March S&P 500 E-Mini futures (ESH24) are trending down -0.07% this morning as investors braced for a flurry of U.S. economic data, with a particular focus on the Federal Reserve’s preferred inflation metric.
In Thursday’s trading session, Wall Street’s major indexes ended higher. Micron Technology Inc (MU) soared over +8% and was the top percentage gainer on the benchmark S&P 500 after the memory producer posted upbeat Q1 results and issued above-consensus Q2 guidance. Also, Carnival Corporation (CCL) climbed more than +6% after the world’s largest cruise line operator reported a narrower-than-anticipated Q4 adjusted loss per share. In addition, CarMax Inc (KMX) gained over +5% after the used automobile retailer reported better-than-expected Q3 EPS and disclosed that it had resumed its share buyback program. On the bearish side, Paychex Inc (PAYX) plunged about -7% after the payroll and human resources solutions provider posted weaker-than-expected Q2 revenue.
The U.S. Department of Commerce’s third estimate of Q3 GDP growth was revised downward to +4.9% q/q from a prior reading of +5.2% q/q. Also, the Philadelphia Fed’s gauge of manufacturing activity unexpectedly fell to -10.5 in December, weaker than expectations of -3.0. In addition, the number of Americans filing for jobless claims the past week rose slightly to 205K, stronger than expectations of 214K.
“Numbers were still in line with the narrative that a cooling economy will keep the Fed on track to cut rates in the not-too-distant future,” said Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley.
Meanwhile, U.S. rate futures have priced in a 14.5% chance of a 25 basis point rate cut at the January meeting and a 72.7% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting.
Today, all eyes are focused on the U.S. core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.2% m/m and +3.4% y/y in November, compared to the previous values of +0.2% m/m and +3.5% y/y.
Also, investors will likely focus on U.S. Personal Spending data, which came in at +0.2% m/m in October. Economists foresee the November figure to be +0.2% m/m.
The U.S. Michigan Consumer Sentiment Index will be reported today. Economists foresee this figure to stand at 69.4 in December, compared to November’s value of 61.3.
U.S. Durable Goods Orders data will come in today. Economists expect November’s figure to be +1.7% m/m, compared to the previous number of -5.4% m/m.
The U.S. Building Permits and New Home Sales data for November will also be closely watched today. Economists forecast Building Permits to be 1.460M and New Home Sales to be 695K.
U.S. Core Durable Goods Orders data will be reported today as well. Economists estimate this figure to come in at +0.2% m/m in November, compared to the previous value of 0.0% m/m.
In the bond markets, United States 10-year rates are at 3.866%, down -0.78%.
The Euro Stoxx 50 futures are down -0.31% this morning as investors digested U.K. growth and retail sales data while adopting a cautious stance in anticipation of a key U.S. inflation print. Losses in technology stocks are leading the overall market lower, with Prosus (PRX.NA) tumbling over -18% after China announced new curbs on online gaming. The Office for National Statistics reported Friday that the U.K.’s gross domestic product contracted in the July-to-September period and was flat in the previous three months. At the same time, separate data showed that British retail sales unexpectedly rose in November. In other corporate news, Adidas Ag (ADS.D.DX) and Puma Se (PUM.D.DX) slid more than -5% following a weak sales outlook from U.S. peer Nike Inc.
U.K.’s GDP, U.K.’s Retail Sales, U.K.’s Core Retail Sales, and Spain’s GDP data were released today.
U.K. GDP has been reported at -0.1% q/q and +0.3% y/y in the third quarter, weaker than expectations of 0.0% q/q and +0.6% y/y.
U.K. November Retail Sales came in at +1.3% m/m and +0.1% y/y, stronger than expectations of +0.4% m/m and -1.8% y/y.
U.K. November Core Retail Sales stood at +1.3% m/m, stronger than expectations of 0.0% m/m.
The Spanish GDP arrived at +0.3% q/q and +1.8% y/y in the third quarter, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.13% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.09%.
China’s Shanghai Composite gave up early gains and closed moderately lower today following the announcement of new curbs on online gaming in the country. Chinese gaming stocks listed in Hong Kong tumbled on Friday following the release of draft regulations by Beijing for the online game industry, which included restrictions on the incentives to play or spend more online. According to the draft proposal from the National Press and Publication Administration, game companies are prohibited from implementing rewards to encourage actions like daily logins, first-time recharges, or continuous recharges. On the ground of this, shares of Netease, one of China’s major online gaming companies, plummeted over -24%, while another Chinese gaming giant, Tencent Holdings Ltd, plunged more than -12%. Meanwhile, China stocks pushed higher initially after the country’s biggest banks lowered interest rates on certain deposits. Five state-owned banks, along with the joint-stock bank China Merchants Bank, announced the rate cuts took effect on Friday. The five state-owned banks were Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications. Interest rates on time deposits with durations of three months, six months, and one year were reduced by 0.1 percentage points, while the rate on two-year deposits was decreased by 0.2 percentage points. Rates on three-year and five-year deposits saw a reduction of 0.25 percentage points each.
“Lower deposit rates should help alleviate pressures on banks’ net interest margins and lay the groundwork for the PBOC to cut its policy lending rates in January, which have been left unchanged for the past four months,” Lu Ting, an economist at Nomura, said in a note Friday.
Japan’s Nikkei 225 Stock Index closed just above the flatline today, booking a second weekly advance. Bank stocks led the gains on Friday, rebounding from losses triggered by the Bank of Japan’s decision to maintain yield-suppressing stimulus measures without providing indications of an exit timeline. Government data showed on Friday that Japan’s core consumer prices increased at their slowest rate in over a year in November but still remained above the Bank of Japan’s annual 2% target for the 20th straight month. Meanwhile, Bank of Japan board members discussed how to communicate a tweak to yield curve control in their October meeting, with some expressing willingness to frame the move as a step toward transitioning away from ultra-loose monetary policy, the minutes showed on Friday. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.49% to 16.81.
The Japanese November National Core CPI stood at +2.5% y/y, in line with expectations.
Pre-Market U.S. Stock Movers
Nike Inc (NKE) tumbled over -11% in pre-market trading after the footwear and sports apparel giant reported mixed Q2 results and issued cautious revenue guidance for the second half of the fiscal year.
Foot Locker Inc (FL) plunged more than -6%, and Under Armour Inc (UA) slid over -4% in pre-market trading amid a cautious outlook from Nike.
Netflix Inc (NFLX) fell about -0.7% in pre-market trading after DZ Bank downgraded the stock to Hold from Buy with a $495 price target.
Rocket Lab USA, Inc. (RKLB) climbed more than +14% in pre-market trading after announcing that it secured a $515 million contract with a U.S. government customer to design, manufacture, deliver, and operate 18 space vehicles.
ANSYS Inc (ANSS) gained over +2% in pre-market trading following a report from Bloomberg stating that the company is evaluating a sale amid takeover interest.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - December 22nd
CEL-SCI (CVM), PHX Minerals (PHX), Citius Pharma (CTXR), Veru (VERU).
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