Morning Markets
March E-Mini S&P 500 futures (ESH24) are down -0.02%, and March Nasdaq 100 E-Mini futures (NQH24) are down -0.01%.
Stock index futures this morning are little changed in thin holiday trading on the last trading day of the year. A jump in European government bond yields to a 1-1/2 week high today has put pressure on T-note prices and is undercutting stocks. Also, year-end positioning and liquidation by fund managers are weighing on stock prices. On the positive side, energy stocks are climbing in pre-market trading, with the price of WTI crude up +0.8%.
The markets are discounting the chances for a -25 bp rate cut at 16% at the next FOMC meeting on Jan 30-31 and 96% for that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields today are higher. The 10-year T-note yield is up +3.1 bp at 3.875%. The 10-year German bund yield climbed to a 1-1/2 week high of 2.023% and is up +6.9 bp at 2.013%. The 10-year UK gilt yield rose to a 1-1/2 week high of 3.582% and is up +4.5 bp at 3.537%.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.39%. China’s Shanghai Composite Index closed up +0.68%. Japan’s Nikkei Stock Index closed down -0.22%.
The Euro Stoxx 50 today is moderately higher in thin holiday trading, with markets in Germany and the UK closing early before the New Year holiday. An easing of price pressures in Europe may prompt the ECB to cut interest rates next year, and support equity prices after Spain’s Dec core CPI rose +3.8% y/y, the slowest pace in 1-3/4 years. Strength in consumer products and media stocks led the overall market higher, while interest rate-sensitive stocks such as real estate lagged after European government bond yields climbed to 1-1/2 week highs.
Spain Dec CPI (EU harmonized) rose +3.3% y/y, unchanged from Nov. However, Dec core CPI eased to +3.8% y/y from +4.5% y/y in Nov, the slowest pace of increase in 1-3/4 years.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 8% for its next meeting on January 25 and at 70% for the following meeting on March 7.
China’s Shanghai Composite Index today climbed to a 2-week high and settled moderately higher. Chinese stocks related to consumer electronics moved higher today on signs of stronger demand as China Nov electronics production rose +10.6% y/y, faster than the +4.8% y/y pace in Oct. Chinese medical and pharmaceutical stocks also rose after China’s National Disease Control and Prevention Administration warned of an increase in Covid cases. The yuan climbed to a 6-3/4 month high against the dollar today after the PBOC set the yuan’s reference rate at 7.0827 per dollar, above estimates of 7.1113.
Overseas investors today bought onshore Chinese equities worth 13.6 billion yuan ($1.9 billion) on a net basis during today’s session.
Japan’s Nikkei Stock Index today closed moderately lower. Stocks fell back slightly today on the last trading day of the year as fund managers and investors closed out stock positions. The Nikkei posted losses for two days in a row today after the yen hit a 5-month high on Thursday, which weighed on exporter stocks. Also, long liquidation pressures weighed on Japanese stocks on concern the BOJ next year may end its negative interest rate policy. A rally in telecom stocks limited losses in the overall market as Rakuten Group rallied more than +7% after announcing its mobile service surpassed 6 million users.
Pre-market U.S. Stock Movers
Lyft (LYFT) dropped more than -2% in pre-market trading after Nomura downgraded the stock to reduce from neutral.
Boston Scientific (BSX) rose more than +1% in pre-market trading after it said it anticipates FDA approval of its Farapulse PFA System for treatment of atrial fibrillation in Q1 of 2024.
Talos Energy (TALO) is up more than +1% in pre-market trading after Roth MKN said the stock should have a “slight positive reaction” after the Biden administration granted Louisiana primacy over the EPA on carbon capture.
Cigna Group (CI) climbed nearly +1% in pre-market trading after reaffirming its full-year adjusted operating earnings forecast.
UnitedHealth Group (UNH) rose +0.6% in pre-market trading after it said it entered into a deal to sell its Brazil operations to a private investor for 2.5 billion to 3 billion reals ($509 million to $610 million).
Regeneron Pharmaceuticals (REGN) is up +0.3% in pre-market trading, adding to Thursday’s and Wednesday’s gains as it alleged in a lawsuit that Samsung Biologics biosimilar version of Eylea infringes on 51 of its patents.
Energy stocks and energy service providers are moving higher in pre-market trading, with the price of WTI crude oil up +0.8%. ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Haliburton (HAL), Marathon Oil (MRO), Schlumberger (SLB), and Valero Energy (VLO) are up nearly +1%.
Earnings Reports (12/29/2023)
DZS Inc (DXSI).
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.
