December S&P 500 E-Mini futures (ESZ24) are down -0.40%, and December Nasdaq 100 E-Mini futures (NQZ24) are down -0.32% this morning as risk sentiment took a hit after Russian President Vladimir Putin updated the country’s nuclear doctrine, while investors awaited fresh data on the U.S. housing market and an earnings report from retail giant Walmart.
Markets were rattled by news that Russian President Vladimir Putin signed a decree allowing Russia to use nuclear weapons in response to a large-scale conventional attack on its territory, including by drones. Russia will consider aggression against itself or its allies by a non-nuclear state, supported by nuclear powers, as a collective attack, according to the document posted online. This follows U.S. President Joe Biden’s decision to allow Ukraine’s Volodymyr Zelenskiy to target military sites in Russia using U.S.-made long-range weapons. A report from RBC-Ukraine indicated that the first such strike has occurred.
In yesterday’s trading session, Wall Street’s major indexes ended mixed. Super Micro Computer (SMCI) surged over +15% and was the top percentage gainer on the S&P 500 and Nasdaq 100 as the company approached a deadline to either file its delayed 10-K annual report or submit a plan to file the form to Nasdaq to prevent delisting. Also, Tesla (TSLA) climbed more than +5% after Bloomberg reported that President-elect Donald Trump’s transition team will make a federal framework for self-driving cars one of the Transportation Department’s priorities. In addition, Advanced Micro Devices (AMD) gained about +3% after International Business Machines announced it would deploy the company’s Instinct MI300X accelerators as a service on IBM Cloud. On the bearish side, Palantir Technologies (PLTR) slid over -6% after an SEC filing revealed that co-founder and CEO Alexander Karp sold shares worth about $399 million from last Wednesday to last Friday.
“Traders appear to be gauging the potential impact of a new Trump administration’s policies on the economy, and the possibility that the Fed may slow down its rate-cutting campaign,” said Chris Larkin at E*Trade from Morgan Stanley. “With a relatively light economic calendar this week, the focus will shift to earnings - especially Nvidia’s, which have the potential to dictate the market’s short-term momentum.”
U.S. rate futures have priced in a 64.9% chance of a 25 basis point rate cut and a 35.1% chance of no rate change at the next FOMC meeting in December.
Meanwhile, market participants are awaiting an earnings report from AI-darling Nvidia (NVDA) on Wednesday to gauge future demand for its new Blackwell AI chips, particularly after The Information reported on Sunday that these chips were experiencing overheating issues when connected to server racks designed to hold up to 72 chips.
Today, retailers such as Walmart (WMT) and Lowe’s (LOW), as well as notable companies like Medtronic (MDT) and Keysight Technologies (KEYS), are slated to release their quarterly results.
On the economic data front, investors will focus on U.S. Building Permits (preliminary) and Housing Starts data. Economists forecast October Building Permits to be 1.440M and Housing Starts to be 1.340M, compared to the prior figures of 1.425M and 1.354M, respectively.
In addition, investors are looking forward to a speech from Kansas City Fed President Jeffrey Schmid.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.359%, down -1.27%.
The Euro Stoxx 50 futures are down -1.29% this morning as concerns over a potential escalation of the war in Ukraine weighed on sentiment. Automobile and bank stocks led the declines on Tuesday, while utilities stocks outperformed. Final data from Eurostat released on Tuesday confirmed that the Eurozone’s annual inflation rate was 2.0% in October, up from 1.7% in September. Meanwhile, European Central Bank Governing Council member Fabio Panetta said the ECB should “focus on the sluggishness of the real economy” and move interest rates toward “neutral, or even expansionary, territory.” In other news, Goldman Sachs lowered its 12-month forecast for Europe’s benchmark equity index, the STOXX 600, from 540 to 530, citing ongoing weak economic performance and modest EPS growth. In corporate news, Thyssenkrupp Ag (TKA.D.DX) surged over +6% after reporting a narrowed net loss and a 1 billion euro ($1.06 billion) impairment on its troubled steel division. Also, Imperial Brands Plc (IMB.LN) rose more than +1% after posting a 4.6% increase in adjusted operating profit for the fiscal year ending September 30th.
Eurozone’s CPI, Eurozone’s Core CPI, and Eurozone’s Current Account data were released today.
Eurozone October CPI has been reported at +0.3% m/m and +2.0% y/y, in line with expectations.
Eurozone October Core CPI came in at +0.2% m/m and +2.7% y/y, in line with expectations.
Eurozone September Current Account arrived at 37.0B euros, stronger than expectations of 27.0B euros.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.67%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.51%.
China’s Shanghai Composite Index closed higher today, snapping a three-day losing streak. Semiconductor and software stocks led the gains on Tuesday. China’s top economic planner said that the nation’s economy is expected to maintain the positive momentum experienced in October through the last two months of 2024, following a series of stimulus measures. The National Development and Reform Commission stated that there is significant potential to support economic growth in 2025. Meanwhile, China may expand the Connect program to include commodity trading, which currently allows overseas investors to access yuan-denominated stocks, bonds, and wealth-management products through Hong Kong, said Wu Qing, chairman of the China Securities Regulatory Commission, at a financial summit on Tuesday. He added that more options and futures will also be included in the cross-border investment scheme. On the negative side, UBS Group stated on Tuesday that China’s growth is expected to slow to 4% next year due to the likelihood of higher tariffs. In corporate news, Trip.com Group climbed over +5% in Hong Kong after the travel platform posted better-than-expected Q3 revenue. Investors are now looking forward to China’s upcoming Loan Prime Rate decision.
Japan’s Nikkei 225 Stock Index closed higher today. Bank stocks led the gains on Tuesday amid expectations that the Bank of Japan could raise rates as early as next month. Chip-related and automobile stocks also gained ground. Meanwhile, BOJ Governor Kazuo Ueda stated on Monday that the timing of the central bank’s next policy adjustment would hinge on the economy and prices. The yen strengthened against the greenback on Tuesday. Japanese Finance Minister Katsunobu Kato stated that the government’s stance on taking appropriate action against excessive currency movements remains unchanged. In other news, the BOJ will publish its findings next month on the advantages and disadvantages of the various unconventional monetary easing tools it has employed during its 25-year fight against deflation, marking another symbolic step toward ending its extensive stimulus. In corporate news, Kadokawa soared about +23% after a Reuters report indicated that Sony is in talks to acquire the parent company of FromSoftware. Investors are now focusing on Japanese trade data, set for release on Wednesday, and inflation data, due on Friday, which are anticipated to offer additional insight into the outlook for the economy and monetary policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -5.63% to 24.65.
Pre-Market U.S. Stock Movers
Super Micro Computer (SMCI) jumped over +31% in pre-market trading after the server maker appointed an independent auditor and submitted a compliance plan to Nasdaq.
Symbotic (SYM) surged more than +26% in pre-market trading after the AI-enabled robotics technology company swung to a profit in FQ4 and provided solid FQ1 revenue guidance.
QuantumScape (QS) rose over +1% in pre-market trading after HSBC upgraded the stock to Hold from Reduce with a $5.30 price target.
Incyte (INCY) plunged more than -10% in pre-market trading after halting enrollment in a Phase 2 trial of its chronic spontaneous urticaria candidate targeting MRGPRX2 due to findings from preclinical toxicology.
ChargePoint (CHPT) fell nearly -1% in pre-market trading after Needham downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - November 19th
Walmart (WMT), Lowe’s (LOW), Medtronic (MDT), Keysight Technologies (KEYS), Viking Holdings (VIK), Jacobs Engineering (J), ZTO Express Cayman (ZTO), Futu (FUTU), Xpeng (XPEV), Elbit Systems (ESLT), Amer Sports (AS), Vipshop (VIPS), Dolby Labs (DLB), Azek Company (AZEK), Golub (GBDC), Powell Industries (POWL), INTL FCStone (SNEX), Energizer (ENR), Star Bulk Carriers (SBLK), Weibo Corp (WB), ReNew Energy Global (RNW), La-Z-Boy (LZB), Oaktree Specialty Lending (OCSL), Kingsoft Cloud (KC), National Energy Services (NESR), Varex Imaging (VREX), MYT Netherlands (MYTE), Allot (ALLT), Northern Technologies (NTIC).
