Stock Index Futures Climb as Debt Ceiling Progress Boosts Sentiment, ECB Minutes in Focus

June S&P 500 futures (ESM23) are up +0.26%, and June Nasdaq 100 E-Mini futures (NQM23) are up +0.11% this morning as market participants cheered the passage through the U.S. House of Representatives of a bill to suspend the debt ceiling.

The Republican-controlled House of Representatives voted in favor of a bill to suspend the $31.4 trillion debt ceiling late Wednesday, pushing it forward to the Senate for consideration. 

In Wednesday’s trading session, Advance Auto Parts Inc (AAP) tumbled about -35% after the auto parts retailer cut its quarterly dividend by 83% and lowered its FY23 guidance. Also, Hewlett Packard Enterprise Co (HPE) plunged more than -7% after reporting weaker-than-expected Q2 revenue and cutting its full-year revenue guidance. In addition, HP Inc (HPQ) slid over -6% after the PC and printer giant reported mixed Q2 results. On the positive side, Intel Corporation (INTC) climbed over +4% and was the top percentage gainer on the benchmark S&P 500 and the blue-chip Dow after the company said it expected Q2 revenue to be at the upper end of its forecasted range.

Economic data on Wednesday showed U.S. JOLTs Job Openings unexpectedly rose to 10.103M in April, stronger than expectations of 9.775M, pointing to persistent strength in the labor market. At the same time, the U.S. May Chicago PMI came in at 40.4, weaker than expectations of 47.0.

Philadelphia Fed President Patrick Harker said Wednesday that the central bank “really should skip, not pause,” an interest-rate hike at the June meeting as monetary policy was close to being restrictive. “I think we can take a bit of a skip for a meeting,” Harker said. Also, Fed Governor Philip Jefferson signaled that the Federal Reserve could hold interest rates steady at its upcoming meeting in June to give policymakers more time to assess data. At the same time, Jefferson warned that such a decision shouldn’t be interpreted as an end to rate hikes. 

Meanwhile, U.S. rate futures have priced in a 67.9% probability of no hike and a 32.1% chance of a 25 basis point rate increase at the June meeting.

Today, all eyes are focused on the U.S. ISM Manufacturing PMI in a couple of hours. Economists, on average, forecast that the May ISM Manufacturing PMI will stand at 47.0, compared to the previous value of 47.1.

Also, investors are likely to focus on U.S. ADP Nonfarm Employment Change data, which was at 296K in April. Economists foresee the new figure to be 170K.

U.S. Manufacturing PMI will be reported today. Economists foresee May’s figure to stand at 48.5, compared to 50.2 in April.

U.S. Initial Jobless Claims data will come in today. Economists expect this figure to be 235K, compared to the previous number of 229K.

U.S. Nonfarm Productivity and U.S. Unit Labor Costs data will also be closely watched today. Economists forecast Nonfarm Productivity to be at -2.7% q/q in the first quarter and Unit Labor Costs to come in at +6.3% q/q in the first quarter.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -1.101M, compared to last week’s value of -12.456M.

In the bond markets, United States 10-Year rates are at 3.677%, up +1.14%.

The Euro Stoxx 50 futures are up +1.33% this morning as investors digested a slew of important regional economic data while also welcoming U.S. lawmakers’ vote to approve the U.S. debt ceiling bill. Data on Thursday showed that Eurozone headline inflation eased more than expected in May amid lower energy costs, while underlying inflation also slowed. Gains in mining and media stock are leading the overall market higher. Meanwhile, European Central Bank Governing Council member Olli Rehn said Thursday that the central bank wouldn’t consider lowering interest rates before core inflation slows continuously. ECB President Christine Lagarde is also scheduled to speak at a conference later today. In addition, market participants will be looking toward the release of the minutes from the ECB’s latest policy meeting. In corporate news, Heidelberg Materials (0MG2.LN) rose about +2% after JPMorgan upgraded the stock to Overweight from Neutral with a price target of 80 euros, up from 66 euros.

Germany’s Retail Sales, Spain’s Manufacturing PMI, Italy’s Manufacturing PMI, France’s Manufacturing PMI, Germany’s Manufacturing PMI, Eurozone's Manufacturing PMI, U.K.’s Manufacturing PMI, Eurozone’s Unemployment Rate, Eurozone’s Core CPI (preliminary), and Eurozone’s CPI (preliminary) data were released today.

The German April Retail Sales stood at +0.8% m/m and -4.3% y/y, compared to expectations of +1.0% m/m and -5.0% y/y.

The Spanish May Manufacturing PMI came in at 48.4, stronger than expectations of 47.8.

The Italian May Manufacturing PMI was at 45.9, stronger than expectations of 45.8.

The French May Manufacturing PMI stood at 45.7, weaker than expectations of 46.1.

The German May Manufacturing PMI has been reported at 43.2, stronger than expectations of 42.9.

Eurozone May Manufacturing PMI came in at 44.8, stronger than expectations of 44.6.

U.K. May Manufacturing PMI has been reported at 47.1, stronger than expectations of 46.9.

Eurozone April Unemployment Rate was at 6.5%, in line with expectations.

Eurozone May Core CPI stood at +0.2% m/m and +5.3% y/y, weaker than expectations of +0.8% m/m and +5.5% y/y.

Eurozone May CPI has been reported at 0.0% m/m and +6.1% y/y, weaker than expectations of +0.6% m/m and +6.3% y/y.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed flat, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.84%.

China’s Shanghai Composite today ended flat even after data showed the country’s factory activity swung to surprise growth in May. A private sector survey on Thursday showed that the Chinese manufacturing sector grew more than expected in May, driven by improved production and demand. At the same time, survey data from the China Index Academy showed that the country’s new home prices among 100 cities fell for the first time in four months in May. Artificial Intelligence stocks outperformed on Thursday, with iFlytek Co. Ltd. surging +10% after the AI firm was appointed by China’s Ministry of Industry and Information Technology as a leader in a large language model working group. 

“We need more time to see whether the improvement would be sustained. Further policy support is still required to boost domestic demand, we reckon a 10 bps MLF rate cut in June,” said Zhou Hao, an economist at Guotai Junan International.

The Chinese May Caixin Manufacturing PMI stood at 50.9, stronger than expectations of 50.3.  

At the same time, Japan’s Nikkei 225 Stock Index closed higher today as strong economic data and progress towards averting a U.S. debt default boosted market sentiment. Data on Thursday showed that Japanese capital spending in the first quarter increased at the fastest rate since 2015, pointing to a potentially upward revision for first-quarter GDP. Also, a private sector survey showed that Japan’s factory activity expanded in May for the first time in seven months. Meanwhile, Japan Steel Works climbed over +3% after SMBC Nikko Securities raised a price target for the machinery maker. In other news, Toyota Motor gained more than +1% after the company said it would invest $2.1 billion more in its new U.S. battery plant in North Carolina. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 0.45% to 20.00.

The Japanese Capital Spending came in at +11.0% y/y in the first quarter, stronger than expectations of +5.5% y/y.

The Japanese May Manufacturing PMI stood at 50.6, weaker than expectations of 50.8.

Pre-Market U.S. Stock Movers

Chewy Inc (CHWY) surged over +16% in pre-market trading after the Florida-based online pet product retailer reported upbeat Q1 results and raised its FY23 revenue guidance. 

Nordstrom Inc (JWN) climbed about +7% in pre-market trading after the company posted an unexpected profit in Q1.

Okta Inc (OKTA) plunged more than -19% in pre-market trading even after the company reported upbeat Q1 results and raised its FY24 outlook.

Salesforce Inc (CRM) slid about -5% in pre-market trading as higher-than-expected capital expenditures overshadowed upbeat Q1 results. 

C3 Ai Inc (AI) tumbled over -18% in pre-market trading after the company posted better-than-expected Q4 results but provided soft Q1 and FY24 revenue guidance.

Chevron Corp (CVX) rose about +1% in pre-market trading after RBC Capital upgraded the stock to Outperform from Sector Perform.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - June 1st

Broadcom (AVGO), Dollar General (DG), Lululemon Athletica (LULU), Dell Tech (DELL), Hormel Foods (HRL), MongoDB (MDB), Zscaler (ZS), Cooper (COO), Samsara (IOT), Five Below (FIVE), GameStop Corp (GME), Elastic (ESTC), Guidewire (GWRE), Bilibili (BILI), SentinelOne (S), BRP Inc (DOOO), BRP Inc (DOOO), Macy’s Inc (M), ChargePoint Holdings (CHPT), Pagerduty (PD), SpartanNash Co (SPTN), Quanex Building Products (NX), Caleres (CAL), Zumiez (ZUMZ), Tillys (TLYS), Lands’ End (LE), Iteris (ITI), Duluth Holdings Inc (DLTH).

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