December S&P 500 futures (ESZ22) are trending down -0.49% this morning after three major US benchmark indices closed higher on Friday as market participants weighed up hawkish remarks from Federal Reserve officials and digested the latest wave of quarterly results from retailers. Three major U.S. stock indexes were fueled primarily by gains in the Utilities, Healthcare, and Financials sectors.
In Friday's trading session, three major US benchmark indices inched up in a choppy trading session as gains in defensive shares overshadowed energy losses. At the same time, Federal Reserve Bank of Boston leader Susan Collins said that the Fed might need to deliver another 75-basis point rate hike as it seeks to return inflation to the 2% target.
"What is driving all equities, of course, is Fed policy and the gravitational force that rising interest rates have on the equity complex as a whole. We are not likely to see any real evidence in terms of potentially declining wage pressure or inflation pressure for another couple of weeks,” said Lauren Goodwin, an economist and portfolio strategist at New York Life Investments.
After last week's hawkish remarks from Fed officials, U.S. rate futures have priced in a 75.8% chance of a 50 basis point rate increase and a 24.2% chance of a 75 basis point hike at December's monetary policy meeting.
In the coming week, investors will be waiting for the release of the FOMC’s meeting minutes and the spate of economic data, including building permits, core durable goods orders, durable goods orders, initial jobless claims, manufacturing PMI (preliminary), S&P global composite PMI (preliminary), services PMI (preliminary), Michigan consumer sentiment, and crude oil inventories.
In addition, investors are likely to focus on a batch of speeches from FOMC members Mester, George, and Bullard for further clues on the Fed's rate hike path.
The U.S. economic data slate is largely empty on Monday.
In the bond markets, United States 10-Year rates are at 3.836%, up +0.48%.
The Euro Stoxx 50 futures are down -0.59% this morning as investors worried about the likelihood of future monetary tightening and the impact on future economic growth. The latest soft U.S. inflation reading had boosted hopes of the Fed pivot, but several Fed policymakers sought to temper those expectations. In addition, European Central Bank President Christine Lagarde said on Friday that interest rates would need to be hiked to levels that restrict economic expansion, indicating another increase at the December meeting. On the ground of this, minutes from the ECB meeting and the Fed later this week will provide more cues on the size of the next interest rate hike in December.
Germany’s Producer Price Index (PPI) data was released today.
The German October PPI has been reported at -4.2% m/m and +34.5% y/y, weaker than expectations of +0.9% m/m and +41.5% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.39%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.16%.
China’s Shanghai Composite today closed lower as several cities in the country logged record-high spikes in daily COVID-19 cases, leading to the introduction of new COVID-19 restrictions in several economic hubs, including Beijing and Shanghai. The rising COVID case numbers, coupled with a series of soft Chinese economic data last week, dented the overall sentiment, bolstering concerns over a renewed slowdown in the country.
At the same time, Japan’s Nikkei 225 Stock Index closed higher today after Warren Buffet’s Berkshire Hathaway raised its stake in the country’s top trading houses, including Mitsubishi Corp., Mitsui & Co., Ltd., Itochu Corp., Marubeni Corp., and Sumitomo Corp. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.62% to 18.31.
Pre-Market U.S. Stock Movers
Cryptocurrency-exposed stocks are moving lower in pre-market trading, with the price of Bitcoin dropping to the $16,000 mark. Marathon Digital (MARA) is down more than -4%. Also, Coinbase Global (COIN) is down about -5%, and Riot Blockchain (RIOT) is down more than -4%. In addition, Coinbase Global was recently downgraded to Neutral at BofA amid clouds from the FTX fallout.
Walt Disney Company (DIS) gained more than +8% in pre-market trading after the company’s Board Of Directors appointed Robert A. Iger as the new Chief Executive Officer.
Cenovus Energy Inc (CVE) slid about -3% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy.
On Holding Ltd (ONON) rose over +3% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a price target of $28 post the Q3 results.
JD.com Inc Adr (JD) plunged about -5% in pre-market trading, extending Friday's losses after the company reported mixed Q3 results.
Ross Stores Inc (ROST) rose about +1% in pre-market trading, extending Friday's gains after the company provided a beat and raise report for the third quarter.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - November 21st
British American Tobacco ADR (BTI), Prudential Public ADR (PUK), Agilent Technologies (A), Fortescue Metals (FSUMF), Compass Group ADR (CMPGY), Lonza Group AG (LZAGY), Dell Tech (DELL), Telstra Corporation ADR (TLSYY), Citic ADR (CTPCY), Zoom Video (ZM), Techtronic Industries ADR (TTNDY), China Resources Beer ADR (CRHKY), Legal & General Group Plc (LGGNY), Trip.com ADR (TCOM), Cathay Financial ADR (CHYYY), ZTO Express Cayman (ZTO), Li Auto (LI), Jacobs Engineering (J), JM Smucker (SJM), Surgutneftegaz ADR (SGTZY), Polyus ADR (OPYGY), Bank Hapoalim ADR (BKHYY), Siemens Gamesa ADR (GCTAY), Brambles ADR (BXBLY), Sonic Healthcare ADR (SKHHY), ASX ADR (ASXFY), Legend Bio (LEGN), Koc Holdings AS (KHOLY), Futu (FUTU), Admiral Group ADR (AMIGY), Ayala ADR (AYALY), Nedbank Group Ltd (NDBKY), Spark New Zealand ADR (SPKKY), Allkem (OROCF), Symbotic (SYM), Grupo Simec ADR (SIM), UOL ADR (UOLGY), Maximus (MMS), Alumina Limited PK (AWCMY), GDS Holdings (GDS), Beijing Capital Airport ADR (BJCHY), Autogrill ADR (ATGSY), Central Garden&Pet (CENT), Urban Outfitters (URBN), Golub (GBDC), iQIYI (IQ), Central Garden&Pet A (CENTA), Boral ADR (BOALY), Manchester United (MANU), INTL FCStone (SNEX), HUTCHMED DRC (HCM), Eaton Vance Tax Managed Diversified (ETY), Adams Diversified Equity Closed (ADX), Banco Macro B ADR (BMA), Bumi Resources ADR (PBMRY), Embotelladora Andina B ADR (AKOb), Sims Metal Management Ltd PK (SMSMY), Paladin Energy (PALAF), Meridian (VIVO), Barloworld ADR (BRRAY), Afya (AFYA), Nexters (GDEV), Northwest Biotherapeutics (NWBO), Teekay Tankers (TNK), Sabine Royalty Trust (SBR), Naas Tech ADR (NAAS).
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