Pre-Market Brief: Stocks Rally as China Pledges to Stabilize Markets

Morning Markets

March S&P 500 futures this morning are up by +1.06%.  Stock indexes are climbing today after Russia hinted at progress in peace talks with Ukraine. Also, positive carry-over from a sharp rally in Chinese stocks today boosted U.S. markets after the Chinese government pledged to stabilize its markets.  U.S. stock indexes fell back from their best levels after U.S. Feb retail sales rose less than expected.

The 10-year T-note yield climbed to a 2-3/4 year high today of 2.201%, ahead of the results of the FOMC later today.  The market fully expects the Fed to raise today's federal funds rate target range by 25 bp.  The FOMC will also release a statement and updated economic forecasts, including projections on interest rates.  Fed Chair Powell will also hold a virtual press conference. 

U.S. Feb retail sales rose +0.3% m/m and +0.2% m/m ex-autos, weaker than expectations of +0.4% m/m and +0.9% m/m ex-autos.

The U.S. import price index ex-petroleum rose +0.7% m/m, weaker than expectations of +0.8% m/m.

The 7-day average of new U.S. Covid infections Tuesday fell to an 8-month low of 31,098.

The Euro Stoxx 50 index today jumped to a 2-week high and is up sharply by +3.92%. European stocks are sharply higher today amid growing hopes of a compromise between Russia and Ukraine.  Russian spokesman Peskov said today that a Ukrainian proposal to become a neutral country but retain its own armed forces "could be viewed as a certain kind of compromise." 

Asian markets today closed higher.  China’s Shanghai Composite rebounded from a 1-1/2 year low and closed up sharply by +3.48%, and Japan’s Nikkei Stock Index closed up by +1.64%.  Chinese stocks erased early losses and moved sharply higher after the government vowed to keep its equity market stable and support overseas share listings.  Hong Kong’s technology-heavy Hang Seng Index surged more than +9%. 

Japanese stocks moved higher today after Tuesday’s slump in crude prices to a 2-week low reduced inflation concerns.  Stocks also rose on the outlook for pandemic restrictions to end after the Sankei newspaper reported that the Japanese government plans to lift Covid emergency measures in Tokyo and 15 other prefectures when they expire on March 21.  A negative for stocks was today’s trade data that showed Japan Feb exports rose +19.1% y/y, weaker than expectations of +20.6% y/y.

Xinhua reported that China's Financial Stability and Development Committee, led by Vice Premier Liu He, said there is a need to "boost the economy" in the first quarter, and the government should "actively introduce policies that benefit markets."

Pre-Market U.S. Stock Movers

Electric vehicle makers are rising in pre-market trading after Chinese automaker BYD follows Tesla in raising car prices due to soaring raw material costs.  Lucid Group (LCID) and Rivian Automotive (RIVN) are up more than +3%, and Tesla (TSLA) and Nikola (NKLA) are all up more than +2%.

U.S.-listed casino operators with exposure to Macau moved higher in pre-market trading after the pledge from the Chinese government to keep capital markets stable.  Melco Resorts & Entertainment (MLCO) is up more than +14%, Wynn Resorts (WYNN) and Las Vegas Sands (LVS) is up more than +7%, and MGM Resorts International (MGM) is up more than +4%.

U.S.-listed Chinese stocks are soaring in pre-market trading after the Chinese government vowed to keep the stock market stable and support overseas share listings. Alibaba Group Holding (BABA) and JD.com (JD) are up +20%, and Baidu (BIDU) and Pinduoduo (PDD) are up more than +10%.

Starbucks (SBUX) jumped more than +6% in pre-market trading after it said CEO Keven Johnson plans to retire next month and founder Howard Schultz will be interim CEO.

Micron Technology (MU) is up more than +4% in pre-market trading after Bernstein raised its recommendation on the stock to outperform from market perform.

Smartsheet (SMAR) slid more than -3% in pre-market trading after it forecast a 2023 adjusted loss per share of -62 cents to -70 cents, a wider loss than the consensus of -27 cents.

CarParts.com (LOTZ) tumbled -14% in pre-market trading after the company said CEO and director Peker would step down effective April 15. 

Today’s U.S. Earnings Reports (3/16/2022)

Jabil Inc (JBL), Lennar Corp (LEN), Williams-Sonoma Inc (WSM).