Stocks Move Lower Before the Open as China Trade Data Disappoints, U.S. CPI Looms

June S&P 500 futures (ESM23) are down -0.38%, and June Nasdaq 100 E-Mini futures (NQM23) are down -0.43% this morning as market participants digested soft Chinese trade data while looking ahead to a busy week in terms of corporate earnings results and economic data. 

In Monday’s trading session, Catalent Inc (CTLT) plunged over -25% after the contract manufacturer postponed the submission of its FQ3 results and sharply decreased its fiscal 2023 net revenue and adjusted EBITDA outlook. Also, Tyson Foods Inc (TSN) slid more than -16% after the food production company reported a surprise loss in the second quarter and slashed its annual revenue forecast. On the positive side, Zscaler Inc (ZS) climbed over +20% after the cloud security company reported better-than-expected preliminary Q3 revenue and raised its FY23 revenue outlook.

The Federal Reserve’s Senior Loan Officer Opinion Survey released on Monday showed that U.S. banks tightened lending standards in the first quarter and saw weakness in demand for commercial and industrial loans and commercial real estate loans. According to the report, the net percentage of U.S. banks tightening terms of credit for large and medium businesses rose to 46.0% in the first quarter from 44.8% in the prior survey in January.

“The recent Beige Book, which provides an advanced look at the SLOOS, reports a reduction in the supply of bank credit. This suggests that on top of the tightening in lending that was already underway, the volatility in the regional banking sector has had the effect of incrementally tightening credit,” said Vishwanath Tirupattur, a global director of fixed income research at Morgan Stanley.

Later today, President Joe Biden will meet with top Republicans and Democrats from Congress at the White House to discuss increasing the debt ceiling before the June 1st deadline.

On the earnings front, major companies like Airbnb Inc (ABNB), Duke Energy Corporation (DUK), Air Products and Chemicals Inc (APD), Occidental Petroleum Corporation (OXY), and Electronic Arts (EA) are slated to release their quarterly figures today.

The U.S. economic data slate is mainly empty on Tuesday. However, investors will likely focus on speeches from Fed Governor Philip Jefferson and New York Fed President John Williams.

Meanwhile, investors are keenly focused on U.S. consumer prices data due on Wednesday for clues on the Federal Reserve’s policy path.

In the bond markets, United States 10-Year rates are at 3.498%, down -0.61%.

The Euro Stoxx 50 futures are down -0.58% this morning as investors digested gloomy Chinese trade data while cautiously awaiting the latest U.S. inflation report. Losses in real estate stocks are leading the overall market lower, with SBB (SBBB.S.DX) plunging over -10% after the Swedish landlord halted dividend payments and canceled a rights issue. Meanwhile, Governing Council member Martins Kazaks said on Monday that market participants shouldn’t count on the European Central Bank’s “unprecedented bout of interest-rate increases” ending in July. “We still have quite some ground to cover, and further rate increases will be necessary to tame inflation,” Kazaks said. In the corporate sector, Banco Bpm Spa (BAMI.M.DX) climbed over +4% after Italy’s third-largest bank reported stronger-than-expected earnings in Q1 and raised its profit target for this year and the next.

U.K.’s BRC Retail Sales Monitor, U.K.’s Halifax House Price Index, and France’s Current Account data were released today.

U.K. April BRC Retail Sales Monitor stood at +5.2% y/y, stronger than expectations of +4.7% y/y.

U.K. April Halifax House Price Index came in at -0.3% m/m and +0.1% y/y, weaker than expectations of +0.2% m/m and +1.7% y/y.

The French March Current Account has been reported at +1.40B, stronger than expectations of -3.30B.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -1.10%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.01%.

China’s Shanghai Composite today closed lower as gloomy trade data weighed on investor sentiment. Customs data released on Tuesday showed that Chinese imports declined sharply in April while exports rose at a slower pace, indicating that domestic demand in the world’s second-biggest economy remained weak despite the lifting of COVID curbs. Meanwhile, shares of Chinese banks and brokers gained ground on Tuesday amid speculation of more policy support for the financial sector, with China International Capital Corp Ltd and China Galaxy Securities Co Ltd jumping about +10%. Focus is now squarely on China’s inflation data due later in the week.

“The main data point moving the markets are the import numbers and the really large downside surprise. Lately, markets have been viewing China’s economic data through a pretty bearish lens, and this shows once again that the import demand component is quite weak,” said Galvin Chia, FX strategist at NatWest Markets.

The Chinese April Exports stood at +8.5% y/y, stronger than expectations of +8.0% y/y.

The Chinese April Imports came in at -7.9% y/y, weaker than expectations of -5.0% y/y.

The Chinese April Trade Balance has been reported at $90.21B, stronger than expectations of $71.60B.

At the same time, Japan’s Nikkei 225 Stock Index closed higher and hit its highest level since January 2022, boosted by gains in steel and shipping stocks following upbeat corporate earnings results. Also, Bank of Japan Governor Kazuo Ueda downplayed expectations of any immediate tightening of monetary policy. Meanwhile, JFE Holdings Inc surged over +14% after Japan’s second-biggest steelmaker projected a 17% increase in net profit this fiscal year amid a recovery in steel demand. In addition, Kawasaki Kisen Kaisha Ltd climbed more than +9% after the shipper reported upbeat quarterly results and raised its dividend forecast. In other news, Sailor Pen Co jumped over +8% on media reports that the company’s high-end fountain pens will be given to officials gathering at a Group of Seven Summit in Hiroshima. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 2.47% to 16.20.

The Japanese March Household Spending stood at -0.8% m/m and -1.9% y/y, weaker than expectations of +1.5% m/m and +0.4% y/y.

Pre-Market U.S. Stock Movers

Palantir Technologies Inc (PLTR) surged more than +19% in pre-market trading after the company reported better-than-expected Q1 results and raised its full-year outlook.

PayPal Holdings Inc (PYPL) plunged over -4% in pre-market trading after the payment tech company reported upbeat Q1 results but lowered its FY23 operating margin outlook to 100bps from 125bps.

Lucid Group Inc (LCID) slid more than -8% in pre-market trading after the company’s first-quarter revenue and deliveries fell short of expectations.

Skyworks Solutions Inc (SWKS) fell about -10% in pre-market trading after the company reported mixed Q2 results and delivered downbeat Q3 guidance. 

Wayfair Inc (W) dropped over -7% in pre-market trading after the company announced it plans to offer $600 million of convertible senior notes due 2028 in a private offering.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - May 9th

Airbnb (ABNB), Duke Energy (DUK), Air Products (APD), Occidental (OXY), Transdigm (TDG), Suncor Energy (SU), Alcon (ALC), Apollo Global Management A (APO), Electronic Arts (EA), Globalfoundries (GFS), Chunghwa Telecom (CHT), Coupang LLC (CPNG), Royalty Pharma (RPRX), Waters (WAT), Fox Corp A (FOXA), Axon Enterprise (AXON), Fox Corp B (FOX), Jacobs Engineering (J), Warner Music (WMG), Fresenius Medical Care ADR (FMS), Bentley (BSY), Rivian Automotive (RIVN), Akamai (AKAM), EXACT Sciences (EXAS), Endeavor Group (EDR), Celanese (CE), Corebridge Financial (CRBG), Henry Schein (HSIC), Coty Inc (COTY), Twilio (TWLO), Masimo (MASI), Toast (TOST), Darling Ingredients (DAR), Aramark Holdings (ARMK), Vistra Energy (VST), Ovintiv (OVV), TPG Inc (TPG), Celsius (CELH), Healthcare RT (HR), Choice Hotels (CHH), Kinross Gold (KGC), Tempur Sealy International (TPX), Catalent Inc (CTLT), GXO Logistics (GXO), Exelixis (EXEL), Nexstar (NXST), Houlihan Lokey Inc (HLI), Novanta (NOVT), Dutch Bros (BROS), IGT (IGT), Duolingo (DUOL), Light Wonder (LNW), B2Gold (BTG), Ormat (ORA), Atkore Intl (ATKR), H&R Block (HRB), Alight (ALIT), IAC/InterActiveCorp (IAC), Elanco Animal Health (ELAN), Hawaiian Electric Industries (HE), Callaway Golf (MODG), Halozyme (HALO), Clear Secure (YOU), Southwest Gas Hold (SWX), Under Armour A (UAA), Diodes (DIOD), Squarespace (SQSP), Zai Lab (ZLAB), SeaWorld Entertainment (SEAS), Bloom Energy (BE), Lincoln National (LNC), Hostess Brands (TWNK), Triple Flag Precious Metals (TFPM), Under Armour C (UA), Affirm Holdings (AFRM), Lumentum Holdings Inc (LITE), Flywire (FLYW), Hagerty (HGTY), Assured Guaranty (AGO), Azenta (AZTA), Ziff Davis (ZD), Cactus (WHD), Grocery Outlet (GO), Kosmos Energy (KOS), DigitalOcean Holdings (DOCN), LCI Industries (LCII), Array (ARRY), Jackson Financial (JXN), Rapid7 Inc (RPD), Global Business Travel (GBTG), Mirati Therapeutics (MRTX), Xenon Pharmaceuticals (XENE), Ringcentral Inc (RNG), Appian (APPN), Olaplex Holdings (OLPX), ESCO Technologies (ESE), Luminar Tech (LAZR), Thoughtworks Holding (TWKS), Guardant Health (GH), Marqeta (MQ), EverCommerce (EVCM), Edgewell Personal Care (EPC), Agiliti (AGTI), Cricut (CRCT), Fisker (FSR), National Health Investors (NHI), ICF International (ICFI), Sciplay (SCPL), Payoneer Global Inc (PAYO), Eve Holding (EVEX), Supernus (SUPN), Sylvamo (SLVM), Xpel (XPEL), Rocket Lab USA (RKLB), CarGurus (CARG), Nuscale Power (SMR), Ziprecruiter (ZIP), Urban Edge Properties (UE), Stagwell (STGW), RadNet (RDNT), Vizio Holding (VZIO), Silk Road Medical (SILK), Oscar Health (OSCR), Adapthealth (AHCO), Hillman Solutions (HLMN), Cytek Biosciences (CTKB), The Hain Celestial (HAIN), Custom Truck One Source (CTOS), LegalZoom.com (LZ), Vivid Seats (SEAT), PDF Solutions (PDFS), Federal Agricultural Mortgage (AGM), Upstart (UPST).

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