Stock Index Futures Move Lower As Fed Jitters Persist

March S&P 500 futures (ESH23) are down -0.38%, and March Nasdaq 100 E-Mini futures (NQH23) are down -0.68% this morning after three major U.S. benchmark indices ended the regular session mixed as market participants digested further comments from Federal Reserve Chair Jerome Powell as well as U.S. economic data that continued to show the labor market’s resilience.

In Wednesday’s trading session, three major U.S. stock indexes fluctuated between moderate gains and losses, ending the session in a mixed fashion after Fed Chair Powell reiterated his hawkish message on the pace and duration of higher interest rate increases in his second day of congressional testimony. At the same time, Powell emphasized that no decision had been made on the pace of interest rate hikes ahead of the central bank’s meeting in March as it would depend on upcoming economic data. “I stress that no decision has been made on this,” Mr. Powell told lawmakers on Wednesday. 

Data on Wednesday showed that U.S. ADP Nonfarm Employment Change came in at +242K in February, above expectations of +200K, indicating continued labor market resilience ahead of the widely-expected nonfarm payrolls report on Friday. In addition, U.S. JOLTs Job Openings fell less than expected to 10.824M in January, and data for December was revised upward.

“We are still looking at a situation where the labor market is very tight. The Fed is pretty clear that they want to see some slack in the labor markets,” said Matt Stucky, a senior portfolio manager at Northwestern Mutual Wealth Management. 

Meanwhile, U.S. rate futures have priced in a 23.6% chance of a 25 basis point rate increase and a 76.4% chance of a 50 basis point hike at the next monetary policy meeting in March. 

Today, all eyes are focused on the U.S. Initial Jobless Claims data in a couple of hours. Economists, on average, forecast that Initial Jobless Claims will come in at 195K, compared to last week’s value of 190K.

Also, investors will likely focus on the U.S. Continuing Jobless Claims data, which stood at 1,655K last week. Economists foresee the new figure to be 1,659K.

In the bond markets, United States 10-Year rates are at 3.993%, up +0.44%.

The Euro Stoxx 50 futures are down -0.81% this morning as investors continued to weigh the economic outlook. European stocks have received a negative handover from Wall Street and Asia after main indexes closed mixed on Fed fears and soft Chinese inflation data. In corporate news, Leg Immobilien Se (LEG.D.DX) plunged over -10% after the German real estate firm suspended its dividend. On the positive side, Dassault Aviation (AM.FP) climbed more than +9% after the French company reported better-than-expected annual results.

France’s Non-Farm Payrolls data was released today.

The French Non-Farm Payrolls stood at +0.2% q/q in the fourth quarter, stronger than expectations of unchanged q/q.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.22%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.63%. 

China’s Shanghai Composite today closed lower after the consumer inflation data for February was softer than expected, while producer inflation deteriorated more than expected in February as spending failed to elevate after the country eased its severe COVID-19 curbs. The data pointed to a sluggish Chinese economic recovery this year, weighing on investors’ sentiment in the region.

The Chinese February CPI has been reported at -0.5% m/m and +1.0% y/y, weaker than expectations of +0.2% m/m and +1.9% y/y.

The Chinese February PPI came in at -1.4% y/y, weaker than expectations of -1.3% y/y.

At the same time, Japan’s Nikkei 225 Stock Index closed higher and hit a six-month high today, extending gains into a fifth straight session as market participants bet that the Bank of Japan will maintain its ultra-loose monetary policy in the near term. Data on Thursday showed the Japanese GDP stood at unchanged q/q and +0.1% y/y in the fourth quarter of 2022, compared to a preliminary estimate of +0.2% q/q and +0.8% y/y. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 4.78% to 17.32.

Pre-Market U.S. Stock Movers

Silvergate Capital Corp (SI) plunged over -43% in pre-market trading after announcing a wind-down of operations and plans to liquidate Silvergate Bank.

SVB Financial Group (SIVB) slid about -27% in pre-market trading after the company filed to sell $1.25B of common stock and $500M of depositary shares.

Asana Inc (ASAN) climbed about +19% in pre-market trading after the company reported upbeat Q4 results and said its CEO plans to enter a trading plan to buy up to 30M shares.

Cassava Sciences Inc (SAVA) rose over +10% in pre-market trading after its director Richard Barry disclosed the purchase of 88,841 shares for $2.29M.

MongoDB (MDB) fell more than -12% in pre-market trading after the company reported upbeat Q4 results but posted weaker-than-expected Q1 and FY24 revenue guidance.

Hyatt Hotels Corporation (H) dropped over -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - March 9th

Oracle (ORCL), JD.com Inc Adr (JD), Deutsche Post AG (DPSGY), Ulta Beauty (ULTA), Hannover Re (HVRRY), Wheaton Precious Metals (WPM), DocuSign (DOCU), Toro (TTC), BJs Wholesale Club (BJ), Vail Resorts (MTN), YPF Sociedad Anonima (YPF), Baloise ADR (BLHEY), Eurobank Ergasias (EGFEY), Endeavour Mining (EDVMF), National Beverage (FIZZ), Gap (GPS), Turkcell Iletisim Hizmetleri (TKC), Global Business Travel (GBTG), 360 Finance (QFIN), John Wiley&Sons (WLY), Earthstone Energy (ESTE), Arhaus (ARHS), Methode Electronics (MEI), FuelCell Energy (FCEL), Geron (GERN), Docebo (DCBO), European Wax Center (EWCZ), RAPT Therapeutics (RAPT), BioLife Solutions (BLFS), Summit Therapeutics PLC (SMMT), Avepoint (AVPT), Distribution Solutions (DSGR), HireRight Holdings (HRT), Quanex Building Products (NX), BioXcel Therapeutics (BTAI), Mission Produce (AVO), ANI Pharma (ANIP), Guild (GHLD).

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