Morning Markets
June S&P 500 futures (ESM23) this morning are up +0.31% at a 1-1/2 month high, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.37% at a 7-1/2 month high.
U.S. stock index futures this morning are moderately higher on reduced interest rate concerns. Monday’s economic news that showed the U.S Mar ISM manufacturing index contracted more than expected bolstered expectations that the Federal Reserve may be close to ending its interest rate hike campaign.
On the positive side today, Tesla is up more than +1% in pre-market trading after reporting China Mar vehicle deliveries of 88,869, up +19% m/m. Also, Fastenal, Comcast, Etsy, Prudential Financial, and ServiceNow are up +1% or more after being upgraded.
On the negative side, Acuity Brands tumbled nearly -3% in pre-market trading after reporting Q2 net sales that were below consensus. Also, Boeing and Ascendis Pharma A/S are down -1% or more after being downgraded.
Citigroup said that about $20 billion of new long positions in the S&P 500 were added over the past week, with positioning turning clearly bullish. Also, there's still $15 billion of losing short positions to clear, which could support the market in the near term.
Global bond yields this morning are higher. The 10-year T-note yield is up +5.1 bp at 3.462%. The 10-year German bund yield is up +6.5 bp at 2.320%. The 10-year UK gilt yield is up +7.6 bp to 3.506%.
Overseas stock markets are higher. The Euro Stoxx 50 today is up +0.73%. China’s Shanghai Composite stock index closed up +0.49%, and Japan’s Nikkei Stock Index closed up +0.35%.
The Euro Stoxx 50 index today climbed to a 14-3/4 month high and is modestly higher. Signs of slowing price pressures and expanding economic growth in the Eurozone are fueling stock gains today. The ECB reported that consumer inflation expectations eased for a second month in February. Also, German exports in February posted their largest increase in 10 months, a sign of economic strength. Goldman Sachs said the recent banking turmoil has led to a macro-driven source of dispersion into European consumer stocks, healthcare, media, and utility companies. In addition, Citigroup said net positioning in stocks in Europe remains net bearish, but $14 billion of shorts are all in losses and the market could be supported in the near term by unwinds.
The ECB reported that consumer inflation expectations eased for the second month in Feb, with 12-month inflation expectations easing to 4.6% from 4.9% in Jan and 3-year inflation expectations in Feb easing to 2.4% from 2.5% in Jan.
Eurozone Feb PPI eased to +13.2% y/y from +15.1% y/y in Jan, better than expectations of +13.3% y/y and the slowest pace of increase in 19 months.
German Feb exports rose +4.0% m/m, stronger than expectations of +1.8% m/m and the largest increase in 10 months.
China’s Shanghai Composite today pushed up to a 4-week high and closed moderately higher. Strength in Chinese telecommunication companies and artificial intelligence-related stocks led the overall market higher today. Also, Chinese infrastructure and construction companies gained after a report by state media Economic Information Daily said the country will maintain a high growth rate in infrastructure investment this year. However, weakness in electric vehicle (EV) makers and companies connected to Chinese EV makers limited gains in the overall market after Tesla’s quarterly results showed that its price cuts barely boosted deliveries, raising demand concerns for the sector as the competition among carmakers intensifies.
Japan’s Nikkei Stock Index today rose to a 3-week high and closed moderately higher. Japanese chipmakers rallied today to boost the overall market after SEMI, a global association of chipmaking equipment producers, said Japan is expected to spend $7 billion on fabrication equipment next year, up +82% y/y and the most in the world, as it attempts to boost its position in the global semiconductor market. Strength in bank stocks and automakers today also supported gains in the Nikkei Stock Index.
Pre-Market U.S. Stock Movers
Tesla (TSLA) rose more than +1% in pre-market trading after reporting China Mar vehicle deliveries of 88,869, up +19% m/m.
Etsy (ETSY) climbed more than +3% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.
Comcast (CMCSA) gained more than +1% in pre-market trading after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $44.
Prudential Financial (PRU) climbed nearly +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral.
ServiceNow (NOW) rose more than +1% in pre-market trading after Robert Baird & Co upgraded the stock to outperform from neutral.
Fastenal (FAST) rose more than +1% in pre-market trading after Stifel initiated coverage of the stock with a buy rating and a price target of $61.
PG&E (PCG) gained more than +1% in pre-market trading after Ladenburg Thalmann & Co initiated coverage of the stock with a buy rating and a price target of $20.50.
Boeing (BA) slid more than -1% in pre-market trading after Northcoast Research downgraded the stock to sell from neutral.
Acuity Brands (AYI) tumbled nearly -3% in pre-market trading after reporting Q2 net sales of $943.6 million, weaker than the consensus of $958.6 million.
Ascendis Pharma A/S (ASND) slid more than -1% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight on increased regulatory uncertainty.
Today’s U.S. Earnings Reports (4/4/2023)
Acuity Brands Inc (AYI), Kura Sushi USA Inc (KRUS), Lindsay Corp (LNN), MSC Industrial Direct Co Inc (MSM), Novagold Resources Inc (NG), Resources Connection Inc (RGP), SMART Global Holdings Inc (SGH).
