March S&P 500 E-Mini futures (ESH24) are trending down -0.23% this morning as investors looked ahead to the crucial monthly U.S. nonfarm payrolls report for further clues on the timing of possible interest-rate cuts this year.
In Thursday’s trading session, Wall Street’s major indexes closed mixed, with the benchmark S&P 500 and tech-heavy Nasdaq 100 dropping to 3-week lows. Walgreens Boots Alliance Inc (WBA) plunged over -5% and was the top percentage loser on the Dow and Nasdaq 100 after the U.S. pharmacy chain nearly halved its dividend. Also, Mobileye Global Inc (MBLY) tumbled more than -24% after providing a below-consensus FY24 revenue outlook. In addition, Apple Inc (AAPL) slid over -1% after Piper Sandler downgraded the stock to Neutral from Overweight with a price target of $205. On the bullish side, Allstate (ALL) climbed more than +2% after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $171.
The ADP National Employment report on Thursday showed private payrolls rose by 164K jobs in December, higher than the consensus figure of 115K and accelerating from the 101K increase in November. Also, the U.S. December S&P Global services PMI came in at 51.4, stronger than expectations of 51.3. In addition, the number of Americans filing for jobless claims the past week fell -18K to a 2-1/2 month low of 202K, stronger than expectations of 216K.
“There was nothing within the data that would suggest any urgency from policymakers to begin normalizing rates lower during the first quarter,” said Ian Lyngen, a strategist at BMO Capital Markets.
Meanwhile, U.S. rate futures have priced in a 4.7% chance of a 25 basis point rate cut at the January FOMC meeting and a 62.7% probability of a 25 basis point rate cut at the March FOMC meeting.
Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that December Nonfarm Payrolls will come in at 175K, compared to the previous value of 199K.
Also, investors will likely focus on the U.S. ISM Non-Manufacturing PMI, which stood at 52.7 in November. Economists foresee the December figure to be 52.6.
U.S. Factory Orders data will come in today. Economists foresee this figure to stand at +2.1% m/m in November, compared to the previous figure of -3.6% m/m.
U.S. Average Hourly Earnings data will also be closely watched today. Economists anticipate December’s figures to be +0.3% m/m and +3.9% y/y, compared to the previous numbers of +0.4% m/m and +4.0% y/y.
The U.S. Unemployment Rate will be reported today as well. Economists estimate this figure to be 3.8% in December, compared to the previous value of 3.7%.
In the bond markets, United States 10-year rates are at 4.041%, up +1.31%.
The Euro Stoxx 50 futures are down -0.98% this morning, on track to end a seven-week run of gains, with investors digesting fresh Eurozone inflation data and awaiting a crucial U.S. payrolls report. Losses in retail and technology stocks are leading the overall market lower. Data showed on Friday that Eurozone headline inflation surged in December, reversing six months of consecutive falls. Separately, data showed on Friday that German retail sales dropped much more than anticipated in November. Meanwhile, markets reduced expectations for ECB rate cuts to less than 150 basis points of easing this year. In corporate news, Endeavour Mining Plc (EDV.LN) plunged over -12% after the immediate removal of CEO Sebastien de Montessus. Also, Signify NV (LIGHT.NA) fell more than -1% after Barclays initiated coverage of the stock with an Underweight rating.
Germany’s Retail Sales, Italy’s CPI (preliminary), Eurozone’s CPI (preliminary), Eurozone’s Core CPI (preliminary), and Eurozone’s PPI data were released today.
The German November Retail Sales stood at -2.5% m/m and -2.4% y/y, weaker than expectations of -0.1% m/m and -0.5% y/y.
The Italian December CPI was at +0.2% m/m and +0.6% y/y, compared to expectations of +0.2% m/m and +0.7% y/y.
Eurozone December CPI arrived at +2.9% y/y, weaker than expectations of +3.0% y/y.
Eurozone December Core CPI came in at +3.4% y/y, weaker than expectations of +3.5% y/y.
Eurozone November PPI has been reported at -0.3% m/m and -8.8% y/y, weaker than expectations of -0.1% m/m and -8.7% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.85% and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.27%.
China’s Shanghai Composite today closed lower as persistent concerns over the country’s sluggish recovery kept investors on edge. Healthcare, artificial intelligence, and defense stocks led the declines on Friday. Hong Kong-listed tech stocks also retreated. Meanwhile, China’s government bonds extended gains on Friday, with the yield on 10-year sovereign notes reaching the lowest point in almost four years, driven by increasing expectations of additional stimulus to support the country’s recovery. In other news, Reuters reported that Beijing has informally asked certain money managers in China to give precedence to launching equity funds over other products, such as bond funds, as authorities work diligently to revive the sluggish stock market. The China Securities Regulatory Commission provided “window guidance,” which is unofficial verbal advice from regulators, to some of the nation’s largest mutual fund managers in recent weeks, the sources said.
“China’s macro picture remained broadly unchanged over the past month: sluggish near-term economic growth momentum with limited concrete easing measures,” Goldman Sachs said in a note.
Japan’s Nikkei 225 Stock Index closed higher today but ended the holiday-shortened week with a moderate loss. All sectors of the Nikkei 225 ended in the green on Friday, with real estate and financial stocks experiencing the largest gains. Export-heavy automobile stocks also gained ground as the yen weakened against the greenback, with Toyota Motor Corp and Honda Motor Co Ltd rising over +2%. A business survey showed on Friday that Japan’s service activity accelerated from the previous month in December, driven by robust demand and a lift in confidence, although the overall growth rate remained modest. Meanwhile, Japanese government bond yields declined on Friday as expectations of an early shift in the Bank of Japan’s monetary policy waned following an earthquake earlier this week. In other news, the government made substantial changes to the Nippon Individual Savings Account program this month, which exempts retail investors from paying capital gains taxes on stocks purchased under the program. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.23% to 18.46.
The Japanese December au Jibun Bank Japan Services PMI stood at 51.5, weaker than expectations of 52.0.
The Japanese December Household Confidence came in at 37.2, stronger than expectations of 36.6.
Pre-Market U.S. Stock Movers
Peloton Interactive Inc (PTON) climbed over +5% in pre-market trading, extending yesterday’s gains after announcing an exclusive partnership with ByteDance-owned video hosting service TikTok.
Applied Therapeutics Inc (APLT) plunged more than -29% in pre-market trading following the biotech company’s announcement of mixed results from a Phase 3 study of its drug AT-001, coupled with its intention to seek a partner for the product.
International Business Machines (IBM) fell over -1% in pre-market trading after Jefferies initiated coverage of the stock with a Hold rating and a $180 price target.
Fusion Pharmaceuticals Inc (FUSN) gained more than +8% in pre-market trading after the company issued an update on its pipeline, highlighting the full operational status of its radiopharmaceuticals manufacturing facility.
Palantir Technologies Inc (PLTR) slid over -3% in pre-market trading after Jefferies downgraded the stock to Underperform from Hold with a price target of $13.
Voyager Therapeutics Inc (VYGR) tumbled more than -14% in pre-market trading after announcing the pricing of an underwritten public offering of about 7.78M common shares and pre-funded warrants to purchase around 3.33M common shares.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - January 5th
Constellation Brands A (STZ), Greenbrier (GBX), AngioDynamics (ANGO).
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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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