June S&P 500 E-Mini futures (ESM24)are trending up +0.27% this morning as investors digest U.S. nonfarm payrolls data which exceeded expectations:  303,000 new jobs were create din March, signficantly exceeding the consesnus forecast of 200,000. And the unemployment rate slid to 3.8% from 3.9%. 

In yesterday’s trading session, Wall Street’s major indexes closed in the red. Lamb Weston (LW) tumbled over -19% and was the top percentage loser on the S&P 500 after the frozen goods maker posted downbeat Q3 results and cut its full-year revenue guidance. Also, AbbVie (ABBV) slid more than -5% after the pharma giant trimmed its full-year EPS forecast. In addition, Block (SQ) plunged over -6% after Morgan Stanley downgraded the stock to Underweight from Equal Weight with a price target of $60. On the bullish side, Conagra Brands (CAG) climbed more than +5% and was the top percentage gainer on the S&P 500 after the company delivered a quarterly profit beat and raised its FY24 adjusted operating margin estimate. 

The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week rose +9K to a 2-month high of 221K, compared to a consensus of 213K. Also, the U.S. trade deficit came in at -$68.90B in February, wider than expectations of -$66.90B and the largest deficit in 10 months.

Chicago Fed President Austan Goolsbee said on Thursday that the higher-than-anticipated inflation figures observed at the beginning of the year probably do not alter the overall picture of cooling price growth. “My overall assessment is that these two months should not knock us off the path back to target,” Goolsbee said. Also, Richmond Fed President Thomas Barkin stated that it is “smart” for the central bank to take its time to gain more clarity regarding the trajectory of inflation before reducing interest rates. “Given a strong labor market, we have time for the clouds to clear before beginning the process of toggling rates down,” Barkin said. At the same time, Philadelphia Fed President Patrick Harker said that inflation remains too high. “We’re not where we need to be,” Harker said. In addition, Minneapolis Fed President Neel Kashkari said that interest-rate cuts might not be necessary this year if progress on inflation stalls, particularly if the economy continues to demonstrate strength.

U.S. rate futures have priced in a 6.5% chance of a 25 basis point rate cut at the next central bank meeting in May and a 60.1% probability of a 25 basis point rate cut at the June FOMC meeting.

Meanwhile, tensions rose in the Middle East after Israel heightened preparations for possible retaliation by Tehran following Monday’s strike on an Iranian diplomatic compound in Syria.

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, forecast that March Nonfarm Payrolls will come in at 212K, compared to the previous value of 275K.

“As always, the monthly jobs report will have the final say. Investors will be looking for a ‘Goldilocks’ number that won’t give the Fed any reason to delay rate cuts but also doesn’t suggest the labor market is taking a serious downturn,” said Chris Larkin at E*Trade from Morgan Stanley.

U.S. Average Hourly Earnings data will also be closely watched today. Economists anticipate March’s figures to be +0.3% m/m and +4.1% y/y, compared to the previous numbers of +0.1% m/m and +4.3% y/y.

The U.S. Unemployment Rate will be reported today. Economists foresee this figure to remain steady at 3.9% in March.

U.S. Consumer Credit data will come in today as well. Economists expect February’s figure to be $16.20B, compared to the previous value of $19.49B.

In addition, market participants will likely focus on speeches from Fed Governor Michelle Bowman, Richmond Fed President Thomas Barkin, and Dallas Fed President Lorie Logan.

In the bond markets, United States 10-year rates are at 4.332%, up +0.56%.

The Euro Stoxx 50 futures are down -1.61% this morning, tracking a broad market retreat as hawkish remarks from some Fed officials and heightened Middle East tensions dampened market sentiment. Travel and retail stocks underperformed on Friday, while energy stocks advanced. Germany’s Federal Statistical Office said Friday that the country’s factory orders rose slightly in February. Separately, Eurostat reported on Friday that Eurozone retail sales slipped back in February over the previous month. Meanwhile, investors are eagerly anticipating the U.S. nonfarm payrolls report for fresh insights into the trajectory of interest rates. In corporate news, Bureau Veritas (BVI.FP) fell over -2% following the announcement from French investment firm Wendel regarding the sale of 9% of shares in the business support company.

Germany’s Factory Orders and Eurozone’s Retail Sales data were released today.

The German February Factory Orders came in at +0.2% m/m, weaker than expectations of +0.6% m/m.

Eurozone February Retail Sales arrived at -0.5% m/m and -0.7% y/y, compared to expectations of -0.3% m/m and -1.3% y/y.

Japan’s Nikkei 225 Stock Index (NIK) closed down -1.96%, while mainland Chinese markets were closed for a holiday.

Today, China’s Shanghai Composite Index was closed for the Ching Ming Festival (Tomb Sweeping Day). Mainland Chinese markets will reopen on Monday, April 8th.

Japan’s Nikkei 225 Stock Index closed sharply lower today, tracking Wall Street’s losses overnight as hawkish signals from some Fed officials and geopolitical tensions weighed on sentiment. Brokerage and chip-related stocks led the decline on Friday. Export-oriented stocks also lost ground as the yen rebounded from recent losses. Government data showed on Friday that Japanese household spending declined for the 12th consecutive month in February compared to the previous year. Separately, preliminary data from the Cabinet Office showed that Japan’s leading economic index for gauging the economic outlook grew in February. Meanwhile, the yen touched a two-week high against the dollar on Friday after reported remarks from Bank of Japan Governor Kazuo Ueda fueled speculation about an additional interest rate hike later in the year. Also, Japanese Finance Minister Shunichi Suzuki reiterated on Friday the government’s resolve to take appropriate action in response to significant declines in the yen. In corporate news, Onwards Holdings surged over +15% after reporting that preliminary total net sales at its existing stores and all stores increased by 2.7% and 3.7%, respectively, in March. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +9.93% to 21.48.

The Japanese February Household Spending stood at +1.4% m/m and -0.5% y/y, stronger than expectations of +0.5% m/m and -2.8% y/y.

The Japanese February Leading Index came in at 111.8, stronger than expectations of 111.6.

Pre-Market U.S. Stock Movers

Grindrod Shipping Holdings (GRIN) surged about +28% in pre-market trading after revealing plans for a selective capital reduction.

Agilent Technologies (A) rose over +1% in pre-market trading after Stifel upgraded the stock to Buy from Hold with a price target of $163.

Krispy Kreme (DNUT) climbed more than +4% in pre-market trading after Piper Sandler upgraded the stock to Overweight from Neutral with a price target of $20.

SoFi Technologies (SOFI) gained about +1% in pre-market trading after Keefe Bruyette upgraded the stock to Market Perform from Underperform with a price target of $7.50.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - April 5th

Greenbrier (GBX), Byrna Technologies (BYRN).

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