June S&P 500 futures (ESM23) are trending up +0.16% this morning after three major U.S. benchmark indices closed higher on Thursday as technology-related shares continued to shine, while investors braced for crucial inflation data for more clues on Federal Reserve’s next rate moves.
In Thursday’s trading session, the benchmark S&P 500 notched a 3-1/2 week high, the blue-chip Dow posted a 3-week high, and the tech-heavy Nasdaq rose to a 7-month high, led by gains in tech stocks as Treasury yields retreated following the latest U.S. economic data. Tech stocks also got a boost from an over +7% jump in the U.S.-listed shares of JD.com (JD) after the Chinese e-commerce giant announced plans to separately list two of its units on the Hong Kong Stock Exchange. At the same time, shares of U.S. regional banks fell after the Biden administration called for tougher measures for mid-size banks following the collapse of Silicon Valley Bank and Signature Bank.
Economic data on Thursday showed weekly initial jobless claims rose +7K to 198K, higher than the expected figure of 196K, pointing to a cooling labor market. Also, fourth-quarter U.S. GDP was revised lower to +2.6% q/q from +2.7% q/q, marking a slowdown from an increase of +3.2% q/q in the third quarter.
Boston Fed President Susan Collins said Thursday that she expects “some modest additional policy tightening, and then holding through the rest of the year” as inflation remains too high. Also, Richmond Fed President Thomas Barkin said that he had not come to a view yet on what rate increase might be appropriate at the central bank’s next meeting. At the same time, Barkin said that the central bank could raise interest rates even further should inflation remain above the Fed’s target. “Inflation is still very high. The job market is still really tight,” he added.
Meanwhile, expectations on the central bank’s move at May’s monetary policy meeting continue to fluctuate. U.S. rate futures have priced in a 57.2% chance of a 25 basis point rate increase and a 42.8% chance of no hike at the May meeting.
Today, all eyes are focused on the U.S. core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the Core PCE Price Index will stand at +0.4% m/m and +4.7% y/y in February, compared to the previous values of +0.6% m/m and +4.7% y/y.
Also, investors are likely to focus on the U.S. Chicago PMI, which was 43.6 in February. Economists foresee the new figure to be 43.4.
U.S. Michigan Consumer Sentiment Index will be reported today. Economists foresee this figure to stand at 63.2 in March, compared to February’s value of 67.0.
U.S. Michigan Consumer Expectations Index will come in today. Economists expect the March figure to be 61.5, compared to 64.7 in February.
U.S. Personal Spending data will also be closely watched today. Economists forecast Personal Spending to be at +0.3% m/m in February, compared to the previous figure of +1.8% m/m.
U.S. Personal Income data will be reported today as well. Economists estimate February’s figure to come in at +0.2% m/m, compared to the previous number of +0.6% m/m.
In addition, investors are likely to focus on speeches from New York Fed President John Williams and Fed Governor Lisa Cook for fresh insights on the Fed’s monetary policy trajectory.
In the bond markets, United States 10-Year rates are at 3.581%, up +0.85%.
The Euro Stoxx 50 futures are up +0.21% this morning as market participants digested a slew of important regional economic data ahead of the U.S. inflation print. Eurozone headline inflation eased to a 13-month low of +6.9% y/y in March from +8.5% y/y in February as energy prices continued to fall. Meanwhile, European Central Bank policymakers suggested that more interest rate hikes are needed to get inflation under control. On the ground of this, markets have largely priced in another 50 basis points in hikes from the ECB this year. In corporate news, shares of Abb Ltd (ABBN.Z.IX) rose about +1% after the swiss engineering company said it would launch its new $1 billion share buyback on April 3rd.
U.K.’s GDP, U.K.’s Current Account, Germany’s Retail Sales, France’s Consumer Spending, France’s CPI (preliminary), Germany’s Unemployment Change, Germany’s Unemployment Rate, Italy’s CPI (preliminary), Eurozone’s Unemployment Rate, Eurozone’s CPI (preliminary), and Eurozone’s Core CPI (preliminary) data were released today.
U.K. GDP has been reported at +0.1% q/q and +0.6% y/y in the fourth quarter, stronger than expectations of 0.0% q/q and +0.4% y/y.
U.K. Current Account stood at -2.5B in the fourth quarter, stronger than expectations of -17.6B.
The German February Retail Sales came in at -1.3% m/m and -7.1% y/y, weaker than expectations of +0.5% m/m and -6.1% y/y.
The French February Consumer Spending was at -0.8% m/m, weaker than expectations of +0.2% m/m.
The French March CPI stood at +0.8% m/m and +5.6% y/y, compared to expectations of +0.8% m/m and +5.5% y/y.
The German March Unemployment Change came in at +16K, weaker than expectations of +3K.
The German March Unemployment Rate was at 5.6%, weaker than expectations of 5.5%.
The Italian March CPI stood at -0.3% m/m and +7.7% y/y, weaker than expectations of 0.0% m/m and +8.2% y/y.
Eurozone March CPI has been reported at +0.9% m/m and +6.9% y/y, compared to expectations of +0.8% m/m and +7.1% y/y.
Eurozone March Core CPI came in at +1.2% m/m and +5.7% y/y, compared to expectations of +0.6% m/m and +5.7% y/y.
Eurozone February Unemployment Rate was at 6.6%, stronger than expectations of 6.7%.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.36%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.93%.
China’s Shanghai Composite lagged its Asian peers and closed slightly higher today as investors digested mixed Chinese activity data. Data on Friday showed manufacturing activity slowed from the prior month, faltering hopes of a robust post-COVID economic recovery amid weak global demand and a continued property market decline. At the same time, the Chinese non-manufacturing activity grew at its fastest pace in 12 years in March, suggesting a strong services sector rebound is on track this year. Meanwhile, the deputy governor of the People’s Bank of China, Xuan Changneng, said on Friday that the country would improve its regulatory oversight over the digital economy.
The Chinese March Composite PMI stood at 57.0, stronger than expectations of 55.1.
The Chinese March Manufacturing PMI came in at 51.9, stronger than expectations of 51.5.
The Chinese March Non-Manufacturing PMI was at 58.2, stronger than expectations of 54.3.
Japan’s Nikkei 225 Stock Index closed higher after data showed core consumer inflation in Japan’s capital Tokyo eased in March, although at a slower-than-expected pace. A separate report showed that the country’s industrial production rebounded sharply in February after a steep decline in January. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 3.39% to 16.79.
The Japanese Tokyo Core CPI has been reported at +3.2% y/y in March, stronger than expectations of +3.1% y/y.
The Japanese February Industrial Production stood at +4.5% m/m, stronger than expectations of +2.7% m/m.
The Japanese February Retail Sales came in at +6.6% y/y, stronger than expectations of +5.8% y/y.
Pre-Market U.S. Stock Movers
Virgin Orbit Holdings Inc (VORB) tumbled over -49% in pre-market trading after the company announced a workforce reduction of approximately 675 employees to reduce expenses amid the inability to secure meaningful funding.
Digital World Acquisition Corp (DWAC) climbed about +8% in pre-market trading after a Manhattan grand jury indicted former President Donald Trump.
Rumble Inc (RUM) soared more than +16% in pre-market trading after the company reported upbeat Q4 results.
Nikola Corp (NKLA) fell over -5% in pre-market trading after the company announced that it had commenced an SEC-registered underwritten public offering of up to $100.0M of shares of its common stock.
Metropolitan Bank Holding (MCB) rose more than +12% in pre-market trading after the company issued a financial update.
Pacific Biosciences of California (PACB) gained about +3% in pre-market trading after TD Cowen upgraded the stock to outperform from market perform.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - March 31st
MSP Recovery (LIFW), Ast Spacemobile (ASTS), I Mab (IMAB), Jushi Holdings (JUSHF), Fathom Digital Manufacturing (FATH), Bioventus (BVS), Creative Media Community Trust (CMCT).
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