Morning Markets

September E-Mini S&P 500 futures (ESU23) this morning are down -0.13%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.19%.

Stock indexes this morning are slightly lower, awaiting news later this morning on July JOLTS job openings, June home prices, and August consumer confidence.   Higher bond yields this morning are also weighing on stocks.

A rally in the Shanghai Composite by more than +1% today is providing some carryover support to global bourses on signs that will boost stimulus measures to bolster confidence in its markets. Bloomberg reported that China is poised to cut interest rates on trillions of yuan of outstanding home mortgages for the first time since the global financial crisis.  Also, Bloomberg reported that Chinese state-owned banks will soon cut deposit rates for the third time in a year to boost their margins.

The markets are discounting the odds at 23% for a +25 bp rate hike at the September 20 FOMC meeting and 69% for that +25 bp rate hike at the November 1 FOMC meeting. 

Global bond yields are higher.  The 10-year T-note yield is up +2.2 bp at 4.224%.  The 10-year German bund yield is up +1.0 bp at 2.574%.  The 10-year UK gilt yield is up +3.2 bp to 4.472%.  

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.14%.  China’s Shanghai Composite Index closed up +1.20%.  Japan’s Nikkei Stock Index closed up +0.18%.

The Euro Stoxx 50 today is modestly higher.  European stocks are following Asian stock markets higher today as China looks to increase support measures.  Gains in European mining and real estate stocks are leading the overall market higher today.  Also, NN Group jumped more than +9% after the Dutch insurance and investment management company reported stronger-than-expected first-half operating profit.  On the negative side, a gauge of German consumer confidence fell more than expected to a 4-month low.

The German Sep GfK consumer confidence index fell -0.9 to a 4-month low of -25.5, weaker than expectations of -24.5.

China’s Shanghai Composite today posted moderate gains.  Chinese stocks rose today on signs the government will take additional measures to boost the economy.  The Xinhua News Agency reported that Finance Minister Liu Kun vowed to “reasonably accelerate” fiscal spending.  Also, Chinese bank stocks moved higher today after Bloomberg reported that some of China’s biggest state-owned banks are considering lowering deposit rates for at least the third time this year to boost growth and protect margins.  The move follows similar rate reductions in June and last September as authorities try to drive more funds into the stock market and alleviate pressure on lenders.  Property stocks also rallied today on a Bloomberg report that China may announce as soon as today that big state-owned banks will cut rates on existing mortgages for first-time home buyers.  According to China’s banking regulator, more than 90% of China’s outstanding mortgages were for first homes as of July 2021, and in 2022, more than 80% of new home loans were on first homes. 

Debt troubles at Chinese companies continue to mount.  Property developer Country Garden Holdings proposed a grace period of 40 days to pay off a maturing yuan bond as the company tries to stave off default. Also, China Great Wall Asset Management, one of China’s state-controlled bad debt managers, tumbled today after the company missed Monday’s deadline for releasing its 2022 financial results. 

Japan’s Nikkei Stock Index today climbed to a 2-week high and closed slightly higher.  A combination of additional Chinese stimulus measures, strength in U.S. equity markets on Monday, and subdued T-note yields boosted market sentiment and supported gains in Japanese stocks.  Also, a decline in Japanese government bond yields supported equities as the 10-year JGB bond yield fell to a 1-week low of 0.647%.  Japanese bond yields fell after economic news today showed Japan’s jobless rate in July unexpectedly rose to a 4-month high.

The Japan Jul jobless rate rose +0.2 to a 4-month high of 2.7%, showing a weaker labor market than expectations of no change at 2.5%.

Pre-Market U.S. Stock Movers

Heico (HEI) tumbled more than -5 % in pre-market trading after reporting Q3 Ebitda of $179.8 million, below the consensus of $181.2 million. 

Donaldson (DCI) fell more than -1% in pre-market trading after reporting Q4 net sales of $879.5 million, weaker than the consensus of $896.4 million.

Shoe Carnival (SCVL) sank more than -8% in pre-market trading after reporting Q2 net sales of $294.6 million, down -5.7% y/y, and cutting its 2024 set sales forecast to $1.19 billion-$1.21 billion from a prior view of $1.23 billion-$1.25 billion, weaker than the consensus of $1.23 billion. 

Nio (NIO) fell more than -3% in pre-market trading after reporting Q2 revenue of 8.77 billion yuan, weaker than the consensus of 9.15 billion yuan.   

Salesforce (CRM) slid more than -1% in pre-market trading on signs of insider selling after an SEC filing showed CEO Benioff sold $3.13 million of shares last Friday.

Celanese (CE) dropped more than -2% in pre-market trading after Piper Sandler downgraded the stock to underweight from neutral.

Best Buy (BBY) rose more than +1% in pre-market trading after it said a sales slump in consumer electronics and household appliances is starting to show signs of easing. 

Verizon Communications (VZ) and AT&T (T) rose more than +1% in pre-market trading after Citigroup upgraded the stocks to buy from neutral.

Jackson Financial (JXN) jumped more than +7% in pre-market trading after S&P Dow Joines Indices said the company will replace NexTier Oilfield Solutions in the S&P SmallCap 600 prior to the opening of trading on September 1.

PDD Holdings (PDD) rallied more than +12% in pre-market trading after reporting Q2 revenue of 52.28 billion yuan, well above the consensus of 43.28 billion yuan.   

Rockwell Automation (ROK) gained more than +1% in pre-market trading after Wells Fargo Securities upgraded the stock to equal weight from underweight.

JM Smucker (SJM) climbed more than +2% in pre-market trading after reporting Q1 adjusted EPS of $2.21, better than the consensus of $2.04, and raising its 2024 adjusted EPS forecast to $9.45-$9.85 from a prior view of $9.20-$9.60, stronger than the consensus of $9.44.

Oracle (ORCL) rose more than +2% in pre-market trading after UBS upgraded the stock to buy from neutral. 

Today’s U.S. Earnings Reports (8/29/2023)

Best Buy Co Inc (BBY), Catalent Inc (CTLT), Donaldson Co Inc (DCI), Hewlett Packard Enterprise Co (HPE), HP Inc (HPQ), J M Smucker Co/The (SJM), nCino Inc (NCNO), PVH Corp (PVH).

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