Morning: Dip in oil prices bringing some relief to battered market

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The S&P 500 futures trade 67 points, or 1.6%, above fair value in a buy-the-dip trade, as oil prices dip below $120 per barrel ($119.38, -4.32, -3.5%).

Oil is cooling off after rising 35% since Feb. 25, but the negative action has also coincided with a report from Reuters citing positive-sounding rhetoric from Russia’s foreign ministry spokesperson. She said that Moscow doesn’t want to overthrow the Kyiv government and that it hopes progress can be made in upcoming talks.

The softer stance, however, contrasts with news that Russian forces continue to push towards Kyiv. On a related note, the EU and UK tightened sanctions against Russia on Wednesday.

Treasury yields, meanwhile, continue to push higher on inflation and rate-hake expectations after China reported hotter-than-expected CPI data for February. The 2-yr yield is up four basis points to 1.67%, and the 10-yr yield is up four basis points to 1.91%. The U.S. Dollar Index is down 0.5% to 98.61.

Separately, noticeable gains in Bumble ( BMBL 20.22, +3.56, +21.4%), Figs ( FIGS 15.79, +1.75, +12.5%), and Oatly Group ( OTLY 6.50, +0.77, +13.4%) following their earnings reports have supported risk sentiment, but not Stitch Fix ( SFIX 8.15, -2.86, -26.0%) with its 26% plunge.

On the data front, investors will receive the JOLTs - Job Openings report for January at 10:00 a.m. ET and the weekly EIA report for weekly crude inventories at 10:30 a.m. ET. Earlier, the weekly MBA Mortgage Applications Index rose 8.5% following a 0.7% decline in the prior week.

In U.S. Corporate news:

  • Bumble (BMBL 20.22, +3.56): +21.4% on better-than-feared earnings results. Regarding guidance, the company guided Q1 revenue below consensus and guided FY22 revenue in-line with consensus estimates.
  • Stitch Fix (SFIX 8.15, -2.86): -26.0% after guiding Q3 revenue below consensus, lowering its full-year revenue growth view, and withdrawing its adj. EBITDA guidance. SFIX beat EPS estimates.
  • Figs (FIGS 15.79, +1.75): +12.5% after beating EPS estimates and guiding FY22 revenue above consensus.
  • XPO Logistics (XPO 70.19, +8.26): +13.3% after announcing plans to spin off its brokered transportation services.
    Casey’s General (CASY 173.00, +1.17): +0.7% after beating EPS estimates and increasing its share repurchase program by $100 mln. CASY reiterated its FY22 guidance.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan’s Nikkei: +1.0% Hong Kong’s Hang Seng: -0.7% China’s Shanghai Composite: -1.1% India’s Sensex: +2.3% South Korea’s Kospi: CLOSED Australia’s ASX All Ordinaries: +1.1%.

    • In economic data:
      • China’s February CPI 0.6% m/m (expected 0.3%; last 0.4%); 0.9% yr/yr, as expected (last 0.9%). February PPI 8.8% yr/yr (expected 8.7%; last 9.1%)
      • Japan’s Q4 GDP 1.1% qtr/qtr (expected 1.4%; last 1.3%); 4.6% yr/yr (expected 5.6%; last 5.4%). Q4 GDP Capital Expenditure 0.3% qtr/qtr (expected 0.7%; last 0.4%) and Q4 GDP Private Consumption 2.4% qtr/qtr (expected 2.7%; last -1.3%)
      • Australia’s March Westpac Consumer Sentiment -4.2% (last -1.3%)
      • New Zealand’s Q4 Manufacturing Sales Volume 8.2% qtr/qtr (last -6.4%)
    • In news:
      • The leading two candidates in South Korea’s presidential election are in dead heat, according to exit polls.
      • State refiners in China have been told to suspend exports of diesel and gasoline in April. Komatsu reported that the use of its machinery in China increased for the first time in eleven months in February.
      • Reserve Bank of Australia Governor Lowe said that the cash rate could be increased later this year.

  • Major European indices trade on a sharply higher note. STOXX Europe 600: +2.8% Germany’s DAX: +4.6% U.K.'s FTSE 100: +1.5% France’s CAC 40: +4.3% Italy’s FTSE MIB: +4.8% Spain’s IBEX 35: +2.7%.

    • In economic data:
      • France’s Q4 nonfarm payrolls 0.4% qtr/qtr (last 0.5%)
      • Italy’s January Industrial Production -3.4% m/m (expected 0.0%; last -1.1%); -2.6% yr/yr (expected 3.2%; last 4.8%)
    • In news:
      • The Russian foreign minister is meeting with his Ukrainian counterpart in Turkey today.
      • The U.K.'s National Institute of Economic and Social Research warned that the U.K. is headed for a recession if high energy prices persist.
      • EU Commissioner Timmermans refuted yesterday’s report that the EU plans to sell joint debt to finance energy and defense.

U.S. equity futures:

  • S&P 500 Futures: +74 @ 4,244
  • DJIA Futures: +510 @ 33,143
  • Nasdaq 100 Futures: +290 @ 13,558

Overseas:

  • Europe: DAX +4.6%, FTSE +1.5%, CAC +4.3%
  • Asia: Nikkei +1.0%, Hang Seng -0.7%, Shanghai Composite -1.1%

Commodities:

  • Crude Oil -3.82 @ 119.87
  • Nat Gas -0.048 @ 4.479
  • Gold -19.70 @ 2023.60
  • Silver -0.162 @ 26.733
  • Copper -0.0837 @ 4.6263
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