Morning Markets
June S&P 500 futures (ESM23) this morning are down -0.20%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.16%.
U.S. stock index futures this morning recovered from overnight losses and are only slightly lower as bond yields fall on signs of a softening labor market after the Mar ADP employment change rose less than expected.
Losses in chipmakers in pre-market trading are leading technology stocks lower after Japan joined the U.S. and Netherlands in restricting exports of chipmaking gear to China.
Concerns that the global economy will slow as the world’s central banks keep raising interest rates weigh on stock index futures. Today, the Reserve Bank of New Zealand raised its benchmark interest rate by 50 bp, twice as much as expected. Also, Eurozone Governing Council member Vujcic said if core inflation in the Eurozone remains above 4%, "further interest rate hikes" can be expected. In addition, Cleveland Fed President Mester Tuesday evening said to put inflation on a steady path down to 2%, monetary policy needs to move "somewhat further into restrictive territory this year, with the fed funds rate moving above 5% and the real fed funds rate staying in positive territory for some time."
The U.S. Mar ADP employment change rose+145,000, weaker than expectations of +210,000.
The U.S. Feb trade deficit expanded to -$70.5 billion, wider than expectations of -$68.8 billion and the most in 4 months, which has negative implications for Q1 GDP.
Global bond yields this morning are retreating after this morning's weaker-than-expected Mar ADP employment change signals weakness in the U.S. labor market. The 10-year T-note yield fell to a 1-1/2 week low of 3.296%. Also, the 10-year German bund yield fell to a 1-week low of 2.212%. The 10-year UK gilt yield is down -0.2 bp to 3.433%.
Overseas stock markets are lower. The Euro Stoxx 50 today is down -0.17%. China’s Shanghai Composite stock index was closed for a holiday, and Japan’s Nikkei Stock Index closed down -1.68%.
The Euro Stoxx 50 index today is moderately lower. Concerns the ECB will have to continue to raise interest rates to lower inflation is weighing on stocks after Eurozone Governing Council member Vujcic said if core inflation in the Eurozone remains above 4%, "further interest rate hikes" can be expected. Losses in technology stocks are leading the overall market lower as investors are rotating out of technology stocks and into defensive shares of utilities and healthcare companies. Losses in stocks were limited on some positive economic news after German Feb factory orders rose more than expected and posted their biggest increase in more than 1-/2 years.
The Eurozone Mar S&P composite PMI was revised downward by -0.4 to 53.7 from the initially reported 54.1.
German Feb factory orders rose +4.8% m/m, stronger than expectations of +0.3% m/m and the largest increase in over 1-1/2 years.
China, Hong Kong, and Taiwan were closed today for holidays. Japan’s Nikkei Stock Index posted moderate losses on concerns the action by global central banks to continue to raise interest rates will slow economic growth. The Reserve Bank of New Zealand today raised its benchmark interest rate by 50 bp, twice as much as expected. That helped push the 10-year Japan JGB bond yields up to a 3-1/2 week high of 0.482%. Japanese airline stocks retreated and followed their overseas peers lower after Jeffries reduced its U.S. airlines earnings estimates for Q2 and full-year 2023. Japanese chipmakers fell back today as Japan joined the U.S. and Netherlands in restricting exports of chipmaking gear to China. Japanese chipmakers get about 28% of their revenue from China. On the positive side, today’s economic news showed activity in Japan’s service sector last month expanded by the most in more than nine years.
The Japan Mar Jibun Bank services PMI was revised upward by +0.8 to 55.0 from the initially reported 54.2, the fastest pace of expansion in 9-1/4 years.
Pre-Market U.S. Stock Movers
U.S. chipmakers are under pressure in pre-market trading after Japan joined the U.S. and Netherlands in restricting exports of chipmaking gear to China. As a result, advanced Micro Devices (AMD), Intel (INTC), Nvidia (NVDA), Broadcom (AVGO), Applied Materials (AMAT), and Qualcomm (QCOM) are down -1% or more.
Dlocal (DLO) dropped more than -7% in pre-market trading after reporting Q4 EPS of 8 cents, weaker than the consensus of 11 cents.
On Holding (ONON) fell more than -2% in pre-market trading after Robert Baird & Co downgraded the stock to neutral from outperform.
Western Alliance Bancorp (WAL) fell more than -5% in pre-market trading after analysts said they were disappointed the company did not give an explicit deposit balance during its quarter-end update.
Ally Financial (ALLY) slid more than -1% in pre-market trading after Morgan Stanley cut its price target on the stock to $22 from $25.
Albemarle (ALB) dropped more than -2% in pre-market trading after Bank of America downgraded the stock to underperform from neutral.
FedEx (FDX) is up more than +2% in pre-market trading after it said it seeks to cut $4 billion in costs by combing its two main delivery networks.
UnitedHealth Group (UNH) and Cigna Group (CI) rose more than +1% in pre-market trading after Raymond James upgraded both stocks to strong buy.
Dutch Bros (BROS) climbed more than +4% in pre-market trading after Wedbush upgraded the stock to outperform from neutral.
Johnson & Johnson (JNJ) rose more than +3% in pre-market trading after it agreed to pay $8.9 billion to resolve all cancer lawsuits related to its talc-based powders.
Sealed Air Corp (SEE) gained more than +1% in pre-market trading after UBS raised its recommendation on the stock to buy with a price target of $59.
Today’s U.S. Earnings Reports (4/5/2023)
Conagra Brands Inc (CAG), Lifecore Biomedical Inc (LFCR), Schnitzer Steel Industries Inc (SCHN), Simply Good Foods Co/The (SMPL), Simulations Plus Inc (SLP), Third Harmonic Bio Inc (THRD).
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.
