March S&P 500 E-Mini futures (ESH25) are up +0.45%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.71% this morning, pointing to a strong opening on Wall Street, while investors looked ahead to the publication of the minutes of the Federal Reserve’s latest policy meeting, comments from Federal Reserve officials, and a raft of U.S. labor market data.
Technology stocks led the gains in U.S. equity futures as spending plans by Microsoft highlighted the continued demand for artificial intelligence infrastructure, with chip heavyweights Nvidia (NVDA) and Advanced Micro Devices (AMD) rising over +2% in pre-market trading.
In Friday’s trading session, Wall Street’s major equity averages closed in the green. Megacap technology stocks advanced, with Tesla (TSLA) climbing over +8%. Also, chip stocks gained ground, with ARM Holdings (ARM) surging more than +10% and Nvidia (NVDA) rising over +4%. In addition, Block (SQ) advanced more than +6% after Raymond James upgraded the stock to Outperform from Market Perform with a $115 price target. On the bearish side, U.S. Steel (X) slumped over -6% after U.S. President Joe Biden blocked the $14.1 billion sale of the company to Japan’s Nippon Steel.
Economic data released on Friday showed that the U.S. ISM manufacturing PMI unexpectedly rose to a 9-month high of 49.3 in December, stronger than expectations of a decline to 48.2.
Richmond Fed President Thomas Barkin said Friday that he still sees upside risks to inflation and growth, which positions him in the camp of “wanting rates to stay restrictive for longer.” Also, San Francisco Fed President Mary Daly said on Saturday that although there has been considerable progress in reducing inflationary pressures over the past two years, inflation remains “uncomfortably above our target.” In addition, Fed Governor Adriana Kugler said, “Obviously our job is not done. We’re not at 2% yet, so we’re definitely aiming still to get there, and we know the job is not done.”
U.S. rate futures have priced in a 90.9% probability of no rate change and a 9.1% chance of a 25 basis point rate cut at January’s monetary policy meeting.
Meanwhile, the U.S. stock markets and the federal government will be closed on Thursday in observance of the National Day of Mourning for former President Jimmy Carter. Also, the bond market will close at 2 p.m. Eastern Time on Thursday, per the recommendation of the Securities Industry and Financial Markets Association. The closures follow a long-standing American tradition where financial institutions halt operations after the death of a president.
Market watchers will be closely following the U.S. Nonfarm Payrolls report for December this week. Other noteworthy data releases include the U.S. JOLTs Job Openings, the ISM Non-Manufacturing PMI, Exports, Imports, Trade Balance, ADP Nonfarm Employment Change, Initial Jobless Claims, Crude Oil Inventories, Consumer Credit, Average Hourly Earnings, the Unemployment Rate, and the University of Michigan’s Consumer Sentiment Index (preliminary).
Also, investors will closely monitor the release of the Federal Reserve’s minutes from the December 17-18 meeting on Wednesday, which might offer insights into how various policymakers view the impact of Trump’s proposed policies on the economy and how this could influence the outlook for interest rates.
In addition, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin, Fed Governor Christopher Waller, Philadelphia Fed President Patrick Harker, Kansas City Fed President Jeffrey Schmid, and Fed Governor Michelle Bowman will be making appearances this week.
Today, investors will focus on the U.S. S&P Global Services PMI, which is set to be released in a couple of hours. Economists, on average, forecast that the final December figure will be 58.5, compared to November’s figure of 56.1.
U.S. Factory Orders data will also be released today. Economists forecast this figure to be -0.3% m/m in November, compared to the previous number of +0.2% m/m.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.622%, up +0.59%.
The Euro Stoxx 50 futures are up +0.63% this morning, kicking off the first full trading week of the year on a positive note. Chip stocks led the gains on Monday as Microsoft’s plan to invest $80 billion in data centers sparked interest. Automobile stocks also advanced. A survey released on Monday showed that the Eurozone economy ended 2024 on shaky ground, with overall activity shrinking for the second consecutive month in December as a slight rebound in the services sector was unable to counter a steeper decline in manufacturing. Separately, research from the European Central Bank published on Monday showed that the exceptional resilience of the Eurozone labor market is unlikely to continue, as the temporary factors driving its strength are fading, though a dramatic downturn is also not expected. Meanwhile, this week’s economic calendar is packed with inflation readings across Europe, beginning with Germany’s preliminary inflation data due later today. In corporate news, Neste Oyj (NESTE.H.DX) gained over +4% after securing its largest-ever contract last week to supply sustainable aviation fuel.
Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, and Eurozone’s Sentix Investor Confidence Index were released today.
The Spanish December Services PMI stood at 57.3, stronger than expectations of 54.1.
The Italian December Services PMI arrived at 50.7, stronger than expectations of 50.0.
The French December Services PMI came in at 49.3, stronger than expectations of 48.2.
The German December Services PMI was 51.2, stronger than expectations of 51.0.
Eurozone December Composite PMI arrived at 49.6, stronger than expectations of 49.5.
Eurozone December Services PMI came in at 51.6, stronger than expectations of 51.4.
Eurozone January Sentix Investor Confidence Index has been reported at -17.7, in line with expectations.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.14% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.47%.
China’s Shanghai Composite Index closed lower and hit a 3-month low today as worries about economic recovery and geopolitical tensions dampened sentiment. Losses in liquor and telecommunication stocks led the overall market lower on Monday. Sentiment toward China remained fragile into the new year, with investors worried about the nation’s economic recovery, the implementation of domestic policy support, and rising geopolitical tensions upon Donald Trump’s return to the White House. A private survey released on Monday showed that China’s services activity expanded at the quickest rate in seven months in December, but orders from abroad fell, indicating increasing trade risks to the economy. Meanwhile, the Shanghai and Shenzhen exchanges recently convened meetings with foreign institutions to strengthen investor confidence, reiterating their commitment to continue opening up China’s capital markets. Over the weekend, the People’s Bank of China also announced plans to ramp up financial support for technological innovation and consumption while introducing new tools to inject liquidity into the stock market. In corporate news, Wolong Electric Group fell over -3% after terminating the plan to list its subsidiary, Longneng Electric Power Technology, on the Beijing Stock Exchange and announcing its decision to delist the subsidiary from the National Equities Exchange and Quotations.
The Chinese December Caixin Services PMI arrived at 52.2, stronger than expectations of 51.7.
Japan’s Nikkei 225 Stock Index closed lower on the first trading day of 2025 as investors locked in profits following the index’s year-end rally. Automobile and retail stocks led the declines on Monday. At the same time, chip stocks outperformed, tracking Friday’s strong performance of their U.S. peers. A private sector survey released on Monday showed that Japan’s service activity expanded in December, supported by robust demand and business expansion. The final reading came in below the flash estimate but remained above the 50 mark, separating expansion from contraction, for the second consecutive month. Meanwhile, Bank of Japan Governor Kazuo Ueda stated on Monday that the central bank must be vigilant to various risks when determining the timing of interest rate hikes. “The timing for adjusting the degree of monetary support will depend on economic, financial, and price developments in the future. We also must be vigilant to various risks,” Ueda said. In other news, a Kyodo News survey revealed that 78% of major Japanese companies expect moderate economic growth in 2025, propelled by wage increases and rebounding consumer spending, whereas merely 2% foresee a contraction. In corporate news, Nippon Steel fell about -0.8% after U.S. President Joe Biden blocked its planned $14.1 billion takeover of U.S. Steel. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.54% to 22.78.
The Japanese December au Jibun Bank Japan Services PMI came in at 50.9, weaker than expectations of 51.4.
Pre-Market U.S. Stock Movers
Chip stocks are moving higher in pre-market trading as Microsoft’s plan to invest $80 billion in data centers sparked interest and Taiwan’s Foxconn posted strong earnings. Nvidia (NVDA), Micron Technology (MU), and Advanced Micro Devices (AMD) are up more than +2%.
Paycor HCM (PYCR) surged over +21% in pre-market trading after Bloomberg reported that Paychex was in advanced talks to acquire the company.
AT&T (T) rose about +1% in pre-market trading after RBC Capital upgraded the stock to Outperform from Sector Perform with a price target of $26.
Lyft (LYFT) climbed more than +4% in pre-market trading after Benchmark upgraded the stock to Buy from Hold with a $20 price target.
Boeing (BA) rose over +1% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $210.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - January 6th
Commercial Metals (CMC).
