a problem where ultimately the Fed may be pushed into a corner, and while they might take a pause because of the lag effect, I don't think they’re done,” said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.
Meanwhile, U.S. rate futures have priced in a 7.0% probability of a 25 basis point rate increase at September’s monetary policy meeting and a 41.8% chance of a 25 basis point rate hike at November’s monetary policy meeting.
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-year rates are at 4.279%, up +0.56%.
The Euro Stoxx 50 futures are up +0.19% this morning as investors eagerly anticipated a critical U.S. inflation report and the upcoming monetary policy decision by the European Central Bank later in the week, seeking further indications regarding the direction of global interest rates. Gains in mining and bank stocks are leading the overall market higher. Meanwhile, the European Commission said on Monday that Germany’s gross domestic product is now anticipated to contract by 0.4% in 2023 due to weak consumption and a decline in construction investment, compared to the 0.2% growth projected previously. In corporate news, Covestro Ag (1COV.D.DX) rose over +3% after the German chemicals maker announced that its management board had opted to engage in discussions regarding a potential takeover by Abu Dhabi National Oil Co.
Italy’s Industrial Production data were released today.
The Italian July Industrial Production has been reported at -0.7% m/m and -2.1% y/y, weaker than expectations of -0.3% m/m and -1.7% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.84%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.43%.
China’s Shanghai Composite today closed higher after data showed the country’s credit demand improved and deflationary pressures eased, while fresh stimulus measures also boosted sentiment. China’s financial regulator on Sunday decreased the risk weighting applied to insurance companies’ holdings of blue-chip shares and technology stocks. Also, China’s securities regulator said it recently convened a meeting with domestic and international investors, including Temasek, Bridgewater, and BlackRock, to discuss ways to enhance investor confidence. Data on Saturday showed that China’s consumer prices returned to positive territory in August, while the rate of factory-gate price declines decelerated as deflationary pressures eased amid signs of economic stabilization. Separately, People’s Bank of China data released on Monday revealed that Chinese banks issued a higher-than-expected amount of new loans in August. Meanwhile, Hong Kong-listed mainland developers fell on Monday amid signs of sluggish property sales in China. In other corporate news, Alibaba Group Holding Ltd. dropped about -3% after the e-commerce giant announced that its outgoing CEO, Daniel Zhang, would also step down as CEO and chairman of its cloud unit.
The Chinese August CPI has been reported at +0.3% m/m and +0.1% y/y, in line with expectations.
The Chinese August PPI stood at -3.0% y/y, in line with expectations.
The Chinese August New Loans came in at 1,360.0B, stronger than expectations of 1,200.0B.
Japan’s Nikkei 225 Stock Index closed lower today following a report suggesting a possible early end to the Bank of Japan’s negative interest rate policy. In an article in the Yomiuri newspaper published over the weekend, Bank of Japan Governor Kazuo Ueda said that ending negative interest rates could be an option if wage and consumer price increases appear to be sustainable. Meanwhile, financial stocks surged as the 10-year government bond yield hit a 9-year high following BOJ’s Ueda weekend comments. As a result, Resona Holdings climbed over +6%, and Sumitomo Mitsui Financial Group gained more than +5%. On the negative side, chip-related stocks retreated, with Tokyo Electron falling over -2% and Advantest shedding more than -3%. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.97% to 16.90.
Pre-Market U.S. Stock Movers
Tesla Inc (TSLA) soared over +5% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
Crinetics Pharmaceuticals Inc (CRNX) surged about +35% in pre-market trading after announcing that paltusotine, an oral, once-daily investigational compound, achieved positive results by meeting the primary endpoint and all secondary endpoints of Phase 3 PATHFNDR-1 study.
Boeing Co (BA) rose about +1% in pre-market trading following a report by Bloomberg News indicating that Vietnam Airlines is nearing an initial $7.5 billion deal to purchase around 50 passenger aircraft from Boeing.
Hostess Brands Inc (TWNK) climbed over +10% in pre-market trading after the Wall Street Journal reported that J.M. Smucker is nearing a deal to acquire the owner of Twinkies snack cakes for about $4 billion.
DoorDash Inc (DASH) gained more than +2% in pre-market trading after Jefferies upgraded the stock to Hold from Underperform.
Kenvue Inc (KVUE) rose over +3% 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: Monday - September 11th
Oracle (ORCL), Caseys (CASY), Abcam (ABCM), Bowlero (BOWL), FuelCell Energy (FCEL), Mission Produce (AVO), Lovesac (LOVE), Matrix (MTRX).
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