S&P Futures Tick Higher Ahead of Key U.S. Inflation Data

March S&P 500 futures (ESH23) are trending up +0.23% this morning after three major U.S. benchmark indices ended the regular session higher as investors took an optimistic stance ahead of a crucial U.S. inflation report that could hint at the path of the Federal Reserve’s future interest rate hikes. Three major U.S. stock indexes were fueled primarily by gains in the Technology, Consumer Services, and Telecoms sectors.

In Monday’s trading session, all three major indexes gained ground on hopes that U.S. inflation will continue to ease, while U.S. Treasury yields retreated from an almost six-week high. Meta Platforms Inc (META) rose more than +3% after the Financial Times reported on Sunday that the company would likely announce a fresh round of job cuts. Also, Microsoft Corporation (MSFT) gained about +3% after Stifel adjusted the price target on the tech-giant stock to $290 from $275 while maintaining a buy rating. In addition, Monday.com (MNDY) climbed over +10% after the company reported upbeat Q4 results.

Fed Governor Michelle Bowman said Monday she sees the need to continue to raise interest rates and then hold them at a sufficiently restrictive level to bring inflation back down to the central bank’s target.

Fourth-quarter earnings season, meanwhile, winds down, with analysts expecting year-over-year earnings from S&P 500 companies to decline about 3.0% for the quarter. Still, major global companies like Coca-Cola (KO), Airbnb (ABNB), and Marriott Int (MAR) are scheduled to report their quarterly earnings today.

Today, all eyes are focused on the U.S. consumer inflation report in a couple of hours. Economists, on average, forecast that January U.S. CPI will stand at +0.5% m/m and +6.2% y/y, compared to the previous values of +0.1% m/m and +6.4% y/y.

“Investors are positioning themselves ahead of what they believe will be a favorable inflation report which could trigger an upward move in equity prices,” said Sam Stovall, a chief investment strategist at CFRA Research in New York.

In addition, investors are likely to focus on a batch of speeches from Federal Reserve officials Logan, Harker, and Williams for more clues on the Fed’s monetary policy trajectory.

U.S. Core CPI data will also be closely watched today. Economists estimate Core CPI to be +0.4% m/m and +5.5% y/y in January, compared to the previous figures of +0.4% m/m and +5.7% y/y.

In the bond markets, United States 10-Year rates are at 3.690%, down -0.78%.

The Euro Stoxx 50 futures are up +0.31% this morning as market participants digested solid U.K. labor market data and Eurozone GDP data ahead of the release of widely anticipated U.S. inflation data. Eurozone GDP came in at +0.1% q/q and +1.9% y/y in the fourth quarter, in line with expectations. The preliminary reading confirmed that the Eurozone economy avoided a recession in the final quarter of 2022. In corporate news, shares of Coca-Cola Hbc Ag (CCH.LN) rose over +3% after the bottling company, which is listed in London, reported a better-than-expected operating profit for 2022.

U.K. Average Earnings Index +Bonus, U.K. Claimant Count Change, U.K. Employment Change 3M/3M, and U.K. Unemployment Rate data were also released today.

U.K. December Average Earnings Index +Bonus has been reported at 5.9%, weaker than expectations of 6.2%

U.K. January Claimant Count Change stood at -12.9K, stronger than expectations of 17.9K.

U.K. December Employment Change 3M/3M came in at 74K, stronger than expectations of 40K.

U.K. December Unemployment Rate remained steady at 3.7%. 

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.28%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.64%.

China’s Shanghai Composite today closed higher, tracking a rebound on Wall Street but caution ahead of key U.S. inflation data limited gains. On the positive side, U.S. Secretary of State Antony Blinken is considering a meeting with senior Chinese diplomat Wang Yi at the Munich Security Conference this week. The move marks a slight easing of tensions between the U.S. and China. 

“Sentiments are largely tracking the positive handover from Wall Street overnight, although much is still up in the air,” said Yeap Jun Rong, a market analyst at IG.

At the same time, Japan’s Nikkei 225 Stock Index closed higher after the government nominated academic Kazuo Ueda as the next Bank of Japan Governor. Ueda is expected to hold off on tightening monetary policy in the near term, which is a positive sign for local stocks. Also, preliminary data on Tuesday showed the Japanese economy returned to growth in the three months through December. However, the economy grew at a slower-than-expected pace in the fourth quarter amid high inflation and waning overseas demand for Japanese goods.

The Japanese GDP stood at +0.2% q/q and +0.6% y/y in the fourth quarter, weaker than expectations of +0.5% q/q and +2.0% y/y.

Pre-Market U.S. Stock Movers

Fusion Pharmaceuticals Inc (FUSN) jumped over +22% in pre-market trading after the company acquired the investigational new drug application for an ongoing Phase 2 clinical trial evaluating 225Ac-PSMA I&T from RadioMedix.

Palantir Technologies Inc (PLTR) climbed more than +17% in pre-market trading after the company reported upbeat Q4 results and said it expects 2023 to be its first year of profitability.

Avis Budget Group Inc (CAR) rose about +2% in pre-market trading after the company released a better-than-expected Q4 report.

T2 Biosystems Inc (TTOO) plunged over -20% in pre-market trading after the company announced underwritten public offering of its common stock and warrants.

Skywater Technology Inc (SKYT) gained about +12% in pre-market trading after the company’s Q4 results topped Wall Street estimates.

Occidental Petroleum Corporation (OXY) rose more than +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with an $81 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - February 14th

Coca-Cola (KO), Zoetis Inc (ZTS), Airbnb (ABNB), America Movil ADR A (AMOV), America Movil ADR (AMX), Marriott Int (MAR), Fortescue Metals (FSUMF), TC Energy (TRP), Ecolab (ECL), Devon Energy (DVN), Exelon (EXC), Japan Tobacco ADR (JAPAY), Restaurant Brands Int (QSR), Globalfoundries (GFS), Eversource Energy (ES), PerkinElmer (PKI), Howmet (HWM), Akamai (AKAM), Leidos (LDOS), TransUnion (TRU), Entegris (ENTG), Godaddy Inc (GDDY), Randstad Holdings NV (RANJY), Boliden ADR (BDNNY), SCI (SCI), Cleveland-Cliffs (CLF), First Quantum Minerals (FQVLF), WESCO (WCC), West Fraser Timber (WFG), CAE Inc. (CAE), EnLink Midstream LLC (ENLC), Agree Realty (ADC), GXO Logistics (GXO), IPG Photonics (IPGP), Endava (DAVA), Magnolia Oil (MGY), Hawaiian Electric Industries (HE), Herc Holdings (HRI), Livent (LTHM), Blackline (BL), Triton Int (TRTN), Franklin Electric (FELE), Comstock Resources (CRK), Tripadvisor (TRIP), Encore Wire (WIRE), LCI Industries (LCII), InMode (INMD), Fannie Mae (FNMA), Corcept (CORT), Patria Investments (PAX), USA Compression Partners LP (USAC), Mercury General (MCY), Safehold (SAFE), NMI Holdings (NMIH), Urban Edge Properties (UE), FLEX LNG (FLNG), GCM Grosvenor (GCMG), Herbalife (HLF), Inventrust Properties (IVT), Textainer (TGH), Udemy (UDMY), Mirion Technologies (MIR), Acadia (AKR), Embecta (EMBC), Upstart (UPST), The Andersons (ANDE), Adaptive Biotechnologies (ADPT), Danaos (DAC), National Research (NRC), Armada Hflr Pr (AHH), Community Healthcare Trust Inc (CHCT), Conduent (CNDT), UNITIL (UTL), Nerdwallet (NRDS), Enhabit (EHAB), Clearwater Paper (CLW), Absolute Software (ABST).

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