Stock Index Futures Muted as Investors Await Key U.S. Economic Data

Oleksandr Pylypenko - Barchart - Tue Aug 29, 2023

September S&P 500 futures (ESU23) are up +0.01%, and September Nasdaq 100 E-Mini futures (NQU23) are down -0.02% this morning as market participants geared up for a week full of economic data that will contribute to shaping the outlook for Federal Reserve policy.

In Monday’s trading session, Wall Street’s major indices closed in the green. 3M Company (MMM) climbed over +5% and was the top percentage gainer on the blue-chip Dow following a Bloomberg News report indicating the company’s tentative agreement to a settlement of more than $5.5 billion over 300,000 lawsuits alleging the sale of defective combat earplugs to the U.S. military. Also, U.S.-listed Chinese stocks gained ground after China halved the stamp duty on stock trading effective Monday, with JD.com Inc (JD) and Alibaba Group Holdings Ltd (BABA) rising more than +2%. In addition, Boston Scientific Corp (BSX) soared over +5% after announcing that its FARAPULSE Pulsed Field Ablation System reached the primary goals in a trial involving patients with atrial fibrillation. On the bearish side, Crowdstrike Holdings Inc (CRWD) slid more than -3% after Morgan Stanley downgraded the stock to Equal Weight from Overweight.

“It’s a positive continuation of Friday’s movement after the market realized Powell was neither hawkish nor dovish, he was reiterating what everyone knew. Inflation is coming down, the economy is not collapsing, and there’s a high likelihood that the Fed will remain on hold this September and most likely will be on hold for the rest of this year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Meanwhile, investor attention turns toward an upcoming report on the core personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, scheduled for release on Thursday, and the August nonfarm payrolls report due Friday.

U.S. rate futures have priced in a 21.5% probability of a 25 basis point rate increase at the September FOMC meeting and a 49.8% chance of a 25 basis point rate hike at the conclusion of the Fed’s November meeting.

Today, all eyes are focused on U.S. CB Consumer Confidence data in a couple of hours. Economists, on average, forecast that August CB Consumer Confidence will stand at 116.0, compared to the previous value of 117.0.

Also, investors will likely focus on U.S. JOLTs Job Openings data, which came in at 9.582M in June. Economists foresee the July figure to be 9.465M.

U.S. S&P/CS HPI Composite - 20 n.s.a. will be reported today as well. Economists expect June’s figure to be -1.3% y/y, compared to the previous number of -1.7% y/y.

In the bond markets, United States 10-year rates are at 4.206%, down -0.16%.

The Euro Stoxx 50 futures are up +0.33% this morning as recent stimulus measures from China boosted risk appetite, while investors awaited a raft of economic data in the days ahead. Gains in mining and real estate stocks are leading the overall market higher. Meanwhile, the British Retail Consortium said on Monday that food inflation in Britain cooled to the lowest level in almost a year in August. In corporate news, NN Group (NN.NA) soared over +10% after the Dutch insurer reported upbeat first-half results. Also, Bunzl Plc (BNZL.L.EB) climbed more than +3% after the British business supplies distributor raised its annual adjusted operating profit guidance.

Germany’s GfK Consumer Climate and France’s Consumer Confidence data were released today.

The German September GfK Consumer Climate Index has been reported at -25.5, weaker than expectations of -24.3.

The French August Consumer Confidence stood at 85, in line with expectations.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.20%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.18%.

China’s Shanghai Composite today closed higher, extending gains from the previous session following Beijing’s introduction of a package of measures aimed at bolstering investor confidence. Also, reports from state media suggested that the People’s Bank of China might consider an earlier-than-anticipated reduction in its reserve ratio requirements, potentially injecting greater liquidity into local markets. In addition, Chinese authorities committed on Monday to strengthen policy support and accelerate government spending, according to the official Xinhua News Agency. Meanwhile, artificial intelligence and semiconductor stocks outperformed on Tuesday. Tech giants and mainland property developers listed in Hong Kong also gained ground. Focus is now squarely on China’s PMI figures, due later in the week.

“If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from ‘too little, too late’ to a more confident stance as policymakers regain credibility,” UBS Global Wealth Management strategists wrote in a note.

Japan’s Nikkei 225 Stock Index closed slightly higher today as investors adopted a cautious stance in anticipation of a series of U.S. economic readings scheduled for this week. Meanwhile, strategists at Goldman Sachs Group Inc. anticipate that the yen could depreciate to levels not witnessed in over three decades if the Bank of Japan remains committed to its dovish stance. Over the next six months, the currency is forecasted to reach 155 per dollar, marking its lowest point since June 1990, according to strategists led by Kamakshya Trivedi. In corporate news, Rakuten Group Inc. rose over +2% after CEO Hiroshi Mikitani wrote on X that mobile phone subscriptions had surpassed the 5 million mark. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.12% to 18.00.

The Japanese July Unemployment Rate came in at 2.7%, weaker than expectations of 2.5%.

The Japanese July jobs/applications ratio stood at 1.29, weaker than expectations of 1.30.

Pre-Market U.S. Stock Movers

Heico Corporation (HEI) fell over -5% in pre-market trading after the maker of aerospace and defense parts reported a decline in its Q3 operating margin and warned that ongoing supply-chain constraints could lead to increased expenses for labor and materials.

Jackson Financial Inc (JXN) climbed more than +7% in pre-market trading after being named to join the S&P SmallCap 600.

Farfetch Ltd Class A (FTCH) fell over -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.

Celanese Corporation (CE) dropped about -2% in pre-market trading after Piper Sandler downgraded the stock to Underweight from Neutral.

Oracle Corporation (ORCL) gained more than +2% in pre-market trading after UBS upgraded the stock to Buy from Neutral.

AT&T Inc (T) rose over +1% in pre-market trading after Citi upgraded the stock to Buy from Neutral.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Tuesday - August 29th

PDD Holdings DRC (PDD), Bank of Montreal (BMO), Bank of Nova Scotia (BNS), HP Inc (HPQ), Hewlett Packard (HPE), ZTO Express Cayman (ZTO), Best Buy (BBY), JM Smucker (SJM), Catalent Inc (CTLT), Donaldson (DCI), PureTech Health (PRTC), PVH (PVH), Box Inc (BOX), Ncino (NCNO), Ambarella (AMBA), Golden Ocean (GOGL), American Woodmark (AMWD), Malibu Boats Inc (MBUU), Chicos FAS (CHS), Shoe Carnival (SCVL), Up Fintech (TIGR), Lexinfintech (LX).

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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.