Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.17%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.20%.
Stock index futures this morning are under pressure on negative carryover from a decline in the Euro Stoxx 50 to a 1-week low. European stocks fell back on hawkish comments from ECB Governing Council member and Bundesbank President Nagel, who said the ECB isn’t yet at a point where it should consider reducing borrowing costs. Also, cybersecurity stocks are moving lower in pre-market trading, led by a 6% fall in Zscaler after it forecasted 2024 calculated billings below consensus. In addition, Shopify and Edwards Lifesciences are down more than -2% after being downgraded.
On the positive side, T-note yields are lower on a decline in inflation expectations after the 10-year breakeven inflation rate dropped to a 4-1/4 month low today at 2.212%. Also, SpringWorks Therapeutics soared more than +11% after the FDA approved the company’s nirogacestat, an oral treatment for desmoid tumors. In addition, Carlyle Group is up more than +5% after S&P Dow Jones Indices said the company will replace ICU Medical in the S&P MidCap 400.
The markets are discounting a 4% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and a 10% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 14% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 56% chance for that same -25 bp rate cut at the Apr 30-May 1, 2024, FOMC meeting.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -0.4 bp at 4.383%. The 10-year German bund yield fell to a 2-3/4 month low of 2.516% and is down -0.9 bp at 2.539%. The 10-year UK gilt yield is down -0.6 bp at 4.206%.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.48%. China’s Shanghai Composite Index closed up +0.23%. Japan’s Nikkei Stock Index closed down -0.12%.
The Euro Stoxx 50 today dropped to a 1-week low and is moderately lower. Losses in luxury goods makers are leading the overall market lower after HSBC cut its price targets across the sector, saying the industry isn’t recession-proof and stock momentum could remain “subdued” for another five to six months as investors focus on a “lackluster” first half of 2024. Hawkish comments from ECB Governing Council member and Bundesbank President Nagel also weighed on stocks when he said the ECB isn’t at the point where it should consider lowering interest rates. On the positive side, the German Dec GfK consumer confidence index unexpectedly rose.
The Eurozone Oct M3 money supply fell -1.0% y/y, weaker than expectations of -0.9% y/y.
The German Dec GfK consumer confidence index unexpectedly rose +0.5 to -27.8, stronger than expectations of a decline to -28.2.
ECB Governing Council member and Bundesbank President Nagel said, "It would be premature for the ECB to lower interest rates soon or to speculate about such steps."
China’s Shanghai Composite today posted moderate gains. Strength in technology stocks led the overall market higher today as chipmakers moved higher ahead of a visit later today by Chinese President Xi Jinping to Shanghai to meet the leaders of some local technology firms. Technology stocks also received a boost on a statement from China’s Politburo, where leaders vowed to make technology innovation a key driver for the economy in a meeting discussing the Yangtze River Economic Belt. On the negative side, Chinese electric vehicle (EV) makers retreated after BYD Co, China’s biggest EV maker, was cut to sell from buy a UOB.
Japan’s Nikkei Stock Index today closed slightly lower. Strength in the yen today undercut exporter stocks, which weighed on the overall market. A more than -9% plunge in Sharp led Japanese technology stocks lower after JPMorgan Chase downgraded the stock to underweight. On the positive side was an increase in M&A activity after the Nikkei reported that Nippon Life Insurance will acquire Nichi Holdings for 210 billion yen. Also, bank stocks rose after JPMorgan Chase upgraded Japan Post Bank Co to overweight.
Pre-Market U.S. Stock Movers
Zscaler (ZS) dropped more than -6% in pre-market trading after forecasting 2024 calculated billings of $2.52 billion-$2.56 billion, the midpoint below the consensus of $2.55 billion. Other cybersecurity stocks fell on the news, with CrowdStrike Holdings (CRWD) and Palo Alto Networks (PANW) falling more than -1%.
Shopify (SHOP) fell more than-2% in pre-market trading after Piper Sandler downgraded the stock to underweight from neutral with a price target of $56.
Edwards Lifesciences (EW) dropped more than -2% in pre-market trading after Wolfe Research downgraded the stock to underperform from peer perform.
Booz Allen Hamilton Holding Corp (BAH) slid more than -1% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight.
American Axle & Manufacturing Holdings (AXL) tumbled more than -5% in pre-market trading after Bank of America Global Research downgraded the stock to underperform from neutral.
Boeing (BA) rose more than+2% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $275.
PDD Holdings ADRs (PDD) surged more than +16% in pre-market trading after reporting Q3 revenue of 68.54 billion yuan, stronger than the consensus of 54.87 billion yuan.
SpringWorks Therapeutics (SWTX) soared more than +11% in pre-market trading after the FDA approved the company’s nirogacestat, an oral treatment for desmoid tumors.
Estee Lauder (EL) gained more than +1% in pre-market trading after HSBC initiated coverage on the stock with a buy recommendation and a price target of $180.
Carlyle Group (CG) climbed more than +5% in pre-market trading after S&P Dow Jones Indices said the company will replace ICU Medical in the S&P MidCap 400 prior to the opening of trading on Thursday, Nov 30.
Affirm Holdings (AFRM) rose more than +2% in pre-market trading after Jeffries upgraded the stock to hold from underperform.
Crocs (CROX) climbed more than +2% in pre-market trading after Raymond James upgraded the stock to a strong buy from outperform and placed the company on its Current Favorites List, replacing Lululemon Athletica.
Earnings Reports (11/28/2023)
AZEK Co Inc/The (AZEK), Crowdstrike Holdings Inc (CRWD), Fluence Energy Inc (FLNC), Hewlett Packard Enterprise Co (HPE), Intuit Inc (INTU), Leslie's Inc (LESL), Nano-X Imaging Ltd (NNOX), NetApp Inc (NTAP), Splunk Inc (SPLK), Workday Inc (WDAY).
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.
