Morning Markets
June E-Mini S&P 500 futures (ESM23) this morning are up +0.19%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.37%.
U.S. stock index futures this morning are moderately higher. Carry-over support from a rally in Asian markets today is underpinning stock futures after the BOJ maintained its ultra-loose monetary policy and China considers additional stimulus measures.
Market volatility may increase today as June stock futures and options contracts expire in the quarterly event known as Triple Witching.
Positive comments today from Fed Governor Waller supported stocks when he said the U.S. economy “is still ripping along for the most part,” and everything seems to be calm in the banking system now.
Market odds for the Fed to raise the fed funds target range by +25 bp at the July 25-26 FOMC meeting rose to 69% today from 67% on Thursday.
Global bond yields are mixed. The 10-year T-note yield is up +1.2 bp at 3.728%. The 10-year German bund yield fell back from a 3-week high of 2.550% and is down -3.5 bp at 2.469%, and the UK 10-year gilt yield is down -0.6 bp at 4.379%.
On the bullish side for stocks, Adobe is up more than +4% in pre-market trading after reporting Q2 revenue above consensus and raising its full-year revenue forecast. Also, Nvidia is up more than +1% after Morgan Stanley made the stock its top pick in the U.S. semiconductor sector. In addition, iRobot Corp is up more than +20% after the UK Competition and Markets Authority cleared Amazon’s $1.7 billion acquisition of the company.
On the bearish side, Millicom International Cellular SA tumbled more than -10% in pre-market trading after it said it terminated discussions with Apollo Global Management and Claure Group regarding a potential acquisition. Also, Verastem Inc is down more than -8% after it said it would offer $85 million of its shares and pre-funded warrants via RBC Capital Markets and Cantor Fitzgerald. In addition, Walt Disney is down more than -1% after the company said CFO McCarthy is stepping down on medical leave.
Overseas stock markets are higher. The Euro Stoxx 50 is up +0.66%. China’s Shanghai Composite closed up +0.63%, and Japan’s Nikkei Stock Index closed up +0.66%.
The Euro Stoxx 50 index today climbed to a 3-1/2 week high and is moderately lower. European stocks found support today after Goldman Sachs said there’s “too much embedded pessimism” around expectations for corporate earnings and that European equities are set for a boost from easing inflation, a peak in interest rates, positive real income growth, and weak investor positioning. Also, Barclays said, “More stimulus may revive the China trade into the second half of the year and give a lift to European equities.” Gains in utilities and consumer spending stocks led the overall market higher today, while construction and mining stocks underperformed. On the negative side were hawkish comments from ECB Governing Council members Muller and Nagel, who both said the ECB needs to keep raising interest rates.
Eurozone Q1 labor costs eased to +5.0% y/y from +5.6% y/y in Q4.
ECB Governing Council member and Bundesbank President Nagel said, "We may need to keep raising rates after the summer break" to contain inflation.
ECB Governing Council member Muller said, "Interest rate hikes by the ECB are probably not over yet on the expectation that price increases in the Eurozone will remain clearly faster than the ECB's target of 2% for more than a year."
China’s Shanghai Composite Stock Index today rose to a 3-1/2 week high and closed moderately higher. Expectations for additional stimulus measures to boost economic growth are lifting stock prices. A Chinese commerce ministry spokesperson said measures to boost consumption, including those to promote the development of the car, home appliance, and catering industries, are in the works. Also, the National Bureau of Statistics said the foundation of the economy’s recovery “is not yet solid,” and the focus needs to be on repairing and expanding demand. In addition, the state-run Economic Daily also said in a front-page commentary that China needs to take further steps to support the economy, including maintaining strong fiscal spending.
Chinese state-owned enterprises rallied today after the national regulator of state-owned firms and the securities watchdog held a meeting urging the companies to enhance quality through mergers and acquisitions. Also, Chinese automakers rallied after the Ministry of Industry and Information Technology issued a statement that said 69 models of new energy vehicles will join government-led promotional events in rural areas this year.
Japan’s Nikkei Stock Index today recovered from early losses, posted a new 33-year high, and closed moderately higher. Japanese stocks rallied today after the BOJ maintained its ultra-loose monetary policy unchanged and kept its target for 10-year JGB yields unchanged. Also, the 10-year JGB bond yield fell to a 2-week low of 0.405% on the BOJ news. Japanese defense-related stocks moved higher today after North Korea test-fired two short-range ballistic missiles. On the negative side, Japanese election-related stocks retreated after Prime Minister Kishida said he’s not thinking of dissolving parliament during the current session, dampening speculation he could call an early election as soon as next month.
The BOJ, as expected, voted 9-0 to maintain the policy balance rate at -0.1% and keep the 10-year JGB yield target at about 0%.
BOJ Governor Ueda said Japan hasn't yet achieved sustainable and stable 2% inflation and that an inflation forecast of 2% may not necessarily lead to a shift in BOJ policy.
Pre-Market U.S. Stock Movers
Adobe (ADBE) climbed more than +4% in pre-market trading after reporting Q2 revenue of $4.82 billion, above the consensus of $4.77 billion, and raised its full-year revenue forecast to $19.25 billion-$19.35 billion from a previous forecast of $19.1 billion-$19.3 billion.
Nvidia (NVDA) rose more than +1% in pre-market trading after Morgan Stanley made the stock its top pick in the U.S. semiconductor sector.
iRobot Corp (IRBT) soared more than +20% in pre-market trading after the UK Competition and Markets Authority cleared Amazon’s $1.7 billion acquisition of the company.
Squarespace (SQSP) jumped more than +7% after it confirmed an agreement to buy Google Domains assets for about $180 million.
Micron Technology (MU) rose more than +2% in pre-market trading after it said it plans to invest more than 4.3 billion yuan ($602 million) in a factory in China to satisfy demand from Chinese customers.
Coherent (COHR) rallied more than +8% in pre-market trading, extending gains for a fifth session after it unveiled new laser processing heads aimed at electric vehicle manufacturing.
LendingClub (LC) rose more than +2% in pre-market trading after Jeffries initiated coverage of the stock with a buy recommendation and a price target of $13.50.
Palantir Technologies (PLTR) is up more than +1% in pre-market trading after it was awarded a U.S. Air Force contract valued at $58.5 million.
Millicom International Cellular SA (TIGO) tumbled more than -10% in pre-market trading after it said it terminated discussions with Apollo Global Management and Claure Group regarding a potential acquisition.
Sofi Technologies (SOFI) tumbled more than -6% in pre-market trading after Pipe Sandler downgraded the stock to neutral from overweight.
Verastem Inc (VSTM) dropped more than -8% in pre-market trading after it said it would offer $85 million of its shares and pre-funded warrants via RBC Capital Markets and Cantor Fitzgerald.
Walt Disney (DIS) fell over 1% in pre-market trading after the company said CFO McCarthy is stepping down on medical leave.
Today’s U.S. Earnings Reports (6/16/2023)
Edgio Inc (EGIO), Tupperware Brands Corp (TUP).
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