Morning Markets

June S&P 500 futures this morning are little changed.  Stocks are seeing some support from lower T-note yields, with the 10-year T-note yield down -2.0 bp to a 1-week low of 2.331%.  A slump of more than -5% in WTI crude prices today is easing inflation concerns but is weighing on energy stocks after the Biden administration said it is weighing a plan to release roughly a million barrels of oil per day for several months from the Strategic Petroleum Reserve (SPR) to combat rising gasoline prices and supply shortages following Russia’s invasion of Ukraine.  U.S. stock index futures gave up most of their gains on this morning’s weaker than expected U.S. economic data.

Today’s U.S. economic data was mostly bearish for stocks.  U.S. weekly initial unemployment claims rose +14,000 to 202,000, showing a weaker labor market than expectations of 196,000.  Also, Feb personal spending rose +0.2% m/m, weaker than expectations of +0.5% m/m.  Feb personal income rose +0.5% m/m, right on expectations.  In addition, the Feb PCE core deflator rose +5.4% y/y, the largest increase in nearly 39 years.

The Euro Stoxx 50 index today is down by -0.46%.  Economic uncertainty from the war in Ukraine and soaring inflation are weighing on European stocks.  Peace negotiations between Russia and Ukraine are set to resume on Friday. European retail stocks are leading losses in the overall market after Hennes & Mauritz AB tumbled after reporting a sudden slowdown in sales growth. 

Eurozone economic data today was mixed for stocks.  On the negative side, German Feb retail sales rose +0.3% m/m, weaker than expectations of +0.5% m/m.  Conversely, the Eurozone Feb unemployment rate fell -0.1 to a record low of 6.8% (data from 1998).

Asian markets today closed lower.  China’s Shanghai Composite closed down by -0.44%, and Japan’s Nikkei Stock Index closed down by -0.73%.  Today, Chinese stocks were under pressure on U.S. delisting risks after U.S. Securities and Exchange Commissioner (SEC) Gensler said that Chinese firms need to fully comply with audit requirements to stay on U.S. exchanges.  Economic concerns also weighed on Chinese stocks after today’s news that Chinese manufacturing and non-manufacturing activity contracted this month. 

China’s March manufacturing PMI fell -0.7 to 49.5, weaker than expectations of 49.8 and the weakest report in 5 months.  The March non-manufacturing PMI fell -3.2 to 48.4, weaker than expectations of 50.3 and the steepest pace of contraction in 7 months.

Japanese stocks moved lower today after weak Chinese manufacturing data raised concern about a slowdown in China’s economy that will undercut global growth.  Also, weaker than expected Japanese economic data today weighed on stocks after Japan Feb industrial production rose +0.1% m/m, weaker than expectations of +0.5% m/m.  The 10-year Japan JGB bond yield fell to a 1-1/2 week low at 0.208% after the BOJ raised the amount of its bond purchases for the April-June quarter.  The BOJ is attempting to keep the range of 10-year bond yields from going above its 0.25% ceiling after the 10-year Japan JGB bond yield rose to a 6-year high Monday of 0.255%.

Pre-Market U.S. Stock Movers

Energy stocks and energy service providers are falling in pre-market trading, with WTI crude down more than -5%.  Devon Energy (DVN), Occidental Petroleum (OXY), Haliburton (HAL), and Marathon Oil (MRO) are down more than -2%, and Diamondback Energy (FANG), Exxon Mobil (XOM), and Chevron (CVX) are down more than -1%. 

U.S.-listed Chinese stocks are weaker in pre-market trading after SEC Commissioner Gensler dialed down the prospects for an imminent deal to allow Chinese companies to keep trading on U.S. exchanges.  JD.com (JD) and Pinduoduo (PDD) are down more than -2%, and Alibaba Group Holding (BABA), Baidu (BIDU), and NetEase (NTES) are down more than -1%.

Advanced Micro Devices (AMD) fell more than -1% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.

HP Inc (HPQ) fell more than -2% in pre-market trading after Morgan Stanley cut its recommendation on the stock to underweight from equal-weight.

UiPath (PATH) tumbled more than -14% in pre-market trading after it forecasted Q1 revenue of $223 million to $225 million, well below the consensus of $246.4 million.

Vipshop ADRs (VIPS) rallied more than +8% in pre-market trading after announcing a $1 billion share buyback plan.

Orbital Energy Group (OEG) jumped more than +11% in pre-market trading after it reported Q4 revenue of $41 million versus $7.6 million y/y.

Today’s U.S. Earnings Reports (3/31/2022)

Duck Creek Technologies Inc (DCT), nCino Inc (NCNO), Walgreens Boots Alliance Inc (WBA).