June S&P 500 E-Mini futures (ESM24) are trending up +0.10% this morning as market participants refrained from making big bets ahead of the release of a crucial U.S. consumer inflation report and the Federal Reserve’s March policy meeting minutes.
In yesterday’s trading session, Wall Street’s major indices ended mixed. Moderna (MRNA) climbed over +6% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after releasing positive data from a Phase 1 study assessing its individualized neoantigen candidate mRNA-4157 plus Merck’s Keytruda for the treatment of head and neck cancer. Also, chip stocks gained ground, with ON Semiconductor (ON) and Analog Devices (ADI) rising more than +3%. In addition, Cisco Systems (CSCO) advanced over +3% and was the top percentage gainer on the Dow after Morgan Stanley resumed coverage of the stock with an Overweight rating and a price target of $58. On the bearish side, Nvidia (NVDA) fell about -2% after Intel unveiled a new version of its artificial intelligence chip called Gaudi 3.
“Valuations are so stretched right now that anything less than perfection from economic data or any geopolitical noise can create substantial and quick selloff. Markets have been strong all year despite substantial changes in Fed rate cut expectations and a mixed bag of returns for last year’s so-called Magnificent Seven,” said David Bahnsen at the Bahnsen Group.
Today, investors will be closely monitoring the publication of the Federal Reserve’s minutes from the March meeting, which may provide additional insight into policymakers’ recent discussions regarding the trajectory of interest rates for this year and the Fed’s balance sheet.
On the economic data front, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that the U.S. March CPI will come in at +0.3% m/m and +3.4% y/y, compared to the previous numbers of +0.4% m/m and +3.2% y/y.
Also, investors will likely focus on the U.S. Core CPI data. Economists anticipate the Core CPI to be +0.3% m/m and +3.7% y/y in March, compared to the previous figures of +0.4% m/m and +3.8% y/y.
U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be 0.900M, compared to last week’s value of 3.210M.
In addition, market participants will be looking toward a speech from Chicago Fed President Austan Goolsbee.
Meanwhile, U.S. rate futures have priced in a 6.3% chance of a 25 basis point rate cut at May’s monetary policy meeting and a 50.8% chance of a 25 basis point rate cut at the June meeting.
On the earnings front, leading U.S. carrier Delta Air Lines (DAL) is set to report its Q1 earnings results today.
In the bond markets, United States 10-year rates are at 4.357%, down -0.16%.
The Euro Stoxx 50 futures are up +0.81% this morning, boosted by gains in technology stocks, while investors looked ahead to the release of key U.S. inflation data. Technology stocks outperformed on Wednesday after Taiwan chipmaker TSMC reported a surge in Q1 sales. Meanwhile, investors are focused on the U.S. March consumer price inflation data, scheduled for later today, and the European Central Bank’s monetary policy meeting on Thursday. In corporate news, Barry Callebaut Ag (BARN.Z.IX) surged over +9% after the Swiss chocolate maker reported better-than-expected half-year revenue. Also, Tesco Plc (TSCO.LN) gained more than +2% after forecasting a higher full-year retail profit and announcing a share buyback.
Italy’s Retail Sales data was released today.
The Italian February Retail Sales stood at +0.1% m/m, weaker than expectations of +0.2% m/m.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.70% and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.48%.
China’s Shanghai Composite Index closed lower today as a decision by a leading credit rating agency to downgrade the country’s credit outlook weighed on sentiment. Property stocks underperformed on Wednesday, with China Vanke falling over -5% after media reported that the general manager of one of its branches is under police investigation. Healthcare and financial stocks also lost ground. Meanwhile, rating agency Fitch cut its outlook for China’s long-term foreign debt to negative from stable on Wednesday, citing increasing risks to public finances. At the same time, Fitch affirmed the issuer default rating for China at A+, which is backed by a “large and diversified economy, still solid gross domestic product growth prospects relative to peers, integral role in global goods trade, robust external finances, and reserve currency status of the yuan.” In corporate news, Alibaba Group climbed more than +4% following reports from Chinese media indicating that founder Jack Ma posted an internal memo endorsing recent reforms implemented by CEO Eddie Wu and Chair Joseph Tsai. Investor focus is now on the release of China’s inflation, trade, and credit lending data for March, scheduled later in the week.
Japan’s Nikkei 225 Stock Index closed lower today as investors opted to secure profits following recent gains and cautiously awaited the latest U.S. inflation reading. Healthcare and trading house stocks led the declines on Wednesday. Preliminary figures released by the Bank of Japan on Wednesday revealed that producer prices in Japan increased by 0.8% year-over-year in March, marking the highest producer inflation rate since October 2023. Meanwhile, Bloomberg reported that the Bank of Japan is expected to contemplate raising its inflation forecast at a policy meeting later this month following unexpectedly strong results from annual wage negotiations. In other news, BOJ Governor Kazuo Ueda stated on Wednesday that the central bank would consider a policy response should the yen’s weakness lead to a significant surge in inflation. In corporate news, Polaris Holdings rose more than +3% following the announcement that its subsidiary, Fino Hotels, would enter into a memorandum of understanding with Star Asia Sogo Kaihatsu to manage a hotel to be built in Chiba Prefecture’s capital city by 2026. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +1.74% to 20.47.
The Japanese March PPI stood at +0.2% m/m and +0.8% y/y, compared to expectations of +0.3% m/m and +0.8% y/y.
Pre-Market U.S. Stock Movers
PriceSmart (PSMT) rose more than +4% in pre-market trading after the company reported upbeat Q2 results and announced a $1.00 per share special dividend.
Aehr Test Systems (AEHR) slid over -3% in pre-market trading after reporting weaker-than-expected Q3 revenue.
Monday.com (MNDY) fell more than -1% in pre-market trading after Citi downgraded the stock to Neutral from Buy with a price target of $250.
Visteon (VC) gained over +1% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $145.
Albemarle (ALB) advanced more than +2% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a $156 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - April 10th
Delta Air Lines (DAL), Applied Digital (APLD), Pure Cycle (PCYO), Richardson Electronics (RELL), Lakeland Industries (LAKE).
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