December S&P 500 futures (ESZ22) are trending up +0.26% this morning after three major US benchmark indices closed lower on Friday, notching their biggest weekly drop in more than a month, as hotter-than-anticipated U.S. producer prices data stoked investor jitters that the Federal Reserve would keep interest rates higher for longer to cool persistent inflation. Three major U.S. stock indexes were weighed down primarily by losses in the Oil & Gas, Healthcare, and Basic Materials sectors.
The U.S. producer price index rose slightly more than anticipated in November amid an increase in the costs of services. However, the data pointed to slowing inflation, with annual inflation at the factory gate posting its smallest growth in 1-1/2 years. At the same time, a University of Michigan survey showed that consumer sentiment improved in December, while inflation expectations dropped to a 15-month low.
“Data shows that inflation is coming down, but it's lingering and is stickier than most assume,” said Anthony Saglimbene, a chief market strategist at Ameriprise Financial in Troy, Michigan.
In the coming week, the U.S. Federal Reserve interest rate decision and statement will be the main highlight. U.S. rate futures have priced in a 74.7% chance of a 50 basis point rate increase and a 25.3% chance of a 75 basis point hike at this week's monetary policy meeting.
In addition, market participants will be eyeing a spate of economic data, including U.S. CPI, Core CPI, Export Price Index, Import Price Index, Crude Oil Inventories, Retail Sales, Core Retail Sales, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Industrial Production, Manufacturing PMI (preliminary), S&P Global Composite PMI (preliminary), and Services PMI (preliminary).
Today, all eyes are focused on the U.S. Federal Budget Balance data in a couple of hours. Economists, on average, forecast that November Federal Budget Balance will stand at -248.0B, compared to the previous value of -88.0B.
In the bond markets, United States 10-Year rates are at 3.543%, down -0.66%.
The Euro Stoxx 50 futures are down -0.23% this morning as investors digested fresh U.K. economic data while awaiting a series of central bank policy-setting meetings this week. U.K. gross domestic product grew +0.5% m/m in October, stronger than expectations of +0.4% m/m, recovering from the impact of the additional bank holiday for the State Funeral. At the same time, the Bank of England expects GDP to contract by 0.3% in the last quarter of the year. Also, the central bank warned that the country is facing its longest recession since records began, with the economic downturn expected to extend well into 2024.
In addition to the Fed, the European Central Bank and the Bank of England are also set to announce interest rate increases on Thursday, with both expected to hike by 50 basis points despite the worsening economic outlook.
U.K. Industrial Production, U.K. Manufacturing Production, U.K. Monthly GDP 3M/3M Change, and U.K. Trade Balance data were also released today.
U.K. October Industrial Production stood at 0.0% m/m and -2.4% y/y, compared to expectations of +0.1% m/m and -2.8% y/y.
U.K. October Manufacturing Production came in at +0.7% m/m and -4.6% y/y, stronger than expectations of +0.1% m/m and -5.4% y/y.
U.K. Monthly GDP 3M/3M Change has been reported at -0.3%, stronger than expectations of -0.4%.
U.K. October Trade Balance was at -14.48B, stronger than expectations of -15.65B.
Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.87%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.21%.
China’s Shanghai Composite today closed lower as market participants feared that the easing of anti-COVID measures in China would result in much higher infection rates. This dampened recent optimism over a potential economic recovery in the country with the withdrawal of COVID restrictions. In addition, analysts anticipate that the further easing of anti-COVID measures will likely lead to high volatility in Chinese markets.
At the same time, Japan’s Nikkei 225 Stock Index closed lower after data revealed that producer price inflation in the country remained near 40-year highs in November. The index's downward momentum was fueled by losses in the Mining, Chemical, Petroleum & Plastic, and Transport sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 4.40% to 18.04.
Pre-Market U.S. Stock Movers
Harpoon Therapeutics Inc (HARP) jumped over +11% in pre-market trading after the company presented updated interim results from Phase 1 evaluating single-agent HPN217.
Horizon Therapeutics PLC (HZNP) climbed about +14% in pre-market trading after The Wall Street Journal reported that Amgen (AMGN) was in advanced talks to buy the drug company in an over $20 billion takeover.
Genuine Parts Co (GPC) slid over -1% in pre-market trading after Goldman Sachs downgraded the stock to sell from neutral with a price target of $147, up from $124, implying a 20% downside.
RH (RH) dropped about -3% in pre-market trading after Goldman Sachs downgraded the stock to sell from neutral with a price target of $215, down from $227.
Ulta Beauty Inc (ULTA) fell more than -1% in pre-market trading after Goldman Sachs downgraded the stock to neutral from buy with a price target of $508, down from $511.
Li Auto Inc (LI) dropped about -1% in pre-market trading, extending Friday's losses after the company reported downbeat Q3 results.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - December 12th
Oracle (ORCL), Siemens Gamesa ADR (GCTAY), Coupa Software (COUP), Fluence Energy (FLNC), Eaton Vance Tax Managed Diversified (ETY), Uranium Energy (UEC), Value Line (VALU), Mitek (MITK), Blue Bird (BLBD), Oramed (ORMP), Azure Power Global (AZRE), Universal Technical Institute (UTI), Mesabi Trust (MSB), Byrna Technologies (BYRN), Joann (JOAN), Inotiv (NOTV), Enzo Biochem (ENZ).
More Stock Market News from Barchart
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- Stocks Retreat as Strength in U.S. PPI Boosts Bond Yields
- Chinese Tech Investors Pivot to Hong Kong from U.S. Exchanges
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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