December S&P 500 results (ESZ23) up +0.02%, and December Nasdaq 100 E-Mini futures (NQZ23) is up +0.12% this morning as market participants anticipated the release of the minutes of the Federal Reserve’s latest policy meeting as well as earnings from semiconductor powerhouse Nvidia later in the week.
In Friday’s trading session, the main Wall Street averages ended in the green. Gap Inc (GPS) soared more than +30% after the business trader reported better-than-expected Q3 results. Also, Ross Stores Inc (ROAST) gained more than +7% after the off-price retailer posted upbeat Q3 results. In addition, energy stocks gained ground as the price of WTI crude rose more than +4%. On the bearish side, Applied Materials Inc (AMAT) fell about -4% following a Reuters report stating that the Justice Department is reviewing the company for allegedly shipping “hundreds of millions” of dollars worth of equipment to Semiconductor Manufacturing International Corporation without the required export licenses.
Economic data on Friday showed that US October Housing unexpectedly rose +1.9% m/m to 1.372M, stronger than expectations of 1.345M. Also, US Building Permits came in at 1.487M in October compared to the 1.450M forecast.
Fed Vice Chairman for Supervision Michael Barr expressed his belief on Friday that the Fed is at or near the peak of interest rate hikes, while San Francisco Fed President Mary Daly and Boston Fed President Susan Collins emphasized the need for more evidence of cooling inflation.
“Although it is unlikely that the Fed will raise rates, investors are too quick to accept rates. Sometime in 2024, the Fed will start to lower rates. But we are in a waiting game,” said David Donabedian, chief investment officer of CIBC Private Wealth USA.
Meanwhile, US exchange rate futures prices have a 99.8% chance of no hike at the December FOMC meeting and a 97.8% chance of no hike at the January monetary policy meeting. Also, US rates were priced in a 29.4% probability of a 25 basis point rate cut at the March meeting.
In the coming week, investors will monitor a host of economic data, including US Existing Home Sales, Durable Goods Orders, Core Durable Goods Orders, Initial Jobless Claims, Michigan Consumer Sentiment, Crude Oil Inventories, S&P Global Composite PMI ( preliminary) , S&P Global Manufacturing PMI (preliminary), and S&P Global Services PMI (preliminary).
In addition, investors will be paying close attention to the release of the Federal Reserve’s minutes from the November meeting on Tuesday for any new insights into the future trajectory of interest rates.
In the revenue, several prominent companies such as NVIDIA (NVDA), Zoom Video (ZM), Baidu (BID), and HP Inc (HPQ), along with retailers including Lowe’s (LOW), Urban Outfitters (URBAN), Dick’s Sporting Goods (DKS), and Best Buy (BBY), are scheduled to release their quarterly results this week.
The US economic data is mostly empty on Monday.
In the bond markets, US 10-year yields are at 4.448%, up +0.11%.
The Euro Stoxx 50 futures are down -0.05% this morning as investors digested a lot of negative corporate news while awaiting the release of the FOMC and ECB minutes later in the week. Energy stocks gained ground on Monday, while healthcare stocks underperformed. The Federal Statistical Office said on Monday that German producer prices remained sharply negative for a fourth consecutive month in October. Meanwhile, Moody’s Investors Service raised its outlook on Italy’s debt to stable, removing the imminent risk of a downgrade to junk status. ECB Governing Council member Pierre Wunsch said on Monday that the European Central Bank may need to raise borrowing costs again if investor expectations of monetary easing undermine the institution’s policy stance. In corporate news, Bayer Ag (BAYN.D.DX) plunged more than -19% after the German pharmaceutical giant stopped a large late-stage trial testing a new anti-clotting drug. Also, Ashtead Group Plc (AHT.LN) fell more than -9% after the British equipment rental company said its full-year profit would come in below market expectations. In addition, Julius Baer Group Ltd (BAER.Z.IX) slipped over -10% after the Swiss bank’s warning of a profit decline.
Germany’s PPI data was released today.
The German October PPI was reported at -0.1% m/m and -11.0% y/y, in line with expectations.
Asian stock markets settled mixed today. China’s Shanghai Composite Index (SHCOMP) closed up +0.46%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.59%.
China’s Shanghai Composite closed higher today. China kept benchmark lending rates unchanged at a monthly setting on Monday, in line with market expectations. In a statement on Monday, the People’s Bank of China announced the retention of the one-year lending prime rate at 3.45% and the five-year LPR at 4.20%. Also, the offshore yuan strengthened after the People’s Bank of China increased its daily reference rate for the currency to the highest level since August. Meanwhile, International Monetary Fund Managing Director Kristalina Georgieva stated on Friday that last week’s meeting between US President Joe Biden and Chinese President Xi Jinping is a decisive signal indicating the need for increased global cooperation. In corporate news, Hong Kong-listed property shares climbed on Monday, with Sunac China Holdings Ltd up more than +5% after the company’s foreign debt restructuring became effective. Tech stocks listed in Hong Kong also gained ground. In other news, James Wang, head of China strategy at UBS, expressed optimism about China’s stock market in 2024, predicting a 15% improvement in the MSCI China index due to the current market’s trough valuation, low investment position and increasing political support
Japan’s Nikkei 225 Stock Index closed lower today after briefly touching a fresh 33-year high. The Nikkei has gained about 28% this year, driven by a prolonged period of weakness in the yen, robust corporate earnings and corporate governance reforms. Meanwhile, export-oriented stocks led decliners on Monday as the yen strengthened slightly after hitting its 2023 low earlier this month, while financial stocks outperformed. In corporate news, Tokio Marine Holdings Inc. climbed more than +5% after the casualty insurer boosted its full-year profit guidance and announced plans to buy back up to 2% of its shares. Also, Panasonic Holdings Corp gained around +5%, extending Friday’s gains after its announcement of the sale of an investment in its automotive systems business to funds managed by American private equity firm Apollo Global Management. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed +1.64% to 18.58.
“Investors sold stocks as they became wary of recent sharp gains in the Nikkei. There are more positive signs for the Nikkei than negative signs, with a robust corporate outlook and share buybacks from last earnings season, and US interest rates seem to have peaked,” said Takehiko Masuzawa, head of trading at Phillip Securities Japan.
Premarket US stock transferors
Microsoft Corporation (MSFT) gained more than +2% in premarket trading after appointing Sam Altman, the co-founder of OpenAI who was ousted from his startup last week, to lead its internal artificial intelligence team.
MediciNova Inc (MNOV) rose about +18% in premarket trading after announcing positive results from a Phase 2 clinical study of MN-166 in glioblastoma patients.
Full Truck Alliance Co Ltd ADR (YMM) climbed over +4% in premarket trading after the company reported upbeat Q3 results.
Boeing Co (B.A) rose more than +1% in premarket trading after Deutsche Bank upgraded the stock to Buy from Hold.
Chegg Inc (CHGG) slipped over -3% in premarket trading after Morgan Stanley downgraded the stock to Underweight from Equal Weight.
Dutch Bros Inc (BROS) gained more than +3% in premarket trading after JPMorgan upgraded the stock to Overweight from Neutral.
You can see more premarket shares here
Today’s US Earnings Spotlight: Monday – November 20
Agilent Technologies (A), Keysight Technologies (KEYS), Symbotic (SYM), Zoom Video (ZM), Legend Bio (LEGN), Bellring (BRBR), Golub (GBDC), Centra Garden&Pet (CENT), Mueller Water Products (MWA ). ), Enlight Energy (ENLT), Fidelis Insurance Holdings (FIHL), FinVolution Group (FINV).
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As of the date of publication, Oleksandr Pylypenko 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.
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