Morning Markets
March E-Mini S&P 500 futures (ESH24) are up +0.58%, and March Nasdaq 100 E-Mini futures (NQH24) are up +0.89%, both at record nearest-future highs.Â
Stock index futures this morning are modestly higher at new record highs on positive quarterly earnings results from technology companies. Netflix is up more than +9% in pre-market trading after reporting Q4 streaming paid memberships well above consensus. Also, ASML Holding NV is up more than +5% in pre-market trading after reporting record Q4 bookings of 9.19 billion euros, a sign of strength in the semiconductor industry.
Global stocks also have support after the People’s Bank of China (PBOC) today cut the reserve requirement ratio for banks by 50 bp to 10.00%, which will boost liquidity and could help revive China’s economy, a supportive factor for global growth prospects.
On the negative side, DuPont de Nemours is down more than 10% in pre-market trading after reporting Q4 preliminary net sales weaker than consensus. Also, AT&T is down more than -4% after forecasting 2024 adjusted EPS below consensus.
The weekly U.S. MBA mortgage applications index rose +3.7% to the highest in 8 months. The home purchase sub-index rose +7.5% to a 9-month high, and the refinancing sub-index fell -7.0%. The average 30-year fixed rate mortgage rose 3 bp to 6.78% from 6.75%.
The markets are discounting the chances for a -25 bp rate cut at 3% at the next FOMC meeting on Jan 30-31 and 54% for that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields today are lower. The 10-year T-note yield is down -3.3 bp at 4.096%. The 10-year German bund yield is down -2.7 bp at 2.325%. The 10-year UK gilt yield fell back from a 6-week high of 4.040% and is down -0.3 bp at 3.983%. Â
Overseas stock markets are mixed. The Euro Stoxx 50 is up +1.86%. China’s Shanghai Composite Index closed up +1.80%. Japan’s Nikkei Stock Index closed down -0.80%.
The Euro Stoxx 50 today climbed to a 3-week high and is moderately lower. A rally in technology stocks is leading the overall market higher on signs the semiconductor industry is resurgent, with ASML Holding NV up more than +5% after reporting orders more than tripled in Q4. Also, SAP SE rose more than +6% after announcing a restructuring plan that will affect about 8,000 jobs and increase its focus on artificial intelligence. Better-than-expected news on manufacturing activity supports stocks after the Eurozone Jan S&P manufacturing PMI rose more than expected to a 10-month high. On the negative side, Puma SE tumbled more than -8% after reporting Q4 sales below expectations.
The Eurozone Jan S&P manufacturing PMI rose +2.2 to a 10-month high of 46.6, stronger than expectations of 44.7.
Swaps are pricing in the chances for a -25 bp rate cut by the ECB at 2% for its next meeting on January 25 and at 16% for the following meeting on March 7.
China’s Shanghai Composite Index today closed moderately higher. Risk sentiment in Chinese stocks improved today after the PBOC cut the reserve requirement ratio for banks by 50 bp to 10.00%. Stocks were already underpinned on carryover support from Tuesday after Bloomberg announced that Chinese authorities are seeking to mobilize a stock rescue package of about 2 trillion yuan ($278 billion). Rallies in energy, brokerage, insurance, and bank stocks have led the overall market higher today. Also, Alibaba Group Holding rose more than +6% after co-founder Jack Ma bought about $50 million of stock in the company last quarter. On the negative side, shares of electric vehicle makers fell after XPeng introduced new discounts and sales promotions that signaled increased competition in the sector.
The PBOC cut the reserve requirement ratio for banks by 50 bp to 10.00% from 10.50%, effective February 5.
Japan’s Nikkei Stock Index today closed moderately lower. Stocks retreated today as government bond yields climbed on expectations the BOJ will raise interest rates in the coming months. Today, the 10-year JGB bond yield rose to a 6-week high at 0.749%. Japanese automotive semiconductor makers fell after Texas Instruments gave a disappointing revenue forecast for the current quarter. On the positive side, Japanese bank stocks moved higher today in hopes that higher interest rates will improve their lending margins. Stocks also found support on today’s trade news that showed Japanese exports in Dec rose more than expected by the most in a year.Â
The Japan Jan Jibun Bank manufacturing PMI rose +0.1 to 48.0.
Japan Dec exports rose +9.8% y/y, stronger than expectations of +9.2% y/y and the biggest increase in a year.
The BOJ raised its 2024 GDP forecast to +1.2% from a previous estimate of +1.0% and cut its 2024 core CPI estimate to 2.4% from 2.8%.
BOJ Governor Ueda said certainty in the BOJ's outlook is rising gradually, and policy will remain accommodating even if the BOJ ends negative rates. Â
Swaps are pricing in the chances for a +10 bp rate increase by the BOJ at 31% for its next meeting on March 19 and at 68% for the following meeting on April 26.
Pre-market U.S. Stock Movers
Netflix (NFLX) jumped more than +9% in pre-market trading after reporting Q4 streaming paid memberships of 260.28 million, well above the consensus of 256.11 million.Â
ASML Holding NV (ASML) climbed more than +5% in pre-market trading after reporting Q4 bookings at a record 9.19 billion euros, much stronger than the consensus of 3.57 billion euros.Â
Ebay (EBAY) rose more than +3% in pre-market trading after announcing it will cut its current workforce by around 1,000, or 9% of its full-time employees.
Intuitive Surgical (ISRG) rallied more than +6% in pre-market trading after confirming it submitted its application to the FDA for a next-generation platform called da Vinci 5, bolstering speculation a new surgical robot was coming.
Progressive (PGR) climbed more than +3% in pre-market trading after reporting Q4 net premiums written of $15.13 billion, above the consensus of $14.58 billion.Â
Textron (TXT) rose more than +2% in pre-market trading after reporting Q4 adjusted EPS of $1.60, above the consensus of $1.53.Â
U.S.-listed Chinese stocks are moving higher in pre-market trading after the PBOC cut the reserve requirement ratio for banks by 50 bp to 10.00%. As a result, Alibaba Group Holding (BABA), Baidu (BIDU), JD.com (JD), NetEase (NTES), PDD Holdings (PDD), and Trip.com (TCOM) are up more than +2%.
Texas Instruments (TXN) fell more than -3% in pre-market trading after reporting Q4 revenue of $4.08 billion, below the consensus of $4.13 billion, and forecast Q1 revenue of $3.45 billion-$3.75 billion, weaker than the consensus of $4.09 billion.Â
DuPont de Nemours (DD) sank more than -10% in pre-market trading after reporting Q4 preliminary net sales of $2.90 billion, weaker than the consensus of $3 billion, and forecast Q1 net sales of $2.8 billion, below the consensus of $3.03 billion.
AT&T (T) tumbled more than -4% in pre-market trading after forecasting 2024 adjusted EPS of $2.15-$2.25, weaker than the consensus of $2.44.Â
Biogen (BIIB) fell more than -2% in pre-market trading after UBS downgraded the stock to neutral from buy.Â
Earnings Reports (1/24/2024)
Abbott Laboratories (ABT), Ameriprise Financial Inc (AMP), Amphenol Corp (APH), AT&T Inc (T), Crown Castle Inc (CCI), CSX Corp (CSX), Elevance Health Inc (ELV), Freeport-McMoRan Inc (FCX), General Dynamics Corp (GD), International Business Machine (IBM), Kimberly-Clark Corp (KMB), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS), Packaging Corp of America (PKG), Progressive Corp/The (PGR), Raymond James Financial Inc (RJF), ResMed Inc (RMD), Seagate Technology Holdings PL (STX), ServiceNow Inc (NOW), TE Connectivity Ltd (TEL), Teledyne Technologies Inc (TDY), Tesla Inc (TSLA), Textron Inc (TXT), United Rentals Inc (URI), W R Berkley Corp (WRB).
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On the date of publication, Rich Asplund 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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