Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.
Stocks Bounce Back Ahead of Today’s Triple-Witching Expiry
Morning Markets
September S&P 500 futures (ESU22) this morning are up by +1.00%. Stock indexes futures are recovering from Thursday’s rout that took the S&P 500 down to a 1-1/2 year low. Today brings the quarterly expiration of stock futures and options known as triple witching. The market is looking ahead to today’s expiration of $3.5 trillion in option positions and also the weight-rebalancing of many indexes.
A positive for stocks is data from EPFR Global showing that U.S. stocks attracted $14.8 billion in inflows in the week through June 15. U.S. stock indexes also have carry-over support from a rally in European stocks today after Bank of America raised its recommendation on European stocks to neutral from negative.
In welcoming remarks today at a Fed conference on the international role of the dollar, Fed Chair Powell said, “my colleagues and I are acutely focused on returning inflation to our 2% objective. The Federal Reserve’s strong commitment to our price-stability mandate contributes to the widespread confidence in the dollar as a store of value.”
The Euro Stoxx 50 today is up by +1.35%. European stocks are climbing today on an upgrade from Bank of America, which raised their recommendation on European stocks to neutral from negative, saying the selloff in European equities has gone too far as most of the impact from negative economic news is now priced in.
Also, European M&A activity is positive for the overall market as bank stocks are rallying today, led by a +17% jump in ABN Amro Bank NV, following a Bloomberg News report that said BNP Paribas is interested in acquiring the bank. In addition, lower European government bond yields are positive for stocks, with the 10-year German bund yield down -5.1 bp at 1.662%, falling back from Thursday’s 8-year high of 1.928%.
ECB Governing Council member Knot said several 50 bp increases in interest rates by the ECB could be needed if inflation worsens.
Asian markets today settled mixed. China’s Shanghai Composite Index closed up by +0.96%, and Japan’s Nikkei stock index tumbled to a 5-week low and closed down by -1.77%.
Chinese stocks today posted moderate gains on speculation the government’s pro-growth policies will keep Chinese stocks outperforming their peers. Also, a reduction in new Covid cases in China should allow the government to lift pandemic lockdowns and reopen the Chinese economy.
Japanese stocks tumbled today, led by a slide in technology stocks on negative carry-over from Thursday’s plunge in U.S. technology stocks. Also, concerns are growing that the campaign by the world’s central banks to tighten their monetary policies to rein in inflation may become overdone and throw major economies into recessions.
Japanese stocks fell today even after the BOJ kept its ultra-loose monetary setting unchanged. The BOJ, in an 8-1 vote, maintained its policy balance rate at -0.1% and kept the 10-year JGB yield target at about 0%.
BOJ Governor Kuroda said the BOJ is not thinking about raising the upper limit on the 10-year JGB yield ceiling target range, and any tightening of monetary policy would add downward pressure on the economy.
Pre-Market U.S. Stock Movers
U.S. Steel (X) jumped more than +5% in pre-market trading after forecasting Q2 adjusted Ebitda of about $1.60 billion, better than the consensus of $1.34 billion.
Roku (ROKU) climbed more than +3% in pre-market trading after it announced that it had entered into a pact with Walmart to enable streamers to purchase featured products fulfilled by Walmart directly on Roku.
U.S.-listed Chinese stocks are climbing in pre-market trading as the market recovers slightly after the Nasdaq Golden Dragon China Index plunged more than -4% on Thursday. JD.com (JD) is up more than +6%. Also, Alibaba Group Holding (BABA), Pinduoduo (PDD), and Baidu (BIDU) are up more than +4%.
Revlon (REV) surged more than +60% in pre-market trading after Reliance Industries said it is considering buying Revlon in the U.S.
Adobe (ADBE) dropped -4% in pre-market trading after cutting its full-year revenue forecast to $17.65 billion from an earlier estimate of $17.90 billion, below the consensus of $17.86 billion.
Owens Corning (OC) slid more than -1% in pre-market trading after Bank of America downgraded the stock to underperform from buy.
Rhythm Pharmaceuticals (RYTM) tumbled -12% in pre-market trading after the company’s Imcivree injection failed to win FDA approval for one of the two supplemental indications it sought.
Today’s U.S. Earnings Reports (6/17/2022)
None.
More Stock Market News from Barchart
