Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are down -0.25%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.47%.
Stock indexes this morning are moderately lower. Concerns that weakness in China’s economy will curb global growth prospects are weighing on stocks. Losses in stock indexes accelerated as bond yields rose after U.S. July producer prices rose more than expected, bolstering speculation the Fed will keep its monetary policy tighter for longer.
U.S. Jul PPI final demand rose +0.8% y/y from +0.2% y/y in Jun, stronger than expectations of +0.7% y/y. Jul PPI ex-food and energy was unchanged from Jun at +2.4% y/y, stronger than expectations of +2.3% y/y.
U.S. stock indexes have a negative carryover from -2% fall in the Shanghai Composite today on concerns about China’s economy after a monthly report on credit growth showed China's July new yuan loans rose by the least amount since 2009. Chinese stocks also fell on concerns that the country’s property debt crisis is worsening after property developer Country Garden Holdings predicted a multibillion-dollar loss for the first half of 2023.
Bank of America said investors put money into cash and bonds while pulling money out of the U.S. stock market over the past week. Data from EPFR Global in the week through August 9 showed cash funds had $20.5 billion of inflows and investors put $6.9 billion into bonds, while stocks had $1.6 billion of outflows.
The markets are discounting the odds at 11% for a +25 bp rate hike at the September 20 FOMC meeting and 32% for that +25 bp rate hike at the November 1 FOMC meeting.
Global bond yields are higher. The 10-year T-note yield rose to a 1-week high of 4.152% and is up +3.7 bp at 4.1431%. The 10-year German bund yield is up +9.0 bp at 2.619%. The 10-year UK gilt yield climbed to a 4-week high of 4.509% and is up +14.2 bp at 4.506%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -1.32%. China’s Shanghai Composite Index today closed down -2.01%. Japan’s Nikkei Stock Index was closed for a holiday.
The Euro Stoxx 50 today is moderately lower as it tracks losses in Asian markets. Concerns that the property debt crisis in China will undercut its economy and reduce global growth prospects are weighing on stocks. Also, worries that the Fed will raise interest rates higher and for longer is pushing European government bond yields higher and weighing on stocks after Thursday’s comments from San Francisco Fed President Daly, who said that the Fed has “more work to do” to tame price pressures. On the positive side, a +4% gain in UBS Group AG is leading European bank stocks higher after it ended an agreement with the Swiss government to cover losses it could incur from the rescue of Credit Suisse, a sign that Credit Suisse’s assets might be less troublesome than initially feared.
China’s Shanghai Composite today tumbled to a 2-1/2 week low and closed sharply lower. Concerns about China’s economic outlook are weighing on stocks and knocked the yuan down to a 1-month low due to weak credit growth in China after Jul new yuan loans posted their smallest increase in nearly 14 years. The weakness in credit growth is another sign of weak demand in China and adds to a raft of negative news recently showing deflation in the economy, plunging exports, and a slump in manufacturing activity.
Also, fears that China’s property debt crisis is worsening sparked a selloff in property stocks after Country Garden Holdings revealed the depth of its funding challenges when it said it expects to post a net loss of 45 billion yuan to 55 billion yuan ($7.6 billion) for the first half of 2023, compared with earnings of 1.91 billion yuan a year earlier. In addition, Chinese chip stocks retreated, led by a -4% fall in Hua Hong Semiconductor, after China’s second-largest chip foundry was downgraded but several brokerages after weak Q2 earnings results.
China Jul aggregate financing, the broadest measure of credit growth, rose 528.2 billion yuan, weaker than expectations of +1.1 trillion yuan. Jul new yuan loans rose +345.9 billion yuan, weaker than expectations of 780.0 billion yuan and the smallest amount of loans in nearly 14 years.
Japan’s Nikkei Stock Index was closed today for the Mountain Day holiday.
Pre-Market U.S. Stock Movers
Lucid Group (LCID) slid more than -1% in pre-market trading after BNP Paribas Exane downgraded the stock to underperform from neutral.
Chip stocks are under pressure in pre-market trading on higher T-note yields. As a result, Advanced Micro Devices (AMD), Applied Materials (AMAT), Nvidia (NVDA), NXP Semiconductors (NXPI), Texas Instruments (TXN), and KLA Corp (KLAC) are down -0.5% or more.
Mining stocks are under pressure in pre-market trading, with the price of COMEX copper falling more than -1% to a 6-week low. As a result, Freeport McMoRan (FCX) and Southern Copper (SCCO) are down more than -1%.
Medical Properties Trust (MPW) tumbled more than -5% in pre-market trading after Bank of America and Raymond James downgraded the stock to underperform.
Sealed Air Corp (SEE) slid more than -1% in pre-market trading after UBS downgraded the stock to neutral from buy.
Stanley Black & Decker (SWK) fell more than -1% in pre-market trading after Wolfe Research downgraded the stock to underperform from peer perform.
IonQ (IONQ) jumped more than +7% in pre-market trading after boosting its full-year bookings forecast to $49 million-$56 million from a prior estimate of $45 million-$55 million.
Semler Scientific (SMLR) surged more than +16% in pre-market trading after reporting Q2 revenue of $18.6 million, stronger than the consensus of $16.0 million.
Rivian Automotive (RIVN) rose more than +1% in pre-market trading after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $30.
Super Micro Computer (SMCI) gained over +1% in pre-market trading after MSCI said the company would be added to its MSCI World Index.
Today’s U.S. Earnings Reports (8/11/2023)
Actinium Pharmaceuticals Inc (ATNM), AirSculpt Technologies Inc (AIRS), Alpine Immune Sciences Inc (ALPN), American Realty Investors Inc (ARL), ARS Pharmaceuticals Inc (SPRY), Boston Omaha Corp (BOC), Bright Green Corp (BGXX), Cadiz Inc (CDZI), Citius Pharmaceuticals Inc (CTXR), Consolidated Water Co Ltd (CWCO), Daily Journal Corp (DJCO), Disc Medicine Inc (IRON), Erasca Inc (ERAS), Graphite Bio Inc (GRPH), Ivanhoe Electric Inc / US (IE), Kezar Life Sciences Inc (KZR), Mammoth Energy Services Inc (TUSK), Maui Land & Pineapple Co Inc (MLP), Mitek Systems Inc (MITK), NextDecade Corp (NEXT), NioCorp Developments Ltd (NB), ORIC Pharmaceuticals Inc (ORIC), Perpetua Resources Corp (PPTA), Point Biopharma Global Inc (PNT), ProKidney Corp (PROK), RAPT Therapeutics Inc (RAPT), Savara Inc (SVRA), Spectrum Brands Holdings Inc (SPB), Tarsus Pharmaceuticals Inc (TARS), Transcontinental Realty Invest (TCI), Vor BioPharma Inc (VOR), Waldencast plc (WALD), Zura Bio Ltd (ZURA).
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.
