The S&P 500 futures trade 28 points, or 0.7%, above fair value in a buy-the-dip trade, even as oil prices top $110 per barrel this morning.
WTI crude futures are currently up 6.3%, or $6.54, to $109.96/bbl, spurred by supply-constraint expectations brought on by the longer-than-expected Russian invasion of Ukraine. The invasion has entered its seventh day.
President Biden, in his State of the Union Address last night, said the U.S. is ready to release more oil into the market, if necessary, unified with its allies. Recall, the U.S. and 30 other countries agreed yesterday to release 60 million barrels of oil, or 4% of their total emergency stockpiles.
The market will soon hear a production decision from OPEC+, which is expected to stick to its schedule of increasing output by 400,000 barrels per day. Later, Fed Chair Powell will appear before Congress for his semiannual monetary policy testimony, starting today at 10:00 a.m. ET and continuing tomorrow morning.
After two days of heavy buying, the Treasury market is looking a little weaker this morning, driving yields higher. The 2-yr yield is up nine basis points to 1.39%, and the 10-yr yield is up five basis points to 1.76%. The U.S. Dollar Index is up 0.1% to 97.54.
Separately, Dow component salesforce.com ( CRM 217.30, +8.41, +4.0%) is up 4% in pre-market action after topping earnings expectations and providing upside revenue guidance. Nordstrom ( JWN 25.82, +6.28, +32.1%) has soared 32% after providing positive earnings results and guidance.
On the data front, investors will receive the ADP Employment Change report for February (Briefing.com consensus 350,000) at 8:15 a.m. ET, weekly crude inventories at 10:30 a.m. ET, and the Fed’s Beige Book at 2:00 p.m. ET. The weekly MBA Mortgage Applications Index decreased 0.7% following a 13.1% decline in the prior week.
In U.S. Corporate news:
- salesforce.com (CRM 217.30, +8.41): +4.0% after beating top and bottom-line estimates and guiding revenue for Q1 and FY23 above consensus. That has outweighed downside EPS guidance for Q1 and FY23.
- Nordstrom (JWN 25.82, +6.28): +32.1% after beating EPS estimates and guiding FY23 EPS above consensus.
- Hewlett Packard Enterprises (HPE 16.25, +0.84): +5.5% after beating EPS estimates and guiding FY22 EPS mostly above consensus.
- Ross Stores (ROST 95.16, +5.61): +6.3% after beating top and bottom-line estimates and authorizing a $1.9 billion share repurchase program. Ross provided downside EPS guidance for fiscal Q1 and FY23.
Reviewing overnight developments:
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Equity indices in the Asia-Pacific region ended Wednesday on a mostly lower note. Japan’s Nikkei: -1.7% Hong Kong’s Hang Seng: -1.8% China’s Shanghai Composite: -0.1% India’s Sensex: -1.4% South Korea’s Kospi: +0.2% Australia’s ASX All Ordinaries: +0.3%.
- In economic data:
- Japan’s Q4 Capital Spending 4.3% yr/yr (expected 2.9%; last 1.2%)
- South Korea’s January Industrial Production 0.2% m/m (expected -0.6%; last 3.7%); 4.3% yr/yr (expected 6.5%; last 7.4%). January Retail Sales -1.9% m/m (last 2.0%). February Nikkei Manufacturing PMI 53.8 (last 52.8)
- India’s February Nikkei Markit Manufacturing PMI 54.9 (expected 54.3; last 54.0)
- Australia’s Q4 GDP 3.4% qtr/qtr (expected -2.7%; last -1.9%); 4.2% yr/yr (expected 3.0%; last 4.0%)
- New Zealand’s January Building Consents -9.2% m/m (last 0.6%)
- In news:
- South Korea’s Yoon Suk-yeol maintains a lead in the polls ahead of next Wednesday’s presidential election.
- South Korea’s Manufacturing PMI expanded for the 17th consecutive month with the Index reaching its highest level since June.
- Shanghai banks are reportedly slightly lowering mortgage rates for first and second homes.
- Chinese press reported that the production of soybeans will be increased sharply.
- Taiwan’s President Tsai praised the visit of a U.S. delegation, saying that it shows rock solid ties.
- In economic data:
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Major European indices trade in the green after a couple days of losses. STOXX Europe 600: +0.5% Germany’s DAX: +0.4% U.K.'s FTSE 100: +0.8% France’s CAC 40: +0.8% Italy’s FTSE MIB: +0.3% Spain’s IBEX 35: +1.3%.
- In economic data:
- Eurozone’s February CPI 0.9% m/m (last 0.3%); 5.8% yr/yr (expected 5.3%; last 5.1%). February Core CPI 0.5% m/m (last -0.9%); 2.7% yr/yr (expected 2.5%; last 2.3%)
- Germany’s February Unemployment change -33,000 (expected -23,000; prior -48,000) and February Unemployment Rate 5.0% (expected 5.1%; last 5.1%)
- U.K.'s February Nationwide HPI 1.7% m/m (expected 0.6%; last 0.8%); 12.6% yr/yr (expected 10.7%; last 11.2%)
- France’s January government budget deficit EUR15.90 bln (last deficit of EUR170.70 bln)
- Spain’s February Unemployment Change -11,400 (expected -44,500; last 17,200)
- In news:
- Negotiators from Ukraine and Russia will reportedly hold talks today.
- Bank of England policymaker Saunders said that CPI could stay above target without action from the BoE, adding that prompt tightening could limit the total scale of tightening that will be necessary.
- Bundesbank’s annual report forecast inflation to average 5.0% in 2022.
- Spain will extend tax breaks on energy until the end of June.
- In economic data:
U.S. equity futures:
- S&P 500 Futures: +24 @ 4,331
- DJIA Futures: +195 @ 33,490
- Nasdaq 100 Futures: +84 @ 14,090
Overseas:
- Europe: DAX +0.4%, FTSE +0.8%, CAC +0.8%
- Asia: Nikkei -1.7%, Hang Seng -1.8%, Shanghai Composite -0.1%
Commodities:
- Crude Oil +6.87 @ 110.78
- Nat Gas +0.135 @ 4.708
- Gold -15.90 @ 1927.90
- Silver -0.406 @ 25.135
- Copper +0.0875 @ 4.6840