Markets Today: Stocks Mixed On Negative Chinese Trade News

Morning Markets

The S&P 500 is up slightly and the Nasdaq is down -0.2%. 

Weak Chinese trade news is compounding concerns about the global economy's health after China Nov exports fell -8.7% y/y, weaker than expectations of -3.9% y/y and the biggest decline in 2-3/4 years.  The markets are concerned that the Covid pandemic in China may yet mushroom as restrictions are eased, thus forcing new economic shutdowns.

Weakness in Apple and its suppliers is weighing on technology stocks and December Nasdaq 100 E-Mini futures.  Apple is down more than -1% after key iPhone supplier Murata Manufacturing said it expects Apple to cut its iPhone 14 production plans further in the coming months because of weak demand. 

Bitcoin (^BTCUSD) is down more than -1% at a 1-week low, which is a risk-off factor for stocks.  Markets are on watch for any fresh news of contagion from last month’s collapse of FTX.com. 

Lower bond yields are supportive for stocks as the 10-year T-note yield today is down -3.3 bp at 3.498%. Fed officials have recently signaled that the Fed will downshift to a +50 bp rate hike at next week’s FOMC meeting after four straight +75 bp increases. 

Today’s U.S. economic news was bullish for stocks after Q3 nonfarm productivity was revised upward to +0.8% from the initially reported +0.6%.  Also, Q3 unit labor costs were revised downward to +2.4% from the initially reported +3.1%.

Overseas stocks today are lower.  The Euro Stoxx 50 index is down -0.40% today and fell to a 2-week low.  Weakness in miners, energy stocks, and telecom companies weighs on the overall market.  Better-than-expected economic news on Eurozone Q3 GDP and German Oct industrial production limits stock losses. 

Today’s Eurozone economic news was bullish for stocks.  Eurozone Q3 GDP was revised upward to +0.3% q/q, and +2.3% y/y from the initially reported +0.2% q/q and +2.1% y/y.  Also, German Oct industrial production fell -0.1% m/m, stronger than expectations of -0.6% m/m.

China’s Shanghai Composite closed down -0.40%, and Japan’s Nikkei Stock Market Index fell to a 3-1/2 week low and closed down by -0.72%. Chinese growth concerns weighed on global equity markets today after Chinese trade news for November contracted more than expected.   Losses in the Shanghai Composite were limited as airline stocks rallied after oil prices tumbled to an 11-1/2 month low and after The International Air Transport Association predicted the airline industry would achieve its first post-pandemic profit next year. 

China Nov exports fell -8.7% y/y, weaker than expectations of -3.9% y/y and the biggest decline in 2-3/4 years.  Also, China Nov imports fell -10.6% y/y, weaker than expectations of -7.1% y/y and the biggest decline in 2-1/2 years.

Japan’s Nikkei Stock Index today followed Tuesday’s losses in U.S stocks as downbeat warnings from bank chiefs deepened concerns over the global economy.  Japanese stocks extended their losses on weaker-than-expected Chinese trade news, which also undercut global growth prospects.  On the positive side, BOJ Board member Nakamura said the BOJ needs to continue with monetary easing as the economy is still recovering from the pandemic. 

Today’s Japanese economic news was supportive for stocks after the Japan Oct leading index CI rose +0.8 to 99.0, stronger than expectations of 98.3.

Pre-Market U.S. Stock Movers

Apple (AAPL) is down more than -1% in pre-market trading after key iPhone supplier Murata Manufacturing said it expects Apple to cut its iPhone 14 production plans further in the coming months because of weak demand. 

Airbnb (ABNB) dropped more than -3% in pre-market trading after Morgan Stanley downgraded the stock to underweight from equal weight.

Autoliv (ALV) fell more than -2% in pre-market trading after UBS downgraded the stock neutral from outperform. 

Chinese stocks listed in the U.S. moved lower in pre-market trading after weaker-than-expected Chinese trade data sparked Chinese growth concerns.  Alibaba Group Holding (BABA) and Pinduoduo (PDD) are down more than -4%.  Also, Baidu (BIDU), JD.com (JD), and NetEase (NTES) are down more than -3%. 

Cryptocurrency-exposed stocks are under pressure in pre-market trading, with Bitcoin down more than -1% to a 1-week low.  Coinbase Global (COIN), Riot Blockchain (RIOT), Marathon Digital (MARA), and MicroStrategy (MSTR) are down more than -1%. 

Toll Brothers (TOL) rose more than +1% in pre-market trading after forecasting 2023 adjusted home sales gross margin of 27%, better than the consensus of 25.7%.   

Pinterest (PINS) gained nearly +2% in pre-market trading after the company added a board seat for Elliot Management as part of a cooperation agreement with the activist investor.

MongoDB (MDB) surged more than +25% in pre-market trading after reporting Q3 revenue of $333.6 million, above the consensus of $303.4 million, and then raising its 2023 revenue forecast to $1.26 billion from a previous forecast of $1.20 billion-$1.21 billion, well above the consensus of $1.21 billion. 

Today’s U.S. Earnings Reports (12/7/2022)

Brown-Forman Corp (BF/B), Campbell Soup Co (CPB), GameStop Corp (GME), Ollie's Bargain Outlet Holding (OLLI), Thor Industries Inc (THO).

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