Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.20%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.38%.
U.S. stock index futures this morning are mildly higher. M&A activity is supportive for stocks after Nasdaq Inc agreed to Adenza from buyout firm Thoma Bravo for $10.5 billion. Also, Novartis AG agreed to buy Chinook Therapeutics Inc for as much as $3.5 billion. The markets are looking ahead to interest rate decisions from the Fed, ECB, and BOJ this week.
The outlook for U.S. price pressure to continue to ease may prompt the Fed to pause its rate hike campaign and is bullish for stocks. The consensus is that Tuesday’s U.S. consumer price report will show May CPI eased to +4.1% y/y from +4.9% y/y in April.
Market odds for the Fed to raise the fed funds target range by +25 bp at Wednesday’s FOMC meeting stand at 29%.
Global bond yields are mixed. The 10-year T-note yield is down -1.7 bp at 3.722%. The 10-year German bund yield is down -3.8 bp at 2.339%, and the UK 10-year gilt yield is up +1.6 bp at 4.255%.
On the bullish side for stocks, Biogen jumped more than +6% in pre-market trading after its Leqembi drug to treat Alzheimer’s developed with Eisai, gained support from advisers to the U.S. FDA. Also, Chinook Therapeutics surged more than +65% after Novartis AG agreed to buy the company for $40 a share in a deal valued at $3.5 billion. In addition, Advanced Micro Devices is up more than +3% after KeyBanc Capital Markets raised its price target on the stock.
On the bearish side, energy stocks and energy service providers are falling in pre-market trading, with the price of WTI crude down more than -2% at a 1-week low. Also, Nasdaq Inc is down more than -5% after announcing it will acquire Adenza from buyout firm Thoma Bravo for $10.5 billion in cash and stock.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.57%. China’s Shanghai Composite closed down -0.08%, and Japan’s Nikkei Stock Index closed up +0.52%.
The Euro Stoxx 50 index today is moderately higher. Consumer products makers are leading the overall market higher today, with Adidas AG up more than +4% after Bernstein upgraded the stock to outperform. A spurt of M&A activity is also supportive for equities, with Novartis AG agreeing to buy Chinook Therapeutics for $3.5 billion and Georg Fischer AG offering to buy Uponor Oyj for about $2.3 billion. Also, Glencore Plc has proposed buying Teck Resources Ltd’s coal business. Limiting the upside in stocks is the outlook for the ECB to lift its benchmark interest rate on Thursday. Market expectations for the ECB to raise the main refinancing rate by +25 bp at Thursday’s ECB meeting are at 95%.
China’s Shanghai Composite Stock Index today closed slightly lower. Chinese stocks fluctuated today on either side of unchanged and were weighed down by ongoing growth concerns. Property stocks led declines in the overall market today after Goldman Sachs said China’s struggling real estate industry is expected to see an L-shaped recovery in the coming years that will put a drag on its economy. Chinese property developers were also under pressure after Citigroup downgraded earnings estimates and price targets on several companies, citing challenging market and liquidity conditions. In addition, Chinese shipping stocks retreated today after Morgan Stanley lowered its price targets on several firms, saying conditions in the container marker remain weak. On the positive side, suppliers of Huawei Technologies gained today after China Securities reported the company raised its mobile phone shipment target to 40 million units from 30 million for 2023.
Japan’s Nikkei Stock Index today posted moderate gains. An easing of Japanese producer price pressures is bullish for stocks after Japan May PPI eased to +5.1% y/y, the smallest increase in nearly two years. Also, JPMorgan Chase said that Japan is a better investment option than the Eurozone among developed market equities due to several supportive factors, including extremely cheap valuations. Shares of Japanese defense-related stocks rallied today after the government extended an order to destroy ballistic missiles launched by North Korea that may be a threat to Japan. The outlook for the BOJ to maintain stimulus measures and extremely low interest rates is bullish for stocks. Market odds for the BOJ to maintain its policy balance rate at -0.1% at Friday’s policy meeting are 93%.
Today’s Japanese economic news was mixed for stocks. On the positive side, Japan May PPI eased to +5.1% y/y from +5.9% y/y in Apr, slower than expectations of +5.6% y/y. Conversely, Japan May machine tool orders fell -22.2% y/y, the steepest pace of decline in 2-3/4 years.
Pre-Market U.S. Stock Movers
Tesla (TSLA) is up more than +1% in pre-market trading on a run of recent positive news for the company, including General Motors and Ford Motor adapting their electric vehicles to Tesla’s Superchargers, as well as Tesla’s Model 3 sedans becoming eligible for the full U.S. tax credit.
Biogen (BIIB) jumped more than +6% in pre-market trading after its Leqembi drug to treat Alzheimer’s developed with Eisai, gained support from advisers to the U.S. FDA.
Chinook Therapeutics (KDNY) surged more than +65% in pre-market trading after Novartis AG agreed to buy the company for $40 a share in a deal valued at $3.5 billion.
Xpeng (XPEV) rallied more than +9% in pre-market trading after the Chinese electric vehicle maker said that over 25,000 customers had pre-ordered its new G6 model.
Advanced Micro Devices (AMD) rose more than +3% in pre-market trading after KeyBanc Capital Markets raised its price target on the stock to $150 from $110.
Oracle (ORCL) climbed more than +3% in pre-market trading after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $130.
Carnival (CCL) rose more than +3% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $16.
SentinelOne (S) jumped more than +5% in pre-market trading after Morgan Stanley upgraded the stock to overweight from equal weight.
Energy stocks and energy service providers are falling in pre-market trading, with the price of WTI crude down more than -2% at a 1-week low. ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), Halliburton (HAL), Occidental Petroleum (OXY), Schlumberger (SLB), and Valero Energy (VLO) are down more than -1%.
Nasdaq Inc (NDAQ) fell more than -5% in pre-market trading after announcing it will acquire Adenza from buyout firm Thoma Bravo for $10.5 billion in cash and stock.
Bill Holdings (BILL) dropped more than -3% in pre-market trading after Morgan Stanley downgraded the stock to equal weight from overweight.
U.S. Bancorp (USB) slid nearly -1% in pre-market trading after Citigroup opened a 90-day negative catalyst watch on the stock and cut its price target to $33 from $39.
Today’s U.S. Earnings Reports (6/12/2023)
Mitek Systems Inc (MITK), Oracle Corp (ORCL).
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.
