September S&P 500 E-Mini futures (ESU24) are up +0.24%, and September Nasdaq 100 E-Mini futures (NQU24) are up +0.27% this morning as investors braced for crucial U.S. producer inflation data while also awaiting the European Central Bank’s interest rate decision.
In yesterday’s trading session, Wall Street’s major indices closed in the green. Solar stocks soared after Wall Street largely declared Vice President Kamala Harris, who is viewed as a supporter of the energy transition, the winner of Tuesday night’s debate with former President Donald Trump, with First Solar (FSLR) surging over +15% to lead gainers in the S&P 500 and Enphase Energy (ENPH) rising more than +5%. Also, chip stocks gained ground, with Arm (ARM) climbing over +10% to lead gainers in the Nasdaq 100 and Nvidia (NVDA) advancing more than +8%. In addition, Albemarle (ALB) gained over +13% after a Reuters report indicated that Chinese battery producer CATL plans to cut lithium production levels. On the bearish side, GameStop (GME) tumbled about -12% after the videogame retailer reported weaker-than-expected Q2 revenue.
The U.S. Bureau of Labor Statistics report released on Wednesday showed that consumer prices increased +0.2% m/m in August, in line with expectations. On an annual basis, headline inflation cooled to +2.5% in August from +2.9% in July, in line with expectations and the smallest increase in 3-1/2 years. At the same time, the core CPI, which excludes volatile food and fuel prices, advanced +0.3% m/m and +3.2% y/y in August, compared to expectations of +0.2% m/m and +3.2% y/y.
“This isn’t the CPI report the market wanted to see,” said Seema Shah at Principal Asset Management. “The number is certainly not an obstacle to policy action next week, but the hawks on the committee will likely seize on [the August] CPI report as evidence that the last mile of inflation needs to be handled with care and caution.”
Meanwhile, U.S. rate futures have priced in an 87.0% probability of a 25 basis point rate cut and a 13.0% chance of a 50 basis point rate cut at the upcoming monetary policy meeting.
Today, all eyes are focused on the U.S. Producer Price Index, set to be released in a couple of hours. Economists, on average, forecast that the U.S. August PPI will come in at +0.1% m/m and +1.8% y/y, compared to the previous figures of +0.1% m/m and +2.2% y/y.
The U.S. Core PPI will also be closely watched today. Economists expect August figures to be +0.2% m/m and +2.5% y/y, compared to the previous numbers of 0.0% m/m and +2.4% y/y.
U.S. Initial Jobless Claims data will be reported today as well. Economists predict this figure will hold steady at 227K, consistent with last week’s number.
On the earnings front, Photoshop maker Adobe (ADBE) is scheduled to report its Q3 earnings results today.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.676%, up +0.69%.
The Euro Stoxx 50 futures are up +1.15% this morning, fueled by a global tech rally, while investors awaited the European Central Bank’s latest monetary policy decision. Technology and mining stocks led the gains on Thursday. Data from the National Statistics Institute released Thursday showed that Spain’s annual inflation rate stood at 2.3% in August, down from 2.8% in July and slightly above the preliminary estimate of 2.2%. Meanwhile, the ECB is widely anticipated to lower the deposit rate by 25 basis points to 3.50% later today, marking the second reduction this year, while market participants will seek hints on whether additional cuts in October and December remain on the table. In corporate news, Roche Holding Ag (ROG.Z.IX) slid about -4% after the drugmaker revealed that the promising results of an early-stage trial for its experimental weight-loss pill were based on data from only six patients.
Germany’s WPI and Spain’s CPI data were released today.
The German August WPI arrived at -0.8% m/m, weaker than expectations of +0.1% m/m.
The Spanish August CPI came in at 0.0% m/m and +2.3% y/y, compared to expectations of 0.0% m/m and +2.2% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.17% and Japan’s Nikkei 225 Stock Index (NIK) closed up +3.41%.
China’s Shanghai Composite Index ended lower today, giving up early gains as weak sentiment in the country continued to weigh on the market. Liquor and telecom stocks led the declines on Thursday. The most recent set of economic data from China showed no clear signs of recovery, while authorities refrained from signaling market support through stronger policy measures. Geopolitical risks and trade tensions with other major economies further contributed to the bearish sentiment. Meanwhile, Bloomberg News reported on Thursday that China is set to reduce interest rates on over $5 trillion in outstanding mortgages as soon as this month. In other news, HSBC analysts believe that further monetary easing could be forthcoming, citing continued weakness in China’s domestic demand. In corporate news, Shanghai Guijiu plunged -10% after the liquor maker’s chairman and general manager, Han Xiao, was charged with alleged involvement in the illegal fundraising activities of Haiyin Wealth Management. Investors are now focusing on Chinese retail sales and industrial production data, set for release later this week.
Japan’s Nikkei 225 Stock Index closed sharply higher today, snapping a seven-day losing streak as the U.S. inflation reading drove the yen down from its highest level against the dollar since December. Technology and materials stocks led the gains on Thursday. The Bank of Japan reported Thursday that annual producer prices in Japan rose less than expected in August, marking the lowest level since April. Separately, the Cabinet Office reported that the business survey index for large manufacturers in Japan surged in the third quarter, showing positive growth for the first time in three quarters. Meanwhile, BOJ policy board member Naoki Tamura helped the yen recover from session lows with remarks about raising the BOJ benchmark rate to at least 1% by the end of its projection period. In other news, data from the Ministry of Finance revealed that overseas investors sold off a net 902.3 billion yen ($6.33 billion) of Japanese stocks in the week ending September 7th, marking the largest weekly foreign outflow in nearly six months. In corporate news, Seven & I Holdings gained over +4% after Bloomberg News reported that Canada’s Alimentation Couche-Tard was considering improving its takeover bid for the Japanese convenience store operator. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -5.65% to 26.73.
The Japanese August PPI came in at -0.2% m/m and +2.5% y/y, weaker than expectations of 0.0% m/m and +2.8% y/y.
The Japanese BSI Large Manufacturing Conditions Index stood at +4.5 in the third quarter, stronger than expectations of -2.5.
Pre-Market U.S. Stock Movers
Oxford Industries (OXM) plunged over -10% in pre-market trading after the clothing retailer posted downbeat Q2 results, issued below-consensus Q3 guidance, and cut its FY24 forecast.
Champions Oncology (CSBR) surged more than +15% in pre-market trading after the company reported better-than-expected Q1 results.
Micron Technology (MU) fell over -1% in pre-market trading after Exane BNP Paribas double-downgraded the stock to Underperform from Outperform with a price target of $67.
Interpublic Group (IPG) slid nearly -2% in pre-market trading after UBS downgraded the stock to Sell from Neutral with a price target of $29.
PotlatchDeltic (PCH) rose more than +1% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a $51 price target.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - September 12th
Adobe (ADBE), Kroger (KR), RH (RH), Signet Jewelers (SIG), Caleres (CAL), Lovesac (LOVE), MYT Netherlands (MYTE), Radiant (RLGT), IBEX (IBEX), Innate Pharma (IPHA), Farmer Bros. Co (FARM).
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