Morning Markets

December S&P 500 futures (ESZ22) this morning are up +1.08% at a 6-week high, and December Nasdaq 100 E-Mini futures (NQZ22) are up +1.36%.  Stock indexes are rallying this morning on carry-over support from a jump of more than +2% in China’s Shanghai Composite.  Chinese stocks soared today on speculation China is preparing to phase-out Covid Zero policies, even as China’s Foreign Ministry said it was unaware of such a plan. 

A gain of more than +2% in Tesla in pre-market trading is boosting technology stocks after Reuters reported the company plans to start mass production of its Cybertruck at the end of 2023.  Also, M&A activity is supporting healthcare stocks as Abiomed surged more than +50% in pre-market trading after Johnson & Johnson said it purchased the company for about $17.3 billion.  In addition, Pfizer is up more than +2% in pre-market trading after raising its full-year revenue forecast.

A decline in European government bond yields today is underpinning T-note prices.  The 10-year T-note yield today fell below 4% and is down -11.3 bp at 3.935%.  The market has priced in a 100% chance the Fed will raise the federal funds target range by +75 bp on Wednesday after the 2-day FOMC meeting concludes.  The markets will also scour post-meeting comments from Fed Chair Powell for clues about the size of future rate hikes. 

The Euro Stoxx 50 index today is up by +1.53% and posted a new 1-1/2 month high.  European energy stocks are climbing today, with BP Plc up more than +1% after announcing a further $2.5 billion of share buybacks.  Also, China-exposed stocks, including miners and travel companies, rose on speculation China might soon exit its Covid Zero policy. In addition, an unexpected easing of inflation pressures in Germany knocked bond yields lower and supported gains in stocks after the German Sep import price index unexpectedly declined. As a result, the 10-year German bund yield is down -10.6 bp at 2.036%.

The German Sep import price index unexpectedly fell -0.9% m/m, weaker than expectations of +0.6% m/m and the biggest decline in nearly 2-1/2 years.

ECB President Lagarde said, "inflation is still too high throughout the Eurozone," and interest rates have further to rise to ensure that inflation returns to the ECB's 2% target over the medium term.

Asian markets today closed higher.  China’s Shanghai Composite closed up +2.62%, and Japan’s Nikkei Stock Index closed up +0.33%.

China’s Shanghai Composite today rallied sharply on speculation that Chinese policymakers are making preparations to gradually exit the strict Covid Zero policies. Unverified social media posts circulated online that a committee was being formed to assess scenarios on how to exit Covid Zero, although China’s Foreign Ministry said it was unaware of such a plan. 

Chinese stocks also garnered support from today’s news that the China Oct Caixin manufacturing PMI rose +1.1 to 49.2, stronger than expectations of 48.5.

Japanese stocks today closed moderately higher.  Strength in construction and heavy machinery stocks led the overall market higher as Komatsu rallied nearly 5% after the maker of construction machinery boosted its operating income guidance for the full year.  Also, technology stocks found support after Sony boosted its full-year operating income estimate to 1.16 trillion yen from a prior view of 1.11 trillion yen.  In addition. Japanese automakers rose today after economic news showed Japan Oct vehicle sales rose +19.7% y/y, the most in 17 months. 

Pre-Market U.S. Stock Movers

Tesla (TSLA) is up more than +2% in pre-market trading after Reuters reported the company plans to start mass production of its Cybertruck at the end of 2023.

Pfizer (PFE) climbed more than +2% in pre-market trading after reporting Q3 revenue of $22.64 billion, stronger than the consensus of $21.12 billion, and raised its full-year revenue forecast to $99.5 billion-$102.0 billion from a previous forecast of $98.0 billion-$102.0 billion, above the consensus of $99.73 billion.

U.S.-listed Chinese stocks are sharply higher in pre-market trading, fueled by speculation China is preparing to phase-out Covid Zero policies.  Bilibili (BILI) is up more than +9%.  Also,  Pinduoduo (PDD) and Alibaba Group Holding (BABA) are up more than +7%.  JD.com (JD), NetEase (NTES), and Baidu (BIDU) are up more than +5%.

Uber Technologies (UBER) jumped more than +5% in pre-market trading after reporting Q3 revenue of $8.34 billion, above the consensus of $8.10 billion. 

Hologic (HOLX) jumped more than +8% in pre-market trading after reporting Q4 adjusted EPS of 82 cents, stronger than the consensus of 63 cents, and forecasting full-year adjusted EPS of $3.30-$3.60, the midpoint above the consensus of $3.41.

U.S. listed casino stocks with exposure to Macau are climbing in pre-market trading on speculation China is preparing to phase-out Covid Zero policies, even as China’s Foreign Ministry said it was unaware of such a plan.  Las Vegas Sands (LVS) is up more than +4%.  Wynn Resorts (WYNN) and MGM Resorts International (MGM) are up more than +2%.

Carvana (CVNA) rallied more than +8% in pre-market trading after JPMorgan Chase upgraded the stock to neutral from underweight. 

Abiomed (ABMD) surged more than +50% in pre-market trading after Johnson & Johnson agreed to buy all of the outstanding shares of the company for an upfront payment of $380 per share in cash plus contingent payments of up to $35 if certain clinical and commercial milestones are achieved,

Eli Lilly & Co (LLY) fell more than -3% in pre-market trading after cutting its full-year adjusted EPS forecast to $7.70-$7.85 from a prior view of $7.90-$8.05. 

Charles Schwab (SCHW) dropped -1% in pre-market trading after Credit Suisse downgraded the stock to neutral from outperform.

Aflac (AFL) fell more than -1% in pre-market trading after reporting Q3 adjusted EPS of $1.15, below the consensus of $1.21. 

Goodyear Tire & Rubber (GT) tumbled more than -7% in pre-market trading after reporting Q3 net sales of $5.31 billion, weaker than the consensus of $5.43 billion. 

Varonis Systems (VRNS) plunged more than -30% in pre-market trading after reporting Q3 revenue of $123.3 million, below the consensus of $124.2 million and forecasting Q4 revenue of $139 million-$142 million, well below the consensus of $155.5 million. 

Today’s U.S. Earnings Reports (11/1/2022)

ABIOMED Inc (ABMD), Advanced Micro Devices Inc (AMD), Amcor PLC (AMCR), American International Group (AIG), AMETEK Inc (AME), Assurant Inc (AIZ), Bio-Techne Corp (TECH), Caesars Entertainment Inc (CZR), Catalent Inc (CTLT), CenterPoint Energy Inc (CNP), Clorox Co/The (CLX), Devon Energy Corp (DVN), Eaton Corp PLC (ETN), Ecolab Inc (ECL), Edison International (EIX), Electronic Arts Inc (EA), Eli Lilly & Co (LLY), Extra Space Storage Inc (EXR), FMC Corp (FMC), Fox Corp (FOXA), Franklin Resources Inc (BEN), Gartner Inc (IT), Healthpeak Properties Inc (PEAK), Henry Schein Inc (HSIC), IDEXX Laboratories Inc (IDXX), Incyte Corp (INCY), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Match Group Inc (MTCH), McKesson Corp (MCK), Molson Coors Beverage Co (TAP), Mondelez International Inc (MDLZ), Newmont Corp (NEM), ONEOK Inc (OKE), Paycom Software Inc (PAYC), Pfizer Inc (PFE), Phillips 66 (PSX), Prudential Financial Inc (PRU), Public Storage (PSA), Sealed Air Corp (SEE), Simon Property Group Inc (SPG), Sysco Corp (SYY), Verisk Analytics Inc (VRSK), Waters Corp (WAT), WEC Energy Group Inc (WEC), Westinghouse Air Brake Technol (WAB), Xylem Inc/NY (XYL), Zebra Technologies Corp (ZBRA).

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