Morning Markets
December S&P 500 futures (ESZ22) are trending down -0.58% this morning after three major US benchmark indices ended in the red for a third straight trading session as investors reacted to the Federal Reserve's increasingly aggressive stance and continued concerns of slowing global growth by selling growth sectors of the market, including consumer and tech stocks. Three major U.S. stock indexes were weighted down primarily by losses in the Consumer Services, Industrials, and Financials sectors.
The Federal Reserve's 0.75% rate hike on Wednesday was already priced in, but its updated projections signaled a longer trajectory for further rate hikes, raising the risk of recession. The Fed forecasts the economic growth to be just 0.2% this year and 1.2% in 2023. Meanwhile, U.S. rate futures have priced in a 26.3% chance of a 50 basis point rate increase and a 73.7% chance of a 75 basis point hike at November's monetary policy meeting.
"If we continue to have sticky inflation, and if Powell sticks to his guns as he indicates, I think we enter recession, and we see significant drawdown on earnings expectations," said Mike Mullaney, a director of global markets at Boston Partners.
Today, investors will likely focus on Canada's Core Retail Sales data, which was at +0.8% m/m in June. Economists, on average, forecast the new number to be -1.2% m/m.
U.S. September Manufacturing Purchasing Managers Index (PMI) preliminary data will be reported today. Economists forecast this figure to be 51.1, compared to the previous value of 51.5.
U.S. September Services PMI preliminary data will come in today as well. Economists, on average, expect this number to stand at 45.0, compared to the previous value of 43.7.
In the bond markets, United States 10-Year rates are at 3.716%, up +0.23%.
The Euro Stoxx 50 is down -1.08% this morning as rising interest rates globally weighed on risk appetite. European stocks have received a negative handover from Wall Street and Asia after main indexes continued to slide on global recession fears.
"The macroeconomic outlook in Europe is bleak as supply disruptions and the impact of Russia’s war in Ukraine on energy and food prices continue to stifle growth," an analyst at HSBC said.
Spain GDP, France Manufacturing PMI, France Services PMI, Germany Manufacturing PMI, Eurozone S&P Global Composite PMI, U.K. Composite PMI, U.K. Manufacturing PMI, and U.K. Services PMI data were released today.
The Spanish GDP stood at +1.5% q/q in the second quarter, stronger than expectations of +1.1% q/q.
The French September Manufacturing PMI data (preliminary) was 47.8, weaker than expectations of 49.8.
The French September Services PMI data (preliminary) stood at 53.0, stronger than expectations of 50.5.
The German September Manufacturing PMI data (preliminary) has been reported at 48.3, in line with forecasts.
Eurozone September S&P Global Composite PMI data (preliminary) came in at 48.2, in line with expectations.
U.K. September Composite PMI (preliminary) data stood at 48.4, weaker than expectations of 49.0.
U.K. September Manufacturing PMI (preliminary) data was 48.5, stronger than expectations of 47.5.
U.K. September Services PMI (preliminary) data came in at 49.2, weaker than expectations of 50.0.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.66%, while the Japanese market was closed for holidays.
China’s Shanghai Composite today closed down as increasing interest rates across the globe spurred fears of a possible global recession. Another negative factor for the Chinese indexes is continued investors' concerns over a slowdown in China’s economy.
“Global equities are struggling as the world anticipates surging rates will trigger a much sooner and possibly severe global recession,” said Edward Moya, a senior market analyst at OANDA.
Pre-Market U.S. Stock Movers
Spectrum Pharmaceuticals Inc (SPPI) plunged more than -20% in pre-market trading after the FDA's Oncologic Drugs Advisory Committee voted 9-4 that the current benefits of SPPI's drug, poziotinib, did not outweigh its risks.
Costco Wholesale Corp (COST) dropped about -3% in pre-market trading despite reporting a better-than-expected Q4 earnings report.
T2 Biosystms Inc (TTOO) rose over +25% in pre-market trading after the company entered into a distribution agreement in the Baltic region to sell its products.
Spero Therapeutics Inc (SPRO) gained over +8% in pre-market trading after Evercore ISI upgraded the stock to outperform from in line with an $8 price target.
Cano Health Inc (CANO) rose over +6% in pre-market trading on reports that Humana (HUM), CVS Health (CVS), and other possible buyers are considering the company as a potential takeover candidate.
Today’s U.S. Earnings Spotlight: Friday - September 23rd
Aspen (AZPN), Sprott Physical Gold and Silver Trust (CEF), Cognyte Software (CGNT), Skillsoft Corp Class A (SKIL), Uxin (UXIN), Mesabi Trust (MSB), Niocorp Developments (NIOBF), Bridgford (BRID), PharmaCyte Biotech (PMCB), Renalytix AI Nas (RNLX), TuanChe (TC), Huize (HUIZ), Espey Mfg&Electronics (ESP), Wolford ADR (WLFDY), Franklin Wireless (FKWL), US Gold (USAU), WVS Financial (WVFC), Applied Genetic (AGTC), Sears (SHLDQ), Coffee Holding (JVA), Tuesday Morning (TUEM), InMed Pharmaceuticals (INM), Amerityre Corp (AMTY), Christopher Banks (CBKCQ), Bon-Ton Stores (BONTQ).
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