Pre-Market Brief: Stocks Rebound As China Concerns Ease

December S&P 500 futures (ESZ22) are trending up +0.31% this morning after three major US benchmark indices finished the regular session sharply lower after protests in major Chinese cities against strict COVID-19 curbs raised concerns about economic growth, while Federal Reserve officials reiterated a stance for rates to remain higher for longer. Three major U.S. stock indexes were weighed down primarily by losses in the Oil & Gas, Basic Materials, and Technology sectors. 

In Monday's trading session, shares of Apple Inc (AAPL) plunged -2.63% following reports that the tech giant could see a production shortfall of six million higher-end models because of worker unrest at the world's largest iPhone factory in China.

“These protests are just evidence that this is a kind of moving target, where will China continue to try to really constrain COVID's spread? We think COVID itself and China’s policy is one of the key variables for 2023 that would influence stock prices and investors,” said Tom Hainlin, a national investment strategist at U.S. Bank Wealth Management in Minneapolis.

At the same time, Federal Reserve Bank of St. Louis President James Bullard said on Monday that markets were “underpricing risk that the FOMC will have to be more aggressive rather than less aggressive to tame the substantial inflation in the U.S.” In addition, Federal Reserve Bank of New York President John Williams said interest rates need to rise further and stay high through next year due to too high inflation.

Meanwhile, U.S. rate futures have priced in a 69.9% chance of a 50 basis point rate increase and a 30.1% chance of a 75 basis point hike at December's monetary policy meeting.

Today, all eyes are focused on the U.S. CB Consumer Confidence data in a couple of hours. Economists, on average, forecast that November CB Consumer Confidence will stand at 100.0, compared to the previous value of 102.5.

Also, investors are likely to focus on the U.S. S&P/CS HPI Composite - 20 n.s.a. data, which was at 13.1% y/y in August. Economists foresee the September figure to be 10.8% y/y.

U.S. House Price Index data will be reported today as well. Economists estimate this figure to be -1.2% m/m in September, compared to the previous value of -0.7% m/m.

In the bond markets, United States 10-Year rates are at 3.668%, down -0.92%.

The Euro Stoxx 50 futures are up +0.10% this morning as market participants digested new stimulus measures in China and the latest Spanish inflation numbers. In addition, European investors will focus on Germany's inflation reading due later in the session, ahead of Wednesday's preliminary Eurozone inflation data for November. ECB President Christine Lagarde said on Monday that Eurozone inflation had not peaked yet, and it could turn out even higher than currently expected, indicating more interest rate hikes ahead.

Switzerland's GDP, Spain's CPI (preliminary), Spain's HICP (preliminary), Eurozone Business and Consumer Survey, and Eurozone Consumer Confidence data were released today.

Switzerland's third-quarter GDP has been reported at +0.2% q/q and +0.5% y/y, weaker than expectations of +0.3% q/q and +1.0% y/y. 

The Spanish November CPI stood at +6.8% y/y, weaker than expectations of +7.4% y/y.

The Spanish November HICP came in at +6.6% y/y, weaker than expectations of +7.5% y/y.

Eurozone November Business and Consumer Survey stood at 93.7, stronger than expectations of 93.5.

Eurozone November Consumer Confidence was at -23.9, in line with expectations.

Most Asian stock markets surged today on China reopening rumors. China’s Shanghai Composite Index (SHCOMP) closed up +2.31%, but Japan’s Nikkei 225 Stock Index (NIK) closed down -0.48%.

China’s Shanghai Composite today closed higher after Beijing rolled out more stimulus measures, while social media rumors suggested that the Chinese authorities were considering scaling back its zero-COVID strategy. The rumors suggested that Beijing would announce an end to the zero-COVID policy by focusing on the low fatality rate of recent outbreaks. Also, Chinese property stocks skyrocketed today after the government lifted a ban on equity financing in the sector, opening up a new line of funding for the beleaguered sector. As a result, optimism over the new stimulus measures and China reopening rumors helped markets look past worries about an escalation in anti-government protests.

“Unswervingly sticking to COVID-0 will increasingly sound like a house is for living in, not for speculation,” Chinese economist Hao Hong said on Twitter. 

At the same time, Japan’s Nikkei 225 Stock Index closed lower today after disappointing retail sales data heralded more headwinds for the country's economy. The index's downward momentum was fueled by losses in the Power, Shipbuilding, and Steel sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 5.95% to 18.53.

The Japanese October Retail Sales stood at 4.3% y/y, weaker than expectations of 5.0% y/y.

Pre-Market U.S. Stock Movers

NanoVibronix Inc (NAOV) jumped over +32% in pre-market trading after the company announced that it had secured FDA clearance for PainShield MD Plus. 

Kala Pharmaceuticals Inc (KALA) climbed about +17% in pre-market trading after the company announced the submission of IND for KPI-012 for PCED treatment.

Alaunos Therapeutics Inc (TCRT) plunged over -16% in pre-market trading after the company commenced an underwritten public offering of its common stock.

Silvergate Capital Corp (SI) dropped more than -3% in pre-market trading after the company said that its BlockFi deposit relationship was limited to less than $20M.

Nexstar Broadcasting Group Inc (NXST) gained more than +5% in pre-market trading after being named to join the S&P Midcap 400.

United Parcel Service Inc (UPS) rose over +1% in pre-market trading after Deutsche Bank upgraded the stock to buy from hold with a price target of $220, up from $197.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - November 29th

Intuit (INTU), Prudential Public ADR (PUK), Bank of Nova Scotia (BNS), Lonza Group AG (LZAGY), Workday (WDAY), Crowdstrike Holdings (CRWD), Citic ADR (CTPCY), Techtronic Industries ADR (TTNDY), Hewlett Packard (HPE), Li Auto (LI), Polyus ADR (OPYGY), NetApp (NTAP), Surgutneftegaz ADR (SGTZY), Shaw B (SJR), Tatneft ADR (OAOFY), Siemens Gamesa ADR (GCTAY), Bank Hapoalim ADR (BKHYY), Sumitomo Mitsui Trust Holdings PK (SUTNY), Brambles ADR (BXBLY), Sonic Healthcare ADR (SKHHY), Koc Holdings AS (KHOLY), ASX ADR (ASXFY), Elbit Systems (ESLT), Legend Bio (LEGN), Nedbank Group Ltd (NDBKY), Allkem (OROCF), Ayala ADR (AYALY), Bilibili (BILI), Grupo Simec ADR (SIM), UOL ADR (UOLGY), Beijing Capital Airport ADR (BJCHY), Autogrill ADR (ATGSY), HUTCHMED DRC (HCM), Kenon Holdings (KEN), Embotelladora Andina B ADR (AKOb), Bumi Resources ADR (PBMRY), Paladin Energy (PALAF), Asseco Poland ADR (ASOZY), Nexters (GDEV), Naas Tech ADR (NAAS), Hello Group (MOMO).

More Stock Market News from Barchart

• Stocks Tumble on China Pandemic Woes and Hawkish Fed Comments
• Unusual Options Volume May Bode Well for Wynn Resorts (WYNN)
• Etsy Is a High-Flier Among E-Commerce Stocks
• Stocks Fall on Global Growth Risks as the Pandemic Worsens in China