Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.23%, and June Nasdaq 100 E-Mini futures (NQM23) are up +1.01%.
U.S. stock index futures this morning are moderately higher. A jump of more than +7% in Microsoft in pre-market trading is leading technology stocks higher after it reported better-than-expected Q3 revenue. However, banking concerns are lingering and are limiting gains in June E-Mini S&P 500 futures as First Republic Bank sank more than -20% in pre-market trading after Bloomberg reported the bank is exploring divesting as much as $100 billion of assets as part of a rescue plan.
The markets are showing a 77% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.
Global bond yields are mixed. The 10-year T-note yield is up +0.6 bp at 3.405%. The 10-year German bund yield fell to a 2-week low of 2.311% and is down -0.2 bp at 2.382%. The 10-year UK gilt yield is up +2.0 bp at 3.715%.
On the bullish side for stocks, Microsoft is up more than +7% in pre-market trading after reporting better-than-expected Q3 revenue. Also, Chipotle Mexican Grill is up more than +7% after reporting Q1 comparable sales above consensus. In addition, Boston Scientific and Norfolk Southern are up more than +1% after reporting Q1 adjusted EPS above consensus.
On the bearish side, First Republic Bank is down more than -20% to a new record low in pre-market trading, adding to Tuesday’s -49% plunge, after Bloomberg reported the bank is exploring divesting as much as $100 billion of assets as part of a rescue plan. Also, Activision Blizzard is down more than -10% the UK’s Competition and Markets Authority blocked Microsoft’s takeover of the company. In addition, Juniper Networks is down more than -3% after forecasting Q2 adjusted operating margin below consensus.
Overseas stock markets are lower. The Euro Stoxx 50 is down -1.01%. China’s Shanghai Composite closed down -0.02%, and Japan’s Nikkei Stock Index closed down -0.71%.
The Euro Stoxx 50 index today dropped to a 2-week low and is moderately lower. Disappointing corporate earnings results are weighing on the Euro Stoxx 50 today. Software producer Dassault Systems tumbled more than -8% after reporting Q1 operating income below consensus. Also, chip toolmaker ASM International dropped more than -10% after reporting lower-than-expected Q1 order intake and offering a downbeat outlook for the rest of the year.
Limiting losses in the overall market is strength in European bank stocks, with Standard Chartered Plc and SEB AB up more than +1% after reporting better-than-expected Q1 earnings. Also, Danone is up more than +1% to lead consumer staples stocks higher after it raised its full-year sales forecast. Today’s slump in stocks boosted safe-haven demand for European government debt and knocked the 10-year German bund yield down to a 2-week low of 2.311%
The German Economy Ministry raised its 2023 German GDP forecast to +0.4% from a January forecast of +0.1%.
The German May GfK consumer confidence index rose +3.6 to a 13-month high of -25.7, stronger than expectations of -28.0.
Hawkish comments today from ECB Governing Council member Vujcic were bearish for stocks when he said the ECB "has no choice but to continue raising interest rates as inflation is falling, but core inflation is stubbornly high."
China’s Shanghai Composite Stock Index today closed slightly lower. Chinese stocks remain under pressure on geopolitical concerns following the report last week that the U.S. is preparing more steps to contain China’s technology ambitions. Union Bancaire Privee cut its recommendation for Chinese stocks to neutral from overweight, citing geopolitical risks related to semiconductors and Taiwan. Also, signs of an uneven recovery have dented market sentiment toward Chinese equities. Chinese semiconductor and software companies moved lower after several companies reported worsening earnings in Q1. Strength in tourism and travel stocks lifted the overall market from its worst levels on optimism for a strong travel season during China’s Golden Week holidays starting Saturday.
Japan’s Nikkei Stock Index today dropped to a 1-1/2 week low and closed moderately lower. Japanese stocks were weighed down today by negative carryover from Tuesday’s selloff in U.S. equity markets. Japanese steelmakers and mining stocks retreated today on industrial metals demand concerns after iron ore prices fell to 4-month lows. Also, exporter stocks moved lower after the yen climbed to a 1-1/2 week high against the dollar, curbing the earnings prospects of exporters. On the positive side, travel stocks moved higher today after the Nikkei reported that the Japanese government is preparing to end border control measures put in place for Covid-19 earlier than planned on April 29.
Pre-Market U.S. Stock Movers
Microsoft (MSFT) rallied more than +7% in pre-market trading after reporting Q3 revenue of $52.86 billion, better than expectations of $51.03 billion. Other software stocks rose on the news, with Datadog (DDOG), Snowflake (SNOW), and ServiceNow (NOW) up more than +1%. The stock maintained its gains after the UK blocked Microsoft’s $69 billion acquisition of Activision Blizzard.
PacWest Bancorp (PACW) jumped more than +15% in pre-market trading after it reported Q1 adjusted EPS of 66 cents, stronger than the consensus of 61 cents, and said deposits stabilized toward the end of March and rose in April.
Chipotle Mexican Grill (CMG) climbed more than +7% in pre-market trading after reporting Q1 comparable sales rose +10.9%y/y, stronger than the consensus of +8.51% y/y.
Boston Scientific (BSX) climbed more than +3% in pre-market trading after reporting Q1 adjusted EPS of 47 cents, better than the consensus of 43 cents, and raised its full-year adjusted EPS forecast to $1.90-$1.96 from a previous forecast of $1.86-$1.93, stronger than the consensus of $1.91.
Norfolk Southern (NSC) gained more than +1% in pre-market trading after reporting Q1 adjusted EPS of $3.32, stronger than the consensus of $3.15.
First Republic Bank (FRC) sank more than -20% to a new record low, adding to Tuesday’s -49% plunge after Bloomberg reported the bank is exploring divesting as much as $100 billion of assets as part of a rescue plan.
Activision Blizzard (ATVI) sank more than -10% in pre-market trading after the UK’s Competition and Markets Authority blocked Microsoft’s takeover of the company.
Alphabet (GOOGL) initially rose after it reported better-than-expected Q1 earnings but gave up its advance and is down more than -1% in pre-market trading as analysts point to ongoing headwinds from the economic backdrop.
Thermo Fisher (TMO) dropped more than -3% in pre-market trading after reporting Q1 operating margin of 21.8%, weaker than the consensus of 22%.
Juniper Networks (JNPR) fell more than -3% in pre-market trading after forecasting Q2 adjusted operating margin of 16.2%, below the consensus of 16.0%.
Today’s U.S. Earnings Reports (4/26/2023)
Aflac Inc (AFL), Align Technology Inc (ALGN), Allegion plc (ALLE), American Tower Corp (AMT), American Water Works Co Inc (AWK), Amphenol Corp (APH), Arch Capital Group Ltd (ACGL), Automatic Data Processing Inc (ADP), AvalonBay Communities Inc (AVB), Avery Dennison Corp (AVY), Boeing Co/The (BA), Boston Scientific Corp (BSX), CH Robinson Worldwide Inc (CHRW), CME Group Inc (CME), Dover Corp (DOV), eBay Inc (EBAY), Edwards Lifesciences Corp (EW), Entergy Corp (ETR), EQT Corp (EQT), Fortive Corp (FTV), General Dynamics Corp (GD), Hess Corp (HES), Hilton Worldwide Holdings Inc (HLT), Humana Inc (HUM), IDEX Corp (IEX), KLA Corp (KLAC), MarketAxess Holdings Inc (MKTX), Masco Corp (MAS), Meta Platforms Inc (META), Mid-America Apartment Communities (MAA), Molina Healthcare Inc (MOH), Norfolk Southern Corp (NSC), Old Dominion Freight Line Inc (ODFL), O'Reilly Automotive Inc (ORLY), Otis Worldwide Corp (OTIS), Pioneer Natural Resources Co (PXD), PTC Inc (PTC), Raymond James Financial Inc (RJF), Robert Half International Inc (RHI), Rollins Inc (ROL), ServiceNow Inc (NOW), TE Connectivity Ltd (TEL), Teledyne Technologies Inc (TDY), Teradyne Inc (TER), Thermo Fisher Scientific Inc (TMO), Tyler Technologies Inc (TYL), UDR Inc (UDR), United Rentals Inc (URI), Waste Management Inc (WM), Westinghouse Air Brake Technol (WAB).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
