Morning Markets
December E-Mini S&P 500 futures (ESZ23) are down -0.13%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are down -0.07%.
Stock index futures this morning are under pressure from concern that economic weakness in China will weigh on global economic prospects after China’s industrial profits rose at the slowest pace in three months in October. Also, energy stocks are under pressure in pre-market trading, with the price of WTI crude down more than -1%. In addition, GE Healthcare Technologies, Southern Copper, and Foot Locker are down more than -2% after seeing downgrades.
On the positive side for stocks, Crown Castle Inc. is up more than +4% after activist investor Elliot Investment Management, which has acquired a more than $2 billion stake in the company, said it plans to push for changes in the company that will help boost its shares. Also, Shopify is up more than +3% after it said merchants set a Black Friday record with a combined $4.1 billion in sales.
According to Adobe Analytics, U.S. shoppers spent a record $9.8 billion online on Black Friday. Also, data from Salesforce Inc. showed U.S. online sales rose +9% year-on-year on Black Friday.
The markets are discounting a 5% chance for a +25 bp rate hike at the next FOMC meeting on Dec 12-13 FOMC and an 11% chance for that +25 bp rate hike at the following FOMC meeting on Jan 30-31, 2024. The markets are then discounting a 17% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 61% 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 fell back from a 1-week high of 4.512% and is down -2.2bp at 4.445%. The 10-year German bund yield is down -6.6 bp at 2.578%. The 10-year UK gilt yield is down -4.5 bp at 4.238%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.03%. China’s Shanghai Composite Index closed down -0.30%. Japan’s Nikkei Stock Index closed down -0.53%.
The Euro Stoxx 50 today fell back from a 3-1/2 month high and is slightly lower. Weakness in energy stocks is leading the overall market lower, with crude prices down more than -1%. Also, some negative corporate news is weighing on stocks, with BASF SE down more than -3% after being downgraded to underweight by Morgan Stanley and Julius Baer Group Ltd down more than -1% after it said it is reviewing its private debt business after one of its clients ran up exposure of 606 million Swiss Francs ($687 million) of losses to a single counterparty.
China’s Shanghai Composite today fell to a 3-week low and closed moderately lower. A slowdown in China’s industrial profit growth raised concerns about deflation and weighed on stocks after today’s news that China’s industrial profits posted their smallest increase in 3 months in October. Also, weakness in property developers was a negative factor for the overall market after the China Index Academy said China’s November home sales were down -10 % m/m and -24 % y/y for 22 cities in the country. The Shanghai Composite recovered from its worst levels as chipmaker stocks rallied on a South China Morning Post report that said Chinese President Xi Jinping would visit the Shanghai Stock Exchange on Tuesday and meet with leaders of several technology companies.
China Oct industrial profits rose +2.7% y/y, the smallest increase in 3 months.
Japan’s Nikkei Stock Index today closed moderately lower. Concern that the BOJ could exit its ultra-easy monetary policy sooner than expected weighed on stocks after Japan’s Oct PPI service prices, a gauge measuring the costs of a range of service products provided by businesses to other firms and government entities, rose +2.3% y/y in October. That was above expectations and the largest increase since April 1992 after excluding various consumption tax increases. Stocks recovered from their worst levels on comments from BOJ Governor Ueda, who said the Japanese economy is recovering moderately and that there is not enough certainty yet on attaining the BOJ’s price goal.
Japan Oct PPI services prices rose +2.3% y/y, stronger than expectations of +2.1% and the largest increase in 3-3/4 years. However, after removing consumption tax increases, the gauge rose at the fastest pace in 31 years.
Pre-Market U.S. Stock Movers
Foot Locker (FL) tumbled more than -3% in pre-market trading after Citigroup downgraded the stock to sell from neutral with a price target of $18.
Energy stocks and energy service providers are falling in pre-market trading, with the price of WTI crude down more than -1%. As a result, ConocoPhillips (COP), Diamondback Energy (FANG), Haliburton (HAL), Devon Energy (DVN), Occidental Petroleum (OXY), Marathon Oil (MRO), and Schlumberger (SLB) are down more than -1%.
GE Healthcare Technologies (GEHC) dropped more than -2% in pre-market trading after UBS downgraded the stock to sell from neutral with a price target of $66.
Southern Copper (SCCO) fell more than -2% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight.
Okta (OKTA) slid more than -1% in pre-market trading after JMP Securities downgraded the stock to market perform from outperform.
Weyerhaeuser (WY) fell more than -1% in pre-market trading after Raymond James downgraded the stock to market perform from strong buy.
Lucid Group (LCID) slid more than -1% in pre-market trading after Needham downgraded the stock to hold from buy.
Crown Castle (CCI) climbed more than +4% in pre-market trading after activist investor Elliot Investment Management, which has acquired a more than $2 billion stake in the company, said it plans to push for changes in the company that will help boost its shares.
Shopify (SHOP) jumped more than +3% in pre-market trading after it said merchants set a Black Friday record with a combined $4.1 billion in sales.
Mondelez International (MDLZ) rose more than +1% in pre-market trading after RBC Capital Markets upgraded the stock to outperform from sector perform.
Pinterest (PINS) gained more than +1% in pre-market trading after New Street Research initiated coverage on the stock with a buy rating and a price target of $48.
Roku (ROKU) rose more than +1% in pre-market trading after Cannonball Research upgraded the stock to buy from neutral with a price target of $116.
Earnings Reports (11/27/2023)
Anavex Life Sciences Corp (AVXL), Cerence Inc (CRNC), Liberty Media Corp-Liberty Liv (LLYVA), Seadrill Ltd (SDRL), Waldencast plc (WALD), Zscaler Inc (ZS).
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.
