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Futures Flat In Quiet End To Torrid Week

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Futures Flat In Quiet End To Torrid Week

US equity futures are flat to end a torrid week which saw all indexes hit a fresh all-time high while the terminally anachronistic Dow Jones briefly topped 40,000. Pre-market, MegaCap Tech are mixed: AMZN +20bp, MSFT +20bp, META -22bp, GOOGL -18bp. WMT is down 27bps pre-mkt, after its +7.0% rally post-earnings yesterday. As of 7:00am S&P and Nasdaq futures are unchanged while bond yields are largely flat. Commodities are mixed: oil is lower; metals/ags are higher. Overnight, China reported mixed April macro data (IP beat, Retail Sales miss) and also announced a new rescue plan to support housing; as a result base metals rallied (Copper +2.0%; Iron Ore +1.4%). Today, key macro focus will be on comments from the Fed’s Christopher Waller, Neel Kashkari and Mary Daly for further clues about the path for interest rates as well as the data from the leading index due at 10:00am (est -0.3%).

In premarket trading, GameStop and AMC rebounded following two sessions of losses, as the meme-stock rally shows fresh signs of life. While GameStop shares rise as much as 9.2% in premarket trading on Friday, AMC jumps as much as 9.5% — both stocks pared some of those early gains. Reddit shares rise 14% after the firm partnered with OpenAI to bring its content to the popular ChatGPT chatbot. Analysts note that this deal will boost the social media company’s data licensing business. Here are the other notable premarket movers:

  • Applied Materials share edge lower, falling 0.9% as the largest US maker of chipmaking machinery’s forecast failed to live up to high investor expectations following the stock’s 32% year-to-date rally.
  • Baidu ADRs tick up 0.4% in premarket trading, after rising 1.7% on Thursday. The search engine operator is set for weak growth in advertising revenue for coming quarters, Morgan Stanley says in a note that downgrades the stock to equal-weight from overweight.
  • Cracker Barrel shares trade 11% lower after the restaurant chain reduced its quarterly dividend as the company increases investment in its business. Additionally, the company also sees third- and fourth-quarter results coming below prior expectations, citing weaker-than-anticipated customer traffic as the main driver.
  • Doximity shares rise 14% after the application software company gave a first-quarter forecast that is stronger than expected. It also reported fourth-quarter results that beat expectations.
  • DXC Technology shares sink 23% after the IT services company gave a full-year forecast that was weaker than expected for both revenue and adjusted earnings. It also reported its fourth-quarter results.
  • Snowflake shares slip 1.3% after Bloomberg reported that the software firm is in talks to acquire startup Reka AI for more than $1 billion, according to people familiar with the matter.
  • Take-Two shares drop 2.8% after the video-game giant issued a weak full-year forecast, reflecting a later release date for the highly-anticipated Grand Theft Auto VI video game. The Rockstar Games title is now expected to release in fall 2025, which is in fiscal year 2026 rather than fiscal year 2025 as some analysts had expected.

Friday’s tentative mood reflected a repricing of US rate cut expectations to only one reduction in 2024. Several Fed policymakers said the the central should keep borrowing costs higher for longer as they await more evidence that inflation is easing.

“The markets are now at a bit of a crossroads,” said Stuart Cole, head macro economist at Equiti Capital. “With the central banks all very much in a data-dependence mode, the markets will be also adjusting expectations to each piece of relevant data that comes out.”

Investors will be tracking comments from the Fed’s Christopher Waller, Neel Kashkari and Mary Daly due later Friday for further clues about the path for interest rates.

European stocks slid for a second day weighed down by rates-sensitive sectors such as tech and real estate as traders pared back bets for policy easing after several Fed speakers suggested interest rates should stay high for longer. The Stoxx 600 dropped 0.4% but was off its worst levels, as construction, industrials and tech underperformed after ECB Executive Board member Isabel Schnabel warned against back-to-back interest rate cuts in June and July. Swap traders continue to price in three ECB rate cuts this year, with a first reduction likely next month. Luxury group Here are Europe’s top movers:

  • Richemont shares rise as much as 6.9%, the most in four months, after the Swiss watch and jewelery maker’s full-year sales beat estimates.
  • Bavarian Nordic shares jump as much as 5.6%, the most in 10 weeks, after US authorities warned that cases of a new clade of the Monkeypox virus are increasing in the Democratic Republic of the Congo.
  • Siemens shares fall as much as 2.4%, declining for a second day after the German industrial giant’s earnings on Thursday disappointed investors.
  • Lanxess shares decline by as much as 5.3% after both Jefferies and BNP Paribas Exane cut stock to underperform, with the former citing risks around demand recovery and also cutting Ebitda outlook.
  • Azelis shares decline by as much as 13%, the most on record, after EQT and PSP Investments Holding Europe offered to sell shares worth approximately 11% of total outstanding in the chemicals distributor, according to terms seen by Bloomberg.
  • Scor shares tumble as much as 13% after the French reinsurer’s first-quarter net income fell short of expectations, with analysts flagging a hit from one-offs including an impact on the firm’s L&H reinsurance division from volatility in US mortality claims.
  • Auto Trader shares slide as much as 5.3% as Morgan Stanley analysts cut their rating on the stock to underweight, saying the market is expecting too much too soon from the online auto marketplace’s Deal Builder product.
  • Engie shares fall as much as 2.2% after the French utility reported a miss in results that was somewhat expected after a warm winter pushed energy prices lower.
  • Haleon shares slip as much as 1.7% after GSK agreed to sell its remaining stake in the consumer health company for £1.25 billion, completing the drugmaker’s separation from the company.

Earlier in the session, property stocks in mainland China rose to the highest since November after the government announced a rescue package — its most forceful attempt yet to shore up the troubled sector. Elsewhere, Asian markets saw mild losses, though still on pace for weekly gains, as a late rally in Chinese stocks was not enough to offset weakness in tech-heavy markets of South Korea and Taiwan. The MSCI Asia Pacific Index declined 0.1%, to cut its weekly gains to 2.2%. Chipmakers TSMC and Samsung Electronics were among the biggest drags Friday. Benchmarks in South Korea, Taiwan and Australia posted among the largest declines in the region.

China’s mainland shares rallied to close at their highest level since Oct. 12 after the world’s second-largest economy announced its most forceful attempt yet to shore up the beleaguered property market, easing mortgage rules and encouraging local governments to buy unsold homes from developers for conversion into affordable housing. The new measures sent a Bloomberg index of Chinese property developers to its highest level since November.

“The lowering of down-payment ratio is beyond market expectations, while scrapping the minimum mortgage rate is well expected by the market,” said Shujin Chen, head of China financial and property research at Jefferies Hong Kong Ltd. “Investors are more willing to chase property stocks on speculation of a series of upcoming supportive policies before the Third Plenary Session in July,” she said.

In FX, the Bloomberg Dollar Spot Index rose 0.2%, but was still on track to end the week 0.5% lower after US CPI data earlier in the week cemented the view that the Fed will cut rates later this year. ING strategists say markets may have oversold the greenback following this week’s CPI and PPI data.  “We still think there is not enough thrust from US data to justify a significantly weaker greenback just yet,” they wrote in a note. USD/JPY climbed as much as 0.4% as the Bank of Japan left the amount of debt purchases unchanged. Leveraged-currency accounts bought dollars against the yen after the BOJ kept debt purchases unchanged in its regular operations Friday following a surprise reduction on Monday, according to an Asia-based FX trader.

In rates, the 10-year Treasury yield inched up 1bp to 4.39%, bouncing off 4.31% hit on Thursday, its lowest in nearly six weeks. Swaps imply a 76% chance of a quarter-point rate cut from the Fed in September, compared with 73% earlier in the week; around 44bps of cuts are priced in total through the end of the year, from around 40bps at the start of the week. Meanwhile in Europe, money markets trimmed ECB interest rate-cut wagers after policymaker Isabel Schnabel warned against back-to-back rate cuts.

In commodities, WTI trades within Thursday’s range at around $79.31. Most base metals trade in the green; LME nickel outperforms peers. Spot gold rises roughly $8 to trade near $2,385/oz.

Market Snapshot

  • S&P 500 futures down 0.1% to 5,314.00
  • STOXX Europe 600 down 0.4% to 521.29
  • German 10Y yield little changed at 2.48%
  • Euro down 0.2% to $1.0842
  • Brent Futures up 0.4% to $83.57/bbl
  • Gold spot up 0.3% to $2,383.06
  • US Dollar Index up 0.29% to 104.76
  • MXAP down 0.1% to 181.46
  • MXAPJ down 0.1% to 569.53
  • Nikkei down 0.3% to 38,787.38
  • Topix up 0.3% to 2,745.62
  • Hang Seng Index up 0.9% to 19,553.61
  • Shanghai Composite up 1.0% to 3,154.03
  • Sensex up 0.4% to 73,983.35
  • Australia S&P/ASX 200 down 0.8% to 7,814.37
  • Kospi down 1.0% to 2,724.62

Top Overnight News

  • European stocks retreated for a second day as dialed-down bets for Federal Reserve policy easing weighed on risk sentiment.
  • China announced its most forceful attempt yet to shore up the beleaguered property market, easing mortgage rules and encouraging local governments to buy unsold homes from developers for conversion into affordable housing.
  • Investors are divided on the likelihood of the Bank of Japan repeating its surprise move earlier this week by reducing purchases of government bonds in a regular buying operation this morning.
  • China’s economic recovery tilted even further toward manufacturing, leaving it more vulnerable to trade barriers and highlighting the stakes of a new bid to shore up domestic demand.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly subdued following the mild losses on Wall St where the major indices pulled back after printing fresh record levels, while participants also digested mixed activity data from China. ASX 200 was pressured as losses across most industries overshadowed the gains in the mining and materials. Nikkei 225 declined but was off worst levels amid a weaker currency and after the BoJ refrained from further cutting its bond purchases. Hang Seng and Shanghai Comp were indecisive with early outperformance in Hong Kong owing to tech strength before briefly wiping out all of its gains, while the mainland was constrained as the focus centred on a slew of data including a further deterioration in Home prices which saw the steepest monthly drop in 9 years, while activity data was mixed as Industrial Production topped forecasts but Retail Sales disappointed. Modest extension of/return of strength in the Hang Seng and Shanghai Composite on the announcement of various Chinese property support measures, incl. a cut to the housing fund loan level.

Top Asian News

  • China’s Vice Premier He Lifeng says must effectively ensure the delivery of homes, adds local governments can purchase some homes for affordable housing at ‘reasonable’ prices, according to Xinhua.
  • PBoC announces it will lower interest rates on provident housing fund loans by 25bps and China will abolish the lower limit of interest rates for housing provident fund for first and second homes at the national level.
  • PBoC to create a CNY 300bln relending loan for affordable housing, expected to drive bank lending of CNY 500bln.
  • China stats bureau spokesperson said complexities and uncertainties in the external environment grew outstandingly and continued economic recovery and improvement still face many challenges, while April economic operations were stable even though some indicators slowed due to a high base and holiday factors. China’s stats bureau said with macro policies taking effect and economic momentum recovering, China’s economic improvement will be further consolidated and strengthened but also noted that China’s property sector continues to be under adjustments.
  • BoJ Governor Ueda said there is no immediate plan to sell BoJ’s ETF holdings and must spend time deciding the fate of BoJ’s holdings including whether to unload them in the future, according to Reuters.
  • BoJ may raise rates as many as three more times this year with the next move potentially coming as early as June given how much room there is to adjust its “excessively” easy settings, according to former BoJ chief economist Sekine cited by Bloomberg.

European bourses, Stoxx600 (-0.2%) are mostly on the back foot, continuing the broad weakness seen in APAC trade overnight. European sectors are mostly lower; Telecoms are found at the top of the pile, building on the prior day’s outperformance; Tech lags.
US Equity Futures (ES -0.1%, NQ -0.1%, RTY -0.1%) are flat, with price action circulating on either side of the unchanged mark.

Top European News

  • ECB’s de Guindos sees inflation moving toward the 2% goal in 2025. Favourable stance on cross-border consolidation in the banking sector.
  • Riksbank’s Thedeen says recent data does not change the picture for rate cuts.
  • UK Chancellor Hunt will claim that only the Conservative Party will cut the tax burden after the election, according to FT.
  • ECB’s Schnabel said depending on incoming data, a rate cut in June may be appropriate, but the path beyond June is much more uncertain, while she added that a rate cut in July does not seem warranted based on current data. Schnabel also stated that with inflation risks still being tilted to the upside, front-loading of the easing process would come with a risk of easing prematurely and cannot pre-commit to any particular rate path due to very high uncertainty, according to Nikkei.

FX

  • DXY is firmer, continuing to reclaim lost ground following the dovish US CPI report on Wednesday, which led the index as low as 104.07. The index currently sits towards the upper end of a 104.77-49 range.
  • EUR is modestly softer vs USD, and overall unreactive to the final EZ inflation figures. EUR/USD dips beyond the lows of Thursday, printing a trough at 1.0842.
  • GBP is slightly softer vs the Dollar, largely a factor of broader Greenback strength, rather than UK-related newsflow; trading towards the bottom end of today’s 1.267-264 range.
  • JPY continues to trundle lower, with USD/JPY going as high as 155.98, just shy of the round 156.0 level. USD/JPY was supported after the BoJ refrained from making any further reductions in Rinban purchase amounts.
  • Antipodeans are both softer vs the Dollar, with the Aussie the G10 underperformer. Chinese activity data overnight was mixed, and subsequent support measures which lifted the Yuan failed to prop up the Antipodes.
  • PBoC set USD/CNY mid-point at 7.1045 vs exp. 7.2222 (prev. 7.1020)

Fixed Income

  • USTs are modestly softer, and to a lesser degree than EGBs; bullish-impetus from the BoJ maintaining its Rinban purchase amount is weighed up against hawkish commentary from ECB’s Schnabel. Currently only a handful of ticks lower at around 109-14.
  • Bunds are weighed on by remarks from ECB’s Schnabel overnight who said that the data does not currently point to a cut in July. Bunds down to a 131.01 base, but with someway to go before the WTD trough from Tuesday at 130.24.
  • Gilts are taking impetus from EGBs and as such are at session lows of 98.08 but again well above Tuesday’s WTD base at 97.23; potential focus on extensive fiscal commentary from Chancellor Hunt, though nothing fundamentally new just yet.

Commodites

  • Crude benchmarks were incrementally firmer but have been drifting from best levels as the USD picks up; WTI & Brent Jul’24 at the low-end of the day’s range at USD 78.80/bbl and USD 83.37/bbl respectively.
  • Precious metals are a touch firmer, torn between the stronger USD/somewhat higher yields and a general downtick in risk appetite. XAU at USD 2380/oz, still yet to test USD 2400/oz.
  • Base metals are in the green, support derived from the extensive Chinese property support measures announced across the APAC/European sessions transition, despite the mixed read from the region’s data overnight.

Geopolitics

  • US Official says the US will agree to the Rafah operation but on conditions, via Al Arabiya; adds, the US’ warnings to Israel about the operation in Rafah are serious. ”The Biden administration will accept a full Israeli attack in Rafah aimed at liquidating Hamas”.
  • Iraqi armed factions said they targeted a “vital target” in Eilat, southern Israel, according to Asharq News.
  • Israel presented a proposal to Egypt to reopen the Rafah crossing with the participation of Palestinians from Gaza and UN personnel, according to Israeli media cited by Asharq News.
  • US Defence Secretary Austin reinforced to Israeli counterpart in a phone call the necessity to protect civilians and ensure uninterrupted aid flow before any potential Israeli military operation in Rafah.
  • Yemen’s Houthis say they downed US MQ9 plane on Thursday evening Maareb Governorate.
  • North Korean leader Kim’s sister denied arms exchanges with Russia and said North Korea has no intention to export its arms, while she added that rocket launchers and missiles recently unveiled are for defence against South Korea, according to KCNA.
  • South Korea said North Korea fired at least one ballistic missile towards the Sea of Japan.

US Event Calendar

  • 10:00: April Leading Index, est. -0.3%, prior -0.3%

Central Bank Speakers

  • 10:15: Fed’s Waller Speaks on Payments Innovation
  • 10:15: Fed’s Kashkari Gives Brief Introduction of Waller
  • 12:15: Fed’s Daly Gives Commencement Speech

Tyler Durden Fri, 05/17/2024 – 06:50

Read More…


Source: https://freedombunker.com/2024/05/17/futures-flat-in-quiet-end-to-torrid-week/


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