Pre-Market Brief: Stocks Move Higher As Ebbing Inflation Boosts Sentiment

Oleksandr Pylypenko - Barchart - Wed Nov 16, 2022

December S&P 500 futures (ESZ22) are trending up +0.35% this morning after three major US benchmark indices finished the regular session higher as investors weighed up weaker-than-expected producer price data and fresh geopolitical tensions amid unconfirmed reports that Russian rockets had crossed into NATO-member Poland. Three major U.S. stock indexes were fueled primarily by gains in the Technology, Consumer Services, and Oil & Gas sectors.

The producer price index rose 0.2% m/m in October, well below the expectations of 0.4% m/m rise, enhancing “the notion that peak prices are behind us,” Stifel said in a note following last week's favorable consumer prices report.

Meanwhile, U.S. rate futures have priced in an 85.4% chance of a 50 basis point rate increase and a 14.6% chance of a 75 basis point hike at December's monetary policy meeting.

"The market has been driven by the inflation number that came out a little bit lower than expected and confirmed last week's number to some degree that we may have rounded the corner on inflation," said Peter Tuz, a president of Chase Investment Counsel in Charlottesville, Virginia.

Two people were killed in an explosion in Przewodow, a village in eastern Poland near the border with Ukraine, firefighters said as NATO allies investigated reports that the blast resulted from Russian missiles. On the ground of this, stocks pulled back around mid-day, with the Dow turning negative.

"The decline was triggered by reports of a Russian missile landing in Poland. This could develop into something far worse, but right now, markets are nervous, not panicked," said Steve Sosnick, a chief strategist at Interactive Brokers.

Today, all eyes are focused on the U.S. Retail Sales data in a couple of hours. Economists, on average, forecast that October Retail Sales will stand at +1.0% m/m, compared to the previous value of 0.0% m/m.

Also, investors are likely to focus on the U.S. Core Retail Sales data, which was at +0.1% m/m in September. Economists foresee the new figure to be +0.4% m/m.

U.S. Industrial Production data will be reported today. Economists foresee this figure to stand at +0.2% m/m in October, compared to the previous number of +0.4% m/m.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.440M, compared to the last week’s value of +3.925M.

In the bond markets, United States 10-Year rates are at 3.794%, down -0.14%.

The Euro Stoxx 50 futures are up +0.13% this morning. However, those gains are likely to be fragile aftera fatal missile strike on a village in NATO-member Poland raised political tensions in the region. NATO ambassadors are set to hold a meeting early Wednesday to discuss the attack, which killed two people in a village near the border with Ukraine. Elsewhere, the latest inflation reading in the U.K. revealed that consumer prices rose 11.1% y/y in October, an increase from 10.1% y/y the prior month and a 41-year high, suggesting more interest rate hikes by the Bank of England.

U.K. Core CPI, U.K. PPI Input, and Italy CPI data were released today.

U.K. October Core CPI has been reported at +6.5% y/y, stronger than expectations of +6.4% y/y.

U.K. PPI Input stood at +0.6% m/m in October, stronger than expectations of +0.3% m/m.

The Italian October CPI came in at +11.8%, weaker than expectations of +11.9% y/y.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.45%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.14%.

China’s Shanghai Composite today closed lower as weak economic data from the country continued to trickle in amid a fresh wave of COVID-19 infections. China's House Prices index stood at -1.6% m/m in October, marking the worst fall in seven years. Nevertheless, Chinese stocks moved higher in recent sessions amid some optimism over the scaling back of COVID-related curbs.

At the same time, Japan’s Nikkei 225 Stock Index closed higher today, fueled by gains in the Real Estate, Paper & Pulp, and Shipbuilding sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 5.03% and hit a new 1-month low of 18.87.

Pre-Market U.S. Stock Movers

Carnival Corporation (CCL) plunged about -12% in pre-market trading after the company commenced a private offering of $1B aggregate principal amount of convertible senior notes due 2027.

Ginkgo Bioworks Holdings (DNA) slid about -6% in pre-market trading after the company announced intentions to sell $100M of its Class A common stock in an underwritten public offering.

Tattooed Chef Inc (TTCF) tumbled over -17% in pre-market trading after the company reported downbeat Q3 results and issued a weak FY2022 revenue outlook.

Advance Auto Parts Inc (AAP) dropped more than -13% in pre-market trading after the company reported weaker-than-expected Q3 numbers and provided soft FY2022 guidance.

Ferroglobe PLC (GSM) fell about -9% in pre-market trading after the company reported weaker-than-expected Q3 results.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Wednesday - November 16th

NVIDIA (NVDA), Tencent ADR (TCEHY), Cisco (CSCO), Lowe’s (LOW), TJX (TJX), Target (TGT), Prudential Public ADR (PUK), Bank Rakyat (BKRKY), Fortescue Metals (FSUMF), Lonza Group AG (LZAGY), Copart (CPRT), Baidu (BIDU), Soquimich B ADR (SQM), Citic ADR (CTPCY), Techtronic Industries ADR (TTNDY), SSE ADR (SSEZY), Trip.com ADR (TCOM), Surgutneftegaz ADR (SGTZY), Polyus ADR (OPYGY), Shaw B (SJR), Bank Hapoalim ADR (BKHYY), Siemens Gamesa ADR (GCTAY), Grab Holdings (GRAB), Brookfield Renewable (BEPC), Brambles ADR (BXBLY), Sonic Healthcare ADR (SKHHY), Kepco ADR (KEP), ASX ADR (ASXFY), Alstom PK (ALSMY), Sage ADR (SGPYY), Koc Holdings AS (KHOLY), Bath & Body Works (BBWI), Woori Financial (WF), KT (KT), Allkem (OROCF), Nedbank Group Ltd (NDBKY), Ayala ADR (AYALY), Bezeq Corp (BZQIY), British Land Company (BTLCY), UOL ADR (UOLGY), GlobalE Online (GLBE), Spire (SR), Victoria's Secret Co (VSCO), ZIM Integrated Shipping Services (ZIM), Hillenbrand (HI), Copa (CPA), Beijing Capital Airport ADR (BJCHY), Grupo Aval (AVAL), Golar (GLNG), Kulicke&Soffa (KLIC), Autogrill ADR (ATGSY), iQIYI (IQ), Ozon (OZON), Sonos (SONO), Bowlero (BOWL), Star Bulk Carriers (SBLK), HUTCHMED DRC (HCM), Golden Ocean (GOGL), Griffon (GFF), Paladin Energy (PALAF), Banco Macro B ADR (BMA), Embotelladora Andina B ADR (AKOb), Bumi Resources ADR (PBMRY), Grupo Simec ADR (SIM), Arcos Dorados (ARCO), CureVac NV (CVAC), Meridian (VIVO), Nexters (GDEV), Naas Tech ADR (NAAS), Sabine Royalty Trust (SBR), Premier Foods ADR (PRRFY).

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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.