Five things you need to know before the market opens on Wednesday January 18:
1. -- Stock Futures Waver, Bonds Rally on Bank of Japan Surprise
U.S. equity futures were little-changed Wednesday, while the dollar drifted south and Treasury yields retreated, as investors reset prices in bond and currency markets following an unexpected policy move by the Bank of Japan and looked to a key reading on retail sales later in the session.
Bond markets rallied in major markets around the world overnight after the Bank of Japan declined to make any changes to its ultra-loose monetary policy, keeping rates near zero percent and maintaining the recently-altered trading bands in Japanese government bonds.
The decision, one of the final policy unveilings of Governor Haruhiko Kuroda, caught markets off-guard and triggered a wave of bond buying, with Japanese government bond yields falling the most in two decades and the yen sliding to a multi-week low against the dollar.
Benchmark 10-year Treasury note yields slipped 2 basis points to 3.49% in overnight trading, while 2-year notes were pegged at 4.184% in the wake of the global rally.
The moves haven't, as yet, provided a spark for U.S. equity futures, however, with investors looking to today's reading of December retail sales and fourth quarter earnings from Procter & Gamble and Netflix later in the week.
Markets are also likely to focus on a trio of speakers from the Federal Reserve today, with Dallas Fed President Lorie Logan, Philadelphia Fed President Patrick Harker and Dallas Fed President Raphel Bostic all set to make public appearances ahead of the central bank's January 31 policy meeting in Washington.
The CME Group's FedWatch is indicating a 93.2% chance of a 25 basis point rate hike from the Fed on February 1, up from around 76.7% this time last week, with traders expecting the Fed Funds rate to peak at a range of between 4.75% and 5% in the early spring.
Heading into the start of the trading day on Wall Street, futures tied to the the S&P 500 are priced for a 2 point opening bell gain while those linked to the Dow Jones Industrial Average are set for a 2 point dip. The tech-focused Nasdaq is trading little-changed from last night's close despite the pullback in bond yields.
In overseas markets, the the region-wide MSCI ex-Japan index gained 0.26% into the close of trading, while Tokyo's Nikkei 225 surged 2.5%, to the highest close since December 19, as the yen retreated following the Bank of Japan's surprise policy stance.
Europe's Stoxx 600 was marked 0.08% higher in early Frankfurt dealing as the regional benchmark extended its recent run of gains to a sixth consecutive session, the longest winning streak since November of 2021.
2. -- December Retail Sales In Focus Amid Gas Price Retreat
A pullback in gas prices is likely to headline retail sales muted over the month of December, analysts suggest, while clouding the assessment of consumer spending over the holiday season.
Headline December retail sales are expected to fall 0.8% from the previous month, economists expect, with core retail sales -- which strip out gasoline, food and auto components -- declining 0.4% as consumers pare back on spending or drawing down on their pandemic-era savings.
The so-called control measure, which also strips out sales from building-materials retailers, gas stations, office supply stores, tobacco stores and mobile homes, is a more refined tally of December spending and will likely provide an indication as to whether the cash saved on cheaper gasoline will find its way into broader discretionary spending.
"Consumers have shifted some of their spending towards services as Covid fear has subsided, but more recently we think people have become more cautious in the face of increased economic uncertainty and sharply higher borrowing costs," said Ian Shepherdson of Pantheon Macroeconomics.
3. -- United Airlines Shares Higher On Earnings Beat, Bullish Outlook
United Airlines (UAL) shares moved firmly higher in pre-market trading after the carrier posted stronger-than-expected fourth quarter earnings and forecast Street-beating profits for the coming year.
United said adjusted earnings for the three months ending in December came in at $2.46 per share, well ahead of the $2.10 Street forecast, as revenues surged to $12.4 million and profit margins advanced to 11.2%.
Looking into the current financial year, United said it expects adjusted earnings to nearly quadruple, thanks in part to the ongoing travel boom and a tighter grip on expenses, to between $10 and $12 per share, nearly double the Refinitiv forecast of $6.54 per share.
"Over the last three years, United has made critical investments in tools, infrastructure and our people – all of which are essential investments in our future," said CEO Scott Kirby. "That's why we've got a big head start, and we're now poised to accelerate in 2023 as our United Next strategy becomes a reality."
United Airlines shares were marked 2.93% higher in pre-market trading to indicate an opening bell price of $52.70 each.
4. -- Moderna Shares Leap On Positive Data from RSV Drug Trial
Moderna (MRNA) shares moved firmly higher in pre-market trading after the drugmaker unveiled positive data from a trial of its developing respiratory syncytial virus treatment.
Moderna, which is using its messenger-RNA technique to develop the treatment, known as mRNA-1345, and said the drug was 83.7% effective in preventing at least two symptoms of the RSV virus in adults over the age of 60. Infections of RSV, which can be fatal in both younger children and older adults, have accelerated in the U.S. and Europe this winter as Covid and flu viruses continue to spread.
Moderna said it hopes to submit mRNA-1345 to the FDA for regulatory approval sometime before June.
Moderna shares were marked 6.7% higher in pre-market trading to indicate an opening bell price of $203.40 each.
5. -- Albertsons Gets Court Approval For $4 Billion Dividend Payment
Albertsons (ACI) shares jumped higher in pre-market trading after a court in Washington state approved the grocer's plans to pay a $4 billion dividend ahead of its proposed $25 billion tie-up with Kroger (KR).
The Washington Supreme Court allowed for the $6.85 per share dividend payment, which state Attorney General Bob Ferguson had sought to prevent, arguing it would weaker the group's finances and ultimately lead to higher food prices if and when its takeover by Kroger is complete. The Federal Trade Commission is reviewing the deal, which would combine the nation's two biggest grocery store chains.
"Albertsons Cos. will immediately begin the process of paying the Special Dividend and amounts will be distributed as soon as practicable to stockholders of record as of the close of business on October 24, 2022," the company said in a brief statement, adding its merger with Kroger is "continuing through required regulatory review".
Albertsons shares were marked 3.25% higher in pre-market trading to indicate an opening bell price of $21.90 each.
