June S&P 500 E-Mini futures (ESM24) are down -0.03%, and June Nasdaq 100 E-Mini futures (NQM24) are up +0.04% this morning as market participants looked ahead to the release of U.S. inflation data and the minutes of the Federal Reserve’s latest policy meeting while also bracing for the start of earnings season later in the week.
In Friday’s trading session, Wall Street’s major averages ended higher. Grindrod Shipping Holdings (GRIN) surged over +29% after the company disclosed its plans for a selective capital reduction. Also, chip stocks gained ground, with Nvidia (NVDA) and Advanced Micro Devices (AMD) rising more than +2%. In addition, Western Digital (WDC) climbed over +3% after Rosenblatt Securities upgraded the stock to Buy from Neutral with a price target of $115. On the bearish side, Tesla (TSLA) fell more than -3% and was the top percentage loser on the Nasdaq 100 following a Reuters report indicating that the electric vehicle giant scrapped its plans to build a mass-market model.
The U.S. Labor Department’s report on Friday showed that nonfarm payrolls advanced by 303K jobs last month, well above the 212K consensus and the biggest increase in 10 months. Also, the U.S. March unemployment rate edged lower to 3.8%, stronger than expectations of no change at 3.9%. In addition, U.S. average hourly earnings came in at +0.3% m/m and +4.1% y/y in March, in line with expectations. Finally, U.S. February consumer credit rose +14.12B, weaker than expectations of +16.20B.
“Bang! Employment up, rate cuts need to come out. The Fed will likely need to reconsider its current stance of three rate cuts this year. But, the reason for this likely change in posture is bullish - the economy is doing well,” said George Mateyo at Key Wealth.
Dallas Fed President Lorie Logan said on Friday that “it’s much too soon” to contemplate reducing interest rates, pointing to recent high inflation figures and indications that borrowing costs might not be restraining the economy to the extent previously thought. Fed Governor Michelle Bowman also expressed her concern regarding potential upward risks to inflation, emphasizing that it’s “still not yet” time to cut interest rates.
U.S. rate futures have priced in a 4.5% chance of a 25 basis point rate cut at the next FOMC meeting in May and a 46.2% probability of a 25 basis point rate cut at June’s policy meeting.
Meanwhile, the first-quarter earnings season kicks off this week, with big banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) scheduled to release their earnings reports. BlackRock (BLK) and Delta Air Lines (DAL) are among other major names set to deliver quarterly updates during the week.
On the economic data front, the U.S. consumer inflation report for March will be the main highlight in the coming week. Also, market participants will be eyeing a spate of other economic data releases, including the U.S. Core CPI, PPI, Core PPI, Wholesale Inventories, Crude Oil Inventories, Initial Jobless Claims, Export Price Index, Import Price Index, and Michigan Consumer Sentiment (preliminary).
In addition, investors will be paying close attention to the release of the Federal Reserve’s minutes from the March meeting on Wednesday.
A host of Fed officials will be making appearances throughout the week, including Kashkari, Bowman, Goolsbee, Williams, Collins, Bostic, and Daly.
In other news, U.S. Treasury Secretary Janet Yellen stated Monday that future discussions between the U.S. and China would center on Beijing’s need to shift its industrial and economic policies. “We intend to underscore the need for a shift in policy during these talks - building on the over two hours I spent on this topic with the Vice Premier last week,” she said in prepared remarks for a press conference.
The U.S. economic data slate is mainly empty on Monday.
In the bond markets, United States 10-year rates are at 4.452%, up +1.72%.
The Euro Stoxx 50 futures are up +0.32% this morning as investors braced for a busy week that includes key data releases, the start of the first-quarter earnings season, and a European Central Bank interest rate decision. Mining stocks gained ground on Monday, while food and beverages stocks underperformed. Data from the Federal Statistics Office showed on Monday that German exports fell more than anticipated in February. Separately, a survey showed that investor morale in the Eurozone improved for the sixth straight month in April to its highest level in over two years. Meanwhile, the ECB meets on Thursday and is widely expected to leave rates unchanged. With markets pricing in an almost 100% chance of a 25 basis point cut in June, ECB President Christine Lagarde’s remarks will be closely monitored for a green light. In corporate news, Zalando Se (ZAL.D.DX) climbed over +4% after Citigroup upgraded the stock to Buy from Neutral.
Germany’s Industrial Production, Germany’s Exports, Germany’s Imports, and Eurozone’s Sentix Investor Confidence Index were released today.
The German February Industrial Production stood at +2.1% m/m, stronger than expectations of +0.6% m/m.
The German February Exports came in at -2.0% m/m, weaker than expectations of -0.5% m/m.
The German February Imports arrived at +3.2% m/m, stronger than expectations of -1.0% m/m.
Eurozone April Sentix Investor Confidence Index was at -5.9, stronger than expectations of -8.3.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.72% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.91%.
China’s Shanghai Composite Index closed lower today as the market reopened after a two-day holiday, with investors looking ahead to key Chinese economic data later in the week. Liquor and semiconductor stocks underperformed on Monday. Real estate stocks also retreated, with Shimao Group plunging over -18% after revealing that China Construction Bank filed a liquidation petition against it in Hong Kong due to its inability to repay loans totaling HK$1,579.5 million ($201.75 million). Meanwhile, official data released over the weekend revealed that Chinese tourists embarked on 119 million domestic trips during the Qingming holiday, marking an 11.5% increase from the same period in 2019 before the pandemic. Domestic tourism revenue amounted to 53.95 billion yuan ($7.46 billion), rising by approximately 13% compared to 2019 levels. In other news, Hong Kong’s leader, John Lee, announced on Monday that authorities were contemplating further measures to boost the securities market in the Asian financial hub. Investor attention this week centers on Chinese credit data, inflation numbers, and trade figures.
Japan’s Nikkei 225 Stock Index closed higher today, tracking Wall Street gains from Friday following better-than-expected U.S. payrolls data. Electronics and automobile stocks led the gains on Monday. Data revealed on Monday that Japanese workers’ real wages declined in February, marking the 23rd consecutive month of decrease. Separately, Ministry of Finance data indicated that Japan’s current account extended its surplus to a 13th straight month in February. Meanwhile, the yen weakened against the dollar on Monday. Former top currency official Takehiko Nakao told Reuters on Monday that Japanese authorities might intervene in the foreign exchange market to stem significant declines in the yen “at any time” if its movements are deemed excessive enough to warrant such action. In corporate news, Nihon Enterprise climbed over +9% after the company almost tripled its attributable profit for the fiscal nine months, driven by increased net sales, and boosted its forecasts for the fiscal year. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.12% to 21.24.
The Japanese February Current Account n.s.a. stood at 2.644T yen, weaker than expectations of 3.112T yen.
Pre-Market U.S. Stock Movers
Tesla (TSLA) advanced over +3% in pre-market trading after CEO Elon Musk said in a post on X Friday that the company will unveil its new Robotaxi on August 8th.
Kroger Company (KR) dropped over -1% in pre-market trading after Exane BNP Paribas downgraded the stock to Underperform from Neutral with a $48 price target.
Skyworks Solutions (SWKS) slid more than -1% in pre-market trading after KeyBanc downgraded the stock to Sector Weight from Overweight.
BJ’s Wholesale (BJ) gained over +1% in pre-market trading after Goldman Sachs upgraded the stock to Buy from Neutral with a price target of $87.
Fastly (FSLY) climbed more than +4% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $16.
Applied Materials (AMAT) rose over +1% in pre-market trading after Cantor Fitzgerald upgraded the stock to Overweight from Neutral with a price target of $260.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - April 8th
Freedom (FRHC), Taylor Devices (TAYD), Lifecore Biomedical (LFCR), Children’s Place (PLCE).
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