Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are down -0.22%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.30%.
Stock index futures this morning are mildly lower. Weakness in technology stocks is weighing on the overall market, with Oracle down -10% in pre-market trading after reporting weaker-than-expected Q1 revenue due to slowing cloud sales. Morgan Stanley said Oracle’s results raise questions about the timing of generative artificial intelligence (AI) demand turning into revenue across the broader business. A decline in T-note yields today is a supportive factor for stocks.
U.S. financial markets are awaiting Wednesday’s consumer price data for direction. The U.S. Aug CPI is expected to increase to +3.6% y/y from July’s +3.2% and June’s 2-1/4 year low of +3.0%. However, the Aug core CPI is expected to ease to a new 1-4/4 year low of +4.3% y/y from July’s 1-3/4 year low of +4.7%.
The markets are discounting the odds at 7% for a +25 bp rate hike at the September 20 FOMC meeting and 46% for that +25 bp rate hike at the November 1 FOMC meeting.
Global bond yields are lower. The 10-year T-note yield is down -2.6 bp at 4.262%. The 10-year German bund yield is down -2.3 bp at 2.615%. The 10-year UK gilt yield fell to a 1-week low of 4.407% and is down -6.3 bp at 4.408%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.31%. China’s Shanghai Composite Index closed -0.18%. Japan’s Nikkei Stock Index closed +0.95%.
The Euro Stoxx 50 today is moderately lower. Weakness in technology stocks is weighing on the overall market. SAP SE is down more than -2% to lead software stocks lower as Oracle sank more than -10% in post-market trading when it reported a slowdown in cloud sales growth after the close on Monday. Losses in the overall market are limited after a gauge of German investor confidence unexpectedly improved. European stocks are awaiting the results of Thursday’s ECB meeting, where markets are discounting the odds at 42% that the ECB will raise interest rates by 25 bp.
The German Sep ZEW survey expectations of economic growth unexpectedly rose +0.9 to -11.4, stronger than expectations of a decline to -15.0.
China’s Shanghai Composite Index closed slightly lower. Chinese property stocks retreated today on signs that the recent spurt of home sales in China’s biggest cities is losing momentum less than two weeks after authorities loosened mortgage restrictions. According to estimates from Centaline Group, sales of existing homes in Beijing plunged by -35% to about 1,700 units last weekend from 2,600 the weekend immediately after the easing of mortgage restrictions. Chinese insurance stocks also fell today after Jeffries cut ratings for many companies in the sector, citing a downside to consolidated dividend estimates following the industry’s adoption of new accounting standards. On the positive side, Chinese miners and material producers gained after Chinese credit data Monday boosted metals prices.
Japan’s Nikkei Stock Index posted moderate gains. Strength in Japanese machinery makers led the overall market higher on a positive spin to Monday’s Japan machine tool orders report after Mitsubishi UFJ Morgan Stanley Securities said that while orders have yet to achieve a full-scale recovery, the decline seems to be coming to a halt. Also, exporter stocks today recovered some of Monday’s losses as the yen retreated against the dollar.
On the negative side, Japanese heavy industry stocks declined on the heels of Monday’s -8% plunge in RTX Corp after the company cut its full-year sales outlook and said it would take a roughly $3 billion pretax charge in Q3 as it addresses the flowed Pratt & Whitney Geared Turbofan engine. Also, Japanese government bond yields continued to rise as the 10-year JGB bond yield climbed to a new 9-1/2 year high today of 0.722% after BOJ Governor Ueda on Monday told the Yomiuri newspaper that the BOJ will have enough information and data by the year-end to judge if wages will continue to rise, a condition for adjusting stimulus.
Pre-Market U.S. Stock Movers
Oracle (ORCL) sank more than -10% in pre-market trading after reporting Q1 adjusted revenue of $12.45 billion, weaker than the consensus of $12.47 billion.
United Parcel Service (UPS) slid more than -1% in pre-market trading after CEO Tome said the company would pay out the biggest portion of its new five-year labor pact over the next 12 months, making for a challenging upcoming year.
RTX Corp (RTX) fell more than -1% in pre-market trading after RBC Capital Markets downgraded the stock to sector perform from outperform.
AerCap Holdings (AER) fell more than -3% in pre-market trading after holder GE Capital offered 32.4 million shares via Goldman Sachs, Citigroup, Barclays, Bank of America Securities, and JPMorgan Chase.
Acelyrin (SLRN) plunged more than -50% in pre-market trading after its drug izokibep did not meet the primary endpoint of a clinical trial of patients with hidradenitis suppurativa, a chronic inflammatory skin condition. Citigroup opened a positive catalyst watch on the stock, seeing “a rich catalyst path ahead” for the company.
Westrock (WRK) climbed more than +6% in pre-market trading after Smurfit Kappa Group Plc agreed to acquire the company in a $11.2 billion deal.
Paramount Global (PARA) rose more than +1% in pre-market trading after the Wall Street Journal reported that National Amusements, the parent company of the Paramount movie studio, had reached a deal with its creditors to restructure some of its debt.
CVS Health Corp (CVS) gained more than +1% in pre-market trading after maintaining its full-year adjusted EPS forecast of $8.50-$8.70.
Earnings Reports (9/12/2023)
Evolution Petroleum Corp (EPM) and Innovage Holding Corp (INNV).
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.
