September E-Mini S&P 500 futures (ESU23) and Sep Nasdaq 100 E-Mini futures (NQU23) are both showing positive movement, up by +0.16% and +0.25%, respectively.
The stock indexes are moderately higher this morning, primarily boosted by a nearly +1% surge in Apple’s pre-market trading. Bloomberg News reported that the tech giant has requested suppliers to manufacture around 85 million iPhone 15 units this year, similar to the previous year’s production, driving up technology stocks. Additionally, a decline in T-note yields is also contributing to the positive sentiment in stock index futures.
Investors are closely eyeing the upcoming quarterly corporate earnings results, with over 500 major companies, including Alphabet and Meta Platforms, scheduled to report. Market participants will be scrutinizing these results to gauge the impact of the slowing economic momentum on profit margins.
This week, the focus will also be on the Federal Reserve and the European Central Bank (ECB) meetings. Both central banks are expected to raise their respective interest rates by 25 basis points, and investors will be seeking guidance on the possibility of further rate hikes.
Today’s economic news revealed that the Jun Chicago Fed activity index unexpectedly fell to -0.32, weaker than the expected increase to -0.13.
The markets have priced in a 96% probability of a +25 bp rate hike during the upcoming Tue/Wed FOMC meeting. The expected peak funds rate of 5.42% by November is +34 bp higher than the current effective federal funds rate of 5.08%.
Global bond yields have decreased, with the 10-year T-note yield down -3.7 bp at 3.798%, the 10-year German bund yields down -6.9 bp at 2.400%, and the 10-year UK Gilt yield down -8.7 bp at 4.193%.
Overseas stock markets present a mixed picture, with the Euro Stoxx 50 down -0.49%. European stocks are weighed down by economic concerns, particularly after a sharp contraction in manufacturing activity in the Eurozone, coupled with uncertainty regarding the economy’s recovery after the expected ECB rate hike. However, bank stocks are receiving support following a +7% surge in Julius Baer Group Ltd due to better-than-expected client additions.
China’s Shanghai Composite closed slightly lower, reaching a 3-1/2 week low. Investor skepticism surrounds the likelihood of significant stimulus measures to revive the economy, especially in the real estate sector, which accounts for about 20% of China’s economy. While the government has not proposed major stimulus, the release of a list of projects open to private investors and improved funding support has somewhat bolstered sentiment.
In contrast, Japan’s Nikkei Stock Index posted moderate gains, supported by indications that the Bank of Japan (BOJ) is unlikely to make immediate changes to its yield curve control program. The yen’s weakening also follows reports of an increase in the BOJ’s consumer inflation projection.
Pre-market U.S. stock movers include Apple (NASDAQ:AAPL), Mattel (NYSE:MAT), Lam Research (NASDAQ:LRCX), D.R. Horton (NYSE:DHI), Shopify (NYSE:SHOP), AppLovin (NASDAQ:APP), Chevron (NYSE:CVX), Tesla (NASDAQ:TSLA), American Express (NYSE:AXP), Zions Bancorp (NASDAQ:ZION), Gilead Sciences (NASDAQ:GILD), ZoomInfo Technologies (NASDAQ:ZI), and Twilio (NYSE:TWLO).
Today’s U.S. earnings reports feature Alexandria Real Estate Equities (NYSE:ARE), Brown & Brown Inc (NYSE:BRO), Cadence Design Systems Inc (NASDAQ:CDNS), Domino’s Pizza Inc (NYSE:DPZ), F5 Inc (NASDAQ:FFIV), NXP Semiconductors NV (NASDAQ:NXPI), Packaging Corp of America (NYSE:PKG), and Whirlpool Corp (NYSE:WHR).
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