September S&P 500 futures (ESU23) are down -0.14%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.28% this morning as investors watched for fallout from a strike initiated by the United Auto Workers union, with the focus now shifting to the Federal Reserve’s interest-rate decision scheduled for next week.
The United Auto Workers launched an unprecedented strike against the “Detroit Three” on Friday after negotiations over union demands faltered and the employees’ four-year contracts with the companies expired at midnight. As a result, Ford Motor Company (F) fell over -2%, and General Motors Company (GM) dropped more than -1% in pre-market trading.
In Thursday’s trading session, the benchmark S&P 500 and tech-heavy Nasdaq 100 climbed to 1-week highs, and the blue-chip Dow posted a 1-1/2 week high. Match Group Inc (MTCH) rose over +3% after JPMorgan Chase designated the stock as a “top pick” and projected the company’s resurgence to double-digit growth in Q3. Also, Norwegian Cruise Line Holdings Ltd (NCLH) soared more than +5% and was the top percentage gainer on the S&P 500 after Redburn Atlantic upgraded the stock to Buy from Neutral. In addition, energy stocks advanced as the price of WTI crude breached the $90 a barrel mark for the first time since November last year. On the bearish side, HP Inc (HPQ) fell over -1% after Warren Buffett’s Berkshire Hathaway sold about 5.5 million shares of the personal computer maker.
Data on Thursday showed the U.S. August producer price index stood at +1.6% y/y compared to +0.8% y/y in July, stronger than expectations of +1.2% y/y. However, U.S. core PPI eased to +2.2% y/y in August from +2.4% y/y in July, in line with expectations. Also, U.S. retail sales rose +0.6% m/m in August, compared to a consensus of +0.2% m/m. In addition, the number of Americans filing for jobless claims the past week rose +3K to 220K, stronger than expectations of 225K.
“Stocks are higher after another round of impressive U.S. economic data suggests the consumer is still doing just fine. Wall Street seems content with the risk of one more Fed rate hike as consumer resilience is expected to gradually weaken. While the U.S. growth story is still alive, the outlook for Europe remains uninspiring as stagflation risks grow,” said Edward Moya, senior market analyst for the Americas at Oanda.
Meanwhile, Citigroup has revised its projection, now anticipating a 25-basis-point interest rate increase by the Fed in November, compared with its previous forecast of a September hike.
U.S. rate futures have priced in a 3.0% chance of a 25 basis point rate increase next week and a 31.9% probability of a 25 basis point rate hike at the November meeting.
Today, all eyes are focused on the U.S. Michigan Consumer Sentiment preliminary reading in a couple of hours. Economists, on average, forecast that the Michigan consumer sentiment index will stand at 69.1 in September, compared to the previous value of 69.5.
U.S. Export and Import Price Indexes for August will also be in focus today. Economists anticipate the export price index to be at +0.4% m/m and the import price index to stand at +0.3% m/m.
U.S. Industrial Production data will come in today. Economists foresee this figure to stand at +0.1% m/m in August, compared to the previous number of +1.0% m/m.
U.S. Manufacturing Production data will be reported today as well. Economists expect August’s figure to be +0.1% m/m, compared to the previous value of +0.5% m/m.
In the bond markets, United States 10-year rates are at 4.321%, up +0.70%.
The Euro Stoxx 50 futures are up +0.76% this morning, adding to their post-ECB gains, while better-than-expected Chinese economic data also bolstered investor sentiment. Gains in luxury and mining stocks are leading the overall market higher after data showed China’s industrial production and retail sales grew more than expected last month. Meanwhile, the European Central Bank raised its main refinancing rate by 25 basis points to 4.50% on Thursday and signaled that the hike was likely to be its last. In corporate news, H & M Hennes & Mauritz Ab (HMB.S.DX) fell over -4% after the world’s second-biggest fashion retailer posted weaker-than-expected sales in its most recent quarter.
France’s CPI and Italy’s CPI data were released today.
The French August CPI has been reported at +1.0% m/m and +4.9% y/y, compared to expectations of +1.0% m/m and +4.8% y/y.
The Italian August CPI stood at +0.3% m/m and +5.4% y/y, weaker than expectations of +0.4% m/m and +5.5% y/y.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.28%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.10%.
China’s Shanghai Composite today erased earlier gains and closed lower even after data showed the country’s economic activity gathered pace in August. Chinese industrial production and retail sales data grew more than expected in August, providing further evidence that earlier stimulus measures are beginning to have an effect. However, fixed asset investment declined, while new home sales fell at the fastest pace in 10 months in August. Meanwhile, the People’s Bank of China announced a 25 basis points reduction in the reserve requirement ratio for all banks, except those that have already implemented a 5% reserve ratio, starting from Friday. In corporate news, Sino-Ocean Group Holding Ltd. plunged over -12% after the Chinese state-linked developer suspended payment on all its offshore borrowings, citing tight liquidity. In other news, Goldman Sachs anticipates more policy easing measures, including another 25 basis points reduction in the reserve requirement ratio and a 10 basis points cut in the policy interest rate in the fourth quarter. Goldman Sachs also expects further relaxation of property policies, such as easing home purchase restrictions and reducing downpayment ratios in major cities.
The Chinese August Industrial Production stood at +4.5% y/y, stronger than expectations of +4.0% y/y.
The Chinese August Retail Sales came in at +4.6% y/y, stronger than expectations of +3.0% y/y.
The Chinese August Fixed Asset Investment arrived at +3.2% y/y, weaker than expectations of +3.3% y/y.
The Chinese August Unemployment Rate was at 5.2%, stronger than expectations of 5.3%.
Japan’s Nikkei 225 Stock Index closed higher today and hit a more than 2-month high, underpinned by Wall Street gains overnight. Adding to positive sentiment, technology stocks experienced a stellar rally on Friday, with increased optimism toward the sector driven by the strong market debut of SoftBank Group’s Arm Holdings. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -0.50% to 15.99.
“First of all, the market rose because Wall Street was strong. And the strong debut of Arm has raised investor sentiment and prompted them to buy chip-related shares,” said Shoichi Arisawa, a general manager of the investment research department at IwaiCosmo Securities.
Pre-Market U.S. Stock Movers
Ford Motor Company (F) fell over -2% and General Motors Company (GM) dropped more than -1% in pre-market trading after the United Auto Workers launched an unprecedented strike against General Motors, Ford, and Stellantis.
Iovance Biotherapeutics Inc (IOVA) surged over +11% in pre-market trading following the FDA update on PDUFA action for lifileucel in the treatment of advanced melanoma.
Keysight Technologies Inc (KEYS) rose more than +1% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight.
Nucor Corp (NUE) fell over -1% in pre-market trading after issuing below-consensus Q3 earnings guidance.
KeyCorp (KEY) gained more than +2% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - September 15th
LightInTheBox (LITB), Nobility Homes (NOBH), Butler National (BUKS).
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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. For more information please view the Barchart Disclosure Policy here.
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