Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.31% at a 9-month nearest-futures high, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.05% at a 13-month high.
U.S. stock index futures this morning are moderately higher. The broader market is garnering support on optimism that U.S. lawmakers are nearing a deal to raise the debt ceiling. However, gains in Jun Nasdaq futures are contained as an increase in U.S. bond yields weighs on technology stocks.
The markets are awaiting comments later this morning from Fed Chair Powell, who is participating in a panel discussion during a monetary policy research conference hosted by the Federal Reserve in Washington.
President Biden expressed confidence there will be no U.S. default, and House Speaker McCarthy and Senate Majority Leader Schumer are making plans for votes in the coming days on a bipartisan deal to raise the debt ceiling.
Global bond yields are higher. The 10-year T-note yield climbed to a 2-month high of 3.696% and is up +4.8 bp at 3.694%. The 10-year German bund yield rose to a 3-1/2 week high of 2.498% and is up +5.0 bp at 2.496%, and the UK 10-year gilt yield climbed to 6-3/4 month high of 4.055% and is up +9.7 bp at 4.054%.
On the bullish side for stocks, Deere & Co climbed more than +3% in pre-market trading after reporting Q2 net income well above consensus and raising its full-year net income forecast. Also, Palantir Technologies is up more than +3%, adding to Thursday’s +15% surge after Ark Investment Management bought an additional 286,714 shares of the stock. In addition, Farfetch is up more than +20% after reporting Q1 revenue well above the consensus.
On the bearish side, Catalent tumbled more than -5% in pre-market trading after forecasting full-year net revenue below consensus. Also, Foot Locker is down more than -3% after cutting its full-year sales forecast. In addition, Applied Materials is down more than -1% after it said Q3 net sales would decline as the memory-chip slump weighs on its business.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.81%. China’s Shanghai Composite closed down -0.42%, and Japan’s Nikkei Stock Index closed up +0.77%.
The Euro Stoxx 50 index today rallied to a 3-1/2 week high and is moderately higher. European stocks found carryover support from Thursday’s gains in U.S. stocks on optimism that U.S. lawmakers will soon come to an agreement on raising the debt ceiling. European technology stocks rose after Applies Materials said it expects sales to decline in the current quarter, though the drop won’t be as sharp as analysts had projected. An easing of German producer price pressures also boosts equity markets after the German Apr PPI rose at the slowest pace in two years. Limiting the upside in stocks is higher European government bond yields as the 10-year UK gilt yield rose to a 6-3/4 month high today, and the 10-year German bund yield climbed to a 3-week high.
German Apr PPI eased to +4.1% y/y from +6.7% y/y in Mar, the slowest pace of increase in 2 years.
China’s Shanghai Composite Stock Index today closed moderately lower. Weakness in Chinese technology and internet stocks weighed on the overall market, led by a -6% fall in Alibaba Group Holding after it reported Q1 sales of 208.2 billion yuan, below market expectations of 209.2 billion yuan. Chinese brokerage firms also retreated today after Cailian reported that regulators are considering a cut in fees paid by mutual funds to the securities companies. The yuan rebounded from a 5-1/2 month low against the dollar today and moved higher after the Peoples Bank of China (PBOC) vowed to curb speculation in the forex market when necessary.
This week’s weaker-than-expected Chinese economic news and corporate earnings result prompted Citigroup today to say China as being “on the brink of a confidence trap,” where companies and households hold back on spending, slowing the pace of the recovery, which in turn lowers confidence even further.
Japan’s Nikkei Stock Index today extended its torrid rally up to a 32-year high. Strength in chip stocks led Japanese technology stocks higher today, following sharp gains Thursday in U.S. tech stocks. Japanese IT service stocks rose after CLSA said it sees benefits from the shift to cloud services amid Japan’s labor shortage. Shares of Ricoh and Toshiba TEC rose more than +7% after the Nikkei reported that the two companies plan to integrate their production. Finally, dovish comments from BOJ Governor Ueda underpinned stocks when he said the BOJ would take its time when deciding to exit from monetary policy easing.
Foreign investors continue to flock to Japanese stocks as exchange data released Thursday showed foreign investors were net buyers of Japanese equities for a sixth straight week, acquiring 781-billion-yen ($5.6 billion) worth of shares and futures in the week ended May 12. fund flows, low valuations, and structural changes continue to attract more investors to Japanese stocks.
Japan's Apr national CPI ex-fresh food and energy rose +4.1% y/y, the largest increase in 41 years.
The Japan Mar tertiary industry index unexpectedly fell -1.7% m/m, weaker than expectations of a +0.3% m/m increase and the biggest decline in 1-3/4 years.
BOJ Governor Ueda reassured that the BOJ will continue easing when he said, "It is appropriate to take time to decide on adjustments to monetary easing toward a future exit."
Pre-Market U.S. Stock Movers
Deere & Co (DE) climbed more than +3% in pre-market trading after reporting Q2 net income of $2.86 billion, well above the consensus of $2.49 billion, and raised its full-year net income forecast to $9.25 billion-$9.50 billion from a previous forecast of $8.75 billion-$9.25 billion, stronger than the consensus of $8.92 billion.
Palantir Technologies (PLTR) is up more than +3% in pre-market trading, adding to Thursday’s +15% surge after Ark Investment Management bought an additional 286,714 shares of the stock.
Farfetch (FTCH) surged more than +20% in pre-market trading after reporting Q1 revenue of $556.4 million, well above the consensus of $519 million.
Bloom Energy (BE) jumped more than +7% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $20.
Globant (GLOB) rose more than +1% in pre-market trading after reporting Q1 revenue of $472.4 million, above the consensus of $471.1 million, and forecast full-year revenue of at least $2.07 billion, better than the consensus of $2.06 billion.
PacWest (PACW) climbed more than +3% in pre-market trading, extending this week’s ongoing relief rally for U.S. regional banks.
Catalent (CTLT) tumbled more than -5% in pre-market trading after forecasting full-year net revenue of $4.25 billion-$4.35 billion, weaker than the consensus of $4.43 billion.
Foot Locker (FL) dropped more than -3% in pre-market trading after cutting its full-year sales forecast to a decline of -6.5% to -8% from a prior view of -3.5% to -5.5%.
Applied Materials (AMAT) slid more than -1% in pre-market trading after it said Q3 net sales would decline as the memory-chip slump weighs on its business.
Exact Sciences (EXAS) fell more than -1% in pre-market trading after Ark Investment Management liquidated its 141,915 shares in the company.
Today’s U.S. Earnings Reports (5/19/2023)
Anterix Inc (ATEX), Catalent Inc (CTLT), Children's Place Inc/The (PLCE), Deere & Co (DE), Foot Locker Inc (FL), IronNet Inc (IRNT), Latch Inc (LTCH), RBC Bearings Inc (RBC), Republic First Bancorp Inc (FRBK), Urban One Inc (UONEK), Veradigm Inc (MDRX), Vinco Ventures Inc (BBIG).
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.
