The S&P 500 futures trade 29 points, or 0.7%, below fair value as growth concerns continue to pressure risk sentiment in front of a huge week for earnings.
Growth concerns were especially evident in Asia, where China’s Shanghai Composite dropped 5.1% on Monday and Hong Kong’s Hang Seng dropped 3.7%. Chinese officials reportedly described the coronavirus situation as “grim” with cases and deaths continuing to rise.
In addition, the Fed’s plans to tighten policy more aggressively continue to hang over the market while ECB members reportedly want a rate hike in July and a fast end to bond purchases. Elsewhere, Russia’s war in Ukraine continues to show no end in sight.
Appropriately, Treasury yields are trading lower, oil prices are trading below $100 per barrel ($97.75, -4.32, -4.2%), and the U.S. Dollar Index (101.61, +0.39, +0.4%) is up once again. The 2-yr yield is down 11 basis points to 2.60%, and the 10-yr yield is down nine basis points to 2.82%.
Regarding earnings, Microsoft ( MSFT 271.50, -2.53, -0.9%) and Alphabet ( GOOG 2374.60, -17.68, -0.7%) will report after Tuesday’s close, Meta Platforms ( FB 182.00, -2.11, -1.2%) on Wednesday, and Apple ( AAPL 160.25, -1.54, -1.0%) and Amazon.com ( AMZN 2855.00, -32.00, -1.1%) on Thursday.
Coca-Cola ( KO 65.57, +0.32, +0.5%), meanwhile, is up modestly in pre-market action after beating top and bottom-line estimates.
In U.S. Corporate news:
- Coca-Cola (KO 65.57, +0.32): +0.5% after beating top and bottom-line estimates.
- Twitter (TWTR 51.20, +2.27): +4.6% on takeover optimism. The company met with Elon Musk yesterday on a potential deal that could be finalized by this week, according to The Wall Street Journal . CNBC is reporting a deal could happen as soon as today.
- Advanced Micro Devices (AMD 88.33, +0.21): +0.2% after the stock was upgraded to Strong Buy from Outperform at Raymond James.
- Verizon (VZ 51.20, -0.71): -1.4% amid an analyst downgrade to Neutral from Buy at Goldman following its earnings report last week.
Reviewing overnight developments:
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Equity indices in the Asia-Pacific region began the week on a lower note while markets in Australia and New Zealand were closed for ANZAC Day. Japan’s Nikkei: -1.9% Hong Kong’s Hang Seng: -3.7% China’s Shanghai Composite: -5.1% India’s Sensex: -1.1% South Korea’s Kospi: -1.8% Australia’s ASX All Ordinaries: CLOSED.
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In economic data:
- Japan’s February Corporate Services Price Index 1.3% yr/yr (expected 1.2%; last 1.1%). February Leading Index -1.2% m/m (last -1.6%) and Coincident Indicator 0.5% m/m (last -0.1%)
- Singapore’s March CPI 5.4% yr/yr (expected 4.7%; last 4.3%)
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In news:
- Equities in China struggled notably while the yuan fell to its lowest level since November 2020 against the dollar.
- Nikkei reported that Japan’s government is planning JPY6.2 trln in new stimulus.
- The spokesman for Japan’s Finance Ministry denied last week’s reports that a plan for joint currency intervention was discussed with U.S. Treasury Secretary Yellen.
- China’s National Development and Reform Commission expects that the 3.0% CPI target will be reached this year.
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Major European indices trade in the red. STOXX Europe 600: -2.0% Germany’s DAX: -1.5% U.K.'s FTSE 100: -2.0% France’s CAC 40: -2.1% Italy’s FTSE MIB: -1.6% Spain’s IBEX 35: -0.4%.
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In economic data:
- Eurozone’s February Construction Output 1.86% m/m (last 3.87%)
- Germany’s April ifo Business Climate Index 91.8 (expected 89.1; last 90.8). April Current Assessment 97.2 (expected 95.8; last 97.1) and Business Expectations 86.7 (expected 83.5; last 84.9)
- U.K.'s April CBI Industrial Trends Orders 14 (expected 21; last 26)
- Spain’s March PPI 46.6% yr/yr (last 41.2%)
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In news:
- The EU’s next set of sanctions on Russia may be presented today.
- French President Macron won a second term.
- European Central Bank President Lagarde indicated that there is a high probability that asset purchases will end in early Q3.
- The German government is expected to announce that this year’s borrowing plan was increased by EUR40 bln to EUR140 bln. Separately, this year’s CPI forecast was raised to 6.1% from 3.3%.
- Standard & Poor’s affirmed Italy’s BBB rating with a Positive outlook while Greece’s rating was raised to BB+ from BB.
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U.S. equity futures:
- S&P 500 Futures: -31 @ 4,281
- DJIA Futures: -197 @ 33,614
- Nasdaq 100 Futures: -104 @ 13,253
Overseas:
- Europe: DAX -1.5%, FTSE -2.0%, CAC -2.1%
- Asia: Nikkei -1.9%, Hang Seng -3.7%, Shanghai Composite -5.1%
Commodities:
- Crude Oil -5.26 @ 96.81
- Nat Gas +0.059 @ 6.722
- Gold -26.75 @ 1907.65
- Silver -0.669 @ 23.590
- Copper -0.1040 @ 4.4900