September S&P 500 futures (ESU23) are down -0.04%, and September Nasdaq 100 E-Mini futures (NQU23) are up +0.07% this morning after three major U.S. benchmark indices ended the regular session higher as investors digested remarks from several Federal Reserve officials while awaiting the release of Wednesday’s consumer price index data that will help determine the trajectory of future rate hikes.
In Monday’s trading session, Icahn Enterprises LP (IEP) surged more than +20% after the Wall Street Journal reported that Carl Icahn disconnected his personal loans from the price of his company’s shares. Chip stocks also rose after Taiwan Semiconductor Manufacturing Co. reported better-than-expected sales, with Intel Corporation (INTC) rising over +2% and Qualcomm Incorporated (QCOM) gaining about +1%. In addition, CAVA Group Inc (CAVA) climbed more than +11% after a majority of brokers initiated coverage on the company with buy-equivalent ratings. On the bearish side, FMC Corporation (FMC) tumbled over -11% and was the top percentage loser on the benchmark S&P 500 after the chemicals maker cut its Q2 and FY23 revenue guidance. Most megacap growth and technology stocks also lost ground, with Alphabet Inc (GOOGL) and Amazon.com Inc (AMZN) falling more than -2%.
San Francisco Fed President Mary Daly said Monday that a couple more rate hikes would be needed by the end of the year to address elevated inflation in the face of a robust labor market. Also, Cleveland Fed President Loretta Mester said that the U.S. central bank needs to lift its benchmark interest rate “somewhat further.” “The economy has shown more underlying strength than anticipated earlier this year, and inflation has remained stubbornly high, with progress on core inflation stalling,” Mester said. At the same time, Federal Reserve officials signaled that the central bank was approaching the conclusion of its tightening cycle.
“The FOMC speak was the main focus of yesterday, and officials who spoke reiterated the recent message that a couple more rate hikes are likely in coming months, so not really a surprise there,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
Meanwhile, U.S. rate futures have priced in a 94.9% probability of a 25 basis point rate increase and a 5.1% chance of no hike at the conclusion of the Fed’s July meeting.
In other news, Citigroup Monday downgraded its view on U.S. stocks to “Neutral,” pointing to lagged effects from the Federal Reserve’s tightening policy and the potential for sharp and non-linear downturns.
The U.S. economic data slate is largely empty on Tuesday. Investor focus is now squarely on U.S. inflation data due on Wednesday, which is expected to have a significant role in determining the outcome of the Federal Reserve’s monetary policy committee meeting scheduled for later this month.
In the bond markets, United States 10-Year rates are at 3.965%, down -1.02%.
The Euro Stoxx 50 futures are up +0.19% this morning as China’s latest economic support measures boosted sentiment, while market participants braced for key U.S. inflation data and the start of the second-quarter earnings season. Gains in real estate and materials stocks are leading the overall market higher. The Federal Statistical Office said Tuesday that Germany’s inflation rose in June after cooling for three months in a row, confirming preliminary estimates. Meanwhile, European Central Bank Governing Council member Francois Villeroy de Galhau stated that the ECB is close to completing its hiking cycle, but emphasized that interest rates will be maintained at a “high plateau” to ensure their complete impact on the economy. In corporate news, Daimler Truck Holding Ag (DTG.D.DX) rose over +1% after the German automaker said it would buy back up to 2 billion euros of its shares and raised its full-year profit and revenue guidance.
U.K.’s Average Earnings Index +Bonus, U.K.’s Claimant Count Change, U.K.’s Employment Change 3M/3M, U.K.’s Unemployment Rate, Germany’s CPI, Italy’s Industrial Production, Germany’s ZEW Current Conditions, Germany’s ZEW Economic Sentiment, Eurozone’s ZEW Economic Sentiment data were released today.
U.K. May Average Earnings Index +Bonus has been reported at 6.9%, stronger than expectations of 6.8%.
U.K. June Claimant Count Change stood at +25.7K, weaker than expectations of -8.6K.
U.K. May Employment Change 3M/3M came in at +102K, weaker than expectations of +125K.
U.K. May Unemployment Rate was at 4.0%, weaker than expectations of 3.8%.
The German June CPI stood at +0.3% m/m and +6.4% y/y, in line with expectations.
The Italian May Industrial Production arrived at +1.6% m/m and -3.7% y/y, stronger than expectations of +0.7% m/m and -4.5% y/y.
The German July ZEW Current Conditions came in at -59.5, stronger than expectations of -60.0.
The German July ZEW Economic Sentiment was at -14.7, weaker than expectations of -10.5.
Eurozone July ZEW Economic Sentiment has been reported at -12.2, weaker than expectations of -10.2.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.55%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.04%.
China’s Shanghai Composite today closed higher following Beijing’s extension of policy support to the struggling property sector, fostering expectations for a new round of easing measures. Hong Kong-listed China developers gained ground on Tuesday after the People’s Bank of China announced an extension of policy support for the sector until the end of 2024. Technology stocks listed in Hong Kong also advanced, with Alibaba Group gaining about +2% and Baidu rising over +1%. In addition, state-run financial newspapers in China released reports on Tuesday indicating the potential implementation of additional property support policies alongside measures aimed at enhancing business confidence. At the same time, investors continued to be cautious about directly investing in Chinese stocks, given the uncertainty over the country’s economic prospects.
Japan’s Nikkei 225 Stock Index closed slightly higher today, snapping a five-day losing streak, yet relinquished most of its initial gains as investors opted to lock in profits. Chip stocks rose on Tuesday after Taiwan Semiconductor Manufacturing Co. reported upbeat Q2 revenue amid a boom in artificial intelligence applications, with chip-testing equipment maker Advantest climbing over +4% and chip-making equipment maker Tokyo Electron rising about +1%. In other corporate news, Sumco Corp soared over +4% after a report indicated that Japan would provide the prominent silicon wafer manufacturer with a subsidy of up to 75 billion yen to fund additional capacity. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.29% to 21.13.
Pre-Market U.S. Stock Movers
Better Therapeutics Inc (BTTX) surged over +52% in pre-market trading after receiving the U.S. FDA authorization for AspyreRx.
WD-40 Company (WDFC) climbed more than +4% in pre-market trading after the company reported upbeat Q3 results and affirmed FY23 guidance.
Zillow Group Inc (ZG) gained over +2% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral.
Payoneer Global Inc (PAYO) rose more than +2% in pre-market trading after the company announced a plan to reduce its workforce by about 9%.
Zions Bancorporation (ZION) fell over -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.
Iovance Biotherapeutics Inc (IOVA) tumbled over -10% in pre-market trading after announcing the pricing of an underwritten public offering of 20 million shares of its common stock at $7.50 per share.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday- July 11th
Commer Intl Bank (CMGGF), Nordic Semiconductor (NDCVF), Eaton Vance Tax Managed Diversified (ETY), E2open Parent Holdings (ETWO), Eaton Vance Tax Advantaged Glb Div (ETG), Indus Realty Trust (INDT), Nurix (NRIX).
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