Pre-Market Brief: Stocks Jump as Geopolitical Tensions in Ukraine Ease

Morning Markets

March S&P 500 futures this morning are up +1.29%.  U.S. stock index futures are moderately higher this morning on reduced Russia-Ukraine tensions after Russia announced the start of a pullback of some of its troops from the Ukraine border.  Stock Indexes fell back from their best levels after U.S. Jan producer prices rose more than expected. 

The Euro Stoxx 50 index today is up by +1.50%.  An easing of geopolitical tensions over Ukraine is giving stocks a boost today after Russia said some of its troops would return to their bases after completing drills.  Another positive for European stocks was a draft proposal published in local media that said Germany would start easing pandemic restrictions on Wednesday and phase them out entirely by March 20.  Finally, today’s economic data was supportive for stocks after the German Feb ZEW survey expectations of economic growth rose +2.6 to a 7-month high of 54.3, although slightly weaker than expectations of 55.0.

Asian markets today settled mixed.  China’s Shanghai Composite closed up +0.50%, while Japan’s Nikkei Stock Index fell to a 2-week low and closed down -0.79%.  Signs of additional stimulus in China gave equities a lift today after China National Radio reported that the State Council will allow smaller companies to claim tax deductions for some equipment purchases and will expand a fee cut program to more companies.  Chinese stocks also garnered support after the PBOC today boosted liquidity and injected 100 billion yuan ($15.7 billion) into the banking system with its medium-term lending facility. 

Japan’s Nikkei Stock Index fell to a 2-week low on signs of slower growth after today’s data showed Japan Q4 GDP grew +5.4% (q/q annualized), weaker than expectations of +6.0%. Deflation concerns also weighed on stocks after Japan’s Q4 deflator fell -1.3% y/y, the steepest pace of contraction in 10 years.

Today’s U.S. economic data was bearish for stocks.  U.S. Jan final-demand PPI rose +1.0% m/m and +9.7% y/y, stronger than expectations of +0.5% m/m and +9.1% y/y.  Also, the Feb Empire manufacturing survey general business conditions index rose +3.8 to 3.1, weaker than expectations of 12.0.

The 7-day average of new U.S. Covid infections fell to a 1-3/4 month low Monday of 151,056. 

Pre-Market U.S. Stock Movers

Mega-cap technology stocks are moving higher in pre-market trading amid optimism that geopolitical tensions in Ukraine may be easing.  Tesla (TSLA) is up more than +3% and, Apple (AAPL) and Microsoft (MSFT) are up more than +1%.

Intel (INTC) rose more than +1% in pre-market trading after it agreed to acquire Tower Semiconductor for about $5.4 billion.

Semiconductor stocks are climbing in pre-market trading, led by a +4% gain in Nvidia (NVDA) after Piper Sandler said it expects “a significant beat and raise” in the company’s Q4 earnings results on Wednesday.  Advanced Micro Devices (AMD) is up more than +3%, and Qualcomm (QCOM) and Texas Instruments (TXN) are up more than +2%. 

Arista Networks (ANET) jumped +10% in pre-market trading after it forecast Q1 revenue of $840 million-$860 million, better than the consensus of $834.5 million.

Marriott International (MAR) rose +2% in pre-market trading after it reported Q4 revenue of $4.45 billion, above the consensus of $3.99 billion. 

Amkor Technology (AMKR) climbed +9% in pre-market trading after it reported Q4 EPS of 88 cents versus 52 cents y/y and forecast Q1 net sales of $1.50 billion to $1.60 billion.

Energy stocks and energy service providers are falling in pre-market trading, with crude prices tumbling more than -3%.  Exxon Mobil (XOM), Diamondback Energy (FANG), Devon Energy (DVN), Marathon Oil (MRO), and Occidental Petroleum (OXY) are down more than -1%.

Avis Budget (CAR) slid more than -1% in pre-market trading after Morgan Stanley said it saw weakness in pricing for the company. 

The Gap (GPS) dropped more than -21% in pre-market trading after Bank of America downgraded the stock to underperform from neutral. 

Today’s U.S. Earnings Reports (2/15/2022)

Akamai Technologies Inc (AKAM), Allegion plc (ALLE), BorgWarner Inc (BWA), CF Industries Holdings Inc (CF), Cincinnati Financial Corp (CINF), Devon Energy Corp (DVN), Ecolab Inc (ECL), Fidelity National Information (FIS), Henry Schein Inc (HSIC), IPG Photonics Corp (IPGP), IQVIA Holdings Inc (IQV), 

Leidos Holdings Inc (LDOS), Marriott International Inc/MD (MAR), SolarEdge Technologies Inc (SEDG), 

ViacomCBS Inc (VIAC), Welltower Inc (WELL), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).