Markets Today: Stock Index Futures Slightly Lower on Mixed Corporate News
U.S. stock index futures this morning are slightly lower on mixed corporate news. Coco-Cola is higher in pre-market trading after reporting stronger-than-expected Q1 revenue, while Tesla is down more than -1% after raising its 2023 capital expenditures target. This week's earnings from mega-cap technology stocks Amazon.com, Microsoft, and Meta Platforms will be parsed for insights into the effect of higher borrowing costs and a struggling economy.
However, lower T-note yields this morning are providing underlying support. The markets are showing a 92% chance of a 25 bp rate hike by the Federal Reserve at the May 2-3 FOMC meeting and have fully priced in a 25 bp rate hike by the ECB at its May 4 ECB meeting.
Global bond yields are mixed. The 10-year T-note yield is down -4.4 bp at 3.528%. The 10-year German bund yield is up +1.0 bp at 2.491%. The 10-year UK gilt yield is up +0.1 bp at 3.759%.
On the bearish side for stocks, Tesla is down more than -1% in pre-market trading after raising its 2023 capex forecast. Also, Mobileye Global is down more than -3% after its 180-day lock-up of selling shares from its October 25, 2022 IPO ends today. In addition, Regions Financial, Viatris, and C3.ai are down -1% or more after being downgraded.
On the positive side, Coca-Cola is up more than +1% after reporting Q1 adjusted organic revenue above consensus. Also, Medtronic Plc, PPG Industries, and Trex Co are up more than +1% after being upgraded.
Overseas stock markets are mixed. The Euro Stoxx 50 is down -0.09%. China’s Shanghai Composite closed down -0.78%, and Japan’s Nikkei Stock Index closed up +0.10%.
The Euro Stoxx 50 index today is slightly lower. An increase in European government bond yields is weighing on stocks after ECB Governing Council member Wunsch said we are "not seeing" inflation going in the right direction yet, and the ECB will only agree to halt interest rate increases once wage growth starts to fall. However, strength in bank stocks is limiting losses in the overall market, with UBS AG climbing more than +2% after reporting net outflows in Q1 that were lower than expected. Also, today’s economic news that showed a larger-than-expected increase in German Apr IFO business sentiment to a 14-month high is supportive of stocks. In addition, Royal Philips NV is up more than +12% after reporting Q1 earnings results that beat estimates.
The German Apr IFO business climate index rose +0.4 to a 14-month high of 93.6, stronger than expectations of 93.4.
Hawkish ECB comments today weighed on stocks. ECB Governing Council member Wunsch said we are "not seeing" inflation going in the right direction yet, and the ECB will only agree to halt interest rate increases once wage growth starts to fall. "We are waiting for wage growth and core inflation to go down, along with headline inflation, before we can arrive at the point where we can pause."
China’s Shanghai Composite Stock Index today dropped to a 3-week low and closed moderately lower. Geopolitical tensions and signs of an uneven recovery are weighing on Chinese stocks. The Shanghai Stock Index extended last Friday’s losses today on technical selling after the index fell below its 200-day moving average. The main focus on Chinese markets this week will be the latest earnings corporate earnings season, with more than 800 companies scheduled to report results this week. On the positive side, China’s Covid drugmakers rallied from concerns circulating on social media over the risk of a potential second Covid wave, with a prominent Chinese doctor saying citizens should stock up on drugs in preparation for the arrival of new Covid variants.
Japan’s Nikkei Stock Index today closed slightly higher. Japanese airline stocks rose today after, with ANA Airlines climbing more than +3% after reporting preliminary full-year profits that beat its guidance and analyst estimates. Tourism and travel stocks also moved higher today after the Nikkei reported that ANA would increase the number of flights between Japan and China by about 50% a week by early June.
The markets are looking ahead to the Thu/Fri BOJ meeting, which will be the first policy meeting chaired by new BOJ Governor Ueda. The Shankei newspaper reported Sunday that the BOJ is planning to review and inspect policies taken over the past decade. The consensus is for no changes to policy, although the BOJ may lay out plans to adjust its yield curve control (YCC) program at its June meeting. BOJ Governor Ueda said today that the BOJ is not at a stage to talk about how to normalize YCC and that premature talk on tweaking YCC could confuse the markets.
Pre-Market U.S. Stock Movers
Tesla (TSLA) fell more than -1% in pre-market trading after raising its 2023 capex forecast to $7 billion-$9 billion from a January forecast of $6 billion-$8 billion.
Micron Technology (MU) is down more than -2% in pre-market trading after the Financial Times reported that the U.S. asked South Korea to urge Samsung Electronics and SK Hynix to resist boosting chip sales to China if the Chinese government bans Micron from selling there. Last year, Micron generated 25% of its revenue from sales to mainland China and Hong Kong.
Perion Network (PERI) slid more than -1% in pre-market trading after Stifel downgraded the stock to hold from buy.
Mobileye Global (MBLY) dropped more than -3% in pre-market trading after its 180-day lock-up of selling shares from its October 25, 2022 IPO ends today.
Regions Financial (RF) slid more than -1% in pre-market trading after Truist Securities downgraded the stock to hold from buy.
Viatris (VTRS) fell more than -2% in pre-market trading after Barclays downgraded the stock to equal weight from overweight.
C3.ai (AI) tumbled more than -5% in pre-market trading after Wolfe Research downgraded the stock to underperform from peer perform.
Medtronic Plc (MDT) 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 $100, saying the FDA’s approval of its insulin pump is a “major milestone” for the firm.
Coca-Cola (KO) gained more than +1% in pre-market trading after reporting Q1 adjusted organic revenue rose +12%, stronger than the consensus of +9.62%.
PPG Industries (PPG) climbed more than +2% in pre-market trading after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $156.
Trex (TREX) gained more than +1% in pre-market trading after Loop Capital Markets upgraded the stock to buy from hold with a price target of $64.
Crinetics Pharmaceuticals (CRNX) rallied more than +5% in pre-market trading after Piper Sandler initiated coverage of the stock with an overweight rating and a price target of $56.
Today’s U.S. Earnings Reports (4/24/2023)
Alexandria Real Estate Equities (ARE), Ameriprise Financial Inc (AMP), Brown & Brown Inc (BRO), Cadence Design Systems Inc (CDNS), Coca-Cola Co/The (KO), First Republic Bank/CA (FRC), Packaging Corp of America (PKG), Whirlpool Corp (WHR).
More Stock Market News from Barchart
- Nvidia Stock Is on a Tear Up 86% YTD - Pushing Its Put Premiums Sky High
- Option Volatility And Earnings Report For April 24 - 28
- Stocks Set to Open Lower as Investors Await Big Tech Earnings, Economic Data
- More Earnings on Tap and Other Key Themes to Watch This Week
On the date of publication, Rich Asplund 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.
Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.