Morning Markets
March E-Mini S&P 500 futures (ESH24) are down -0.79%, and March Nasdaq 100 E-Mini futures (NQH24) are down -1.10%, both at 1-week lows.
Stock index futures this morning are falling due to weakness in technology stocks. Apple is down more than -2% in pre-market trading after Barclays downgraded it to underweight due to concern about iPhone demand. Also, chip stocks are under pressure today after Bloomberg News reported that ASML Holding NV canceled some shipments of its chip-making machines to China at the request of the Biden administration. In addition, higher bond yields are weighing on stocks as the 10-year T-note yield rose to a 2-week high.
An escalation of tensions in the Middle East is weighing on stocks and pushed WTI crude oil prices up more than +2% after Iran dispatched a warship into the Red Sea after the U.S. Navy said it was fired upon when responding to a distress call from a vessel in the Red Sea. On Sunday, the U.S. Navy sank three Houthi boats in the Red Sea after they fired on U.S. aircraft.
The price of Bitcoin (^BTCUSD) is up more than +4% at a 21-month high in anticipation that the U.S. SEC will soon approve a spot Bitcoin exchange-traded fund (ETF).
The markets are discounting the chances for a -25 bp rate cut at 13% at the next FOMC meeting on Jan 30-31 and 87% 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 climbed to a 2-week high of 3.971% and is up +8.0 bp at 3.959%. The 10-year German bund yield rose to a 2-week high of 2.112% and is up +6.9 bp at 2.094%. The 10-year UK gilt yield rose to a 2-week high of 3.690% and is up +14.1 bp at 3.679%.
Overseas stock markets are lower. The Euro Stoxx 50 is down -0.75%. China’s Shanghai Composite Index closed down -0.43%. Japan’s Nikkei Stock Index was closed for the New Year’s holiday.
The Euro Stoxx 50 today fell back from a 2-week high and tumbled to a 3-week low on a jump in the 10-year German and UK bond yields to 2-week highs. European stocks today initially opened higher as energy stocks rallied and European defense companies rose, with crude oil prices up more than +2% after Iran dispatched a warship to the Red Sea following the U.S. Navy’s sinking of three Houthi boats. Stocks also garnered support after the Eurozone Dec S&P manufacturing PMI was revised higher.
The Eurozone Dec S&P manufacturing PMI was revised upward by +0.2 to 44.4 from the previously reported 44.2.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 7% for its next meeting on January 25 and at 61% for the following meeting on March 7.
China’s Shanghai Composite Index today fell back from a 2-week high and posted moderate losses. Economic concerns weighed on Chinese stocks after Chinese manufacturing activity last month unexpectedly contracted by the most in 6 months. Also, a resurgence in geopolitical tensions weighed on Chinese semiconductor stocks after ASML holding NV canceled a shipment of chip manufacturing equipment to China at the request of the U.S. In addition, property stocks declined after the slide in China’s home sales accelerated in December.
The China Real Estate Information Corp reported the value of new home sales among the 100 biggest real estate companies in December fell -34.6% y/y top 451.3 billion yuan ($64 billion), accelerating from a -29.6% y/y decline in November.
The China Dec manufacturing PMI unexpectedly fell -0.2 to 49.0, weaker than expectations of an increase to 49.6 and the weakest level in 6 months. Also, the Dec non-manufacturing PMI rose +0.2 to 50.4, weaker than expectations of 50.5.
Japan’s Nikkei Stock Index today was closed for the New Year’s holiday.
Pre-market U.S. Stock Movers
Apple (AAPL) fell over 2% in pre-market trading after Barclays downgraded the stock to underweight from equal weight with a price target of $160.
ASML Holding NV (ASML) dropped nearly -2% in pre-market trading after it canceled some shipments of chip-making machines to China at the request of the U.S. Other chip stocks are falling on the news with Marvell Technology (MRVL) and Applied Materials (AMAT) down more than -1%.
Boeing (BA) fell more than -1% in pre-market trading after Goldman Sachs removed the stock from its U.S. Conviction List.
Unity Software (U) tumbled more than -3% in pre-market trading after Piper Sander downgraded the stock to underweight from neutral.
Estee Lauder (EL) dropped more than -1% in pre-market trading after Deutsche Bank downgraded the stock to hold from buy.
Hasbro (HAS) fell more than -2% in pre-market trading after D.A. Davidson downgraded the stock to neutral from buy.
Ball Corp (BALL) dropped more than -2% in pre-market trading after Bank of America Global Research downgraded the stock to underperform from neutral.
Corcept Therapeutics (CORT) plunged more than -35% in pre-market trading after a U.S. federal court ruled the company failed to meet its burden of proof in a patent infringement case against Teva for planning to sell a copycat version of Corcept’s Korlym.
Energy stocks and energy service providers are moving higher in pre-market trading, with the price of WTI crude oil up more than +2%. ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Haliburton (HAL), Marathon Oil (MRO), Schlumberger (SLB), and Valero Energy (VLO) are up more than +1%.
Moderna (MRNA) gained nearly +1% in pre-market trading after Oppenheimer upgraded the stock to outperform from market perform.
Huntington Bancshares (HBAN) climbed more than +2% in pre-market trading after Barclays upgraded the stock to equal weight from underweight.
Cryptocurrency-related stocks are moving higher in pre-market trading, with the price of Bitcoin up more than +4% at a 21-month high. Coinbase Global (COIN), Microstrategy (MSTR), Marathon Digital (MARA), and Riot Platforms (RIOT) are up more than +5%
Earnings Reports (1/2/2024)
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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.
