Morning Markets

March S&P 500 futures (ESM23) this morning are down -0.90%, and March Nasdaq 100 E-Mini futures (NQM23) are down -0.57%.

U.S. stock index futures this morning are falling on continued concern about the banking sector's stability. A sell-off of bank stocks in pre-market trading is leading the overall market lower. 

Treasury Secretary Yellen on Wednesday alarmed the market when she said the U.S. government is not considering a “blanket” protection of deposits.  Ms. Yellen on Thursday had little success in damage control when she said that the government is prepared for further steps to protect bank deposits if needed.

Bank of America said EPFR Global data shows investors are fleeing into cash to escape the turmoil in financial markets as global cash funds had inflows of nearly $143 billion in the week through Wednesday, the largest increase since March 2020.  Over the past four weeks, investors have poured more than $300 billion into cash funds. 

Global bond yields are falling sharply due to the banking turmoil.  The 10-year T-note yield today fell to a 6-1/4 month low of 3.280%.  Also, the 10-year German bund yield dropped -13.0 bp to 2.065%, and the 10-year UK gilt yield fell to a 6-week low of 3.132%. 

Today’s U.S. economic news was better-than-expected and supportive for stocks after Feb capital goods new orders nondefense ex-aircraft unexpectedly rose +0.2% m/m, stronger than expectations of a decline of -0.2% m/m.

Overseas stock markets are lower.  The Euro Stoxx 50 today is down -2.36%.  China’s Shanghai Composite stock index closed down -0.64% and Japan’s Nikkei Stock Index closed down -0.13%. 

The Euro Stoxx 50 index today is sharply lower.  European bank stocks are under pressure and are leading the overall market lower as concerns about financial stability hammered bank stocks with high exposure to corporate lending.  Deutsche Bank AG is down more than -14% and Commerzbank AG and Societe Generale are down more than -7%.  European bank stocks also slumped after Bloomberg News reported that Credit Suisse Group AG and UBS Group AG were among banks under scrutiny in a U.S. Justice Department probe into whether financial professionals helped Russian oligarchs evade sanctions.  UBS Group AG is down more than -6%.  In addition, European stocks are under pressure after today’s economic news showed the March Eurozone S&P manufacturing PMI unexpectedly declined.

ECB Governing Council member and Bundesbank President Nagle said, "we have not yet won the fight against inflation," and the ECB will need to continue raising interest rates and should keep them at a high level.

The March Eurozone S&P manufacturing PMI unexpectedly fell -1.4 to 47.1, weaker than expectations of an increase to 49.0. However, the March S&P composite PMI rose +2.1 to 54.1, stronger than expectations of unchanged at 52.0 and the fastest pace of expansion in 10 months.

China’s Shanghai Composite today closed moderately lower.  Financial stocks led the Shanghai Composite lower today on lingering concerns about the health of the global banking sector.  However, losses in the overall market were limited as Chinese technology stocks rallied after JPMorgan Chase indicated it was positive on the sector, saying, “China’s tech sector is attractive given improving regulatory outlook, leaner and more cost-effective cost structure, and improving margins.” In addition, Chinese online healthcare platform operators rose after the government issued a plan that calls for enhancing the usage of the internet in the country’s medical and healthcare services.

Japan’s Nikkei Stock Index today closed slightly lower. Japanese bank stocks were under pressure today following Thursday’s slide in U.S. bank stocks.  Also, Japanese exporters slid due to the strength of the yen, which reduced the earnings prospects of exporters.  The ongoing turmoil in the global banking sector pushed the yen today to a 7-week high against the dollar on increased safe-haven demand.  Losses in the overall market were limited by strength in Japan’s service sector after today’s economic news showed the Japan March Jibun Bank services PMI expanded at the fastest pace in more than 9 years.

The Japan Feb national CPI ex-fresh food and energy rose +3.5% y/y, slightly stronger than expectations of +3.4% y/y and the fastest pace of increase in 41 years.

The March Japan Jibun Bank manufacturing PMI rose +0.9 to 48.6. Also, the March Jibun Bank services PMI rose +0.2 to 54.2, the fastest pace of expansion in more than 9 years.

Pre-Market U.S. Stock Movers

Bank stocks are under pressure in pre-market trading as concerns linger about the health of the banking system.  First Republic Bank (FRC) is down more than -5%.  Lincoln National (LNC), M&T Bank (MTB), US Bancorp (USB), Zions Bancorp (ZION), Citizens Financial Group (CFG), Regions Financial (RF), and Western Alliance Bancorp (WAL) are down -2% or more.

Oxford Industries (OXM) tumbled more than -5% in pre-market trading after forecasting Q1 adjusted EPS of $3.60-$3.80, weaker than the consensus of $4.06.

Block (SQ) slid more than -4% in pre-market trading, adding to Thursday’s -15% plunge, after Hindenburg Research said it took a short position in the company and that Block facilitated fraudsters who took advantage of government stimulus programs during the pandemic.

Scholastic (SCHL) sank more than -11% in pre-market trading after reporting a Q3 adjusted loss per share of -57 cents, wider than the consensus of -38 cents, and cutting its full-year revenue forecast to grow about 4%, compared to a previous forecast of growth of 8% to 10%. 

Activision Blizzard (ATVI) jumped more than +5% in pre-market trading after the UK’s Competition and Markets Authority updated its provisional findings on Microsoft’s acquisition of Activision after new evidence showed the buyout would not result in a substantial lessening of competition in console gaming in the UK.

First Horizon (FHN) rose more than +1% in pre-market trading after Wells Fargo Securities upgraded the stock to overweight from equal weight with a price target of $25.

Genuine Parts (GPC) rose more than +1% in pre-market trading after Truist Securities upgraded the stock to buy from hold.

Today’s U.S. Earnings Reports (3/24/2023)

Athira Pharma Inc (ATHA), DXP Enterprises Inc/TX (DXPE), Erasca Inc (ERAS), Express Inc (EXPR), Gelesis Holdings Inc (GLS), Humacyte Inc (HUMA), Point Biopharma Global Inc (PNT), TuSimple Holdings Inc (TSP), Vera Therapeutics Inc (VERA).

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