Markets Today: Stocks Surge After Smaller-Than-Expected Australian Rate Hike

Morning Markets

December S&P 500 futures (ESZ22) this morning are up sharply by +1.61% at a 1-week high.  Stock index futures are soaring this morning as global stock and bond markets rallied after the Reserve Bank of Australia raised interest rates less than expected, which bolstered speculation that aggressive interest rate hikes by the world’s central banks may be nearing the end.  The 10-year T-note yield fell to a 1-week low today at 3.558%.

A rally in mega-cap technology stocks in pre-market trading is lifting the overall market.  Also, Tesla is up more than +3% in pre-market trading after Bloomberg data showed funds backed by Cathie Wood’s Ark Investment Management LLC bought Tesla stock on Monday.  In addition, E-commerce stocks are rallying in pre-market trading after South Korea’s Naver agreed to Poshmark in a deal worth $1.2 billion.

Australian’s central bank, the Reserve Bank of Australia (RBA), today raised its cash rate target by 25 bp to 2.60%, less than expectations of a 50 bp rate hike.

The Euro Stoxx 50 today is up sharply by +3.57% at a 1-1/2 week high.   Strength in travel, technology, and retail stocks is leading the overall market higher today.  Also, a decline in European government bond yields today has sparked buying of equities. The 10-year German bund yield fell to a 2-week low today of 1.770% on dovish ECB comments and the smaller-than-expected Australian rate hike

ECB Governing Council member Villeroy de Galhau said the ECB should continue raising interest rates by large increments at its meetings in October and December before reassessing and possibly shifting to a slower pace.

The Eurozone Aug PPI rose a record +43.3% y/y, stronger than expectations of +43.2% y/y.

Asian markets today closed sharply higher.  Chinese markets are closed this week for the Golden Week holidays, and Hong Kong was closed today for a holiday as well.  Japan’s Nikkei Stock Index closed up +2.96%. 

Japan’s Nikkei Stock Index today rallied to a 1-1/2 week high and closed sharply higher.  Speculation that the world’s central banks may be close to ending their interest rate hike campaigns fueled a rally in global stock and bond markets today after Australia’s smaller-than-expected rate hike.  Asian chip stocks that predominantly serve Chinese customers rallied today on a Bloomberg report that said the Biden administration plans to announce new restrictions on China’s access to U.S. semiconductor technology. Asian defense-related stocks also rose today after North Korea fired a missile over Japan for the first time since 2017. 

Pre-Market U.S. Stock Movers

Mega cap technology stocks rose in pre-market trading as the 10-year T-note yield dropped to a 1-1/2 week low.  Alphabet (GOOGL), Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), and Nvidia (NVDA) are all up more than +1%. 

Amazon.com (AMZN) is up nearly +3% in pre-market trading after JPMorgan Chase said Amazon is the company’s favorite internet stock “by a wide margin,” saying it is positive about Amazon’s prospects over the remainder of the year. 

Tesla (TSLA) jumped more than +3% in pre-market trading after Bloomberg data showed that funds backed by Cathie Wood’s Ark Investment Management LLC bought 132,213 shares of Tesla stock on Monday, its first purchase since mid-June.

Rivian Automotive (RIVN) rallied +9% in pre-market trading after the company reaffirmed its production forecast of 25,000 vehicles this year.  Goldman Sachs upgraded the stock to buy from neutral. 

E-commerce stocks are rallying in pre-market trading after South Korea’s Naver agreed to Poshmark in a deal worth $1.2 billion.  Poshmark (POSH) surged +13%.  Also, Etsy (ETSY), Wayfair (W), Stitch Fix (SFIX), and RealReal (REAL) are up more than +3%.  In addition, eBay (EBAY) is up more than +1%.

United Airlines Holdings (UAL) and Delta Air Lines (DAL) are up more than +2% in pre-market trading after Raymond James said the companies are in a relatively stronger position in terms of revenue recovery into Q4. 

Bank of New York Mellon (BK) climbed nearly +3% in pre-market trading after Citigroup upgraded the stock to buy from neutral. 

Bed Bath and Beyond (BBBY) rose more than +3% in pre-market trading after the Wall Street Journal reported that some of the company’s bondholders are working with Perella Weinberg Partners ahead of debt talks expected to be held with the company. 

Paramount Global (PARA) slid -1% in pre-market trading after Wells Fargo Securities downgraded the stock to equal weight from overweight.

Today’s U.S. Earnings Reports (10/4/2022)

Acuity Brands Inc (AYI), Novagold Resources Inc (NG), SMART Global Holdings Inc (SGH).

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