The S&P 500 futures trade five points, or 0.1%, below fair value as the market takes a breather amid tempered hopes for a ceasefire.
Russia has refuted a breakthrough in talks with Ukraine, reportedly continuing its attacks near Kyiv despite promising to reduce military operations, according to Bloomberg . Foreign policy analysts have said that Russia is employing a tactical shift to focus on two eastern provinces.
The market, though, doesn’t seem too concerned about that situation right now based on the slightly negative bias in the futures market. It appears more likely that the futures market is taking a pause after the S&P 500 rallied 11.0% since March 14.
At the individual stock level, Micron ( MU 85.35, +3.30, +4.0%) and lululemon athletica ( LULU 369.34, +25.37, +7.4%) are standing out with 4% and 7% gains, respectively, after beating EPS estimates and providing upside guidance.
On the data front, investors will receive the ADP Employment Change report for March (Briefing.com consensus 440,000) at 8:15 a.m. ET and the third estimate for Q4 GDP (Briefing.com consensus 7.1%) at 8:30 a.m. ET. The weekly MBA Mortgage Applications Index fell 6.8% following an 8.1% decline in the prior week.
The Treasury yield curve is widening a bit after a brief inversion of the 2s10s spread yesterday. The 2-yr yield is down two basis points to 2.33% while the 10-yr yield is up one basis point to 2.41%. The U.S. Dollar Index is down 0.5% to 97.88. WTI crude is up 2.4% to $106.69/bbl amid expectations for OPEC+ to maintain current output for May.
In U.S. Corporate news:
- Micron (MU 85.35, +3.30): +4.0% after beating top and bottom-line estimates and guiding Q3 EPS and revenue above consensus.
- lululemon athletica (LULU 369.34, +25.37): +7.4% after beating EPS estimates, issuing upside EPS/revenue guidance for fiscal Q1 and FY22, and authorizing a $1 billion stock repurchase program.
- Five Below (FIVE 166.00, -5.39): -3.1% after guiding EPS and revenue for Q1 and FY23 below consensus.
- Chewy (CHWY 43.85, -7.15): -14.0% after missing top and bottom-line estimates and guiding revenue for Q1 and FY23 below consensus.
Reviewing overnight developments:
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Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan’s Nikkei: -0.8% Hong Kong’s Hang Seng: +1.4% China’s Shanghai Composite: +2.0% India’s Sensex: +1.3% South Korea’s Kospi: +0.2% Australia’s ASX All Ordinaries: +0.7%.
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In economic data:
- Japan’s February Retail Sales -0.8% yr/yr (expected -0.3%; last 1.1%)
- New Zealand’s February Building Consents 10.5% m/m (last -8.7%). March ANZ Business Confidence -41.9 (last -51.8)
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In news:
- The Bank of Japan continued buying JGBs ahead of tomorrow’s end of the fiscal year.
- China Securities Journal reported that Chinese companies have forecast an improvement in profits for Q1.
- Developer Evergrande is reportedly planning another asset sale.
- Australia is reportedly nearing a free trade agreement with India.
- Australia is planning to sell AUD125 bln in debt during FY22/23, up from AUD100 bln sold a year ago.
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Major European indices trade on a mostly lower note with Germany’s DAX (-1.4%) showing relative weakness. STOXX Europe 600: -0.6% Germany’s DAX: -1.4% U.K.'s FTSE 100: UNCH France’s CAC 40: -0.9% Italy’s FTSE MIB: -0.3% Spain’s IBEX 35: -0.7%.
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In economic data:
- Eurozone’s March Business and Consumer Survey 108.5 (expected 109.0; last 113.9)
- Italy’s January Industrial Sales 2.3% m/m (last -2.0%); 16.9% yr/yr (last 14.5%). February PPI 0.4% m/m (last 9.7%); 32.8% yr/yr (last 32.9%)
- Spain’s March CPI 3.0% m/m (expected 1.3%; last 0.8%); 9.8% yr/yr (expected 8.0%; last 7.6%). March Business Confidence 5.3 (last 10.0)
- Swiss March KOF Leading Indicators 99.7 (expected 100.8; last 105.3). March ZEW Expectations -27.8 (last 9.0)
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In news:
- European Central Bank President Lagarde said that inflation is expected to accelerate in the short term and that households have become more pessimistic. She also claimed that the economic consequences could be mitigated with the right response.
- European Central Bank policymaker Kazimir said that the first rate hike could take place by the end of the year.
- Germany has activated the early warning phase of its gas emergency law as the potential for shortages grows due to Germany’s refusal to pay for deliveries from Russia in rubles.
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U.S. equity futures:
- S&P 500 Futures: -11 @ 4,620
- DJIA Futures: -81 @ 35,213
- Nasdaq 100 Futures: -53 @ 15,186
Overseas:
- Europe: DAX -1.4%, FTSE UNCH, CAC -0.9%
- Asia: Nikkei -0.8%, Hang Seng +1.4%, Shanghai Composite +2.0%
Commodities:
- Crude Oil +2.45 @ 106.69
- Nat Gas +0.015 @ 5.345
- Gold +11.40 @ 1923.60
- Silver +0.324 @ 25.060
- Copper +0.0375 @ 4.7685