December S&P 500 futures (ESZ23) are up +0.03%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.11% this morning as U.S. Treasury yields climbed after trading resumed following a holiday, while market participants geared up for U.S. business activity data.
Today, the U.S. stock market will be opened for a half-session, with trading ending at 1 p.m. ET.
In Wednesday’s trading session, the benchmark S&P 500 rose to a 3-1/2 month high, the blue-chip Dow climbed to a 3-1/4 month high, and the tech-heavy Nasdaq 100 notched a 1-3/4 year high. eBay Inc (EBAY) gained over +3% following an offer from an investor group led by Permira and Blackstone to acquire Adevinta ASA for about $15 billion. EBay Inc., which is one of Adevinta’s biggest shareholders, agreed to sell half of its stake in the company for about $2.2 billion in cash and plans to exchange the remaining stock for a 20% ownership stake in the newly privatized company. Also, Microsoft Corporation (MSFT) rose more than +1% following OpenAI’s announcement of the return of Sam Altman and a board overhaul with new directors. On the bearish side, Deere & Company (DE) fell over -3% after the agricultural machinery giant provided a below-consensus FY24 net income forecast. Also, NVIDIA Corporation (NVDA) slid more than -2% after the semiconductor giant reported upbeat Q3 results and provided Q4 revenue guidance that topped average analysts’ estimates but failed to meet the high expectations of shareholders who have bet heavily on an artificial intelligence boom.
The Labor Department’s report on Wednesday showed claims for state unemployment benefits unexpectedly fell -24K to a 5-week low of 209K last week, stronger than expectations of 225K. Also, the University of Michigan’s reading of consumer sentiment in November was revised upward to 61.3, stronger than expectations of 60.4. In addition, the University of Michigan’s November year-ahead inflation expectations ticked up to 4.5%, stronger than expectations of 4.4%, while 5-year inflation expectations remained unchanged at 3.2% in November. At the same time, U.S. durable goods orders came in at -5.4% m/m in October, weaker than expectations of -3.1% m/m.
“For a data-dependent Fed, this is not good news as they do not want to see consumer inflation expectations become unanchored, since historically it becomes increasingly difficult to reset consumer psychology towards a lower inflationary environment,” said Quincy Krosby, chief global strategist for LPL Financial.
Meanwhile, U.S. rate futures have priced in a 99.5% probability of no hike at the next central bank meeting in December and a 93.3% chance of no hike at the conclusion of the Fed’s January meeting. Also, U.S. rate futures have priced in a 24.6% probability of a 25 basis point rate cut at the March FOMC meeting.
On the economic data front, all eyes are focused on the U.S. S&P Global Manufacturing PMI preliminary reading in a couple of hours. Economists, on average, forecast that the November manufacturing PMI will stand at 49.8, compared to the previous value of 50.0.
The U.S. S&P Global Services PMI preliminary reading will also be closely watched today. Economists foresee this figure to come in at 50.4 in November, compared to 50.6 in October.
In the bond markets, United States 10-year rates are at 4.481%, up +1.46%.
The Euro Stoxx 50 futures are up +0.11% this morning, holding onto a modest weekly gain. Mining and technology stocks underperformed on Friday, while chemical stocks gained ground. The statistics office reported Friday that the German economy contracted slightly in the third quarter compared with the previous three months, confirming an initial reading. Meanwhile, minutes of the European Central Bank’s October policy meeting released on Thursday indicated that Eurozone inflation was decreasing as anticipated, or possibly even at a slightly faster rate, while suggesting that policymakers should keep the possibility of an interest rate hike on the table. Eurozone government bond yields continued to rise on Friday in response to a report on Thursday indicating that Germany plans to suspend debt limits for a fourth consecutive year, heightening concerns about increased borrowing. In corporate news, Basf Se (BAS.D.DX) rose over +1% following a report from Bloomberg News that Abu Dhabi National Oil Co. is considering an acquisition of its Wintershall Dea unit.
ECB President Christine Lagarde stated on Friday that the central bank has reached a point where it can pause and evaluate the impact of its tightening. “We have already done a lot,” Lagarde said.
Germany’s GDP, Germany’s Ifo Business Climate Index, Germany’s Business Expectations, and Germany’s Current Assessment data were released today.
The German GDP has been reported at -0.1% q/q and -0.4% y/y in the third quarter, compared to expectations of -0.1% q/q and -0.3% y/y.
The German November Ifo Business Climate Index arrived at 87.3, weaker than expectations of 87.5.
The German November Business Expectations stood at 85.2, weaker than expectations of 85.7.
The German November Current Assessment came in at 89.4, weaker than expectations of 89.5.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.68%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.52%.
China’s Shanghai Composite today closed lower as investors exercised caution due to concerns about the country’s slow economic recovery, while strong foreign outflows also weighed on sentiment. Artificial intelligence, new energy, and semiconductor stocks underperformed on Friday. Foreign investors offloaded a net total of 6.2 billion yuan ($859.79 million) in Chinese shares via the Stock Connect on Friday, marking the biggest daily outflow in over a month. Meanwhile, Hong Kong-listed property stocks retreated after jumping on Thursday on the back of a report from Bloomberg News suggesting that China might permit banks to provide unsecured short-term loans to qualified builders for the first time, marking the latest effort to address a downturn in the housing market. Tech giants listed in Hong Kong also slumped. Investor attention is now squarely on the upcoming release of the PMI data from China next week.
Japan’s Nikkei 225 Stock Index closed higher in catch-up trade after a national holiday as a weaker yen buoyed export-oriented stocks. Export-heavy automobile stocks gained ground on Friday, with Mazda Motor Corp climbing nearly +3%, Isuzu Motors Ltd gaining about +2%, and Toyota Motor Corp rising over +2%. Meanwhile, government data revealed Friday that Japan’s core consumer inflation picked up slightly in October after easing the previous month, strengthening investors’ belief that persistent inflation could prompt the Bank of Japan to scale back monetary stimulus before long. Separately, a business survey showed on Friday that Japan’s factory activity contracted for a sixth consecutive month in November, while modest growth in the service sector was little changed. In other news, Japanese stocks witnessed massive foreign inflows during the week ending on November 17th. Data from Japanese exchanges revealed that foreign investors acquired a net total of 1.03 trillion yen ($6.88 billion) worth of stocks last week. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.88% to 16.87.
The Japanese October National Core CPI came in at +2.9% y/y, weaker than expectations of +3.0% y/y.
The Japanese November Manufacturing PMI stood at 48.1, weaker than expectations of 48.8.
Pre-Market U.S. Stock Movers
iRobot Corporation (IRBT) surged about +33% in pre-market trading following a report indicating that Amazon is progressing towards obtaining unconditional EU approval for its planned $1.4 billion acquisition of the company.
NVIDIA Corporation (NVDA) fell over -2% in pre-market trading following a Reuters report stating that the company informed its customers in China about the delay in the launch of a new artificial intelligence chip designed to comply with U.S. export regulations until the first quarter of next year.
Fisker Inc (FSR) climbed more than +6% in pre-market trading after effectively submitting its quarterly report, demonstrating compliance with the requirements of the NYSE-listed company.
Gaotu Techedu Inc (GOTU) slid over -2% in pre-market trading after the company reported its Q3 results. Also, China Renaissance downgraded the stock to Hold from Buy.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - November 24th
Huazhu (HTHT), Natuzzi (NTZ), Jianpu Tech (JT).
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