Markets Today: Stocks Slightly Higher on a Rebound in Chinese Markets

Morning Markets

December S&P 500 futures (ESZ22) this morning are up +0.04%, and December Nasdaq 100 E-Mini futures (NQZ22) are up +0.08%.

Stock indexes this morning are slightly higher on positive carry-over from a rally of more than +2% in China’s Shanghai Composite Stock Index.  Chinese stocks jumped on signs that Chinese authorities may move faster in loosening the Covid restrictions that sparked protests in several cities. China today pledged to boost vaccinations among its senior citizens, and its National Health Commission said local authorities must avoid using excessive pandemic restrictions.

Strength in energy stocks is supporting the overall market, with WTI crude up more than +2% on concerns about tighter global crude supplies.  OPEC+ delegates said yesterday they may consider additional oil production cuts at its Dec 4 meeting “to balance supply and demand.”

Bitcoin (^BTCUSD) is up +1.4% this morning and is another supportive factor for stocks.  However, worries linger about the fallout from the collapse of FTX.com after BlockFi on Monday became the latest crypto company to file for bankruptcy.

An increase in bond yields today is limiting the upside in stocks.  The 10-year T-note yield is up +2.6 bp at 3.707% as China Covid unrest eased, curbing safe-haven demand for T-notes.  Also, supply pressures are pushing yields higher after Amazon.com announced today an unexpected 5-part bond sale. 

Overseas stocks today are mixed.  The Euro Stoxx 50 index today is up by +0.28%.  European mining and energy stocks are leading the overall market higher today amid a rebound in commodity markets as Chinese stocks rallied after the government refined its approach for dealing with Covid.  Also, a slight easing of German consumer prices knocked government bond yields lower and was supportive of stocks.  The 10-year German bund yield is down -5.7 bp at 1.935% after German Nov CPI eased to +11.3% y/y from the record +11.6% pace in October. 

Today’s Eurozone economic news was supportive for stocks after Eurozone Nov economic confidence rose +1.0 to 93.7, stronger than expectations of 93.2.

China’s Shanghai Composite rallied to a 2-1/2 month high and closed up sharply by +2.21%, and Japan’s Nikkei Stock Market Index closed down -0.48%. Chinese stocks rallied today as unrest in Chinese cities over Covid restrictions eased.  The government said today it would boost vaccinations among senior citizens, and China’s National Health Commission said local officials must avoid excessive pandemic restrictions.  Chinese property stocks also rallied today after the China securities regulator lifted a multi-year ban on share shares by builders and said it aims to support the “stable and healthy” development of the sector.

Japan’s Nikkei Stock Market Index today fell to a 1-week low and posted moderate losses.  Negative carry-over from Monday’s slide in U.S. equity markets pressured Japanese stocks today.  A stronger yen today also weighed on Japanese exporter stocks.

Today’s Japanese economic news was bearish for stocks after Japan Oct retail sales rose +0.2% m/m, weaker than expectations of +1.0% m/m.  Also, Japan’s Oct jobless rate remained unchanged at 2.6%, showing a weaker labor market than expectations of a decline to 2.5%.

Pre-Market U.S. Stock Movers

United Parcel Service (UPS) is up more than +1% in pre-market trading after Deutsche Bank upgraded the stock to buy from hold. 

Microsoft (MSFT) is up +0.5% in pre-market trading after Morgan Stanley reiterated its overweight rating on the stock and said it expects to see improving revenue and EPS growth in the stock in the second half of 2023.

Energy stocks and energy service providers are moving higher in pre-market trading, with the price of crude oil up more than +2% after OPEC+ delegates said they may consider additional oil production cuts at its Dec 4 meeting “to balance supply and demand.” Devon Energy (DVN), Marathon Oil (MRO), Haliburton (HAL), Diamondback Energy (FANG), Schlumberger (SLB), and ConocoPhillips (COP) are down -2% or more.

U.S.-listed Chinese stocks are climbing in pre-market trading after government officials vowed to speed up Covid vaccinations for the elderly and to avoid excessive Covid restrictions.  JD.com (JD) is up more than +7%.  Also, Alibaba Group Holding (BABA), Pinduoduo (PDD), and Baidu (BIDU) are up more than +5%.  In addition, NetEase (NTES) is up more than +4%.

U.S. casino stocks with exposure to Macau are rising in pre-market trading after Macau renewed the provisional 10-year licenses to the six existing casinos.  Wynn Resorts (WYNN) is up more than +4%, and Las Vegas Sands (LVS) and MGM Resorts International (MGM) are up more than +2%. 

Nexstar Media (NXST) and PBF Energy (PBF) are up more than +5% in pre-market trading after S&P Dow Jones Indices said the stocks would join the S&P Midcap 400 Index before the opening of trading on Dec 1. 

Roku (ROKU) slid more than -2% in pre-market trading after KeyBanc Capital Markets downgraded the stock to sector weight from overweight, saying the consensus for 2023 and 2024 looks “too optimistic.”

Hibbett (HIBB) tumbled more than -5% in pre-market trading after reporting Q3 EPS of $1.94, well below the consensus of $2.46.

Generac Holdings (GNRC) fell more than -3% in pre-market trading after Jeffries downgraded the stock to underperform from hold.

Evergy (EVRG) fell more than -1% in pre-market trading after Credit Suisses double-downgraded the stock to underperform from outperform.

Today’s U.S. Earnings Reports (11/29/2022)

Crowdstrike Holdings Inc (CRWD), Hewlett Packard Enterprise Co (HPE), Intuit Inc (INTU), NetApp Inc (NTAP), Workday Inc (WDAY).

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