Morning Markets
Dec E-Mini S&P 500 futures (ESZ23) are up +0.35%, and Dec Nasdaq 100 E-Mini futures (NQZ23) are up +0.32%.
Stock index futures this morning are slightly higher and have carryover support from a rally in the Euro Stoxx 50 to a 3-1/2 month high. European stocks rose after Eurozone New CPI rose less than expected, knocking the 10-year German bund yield down to a 4-1/2-month low and bolstering expectations that the ECB is done raising interest rates. US stock index futures extended their gains on today’s Fed-friendly jobless claims and October’s core PCE reports.
On the positive side for stocks, M&A activity is supportive for stocks after AbbVie agreed to acquire ImmunoGen for $10.1 billion. Also, Salesforce rose more than +9% in premarket trading after reporting Q3 adjusted EPS above consensus and raising its 2024 adjusted EPS forecast. In addition, Snowflake is up more than +8% after reporting Q3 earnings above consensus.
On the downside, Pure Storage is down more than -16% after forecasting 2024 earnings below consensus. Also, Okta is down more than -3%, adding to Wednesday’s -2% loss after Wells Fargo Securities and KeyBanc Capital Markets downgraded the stock.
US weekly initial jobless claims rose +7,000 to 218,000, right in line with expectations. However, weekly continuous shells rose +86,000 to a 2-year high of 1.927 million, showing a weaker labor market than expectations of 1.865 million.
US personal spending rose +0.2% m/m, right in line with expectations. October personal income rose +0.2% m/m, right in line with expectations.
The US Oct core PCE deflator, the Fed’s preferred gauge of inflation, eased to +3.5% y/y from +3.7% y/y in September, right in line with expectations and the smallest increase in 2-1/ 2 years Oct’s headline deflator eased to +3.0% y/y from +3.4% in September, better than expectations of +3.1% y/y.
The markets are discounting a 4% chance for a +25 bp rate at the next FOMC meeting on December 12-13 FOMC and a 0% chance for that +25 bp rate at the next FOMC meeting on December 30-31 January 2024. The markets are then discounting a 46% chance for a -25 bp rate cut at the March 19-20, 2024, FOMC meeting and a 100% chance for that same -25 bp rate cut reduction at April 30-May 1, 2024. , FOMC meeting.
US and European government bond yields are mixed today. The 10-year T-note yield is up +3.7 bp at 4.292%. The 10-year German bund yield fell to a 4-1/2-month low of 2.395% and is down -0.2 bp at 2.430%. The 10-year UK gilt yield is up +5.4bp at 4.150%.
Foreign stock markets are higher. The Euro Stoxx 50 rises + 0.44%. China’s Shanghai Composite Index closed up +0.26%. Japan’s Nikkei Stock Index closed +0.50%.
The Euro Stoxx 50 climbed to a 3-1/2 month high today and is moderately higher. An easing of pressures on Eurozone consumers boosted stocks and boosted expectations that the ECB will raise interest rates after the New Eurozone CPI rose less than expected. Today’s news also showed stronger than expected October German sales, which shows strength in consumer spending and is another positive factor for stocks.
Exchanges linked to ECB meeting dates have now priced in a 49% chance that the ECB will cut its benchmark rate by -25 bp at the March 7 meeting and fully price in (+109%) a -25 bp rate at the April 11th ECB meeting.
The Eurozone New CPI decreased to + 2.4% y/y from + 2.9% y/y in October, better than expectations of + 2.7% y/y and the smallest increase in 2-1/3 years. Also, New-core CPI decreased to +3.6% y/y from +4.2% y/y in October, better than expectations of +3.9% y/y and the smallest increase in 1-1/2 years.
The German Nov unemployment change increased by +22,000, showing a weaker labor market than expectations of +20,000.
German Oct retail sales rose +1.1% m/m, stronger than expectations +0.4% m/m and the biggest increase in 13 months.
Italy’s Nov unemployment rate unexpectedly rose +0.2 to a 6-month high of 7.8%, pointing to a weaker labor market than expectations of no change at 7.4%.
China’s Shanghai Composite today recovered from early losses and posted moderate gains. Stocks initially moved lower today after economic news showed that Chinese manufacturing and service sector activity unexpectedly fell this month. However, stocks recovered their losses and moved higher on speculation that the weak growth would prompt the Chinese government to step up stimulus measures to support the economy. Chinese robot-related stocks rallied today after President Xi Jinping was seen observing a walking robot at an exhibition during his Shanghai visit.
China’s New manufacturing PMI unexpectedly fell -0.1 to a 4-month low of 49.4, weaker than expectations of an increase to 49.8. Also, the New non-manufacturing PMI unexpectedly fell -0.4 to an 11-month low of 50.2, weaker than expectations of an increase to 50.9.
Japan’s Nikkei Stock Index today recovered from a 2-week low and ended moderately higher. Weakness in the yen today sparked a rally in export stocks, which helped the overall market recover from early losses. The yen retreated on dovish comments from BOJ board member Nakamura, who said the Japanese economy still needed the BOJ’s yield curve control program and negative interest rates and “now is not the time” to adjust monetary policy. Also, a decline in government bond yields today sparked a rally in tech stocks.
Japan’s consumer confidence index unexpectedly rose +0.4 to 36.1, stronger than expectations of a decline to 35.6.
Japanese October industrial production rose +1.0% m/m, stronger than expectations of +0.8% m/m and the largest increase in 4 months.
Japanese Oct-retail sales unexpectedly fell -1.6% m / m, weaker than expectations of + 0.4% m / m increase and the largest decline in 2-1 / 2 years.
Premarket US stock transferors
Salesforce Inc ( CRM ) rose more than +9% in premarket trading after reporting Q3 adjusted EPS of $2.11, better than the consensus of $2.06, and raising its 2024 adjusted EPS forecast to $8.18-$8.19 from a previous forecast from $8.04-$8.06. , stronger than the $8.06 consensus.
HP Enterprise (HPE) climbed more than +4% in premarket trading, adding to Wednesday’s +5% gain after Morgan Stanley upgraded the stock to equal weight from underweight.
Snowflake (SNOW) jumped more than +8% in premarket trading after reporting Q3 revenue of $734.2 million, above the consensus of $713.8 million.
Snap (SNAP) and Pinterest (PINS) both climbed more than +3% in premarket trading after Jeffries upgraded the stock to buy from hold.
Nutanix (NTNX) rallied more than +9% in premarket trading after Barclays raised its price target on the stock to $49 from $43 and Morgan Stanley raised its price target on the stock to $50 from $38.
Synopsys ( SNPS ) climbed more than +2% in premarket trading after reporting Q3 adjusted EPS of $3.17, better than the consensus of $3.05.
Kroger (KR) rose more than +1% in premarket trading after reporting Q3 sales of $34.00 billion, better than the consensus of $33.91 billion.
Okta (OKTA) is down more than -3% in premarket trading, adding to Wednesday’s -2% loss after Wells Fargo Securities and KeyBanc Capital Markets downgraded the stock to hold equivalent ratings of overweight.
Pure Storage ( PSTG ) fell more than -16% in premarket trading after forecasting 2024 revenue of $2.82 billion, weaker than the consensus of $2.96 billion.
Earnings Reports (11/30/2023)
Elastic NV (ESTC), Kroger Co/The (KR), Marvell Technology Inc (MRVL), UiPath Inc (PATH), Ulta Beauty Inc (ULTA).
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As of the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.