December S&P 500 futures (ESZ23) are up +0.46%, and December Nasdaq 100 E-Mini futures (NQZ23) are up +0.52% this morning as market participants awaited U.S. business activity data while also gearing up for a deluge of quarterly reports from heavyweight names.
In Monday’s trading session, Wall Street’s major indices closed mixed. Textainer Group Holdings Ltd (TGH) climbed over +44% after U.S. infrastructure investor Stonepeak agreed to buy the shipping container lessor in a deal valued at about $7.4 billion. Also, NVIDIA Corporation (NVDA) rose more than +3% following a report from Reuters stating that the company could sell chips for Windows PCs using Arm Holdings’ architecture as soon as 2025. In addition, Walgreens Boots Alliance Inc (WBA) gained over +3% after JPMorgan upgraded the stock to Overweight from Neutral. On the bearish side, FMC Corporation (FMC) plunged more than -13% and was the top percentage loser on the benchmark S&P 500 after the agricultural products supplier cut its Q3 guidance.
“The world’s biggest bond market has faced intense volatility amid expectations the Federal Reserve will maintain elevated interest rates and that the government will further boost bond sales to cover widening deficits. Exactly how the inter-relationships between growth, interest rates, and the Fed are working right now is uncertain,” said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management.
Meanwhile, U.S. rate futures have priced in a 98.5% chance of no hike at November’s monetary policy meeting and a 24.1% probability of a 25 basis point rate increase at the December meeting.
Third-quarter corporate earnings season is gathering pace, with high-profile mega-caps like Microsoft (MSFT), Alphabet (GOOGL), Visa (V), and Coca-Cola (KO) set to report their quarterly figures today. According to data from LSEG, earnings are expected to grow at 1.2% year-over-year in Q3 for S&P 500 companies.
Today, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading in a couple of hours. Economists, on average, forecast that the October Manufacturing PMI will stand at 49.5, compared to the previous value of 49.8.
The U.S. S&P Global Services PMI preliminary reading will also be closely watched today. Economists foresee this figure to stand at 49.8 in October, compared to the previous number of 50.1.
The U.S. Richmond Manufacturing Index will be reported today as well. Economists estimate October’s figure to be +3, compared to the previous number of +5.
In the bond markets, United States 10-year rates are at 4.826%, down -0.19%.
The Euro Stoxx 50 futures are up +0.17% this morning as investors digested a slew of important regional economic data as well as corporate earnings reports. Strength in mining stocks is lending support to the overall market. A survey released on Tuesday revealed that Eurozone business activity reached its lowest point in nearly three years in October, reflecting reduced demand in a broad-based downturn across the region. Meanwhile, ECB President Christine Lagarde is scheduled to deliver a speech later today. In corporate news, Hermes Intl (RMS.FP) rose over +2% after the Birkin bag maker topped Q3 sales estimates. Also, Logitech International Sa (LOGN.Z.IX) climbed more than +9% after boosting its annual guidance. At the same time, Barclays Plc (BARC.LN) slumped over -5% after the British lender’s Q3 profit fell slightly from a year ago, and the bank said it was “evaluating material structural cost actions” to help improve returns.
U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Germany’s GfK Consumer Climate, Germany’s Manufacturing PMI (preliminary), Germany’s Services PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), Eurozone’s Composite PMI (preliminary), Eurozone’s Services PMI (preliminary), U.K.’s Manufacturing PMI (preliminary), and U.K.’s Services PMI (preliminary) data were released today.
U.K. September Claimant Count Change stood at +20.4K, weaker than expectations of +2.3K.
U.K. August Employment Change 3M/3M came in at -82K, stronger than expectations of -198K.
U.K. August Unemployment Rate was at 4.2%, stronger than expectations of 4.3%.
The German November GfK Consumer Climate arrived at -28.1, weaker than expectations of -26.6.
The German October Manufacturing PMI stood at 40.7, stronger than expectations of 40.0.
The German October Services PMI arrived at 48.0, weaker than expectations of 50.0.
Eurozone October Manufacturing PMI came in at 43.0, weaker than expectations of 43.7.
Eurozone October Composite PMI has been reported at 46.5, weaker than expectations of 47.4.
Eurozone October Services PMI was at 47.8, weaker than expectations of 48.7.
U.K. October Manufacturing PMI has been reported at 45.2, stronger than expectations of 44.7
U.K. October Services PMI came in at 49.2, weaker than expectations of 49.3.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.78%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.20%.
China’s Shanghai Composite today closed higher after the country’s sovereign wealth fund bought exchange-traded funds to support the flagging market. Central Huijin Investment Ltd., a unit of the $1.4 trillion wealth fund China Investment Corp., bought an undisclosed amount of ETFs and declared its intention to expand its holdings further, it said in a brief statement released on Monday. Meanwhile, as reported by Reuters on Monday, China is set to approve slightly more than 1 trillion yuan in additional sovereign debt issuance on Tuesday as part of Beijing’s intensified efforts to stimulate infrastructure spending and encourage economic growth. In other news, S&P Global Ratings has cautioned that if the real estate slowdown in China deepens, the country’s economic growth could fall below 3% in 2024.
“The rebound in Chinese equities shows that while it may still be too early to call a bottom, the authorities are making it a rule to step on the brakes whenever there looks like there’s overwhelming downward momentum,” said Raymond Chen, fund manager at Zizhou Investment Asset Management.
Japan’s Nikkei 225 Stock Index closed slightly higher today, snapping a 3-day losing streak as investors scooped up beaten-down stocks. Gains in materials, non-cyclical consumer, and tech stocks led the overall market higher. A survey showed on Tuesday that Japan’s factory activity contracted for the fifth consecutive month in October, while the service sector experienced its slowest growth of the year, reflecting growing uncertainty about the outlook for the world’s third-largest economy. Meanwhile, Japanese government bond yields retreated from decade highs on Tuesday following the sixth intervention this month by the Bank of Japan to slow their increase. In corporate news, a key supplier to the tech and electric vehicle industries, Nidec, plunged over -10% after reporting weaker-than-expected quarterly earnings. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -4.12% to 22.55.
“As the Nikkei fell below 31,000, investors turned cautions that shares were oversold, and they scooped up stocks. But the market overall had no clear directions amid uncertainties outside Japan,” said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.
The Japanese October Manufacturing PMI stood at 48.5, weaker than expectations of 48.9.
Pre-Market U.S. Stock Movers
FMC Corporation (FMC) fell over -3% in pre-market trading after Goldman Sachs and BofA downgraded the stock to Neutral from Buy.
IONQ Inc (IONQ) plunged more than -15% in pre-market trading after announcing that co-founder and chief science officer Chris Monroe would be leaving the company.
Agilysys Inc (AGYS) soared over +12% in pre-market trading after the company reported better-than-expected Q2 results and lifted its FY24 revenue guidance.
Medpace Holdings Inc (MEDP) climbed more than +8% in pre-market trading after posting upbeat Q3 results and raising its FY23 guidance.
Golden Ocean Group Ltd (GOGL) gained about +3% in pre-market trading after Jefferies upgraded the stock to Buy from Hold.
Editas Medicine Inc (EDIT) gained more than +3% in pre-market trading after Citi upgraded the stock to Buy from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - October 24th
Microsoft (MSFT), Alphabet (GOOGL), Visa A (V), Coca-Cola (KO), Danaher (DHR), Texas Instruments (TXN), Verizon (VZ), General Electric (GE), Rtx Corp (RTX), NextEra Energy (NEE), Chubb (CB), Illinois Tool Works (ITW), Fiserv (FI), Waste Management (WM), Sherwin-Williams (SHW), 3M (MMM), PACCAR (PCAR), Kimberly-Clark (KMB), General Motors (GM), Archer-Daniels-Midland (ADM), Centene (CNC), Halliburton (HAL), Nucor (NUE), Dow (DOW), Spotify Tech (SPOT), CoStar (CSGP), Corning (GLW), Dover (DOV), Snap (SNAP), PulteGroup (PHM), Quest Diagnostics (DGX), TransUnion (TRU), Synchrony Financial (SYF), Manhattan Associates (MANH), Logitech (LOGI), Ares Capital (ARCC), Pentair (PNR), New Oriental Education&Tech (EDU), F5 Networks (FFIV), Range Resources (RRC), Robert Half (RHI), Matador (MTDR), EastGroup Properties (EGP), Boyd Gaming (BYD), MSA Safety (MSA), Invesco (IVZ), Polaris Industries (PII), Agree Realty (ADC), Asbury Automotive (ABG), Old National Bancorp (ONB), Franklin Electric (FELE), GATX (GATX), Simply Good Foods (SMPL), John Bean Tech (JBT), Herc Holdings (HRI), Teladoc Inc (TDOC), UMB Financial (UMBF), Encore Wire (WIRE), Vicor (VICR), Community Bank System (CBU), Xerox (XRX), Nextera Energy Partners LP (NEP), Pacific Premier (PPBI), Highwoods Properties (HIW), Simmons First National (SFNC), ChampionX Corp (CHX), Garrett Motion (GTX), Stride (LRN), First Financial Bancorp (FFBC), Retail Opportunity (ROIC), NBT Bancorp (NBTB), Enova International Inc (ENVA), Renasant (RNST), American Assets (AAT), Bank of N.T. Butterfield Son (NTB), Trustmark (TRMK), First Commonwealth Financial (FCF), National Bank Holdings (NBHC), USANA Health Sciences (USNA), First Busey (BUSE).
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