December S&P 500 futures (ESZ23) are trending up +0.04% this morning as market participants looked ahead to a pivotal monthly U.S. nonfarm payrolls report for clues on the Federal Reserve’s monetary policy outlook.
In Thursday’s trading session, the tech-heavy Nasdaq 100 outperformed major benchmarks, underpinned by an over +9% surge in Advanced Micro Devices Inc (AMD) after the company unveiled its latest AI accelerator Instinct MI300X, and raised its expected 2027 AI Accelerator total addressable market to $400 billion from $150 billion. Also, Alphabet Inc (GOOGL) climbed more than +5% after Google released Gemini, the “largest and most-capable AI model” it has ever built. In addition, regional bank stocks gained ground, with Comerica Inc (CMA) and Zions Bancorporation (ZION) rising over +3%. On the bearish side, PayPal Holdings Inc (PYPL) fell more than -1% following Amazon’s announcement that it would stop accepting PayPal’s Venmo as a payment option starting January.
“Artificial intelligence has the potential to drive productivity gains sharply higher in 2024 and beyond. Resilience, adaptability, and innovation have been hallmarks of the economy in 2023, and we see those factors carrying us through in 2024 as well,” said Yung-Yu Ma at BMO Wealth Management.
The Labor Department’s report on Thursday showed claims for state unemployment benefits inched up by 1K to 220K last week, compared to a consensus of 222K.
Meanwhile, U.S. rate futures have priced in a 97.7% probability of no hike next week and a 98% chance of no hike at the conclusion of the Fed’s January meeting. Also, U.S. rate futures have priced in a 51.9% probability of a 25 basis point rate cut at the March FOMC meeting.
Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that November Nonfarm Payrolls will come in at 180K, compared to the previous value of 150K.
Also, investors will likely focus on U.S. Private Nonfarm Payrolls data, which stood at 99K in October. Economists foresee the new figure to be 153K.
The U.S. Michigan Consumer Sentiment preliminary reading will be reported today. Economists foresee this figure to stand at 62.0 in December, compared to the previous figure of 61.3.
U.S. Average Hourly Earnings data will also be closely watched today. Economists anticipate November’s figures to be +0.3% m/m and +4.0% y/y, compared to the previous numbers of +0.2% m/m and +4.1% y/y.
The U.S. Unemployment Rate will be reported today as well. Economists foresee this figure to remain steady at 3.9% in November.
In the bond markets, United States 10-year rates are at 4.179%, up +1.29%.
The Euro Stoxx 50 futures are up +0.51% this morning as investors digested Germany’s inflation data and keenly awaited a crucial U.S. payrolls report. Luxury and energy stocks gained ground on Friday, while mining stocks underperformed following a more than -5% drop in Anglo American Plc (AAL.LN) due to its announcement of plans to cut capital expenditure by $1.8 billion across its businesses by 2026. Data from the German statistics office Destatis showed Friday that German inflation declined in November for the fifth consecutive month, confirming prior estimates and supporting the argument for a peak in Eurozone interest rates. In other corporate news, Kering (KER.FP) rose more than +2% after the owner of Gucci announced an interim dividend for 2023.
Germany’s CPI data was released today.
The German November CPI has been reported at -0.4% m/m and +3.2% y/y, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.11%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.68%.
China’s Shanghai Composite today closed slightly higher as investors exercised caution amid concerns about the country’s weak recovery and awaited clues from upcoming policy meetings. The index ended the week lower as investor sentiment was adversely affected by Moody’s issuing a downgrade warning on China and Hong Kong’s credit ratings, further intensifying concerns about China’s already fragile economic recovery. Sentiment was also dampened by mixed trade data for November, with a mild increase in exports for the first time in six months offset by a surprise decline in imports. Meanwhile, China is set to host the annual Central Economic Work Conference this month, during which top leaders will deliberate on policy plans and assess the outlook for the world’s second-largest economy. In corporate news, online travel agency Trip.com Group rose more than +1% on optimism regarding travel demand following Singapore’s announcement that it would permit Chinese tourists to enter the country without visas. In other news, figures from the China Passenger Car Association revealed a 25.5% year-on-year increase in China’s passenger vehicle sales for November, marking the fourth consecutive month of growth. Additional insights into China’s economy are expected over the weekend with the release of the country’s inflation data for November.
Japan’s Nikkei 225 Stock Index closed sharply lower today amid growing speculation about a conclusion to the Bank of Japan’s negative interest-rate regime as soon as this month. Export-heavy automobile stocks retreated on Friday as the Japanese yen reached its strongest level since August, with Toyota Motor Corp plunging over -4%, Subaru Corp falling more than -4%, and Mazda Motor Corp dropping -3%. The revised Cabinet Office data showed on Friday that Japan’s economy contracted at a faster pace than initially estimated in the third quarter. Separately, government data revealed that Japanese household spending experienced a year-on-year decline in October, marking the eighth consecutive month of decrease. Meanwhile, Japan’s 10-year government bond yield surged to a 3-week high on Friday, fueled by increasing speculation that the Bank of Japan would soon phase out its ultra-low interest rate policy. Bank of Japan Governor Kazuo Ueda stated on Thursday that the central bank has several options regarding which interest rates to target once it withdraws short-term borrowing costs from negative territory. Ueda also remarked that the central bank will face an “even more challenging” situation at the year-end and the beginning of the next year in response to a question about the economy and guidance of monetary policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +7.29% to 19.72.
The Japanese GDP has been reported at -0.7% q/q and -2.9% y/y in the third quarter, weaker than expectations of -0.5% q/q and -2.1% y/y.
The Japanese October Household Spending came in at -0.1% m/m and -2.5% y/y, stronger than expectations of -0.2% m/m and -3.0% y/y.
Pre-Market U.S. Stock Movers
MBIA Inc (MBI) surged about +60% in pre-market trading after the provider of financial guarantee insurance announced that its Board of Directors had declared an extraordinary cash dividend on MBIA common stock of $8.00 per share.
Lululemon Athletica Inc (LULU) fell over -2% in pre-market trading after the company issued weaker-than-expected guidance for the holiday quarter.
RH (RH) plunged more than -9% in pre-market trading after the trendy home goods retailer reported downbeat Q3 results and reduced its full-year operating margin guidance.
Qualcomm Incorporated (QCOM) fell about -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight with a price target of $132.
Bluebird Bio Inc (BLUE) climbed over +3% in pre-market trading after Morgan Stanley upgraded the stock to Equal Weight from Underweight with a price target of $7.
Beam Therapeutics Inc (BEAM) dropped more than -2% in pre-market trading after Jefferies downgraded the stock to Hold from Buy with a price target of $30.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - December 8th
National Beverage (FIZZ), Johnson Outdoors (JOUT).
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