Stock Index Futures Mixed as Bank Jitters Weigh on Sentiment, ECB Decision in Focus

Oleksandr Pylypenko - Barchart - Thu Mar 16, 2023

March S&P 500 futures (ESH23) are down -0.10%, and March Nasdaq 100 E-Mini futures (NQH23) are up +0.21% this morning after three major U.S. benchmark indices ended the regular session mixed as signs of further distress in Credit Suisse sparked fresh fears of a banking crisis, while another round of U.S. economic data stoked hopes for a less aggressive Federal Reserve.

U.S.-listed shares of Credit Suisse plunged over -13% on Wednesday after the Swiss lender’s largest investor, Saudi National Bank, said it could not provide more financial assistance, citing regulatory restrictions. However, Credit Suisse said on early Thursday that it would exercise an option to borrow up to $54 billion from the Swiss National Bank under a covered loan facility and a short-term liquidity facility. On the ground of this, Credit Suisse (CS) shares soared by over +7% in pre-market trading on Thursday.

In Wednesday’s trading session, the benchmark S&P 500 and the blue-chip Dow finished lower as fresh turmoil in the banking sector weighed on market sentiment. Energy stocks also weighed on the broader market as the price of WTI crude dropped over -5% to a 15-month low on banking sector fears. Meanwhile, the tech-heavy Nasdaq closed just above the flatline as the plunge in Treasury yields pushed mega-cap tech stocks higher, with Meta (META), Amazon.com (AMZN), and Microsoft (MSFT) closing up over +1%.

Data on Wednesday showed U.S. retail sales fell -0.4% m/m in February, a greater-than-expected contraction after +3.2% m/m growth in January. A separate report showed U.S. producer price index fell -0.1% m/m and rose +4.6% y/y in February, weaker than expectations of +0.3% m/m and +5.4% y/y.

Meanwhile, U.S. rate futures have priced in a 67.2% chance of a 25 basis point rate increase and a 32.8% chance of no hike at the upcoming monetary policy meeting.

Today, all eyes are focused on the U.S. Philadelphia Fed Manufacturing Index in a couple of hours. Economists, on average, forecast that the Philadelphia Federal Reserve’s monthly manufacturing index will stand at -15.6 in March, compared to the previous value of -24.3.

Also, investors are likely to focus on the U.S. Housing Starts data, which was at 1.309M in January. Economists foresee the new figure to be 1.310M.

U.S. Building Permits preliminary data will be reported today. Economists foresee this figure to come in at 1.340M in February, compared to the previous number of 1.339M.

U.S. Export and Import Price Indexes for February will also be in focus today. Economists anticipate Export Price Index to be at -0.1% m/m and Import Price Index to stand at -0.2% m/m.

U.S. Initial Jobless Claims data will be reported today as well. Economists estimate this figure to be 205K, compared to last week’s value of 211K.

In the bond markets, United States 10-Year rates are at 3.487%, down -0.21%.

The Euro Stoxx 50 futures are up +0.77% this morning as market participants breathed a sigh of relief on the news that Credit Suisse secured a $54 billion lifeline from the Swiss National Bank. The focus now shifts to the European Central Bank’s interest rate decision later in the session. The ECB previously signaled the likelihood of another 50 basis point rate increase amid elevated inflation in the region. However, investors see a 42% chance of a 25 basis point hike amid the banking turmoil.

“We’ve got to get through ECB and see how that goes down. And then the impact of that may well impact on what we think about the Fed next week,” said ING economist Rob Carnell.

Italy’s CPI data was released today.

The Italian February CPI has been reported at +0.2% m/m and +9.1% y/y, weaker than expectations of +0.3% m/m and +9.2% y/y.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.12%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.80%.

China’s Shanghai Composite today closed lower in tandem with global equities amid renewed concerns about financial contagion. On the positive side, Goldman Sachs lifted its economic growth outlook for the country to 6% from 5.5%. The investment bank noted improving trends after China eased its COVID-19 curbs and said the world’s second-largest economy was primed for a rebound this year. The upbeat outlook and recent data that pointed to a gradual Chinese economic recovery helped limit losses.

Japan’s Nikkei 225 Stock Index closed lower and hit a new 1-month low as major financial stocks faced renewed selling pressure amid continuing worries about the health of the global financial system. Toshiba Corp., meanwhile, closed up over +3% following a report it was planning to hold a board meeting to discuss the buyout offer. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 9.76% to 19.42.

Pre-Market U.S. Stock Movers

Adobe Systems Incorporated (ADBE) climbed over +6% in pre-market trading after the company reported upbeat Q1 results and lifted its annual guidance.

Uipath Inc (PATH) soared more than +14% in pre-market trading after the company reported better-than-expected Q4 results and posted upbeat FY24 revenue guidance.

LivePerson Inc (LPSN) plunged about -38% in pre-market trading after the company reported downbeat Q4 results and its FY23 revenue outlook fell short of expectations.

Esperion Therapeutics Inc (ESPR) tumbled over -51% in pre-market trading after the company reported a disagreement with Daiichi Sankyo over milestone payments.

CVR Energy Inc (CVI) rose more than +7% in pre-market trading after entering S&P SmallCap 600.

Enovix Corp (ENVX) gained about +6% in pre-market trading after the company’s director Thurman Rodgers bought 129.1K shares of common stock in a total transaction size of $1.35M.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Thursday - March 16th

FedEx (FDX), Dollar General (DG), Ke Hldg (BEKE), Jabil Circuit (JBL), Pharming Group (PHAR), Williams-Sonoma (WSM), Energy of Minas Gerais (CIG), Academy Sports (ASO), Signet Jewelers (SIG), Pagerduty (PD), Provention Bio (PRVB), Hello Group (MOMO), Janus International Group (JBI), Montauk Renewables (MNTK), Geron (GERN), BioLife Solutions (BLFS), Titan Machinery (TITN), Cymabay Therapeu (CBAY), G-III Apparel (GIII), Cresco Labs (CRLBF), Tsakos Energy (TNP), Cion Investment (CION), Liquidia Technologies (LQDA), Microvast Holdings (MVST), Traeger (COOK).

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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.