Morning Markets
March E-Mini S&P 500 futures (ESH24) are up +0.09%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.15%.
Stock index futures this morning are modestly higher in thin holiday trade, with markets in Europe and parts of Asia closed for Boxing Day. Stocks are supported by the seasonal Santa Claus rally, where equity prices tend to climb between Christmas and the first few days of the new year. Stock index futures fell back from their best levels as bond yields ticked higher after the Nov Chicago Fed national activity index rose to a 4-month high.
An increase in M&A activity today is bullish for stocks. Hollysys Automation Technologies (HOLI) climbed over 6% in pre-market trading after a group led by Dazheng Group made an improved offer to acquire the company for $1.8 billion. Also, Stratasys (SSYS) jumped more than +12% after it received an unsolicited takeover offer from Nano Dimensions for about $1.1 billion. In addition, RayzeBio (RYZB) soared more than +100% after Bristol Myers Squibb agreed to buy the company for about $4.1 billion.
WTI crude prices jumped more than +1% today after the U.S. military launched strikes on three installations in Iraq, targeting a terrorist group backed by Iran that was accused of a series of drone attacks on American troops. Also, the UK navy today reported attacks on two commercial vessels sailing in the Red Sea near Yemen.
The U.S. Nov Chicago Fed national activity index rose +0.69 to a 4-month high of 0.03.
The markets are discounting the chances for a -25 bp rate cut at 14% at the next FOMC meeting on Jan 30-31 and at 99% for the following meeting on March 19-20.
U.S. government bond yields today are higher. The 10-year T-note yield is up +0.4 bp at 3.899%.
Overseas stock markets are mixed. The Euro Stoxx 50 is closed for Boxing Day. China’s Shanghai Composite Index closed down -0.68%. Japan’s Nikkei Stock Index closed up +0.16%.
European markets are closed today for the Boxing Day Holiday.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 3% for its next meeting on Jan 25 and at 60% for the following meeting on March 7.
China’s Shanghai Composite Index today closed moderately lower. Investor sentiment in Chinese stocks remains weak after government authorities unexpectedly tightened restrictions on the video game industry last week. Last Friday, China’s gaming regulator issued new rules that seek to limit players’ time and money spent on online video gaming. However, losses in video-game-related stocks were limited as the sector stabilized today after the government approved 105 new games on Monday, suggesting the government has softened its stance following last Friday’s rout. Also, several video game makers, including Electronic Soul Network, Giant Network Group, and Kingnet Network, rallied after they said they planned buybacks of their stock.
Japan’s Nikkei Stock Index closed slightly higher. Japanese stocks edged higher today in thin holiday trading, with some markets closed for the Boxing Day holiday. Stocks garnered support today on Monday’s comments from BOJ Governor Ueda, who said that he’s in no hurry to end the BOJ’s ultra-easy monetary policy. Losses in insurance stocks limited gains in the overall market after Japan’s financial regulator penalized the country’s largest property and casualty insurers for colluding to fix prices in contracts with corporate clients.
Japan Nov PPI services prices rose +2.3% y/y, unchanged from Oct and weaker than expectations of +2.4% y/y.
The Japan Nov jobless rate was unchanged at 2.5%, right on expectations. However, the Nov job-to-applicant ratio unexpectedly fell -0.2 to 1.28, weaker than expectations of no change at 1.30 and a sign of a softer labor market.
The Japan Oct leading index CI was revised upward by +0.2 to 108.9 from the previously reported 108.7.
Pre-market U.S. Stock Movers
Intel (INTC) climbed more than +2% in pre-market trading after it said it reached a pact with Israel on an incentive package to support its expansion of its Kiryat Gat wafer fabrication operations valued at $3.2 billion.
RayzeBio (RYZB) soared more than +100% in pre-market trading after Bristol Myers Squibb agreed to buy the company for about $4.1 billion.
Hollysys Automation Technologies (HOLI) climbed over 6% in pre-market trading after a group led by Dazheng Group made an improved offer to acquire the company for $1.8 billion.
Stratasys (SSYS) jumped more than +12% in pre-market trading after it received an unsolicited takeover offer from Nano Dimensions for about $1.1 billion.
Manchester United (MANU) rallied more than +7% in pre-market trading after billionaire Jim Ratcliffe agreed to buy a 25% stake in the company for about $1.3 billion.
U.S. ADRs in Bilibili (BILI) and NetEase (NTES) climbed more than +2% in pre-market trading after China approved 105 domestic online games.
ZIM Integrated Shipping (ZIM) dropped more than -7% in pre-market trading after Maersk said it’s preparing to resume shipping through the Red Sea as a multinational task force begins protecting vessels from attacks by Houthi rebels from Yemen. The resumption of shipping through the Red Sea should reduce freight charges.
Earnings Reports (12/26/2023)
Liberty Media Corp-Liberty Liv (LLYVA), Waldencast plc (WALD).
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.
