December S&P 500 futures (ESZ22) are trending down -0.52% this morning after three major US benchmark indices rallied for the third consecutive session as market participants braced for U.S. inflation data due this week and awaited the results of the midterm elections that could indicate a power shift in Washington. Three major U.S. stock indexes were fueled primarily by gains in the Basic Materials, Telecoms, and Industrials sectors.
The outcome of the U.S. midterm election will decide whether Democrats lose or keep congressional control halfway through President Joe Biden's term, boosting the chance of legislative gridlock. Nonpartisan forecasts and opinion polls proposed a strong possibility of Republicans winning a House majority and a tight race for Senate control.
"A more conservative fiscal policy which could be enacted by Republican-controlled Congress would put less inflationary pressure on the economy, and that would make the Fed’s job easier," said Joseph Sroka, a chief investment officer at NovaPoint in Atlanta.
However, a surprise victory for Democrats will likely raise concerns about tech-sector regulation and budget spending that could fuel already-high inflation.
Investors are also awaiting crucial consumer price data due on Thursday, which is expected to show a deceleration in consumer prices and provide further clues on whether the U.S. Federal Reserve could ease its aggressive interest rate hikes.
Meanwhile, U.S. rate futures have priced in a 56.8% chance of a 50 basis point rate increase and a 43.2% chance of a 75 basis point hike at December's monetary policy meeting.
Today, all eyes are focused on the U.S. Crude Oil Inventories data in a couple of hours. Economists, on average, forecast that Crude Oil Inventories will stand at +1.360M, compared to last week's figure of -3.115M.
U.S. Wholesale Inventories data will be reported today as well. Economists estimate this figure to come in at 0.8% m/m, compared to the previous figure of 0.8% m/m.
In the bond markets, United States 10-Year rates are at 4.149%, up +0.51%.
The Euro Stoxx 50 futures are down -0.70% this morning, retreating from eight-week highs as global investors await the outcomes of the U.S. midterm elections to determine a shift of power in Washington. Europe’s benchmark index has rebounded in the fourth quarter due to a better-than-expected earnings season, revealing that most company earnings withstood higher inflation and slowing growth. All eyes are now on tomorrow’s U.S. inflation reading for October.
“European equities have had a solid run the last month with not really much behind that at all beyond the market’s preference for value over growth,” said James Athey, an investment director at Abrdn.
The European economic data slate is largely empty on Wednesday.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.53%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.56%.
China’s Shanghai Composite today closed lower as economic woes worsened. The data showed the country’s Producer Price Index shrank for the first time in a year and was at -1.3% y/y. Consumer inflation stood at 2.1% y/y in October, weaker than expectations of 2.4% y/y, as COVID-19 lockdowns crimped local economic activity. The gloomy economic data deteriorated sentiment toward Chinese markets amid dwindling hopes that the government will scale back its strict COVID-19 strategy.
At the same time, Japan’s Nikkei 225 Stock Index closed lower today, weighed down by losses in the Power, Financial Services, and Warehousing sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 2.56% and hit a new 1-month low of 20.54.
Pre-Market U.S. Stock Movers
CarGurus (CARG) plunged more than -22% in pre-market trading after the company reported downbeat Q3 results and issued a weak Q4 and FY2022 outlook.
Affirm Holdings Inc (AFRM) tumbled about -15% in pre-market trading after the company delivered mixed Q1 results and issued soft Q2 2023 revenue guidance.
Walt Disney Company (DIS) slumped about -7% in pre-market trading after the company announced weaker-than-expected fourth-quarter numbers.
Lucid Group Inc (LCID) slid over -8% in pre-market trading after the company reported downbeat Q3 results.
Carvana Co (CVNA) climbed about +1% in pre-market trading on two insider buys.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Wednesday - November 9th
Siemens Healthineers ADR (SMMNY), TC Energy (TRP), Honda Motor ADR (HMC), Muenchener Rueckver Ges (MURGY), Lonza Group AG (LZAGY), Fortescue Metals (FSUMF), Manulife Financial (MFC), Coupang LLC (CPNG), Singapore Telecommunications PK (SGAPY), Rivian Automotive (RIVN), Koninklijke Ahold ADR (ADRNY), Centrais Eletricas Brasileiras ADR (EBRb), Centrais Electricas Brasileiras (EBR), Citic ADR (CTPCY), Henkel Ag A (HENOY), Henkel AG & Co KGAA (HENKY), Genmab AS (GMAB), DR Horton (DHI), Flutter Entertainment ADR (PDYPY), Roblox (RBLX), Rogers Communications (RCI), The Trade Desk (TTD), Banco Do Brasil SA (BDORY), Ecopetrol ADR (EC), BeiGene ADS (BGNE), EON SE (EONGY), CGI Inc (GIB), Kubota ADR (KUBTY), Trip.com ADR (TCOM), Veolia ADR (VEOEY), STERIS (STE), Surgutneftegaz ADR (SGTZY), Polyus ADR (OPYGY), Atmos Energy (ATO), Shaw B (SJR), Nissan Motor ADR (NSANY), Siemens Gamesa ADR (GCTAY), Kirin Holdings Co (KNBWY), Brookfield Renewable (BEPC), Fair Isaac (FICO), Sysmex Corp (SSMXY), ICL Israel Chemicals (ICL), Tata Motors ADR (TTM), Brambles ADR (BXBLY), Commerzbank AG PK (CRZBY), Amerco (UHAL), TPG Inc (TPG), Isuzu Motors (ISUZY), Asahi Kaisei Corp (AHKSY), Jazz Pharma (JAZZ), ASX ADR (ASXFY), Genpact (G), Gerdau ADR (GGB), Switch (SWCH), Performance Food Group Co (PFGC), Mowi ADR (MHGVY), Wynn Resorts (WYNN), Tetra Tech (TTEK), Healthcare RT (HR), Middleby Corp (MIDD), Unity Software (U), Signify Health (SGFY), ageas SA/NV (AGESY), Smiths Group Plc (SMGZY), Capri Holdings (CPRI), Starwood Property (STWD), Celsius (CELH), Woori Financial (WF), Allkem (OROCF), Ionis Pharma (IONS), YPF Sociedad Anonima (YPF), Applovin (APP), Dutch Bros (BROS), Kinross Gold (KGC), Light Wonder (LNW), Kinetik Holdings (KNTK), Southwest Gas Hold (SWX), Bumble (BMBL), Hilton Grand Vacations (HGV), The Wendy’s Co (WEN), Coherent (COHR), Vermilion Energy (VET), Taylor Wimpey ADR (TWODY), SeaWorld Entertainment (SEAS), Marqeta (MQ), Stepstone (STEP), Atlantica Sustainable Infrastructure (AY), Pan American Silver (PAAS), Allete (ALE), Olaplex Holdings (OLPX), Hecla Mining (HL), Hecla Mining Co Pref (HL_pb), Prospect Capital (PSEC), Excelerate Energy (EE), Ultrapar Participacoes (UGP), Ringcentral Inc (RNG), Zai Lab (ZLAB), SCOR PK (SCRYY), Jackson Financial (JXN), Walker&Dunlop (WD), Enersys (ENS), Inter Parfums (IPAR), Marks & Spencer Group Plc (MAKSY), Jamf (JAMF), Crescent Energy (CRGY), Vertex (VERX), First Majestic Silver (AG), Hanesbrands (HBI), Rocket Lab USA (RKLB), Claros Mortgage Trust (CMTG), Payoneer Global Inc (PAYO), Osisko Gold Ro (OR), Trulieve Cannabis (TCNNF), NuVasive (NUVA), Cytek Biosciences (CTKB), TTEC (TTEC), Life Time Holdings (LTH), Vizio Holding (VZIO), Montauk Renewables (MNTK), Cannae (CNNE), Sciplay (SCPL), SES AI (SES), Ziprecruiter (ZIP), Xpel (XPEL), Cano Health (CANO), Vacasa (VCSA), Calumet (CLMT), Catalyst Pharmaceuticals (CPRX), Madison Square Garden Entertainment (MSGE), Canopy Growth (CGC), TechTarget (TTGT), GCM Grosvenor (GCMG), Wolverine (WWW), Sterling Check (STER), Olo (OLO), Mativ Holdings (MATV), W&T Offshore (WTI), Coeur Mining (CDE), Paymentus (PAY), SunOpta Inc. (STKL), Digital Turbine (APPS), Kornit Digital Ltd (KRNT), Franklin BSP Realty Trust (FBRT), Bilfinger ADR (BFLBY), ACV Auctions (ACVA), B&G Foods (BGS), Vericel Corp Ord (VCEL), Target Hospitality (TH), Fiverr International (FVRR), Advantage Solutions (ADV), Rackspace (RXT).
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