Pre-Market Brief: Stocks Mixed as Sentiment Remains Strained
Morning Markets
December S&P 500 futures (ESZ22) are trending down -0.16% after three major US benchmark indices veered to a sharply lower end on Friday, erasing early gains in the session as investors prepared for further Federal Reserve rate hikes to bring down inflation.
Three major U.S. stock indexes were weighted down primarily by losses in the Consumer Goods, Utilities, and Technology sectors.
The S&P 500 is down almost 25% year-to-date, and Nasdaq has fallen by around 33% year-to-date, while the 10-year Treasury yield recently hit its highest level since 2008. At the same time, the Dow rounded off the worst quarterly losing streak since 2015. All three benchmark indices finished the third straight quarter in the red.
The core personal consumption expenditure price index has been reported at +0.6% m/m compared to the forecast of +0.5% m/m, showing that inflation rose more than expected in August. This “compounds the pressure for the Fed to stay on course in its fight against inflation,” Stifel reported in a note. In addition, Fed vice chair Lael Brainard said the Fed's policy would need to be “restrictive for some time to have confidence that inflation is moving back to target.”
Meanwhile, U.S. rate futures have priced in a 45.7% chance of a 50 basis point rate increase and a 54.3% chance of a 75 basis point hike at November's monetary policy meeting.
Ahead in the week, investors will be closely monitoring U.S. employment data to see whether the Fed’s rate rises are beginning to dent growth. Economists, on average, forecast the September unemployment rate to remain unchanged at 3.7%.
Today, investors will likely focus on U.S. September ISM Manufacturing Purchasing Managers Index (PMI) data, which was at 52.8 in August. Economists foresee the new number to be 52.2.
In the bond markets, United States 10-Year rates are at 3.789%, down -0.41%.
The Euro Stoxx 50 is down -1.54% this morning as investors digest renewed regional energy problems, political turmoil in the U.K., and concerns about the health of Swiss banking giant Credit Suisse.
Gazprom paused its gas supplies to Italy over the weekend, saying it didn’t receive the authorization for the pipeline flows via Austria.
Liz Truss’s government has abandoned its plan to revoke the 45% top rate of income tax, following a mounting Conservative revolt over the policy and a rough reaction from markets.
At the same time, the Financial Times reported on Sunday that Credit Suisse executives spent the weekend reassuring investors about its financial health after the bank’s credit default swaps rose to the highest level in 10 years.
Switzerland Consumer Price Index (CPI), Spain Manufacturing PMI, Switzerland procure.ch PMI, Italy Manufacturing PMI, France Manufacturing PMI, Germany Manufacturing PMI, Eurozone Manufacturing PMI, and U.K. Manufacturing PMI data were released today.
Switzerland's September CPI has been reported at -0.2% m/m, weaker than expectations of +0.2% m/m.
The Spanish Manufacturing PMI was 49.0 in September, weaker than expectations of 49.2.
Switzerland's September procure.ch PMI stood at 57.1, stronger than expectations of 54.5.
The Italian September Manufacturing PMI was 48.3, stronger than expectations of 47.5.
France’s September Manufacturing PMI stood at 47.7, weaker than expectations of 47.8.
The German September Manufacturing PMI came in at 47.8, weaker than expectations of 48.3.
Eurozone September Manufacturing PMI stood at 48.4, weaker than expectations of 48.5.
U.K. Manufacturing PMI was 48.4 in September, weaker than expectations of 48.5.
Asian stock markets today settled in the green. Japan’s Nikkei 225 Stock Index (NIK) closed up +1.03%, while the Chinese market was closed for holidays.
Japan’s Nikkei 225 Stock Index closed higher today after better-than-expected quarterly earnings from Mimasu Semiconductor boosted chip shares. The index's upward momentum was fueled by gains in the Food, Fishery, and Pharmaceutical Industry sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 5.19% at a new 3-months high of 26.33.
Japan's Tankan Large Manufacturers Index has been reported at 8 in Q3, weaker than expectations of 11.
The Japanese Tankan Large Non-Manufacturers Index stood at 14 in the third quarter, stronger than expectations of 13.
Pre-Market U.S. Stock Movers
Tesla Inc (TSLA) plunged more than -4% in pre-market trading after the company reported delivery of 343,830 electric vehicles in Q3, up 42.5% y/y. However, this figure is below the analysts' consensus of 357,938.
Flexible Solutions International Inc (FSI) climbed over 18% in pre-market trading after the company announced the termination of the merger pact with Lygos.
Lockheed Martin Corporation (LMT) rose about +1% in pre-market trading after the company was awarded a $265.59M modification contract for Naval Air Systems and a $350M modification contract for US Navy.
Wells Fargo & Company (WFC) grew around +1% in pre-market trading after Goldman Sachs upgraded the stock to buy from neutral with a price target of $48, up from $46.
Xpeng Inc (XPEV) fell more than 2% in pre-market trading after the company's September monthly deliveries stood at 8468, down 11.6% m/m and 18.7% y/y.
Today’s U.S. Earnings Spotlight: Monday - October 3rd
Tortoise PowerEnergy Infrast Closed (TPZ), TSR (TSRI), Color Star Technology Co (CSCW).
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