Morning Markets

March S&P 500 futures (ESM23) this morning are down -0.09%, and March Nasdaq 100 E-Mini futures (NQM23) are down -0.19%.

U.S. stock index futures this morning are slightly lower as the markets await today’s interest rate decision from the Fed.  The federal funds futures market is discounting an 80% chance for the Fed to raise its federal funds target range by 25 bp to 4.75-5.00% from the current 4.50-4.75%.  The FOMC will also issue updated interest rate projections and offer guidance on whether they still expect additional interest rate increases this year.

The markets will also scour post-FOMC meeting comments from Fed Chair Powell, who may adopt a more cautious approach to tightening monetary policy due to the crisis of confidence in the banking system.   

Global bond yields are climbing this morning on hawkish comments from ECB President Lagarde and an unexpected acceleration of UK consumer prices in February.  The 10-year T-note yield today is up +2.1 bp at 3.630%, the 10-year German bund is up +9.1 bp at 2.384%, and the 10-year UK gilt yield jumped to a 1-week high of 3.562%. 

Overseas stock markets are higher.  The Euro Stoxx 50 today is up +0.39%.  China’s Shanghai Composite stock index closed up +0.31%, and Japan’s Nikkei Stock Index closed up +1.93%. 

The Euro Stoxx 50 index today is moderately higher.  A rally in European bank stocks is leading the overall market higher today as fears about the financial system eased.  UBS Group AG is up more than +3% today after it said it wanted to buy back some of its euro-denominated senior unsecured bail-in notes in the wake of its purchase of Credit Suisse Group AG.  UBS has now recovered nearly all of its losses made during the recent banking rout.  Stock gains were limited as bond yields rose on hawkish comments from ECB President Lagarde, who said the ECB would take a “robust” approach to inflation risks. 

ECB President Lagarde said, "we do not see clear evidence that underlying inflation is trending downwards," and the ECB will take a "robust" approach that allows it to respond to inflation risks as needed but also aid financial markets if threats emerge.  As a result, the 10-year German bund yield is up +4.7 bp at 2.340%.

The British pound climbed to a 6-week high after today’s UK consumer price report showed UK Feb CPI unexpectedly accelerated, bolstering the outlook for the BOE to raise interest rates by 25 bp on Thursday.   UK Feb CPI unexpectedly accelerated to +10.4% y/y from +10.1% y/y in Jan, stronger than expectations of an easing to +9.9% y/y.

China’s Shanghai Composite today posted moderate gains.  A rally in Chinese financial stocks led the overall market higher as concern about a global banking crisis abated.  Chinese electric vehicle makers also rallied today after the government released guidelines to encourage auto consumption, providing a subsidy of 10,000 yuan ($1,452) for those that trade in a used car for an electric vehicle (EV) before the end of August.  In addition, suppliers of EV batteries and battery materials moved higher after Nomura said it is bullish on the sector and expected EV battery demand to grow by +43% this year.

Japan’s Nikkei Stock Index today rose to a 1-week high and finished moderately higher.  Japanese bank stocks moved higher today as sentiment in the banking sector improved after U.S. Treasury Secretary Yellen said the U.S. government could intervene if the stability of smaller banks is threatened.  Japanese shipping stocks rallied after Nomura said the sector is attractive because of its low price-to-book valuations and for its defensive qualities in the wake of the U.S.-European banking turmoil.  In addition, Japanese videogame makers rose after China announced approvals of some foreign online games.

Pre-Market U.S. Stock Movers

First Republic Bank (FRC) gave up an overnight advance of more than +4% and is now down -5% in pre-market trading as U.S. officials discuss the possibility of government backing to encourage a deal to shore up the bank.

Nike (NKE) slid more than -1% in pre-market trading after saying it sees the fiscal year 2023 gross margins declining about 250 basis points, at the low end of a December projection for a decline of 200 to 250 basis points.

Petco (WOOF) tumbled more than -6% in pre-market trading after reporting Q4 net sales of $1.58 billion, below the consensus of $1.59 billion. 

DR Horton (DHI) slid more than -1% in pre-market trading after Wolfe Research downgraded the stock to peer perform from outperform.

Antero Resources (AR) fell more than -1% in pre-market trading after BMO Capital Markets downgraded the stock to market perform from outperform.

Meta Platforms (META) is up more than +1% in pre-market trading after KeyBanc Capital Markets upgraded the stock to overweight from sector weight. 

GameStop (GME) surged more than +45% in pre-market trading after reporting an unexpected Q4 EPS profit of 16 cents, much better than expectations of a -15 cent EPS loss.  AMC Entertainment Holdings (AMC) also rose +10% on the news.

Winnebago Industries (WGO) climbed more than +5% in pre-market trading after reporting Q2 adjusted EPS of $1.88, well above the consensus of $1.30. 

Spotify (SPOT) rose more than +2% in pre-market trading after Guggenheim Securities upgraded the stock to buy from neutral.

Krispy Kreme (DNUT) jumped more than +3 in pre-market trading after Truist Securities upgraded the stock to buy from hold. 

Ollie’s Bargain Outlet Holdings (OLLI) surged more than +11% in pre-market trading after reporting Q4 comparable sales rose +3%, stronger than the consensus of +1.83% and forecast 2024 net sales of $2.04 billion-$2.06 billion, above the consensus of $2.01 billion

Today’s U.S. Earnings Reports (3/22/2023)

Absci Corp (ABSI), Aeva Technologies Inc (AEVA), Focus Universal Inc (FCUV), Hycroft Mining Holding Corp (HYMC), KB Home (KBH), MillerKnoll Inc (MLKN), NextNav Inc (NN), Ollie's Bargain Outlet Holding (OLLI), Petco Health & Wellness Co Inc (WOOF), Phreesia Inc (PHR), Shoe Carnival Inc (SCVL), Steelcase Inc (SCS), Third Harmonic Bio Inc (THRD), Winnebago Industries Inc (WGO), Worthington Industries Inc (WOR).

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