December S&P 500 futures (ESZ23) are up +0.10%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.09% this morning as market participants once again looked ahead to remarks from U.S. Federal Reserve Chief Jerome Powell for more clues on interest rates.
In Wednesday’s trading session, Wall Street’s major averages ended mixed. Warner Bros Discovery Inc (WBD) tumbled over -19% and was the top percentage loser on the benchmark S&P 500 after the company reported mixed Q3 results and said that Hollywood strikes and a weak advertising market could hurt next year’s earnings. Also, Lucid Group Inc (LCID) slid more than -8% after the company posted mixed Q3 results and trimmed its full-year vehicle production outlook. In addition, eBay Inc (EBAY) fell about -2% after issuing disappointing guidance for the busy holiday quarter. On the bullish side, Take-Two Interactive Software Inc (TTWO) climbed more than +5% following the company’s announcement that it will unveil a trailer for a new version of the Grand Theft Auto game early next month. Also, DaVita HealthCare Partners Inc (DVA) gained over +5% after the dialysis services provider reported upbeat Q3 results and raised its full-year free cash flow guidance.
Meanwhile, on Wednesday, Fed Chair Jerome Powell delivered opening remarks at the Fed’s Division of Research and Statistics Centennial Conference. Powell emphasized the need for the central bank to think beyond traditional mathematical simulations for forecasting while avoiding any commentary on monetary policy. At the same time, Philadelphia Fed President Patrick Harker, speaking at a different event, expressed the view that maintaining interest rates at their current restrictive level was the right course of action. “With monetary policy, there are always lags. Holding the rate steady will give those lags time to catch up,” Harker said.
U.S. rate futures have priced in a 9.5% probability of a 25 basis point rate increase at the next central bank meeting in December and a 17.8% chance of a 25 basis point rate hike at the January FOMC meeting.
Today, market participants will be closely watching the speech by Federal Reserve Chair Jerome Powell at the 24th Jacques Polak Annual Research Conference later in the day, which could provide additional clarity on the U.S. rate outlook.
“His comments are anticipated to shape the narrative for the year’s final FOMC meeting next month,” Philip Wee, a strategist at DBS Bank, wrote in a note. Wee anticipates the Fed Chair to “emphasize the irreplaceable role of interest rate policy to achieve its dual mandate.”
Also, investors will likely focus on speeches from Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin.
On the economic data front, all eyes are focused on U.S. Initial Jobless Claims data in a couple of hours. Economists estimate this figure to be 215K, compared to last week’s value of 217K.
In the bond markets, United States 10-year rates are at 4.555%, up +0.62%.
The Euro Stoxx 50 futures are up +0.60% this morning as investors digested upbeat corporate earnings reports while also awaiting remarks from Federal Reserve Chair Jerome Powell to assess the path for global interest rates. Eurozone government bond yields climbed on Thursday, rebounding from the decline observed in the two previous sessions, as central bankers countered market expectations of interest rate cuts in 2024. Meanwhile, European Central Bank President Christine Lagarde is set to deliver a speech due later in the session. In corporate news, AstraZeneca Plc (AZN.L.EB) rose over +2% after the company posted better-than-expected Q3 results and boosted its full-year earnings guidance. Also, Schneider Electric Se (SU.FP) climbed more than +5% following its medium and long-term outlook announcement. In addition, Adyen (ADYEN.NA) surged about +30% after the digital payments processor reported better-than-feared Q3 sales.
The European economic data slate is mainly empty on Thursday.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.03%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.49%.
China’s Shanghai Composite today closed just above the flatline after data revealed the country slipped back into disinflation territory in October. Data from the National Bureau of Statistics showed on Thursday that China’s consumer prices swung into decline, and factory-gate deflation persisted in October, posing concerns about the prospects of any broader economic recovery in the world’s second-largest economy. Meanwhile, Country Garden Holdings Co Ltd plunged over -9%, giving up almost all of yesterday’s gains amid a report that Beijing had asked Ping An Insurance Group to acquire a controlling stake in the troubled homebuilder. Stocks of other Chinese developers also retreated, with China Evergrande Group falling more than -6% and CIFI Holdings slumping over -11%. On the positive side, Inspur Electronic Information Industry soared about +10% after local media reported that Nvidia intends to release three new chips for China.
“The inflation data is likely to reinforce the weaker-than-expected PMI figures last week, which continue to point to low-for-longer growth conditions. Today’s data seems to reinforce the view that more needs to be done,” said Jun Rong Yeap, a market strategist at IG Asia Pte.
The Chinese October CPI has been reported at -0.1% m/m and -0.2% y/y, weaker than expectations of 0.0% m/m and -0.1% y/y.
The Chinese October PPI came in at -2.6% y/y, stronger than expectations of -2.7% y/y.
Japan’s Nikkei 225 Stock Index closed higher today, snapping a two-day losing streak as a series of upbeat earnings reports boosted investor sentiment. Ministry of Finance data revealed on Thursday that Japan recorded its largest current account surplus in 18 months in September as the trade balance swung into the black, driven by substantial gains from overseas investments. Meanwhile, a summary of opinions from the Bank of Japan’s October meeting on Thursday revealed that some policymakers advocated initiating the gradual reduction of extensive stimulus measures and preparing for a potential exit from ultra-low interest rates in the future. In addition, former Bank of Japan executive Eiji Maeda said Thursday that the central bank might end its negative interest rate policy as early as January, opting to increase short-term borrowing costs if the economy proves resilient to uncertainties from abroad. In corporate news, Cosmo Energy Holdings Co Ltd soared over +8% after the company lifted its profit forecast. Also, Casio Computer Co Ltd climbed nearly +7% after the watch and calculator maker posted positive financial results. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.80% to 19.47.
The Japanese September Current Account n.s.a. stood at 2.724T, weaker than expectations of 3.000T.
Pre-Market U.S. Stock Movers
Walt Disney Company (DIS) climbed over +3% in pre-market trading after the company reported stronger-than-expected Q4 EPS and showed better streaming subscriber growth than expected.
Twilio Inc (TWLO) gained more than +5% in pre-market trading after the communications software company posted upbeat Q3 results and issued strong Q4 guidance.
Affirm Holdings Inc (AFRM) soared over +12% in pre-market trading after reporting better-than-expected Q1 results and raising its FY24 gross merchandise volume guidance.
Applovin Corp (APP) surged about +15% in pre-market trading after the company posted upbeat Q3 results.
Arm Holdings (ARM) plunged more than -6% in pre-market trading after the company reported stronger-than-expected Q2 results but noted that “there is uncertainty regarding the exact timing of some deals and the revenue recognition profiles for future agreements are subject to change.”
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 9th
Becton Dickinson (BDX), Transdigm (TDG), Li Auto (LI), The Trade Desk (TTD), Banco Bradesco (BBD), Mettler-Toledo (MTD), Rogers Communications (RCI), Illumina (ILMN), Hologic (HOLX), News Corp (NWS), Grab Holdings (GRAB), News Corp A (NWSA), Wynn Resorts (WYNN), US Foods (USFD), Unity Software (U), WestRock Co (WRK), Light Wonder (LNW), Stantec (STN), Sharkninja (SN), Energy of Minas Gerais (CIG), RBC Bearings (RBC), Tapestry (TPR), Onto Innovation (ONTO), Capri Holdings (CPRI), Wix.Com Ltd (WIX), DoubleVerify Holdings (DV), Flowers Foods (FLO), Doximity (DOCS), Plug Power (PLUG), Synaptics (SYNA), Vertex (VERX), YETI (YETI), Verra Mobility (VRRM), Cogent (CCOI), Burford (BUR), Nova (NVMI), Weibo Corp (WB), Scorpio Tankers (STNG), Indivior PLC (INDV), Alarm.com Holdings (ALRM), Intellia Therapeutics Inc (NTLA), Savers Value Village (SVV), Nomad Foods (NOMD), Walker&Dunlop (WD), NCR (VYX), Krispy Kreme (DNUT), Goodrx (GDRX), Caretrust Inc (CTRE), RadNet (RDNT), First Advantage (FA), SGHC Limited (SGHC), Sylvamo (SLVM), Edgewell Personal Care (EPC), Utz Brands (UTZ), Hawaiian Electric Industries (HE), Hanesbrands (HBI), Montauk Renewables (MNTK), Ironwood (IRWD), Avepoint (AVPT), Docebo (DCBO), Liberty Latin America (LILA), Profrac Holding (ACDC), National Vision (EYE), Amylyx Pharmaceuticals (AMLX), P10 Inc (PX), Vizio Holding (VZIO), Suburban Propane Partners LP (SPH), Global Partners (GLP), Calumet (CLMT), Navitas Semiconductor (NVTS).
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