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03/07/23 Briefing



The S&P 500 futures are down 4 points and are trading fractionally below fair value. The Nasdaq 100 futures are flat and are trading in line with fair value. The Dow Jones Industrial Average futures are down 74 points and are trading 0.2% below fair value.

This first day of the new month, new quarter, and second half of the year is poised to start on a mixed note for the stock market. There has not been a lot of conviction on the part of buyers or sellers, leading to limited moves in the equity futures market.

Some of the hesitation relates to holiday conditions, as market participants take advantage of an extended July 4break.

Market participants are digesting capital return plans announced by the banks after Friday'sclose and await the ISM Manufacturing PMI report at 10:00 a.m. ET

China's Caixin Manufacturing PMI remained in expansionary territory for the second consecutive month, but still declined to 50.5 from 50.9.

As a reminder, the stock market closes early today at 1:00 p.m. ETand the Treasury market closes at 2:00 p.m. ET

Market participants will receive the following U.S. economic data today:

  • 9:45 a.m. ET: June IHS Markit Manufacturing PMI - Final (Prior 48.4)

  • 10:00 ET: May Construction Spending (Briefing.comconsensus 0.4%; Prior 1.2%)

  • 10:00 ET: June ISM Manufacturing Index (Briefing.comconsensus 47.1; Prior 46.9)

Treasury yields have been climbing. The 2-yr note yield is up seven basis points to 4.94% and the 10-yr note yield is up five basis points to 3.86%.

In corporate news:

  • Tesla (TSLA 278.34, +16.58, +6.3%): reports Q2 deliveries of 466,140 vehicles

  • Apple (AAPL 193.50, -0.47, -0.2%): Goldman Sachs is reportedly seeking a way out of its partnership with Apple; American Express (AXP) to possibly take over card deal, according to WSJ; Apple makes large cuts to Vision Pro production forecasts, according to the FT.

  • AstraZeneca (AZN 67.09, -4.48, -6.3%): reports Datopotamab deruxtecan met dual primary endpoint of progression-free survival in patients with advanced non-small cell lung cancer in TROPION-Lung01 Phase III trial; For the dual primary endpoint of overall survival (OS), the data were not mature and an early trend was observed in favour of datopotamab deruxtecan versus docetaxel that did not meet the prespecified threshold for statistical significance at this interim analysis

  • Netflix (NFLX 439.03, -1.46, -0.3%): to revamp advertising strategy, according to FT

  • Morgan Stanley (MS 86.43, +1.03, +1.2%): to increase its quarterly dividend to $0.85/share from $0.775/share and reauthorizes a share repurchase program of up to $20 bln

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a higher note. Japan's Nikkei: +1.7%, Hong Kong's Hang Seng: +2.1%, China's Shanghai Composite: +1.3%, India's Sensex: +0.8%, South Korea's Kospi: +1.5%, Australia's ASX All Ordinaries: +0.6%.

  • In economic data:

  • China's June Caixin Manufacturing PMI 50.5 (expected 50.2; last 50.9)

  • Japan's June Manufacturing PMI 49.8, as expected (last 50.6). Q2 Tankan All Big Industry Capex 13.4% (expected 10.1%; last 3.2%). Q2 Big Manufacturers Outlook Index 9 (expected 5; last 3) and Q2 Large Non-Manufacturers Index 23 (expected 22; last 20)

  • South Korea's June Nikkei Manufacturing PMI 47.8 (expected 49.4; last 48.4)

  • India's June Manufacturing PMI 57.8 (expected 58.0; last 58.7)

  • Hong Kong's May Retail Sales 18.4% yr/yr (expected 11.5%; last 15.0%)

  • Australia's May Building Approvals 20.6% m/m (expected 2.0%; last -6.8%) and Home Loans 4.0% m/m (last -3.0%). May Private House Approvals 0.9% m/m (last -3.8%) and June MI Inflation Gauge 0.1% m/m (last 0.9%). June Manufacturing PMI 48.2 (expected 48.6; last 48.4) and June Commodity Prices -21.5% yr/yr (expected -15.5%; last -22.2%)

  • New Zealand's May Building Consents -2.2% m/m (expected -1.8%; last -2.6%)

  • Singapore's Q2 URA Property Index -0.4% qtr/qtr (expected 2.3%; last 3.3%)

  • In news:

  • China's Caixin Manufacturing PMI remained in expansionary territory for the second consecutive month while Japan's Manufacturing PMI slipped back into contraction after one month of expansion.

  • The Bank of Japan announced that the frequency and size of its bond purchases will not change in Q3.

  • Japan and the EU are reportedly discussing a broadening of their maritime, cyberspace, and supply chain security cooperation.

  • The Reserve Bank of Australia is expected to raise its cash rate by 25 bps to 4.35% overnight.

  • Major European indices trade in positive territory. STOXX Europe 600: +0.2%, Germany's DAX: UNCH, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.2%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +0.5%.

  • In economic data:

  • Eurozone's June Manufacturing PMI 43.4 (expected 43.6; last 44.8)

  • Germany's June Manufacturing PMI 40.6 (expected 41.0; last 43.2)

  • U.K.'s June Manufacturing PMI 46.5 (expected 46.2; last 47.1)

  • France's June Manufacturing PMI 46.0 (expected 45.5; last 45.7). May Budget deficit EUR107.20 bln (last deficit of EUR83.70 bln)

  • Italy's June Manufacturing PMI 43.8 (expected 45.3; last 45.9)

  • Spain's June Manufacturing PMI 48.0 (expected 47.7; last 48.4)

  • Swiss June procure.chPMI 44.9 (expected 42.3; last 43.2) and June CPI 0.1% m/m (expected 0.2%; last 0.3%); 1.7% yr/yr (expected 1.8%; last 2.2%)

  • In news:

  • Final June Manufacturing PMI readings from Germany, France, Spain, Italy, Switzerland, and the U.K. remained in contractionary territory.

  • Germany expects EUR16.6 bln of net new borrowing for 2024 and it is planning to spend 2% of GDP on defense, in-line with the NATO target.

 

U.S. equity futures:

  • S&P 500 Futures: -4 @ 4,384

  • DJIA Futures: -74 @ 34,569

  • Nasdaq 100 Futures: flat  @ 15,337

Overseas:

  • Europe: DAX unch, FTSE +0.3%, CAC +0.2%

  • Asia: Nikkei +1.7%, Hang Seng +2.1%, Shanghai Composite +1.3%

Commodities:

  • Crude Oil +0.63 @ 71.27

  • Nat Gas -0.087 @ 2.687

  • Gold -9.20 @ 1920.20

  • Silver -0.045 @ 22.975

  • Copper +0.0240 @ 3.7835


 

Earnings/Guidance:

  • There are no earnings results of note

News:

  • President Biden announced new student debt relief actions

  • Treasury Secretary Janet Yellen will travel to China on Wednesday, according to New York Times

  • Saudi Arabia and Russia extend oil production cuts, according to Bloomberg

  • Macau Gaming Inspection and Coordination Bureau reported June gross revs 514% yr/yr to HKD 15.2 bln versus -62.1% in June of 2022

  • EV charging firms are against Texas plan to mandate Tesla (TSLA) charging standard, according to Reuters

  • Apple (AAPL) makes large cuts to Vision Pro production forecasts, according to FT

  • AstraZeneca (AZN) reports Datopotamab deruxtecan met dual primary endpoint of progression-free survival in patients with advanced non-small cell lung cancer in TROPION-Lung01 Phase III trial

  • ATS Corp (ATS) adopts shareholder rights plan

  • BNY Mellon (BK) increases quarterly common stock dividend 14% to $0.42/share from $0.37/share

  • Citigroup (C) plans to increase dividend by 4%

  • Goldman Sachs (GS) seeking a way out of its partnership with Apple (AAPL); American Express (AXP) to possibly take over card deal, according to The Wall Street Journal

  • Goldman Sachs (GS) to increase quarterly dividend by 10% to $2.75/sh

  • JPMorgan Chase (JPM) to increase dividend by 5%, to maintain share buyback plan at current level, continues to maintain a "fortress balance sheet"

  • Microchip (MCHP) launches $300 mln multi-year investment initiative to expand its presence in India

  • Moderna (MRNA) submits filing to EMA for COVID-19 Vaccine

  • Morgan Stanley (MS) to increase its quarterly dividend to $0.85/share from $0.775/share and reauthorizes a share repurchase program of up to $20 bln

  • Netflix (NFLX) to revamp advertising strategy, according to FT

  • Nokia (NOK) signs a new patent cross-license agreement with Apple (AAPL) which will replace the current license that is due to expire at the end of 2023

  • State Street (STT) announces preliminary stress capital buffer requirement, to be maintained at 2.5%; increases its quarterly dividend 10% to $0.69/share; remains committed to repurchasing shares under existing authorization for up to $4.5 bln in 2023

  • Tesla (TSLA) reports Q2 deliveries of 466,140 vehicles (produced nearly 479,700 vehicles)

  • Truist (TFC) to maintain dividend at current level

  • UBS (UBS) not expected to take Credit Suisse (CS) domestic unit public, according to Bloomberg

  • U.S. Bancorp (USB) comments on 2023 Dodd-Frank Act Stress Test Results; common stock repurchases currently remain suspended

  • Wells Fargo (WFC) expects to increase its third quarter 2023 common stock dividend to $0.35/share from $0.30/share

M&A:

  • Glencore Intl plc (GLNCY) submits proposal to Polymet Mining's (PLM) Board for $2.11/share in cash

  • Great Ajax (AJX) and Ellington Financial (EFC) announce merger agreement; Ellington Financial's common stock closing price on the New York Stock Exchange on June 30, 2023 implies an offer price of $7.33 per share of Great Ajax common stock

  • RPC (RES) to acquire Spinnaker Oilwell Services, an oilfield cementing services provider, for $79.5 mln

Syndicate:

  • Cibus Global (CBUS) files $200 mln mixed shelf securities offering

  • DiaMedica Therapeutics (DMAC) files for 11,011,406 shares of common stock by selling shareholders

  • Energy Vault (NRGV) files for $300 mln mixed securities shelf offering

  • SKYX Platforms (SKYX) files for 7,274,939 shares of common stock by selling shareholders

  • TOP Financial Group Limited (TOP) files $300 mln mixed shelf securities offering

  • VSE Corp (VSEC) files for 3,500,000 shares of common stock

IPOs:

  • There are no IPOs scheduled at this time

Gapping Up/Down

  • Gapping up:

  • XPEV +8.9%, AJX +8.5%, TSLA +6.4%, LI +6%, NIO +5%, NRGV +4.4%, DMAC +4.2%, GCT +3.6%, LH +3.4%, NOK +2.2%, BITF +2%, MS +1.2%

  •  Gapping down:

  • AZN -5.9%, TOP -4.3%, KRYS -3.6%, SKYX -3%, CBUS -2%, EFC -1.4%, TRUP -1.2%, IFRX -1.1%, RES -1%

 

Analyst Research (see Upgrades/Downgradescalendarfor full list):

  • Upgrades

  • ACMR, LAZ, SO

  • Downgrades:

  • COIHY, SMNUF

  • Others:

  • AMZN, LFMD, LCID

Econ Data:

  • 10:00 ET: May Construction Spending (prior 1.2%)

  • 10:00 ET: June ISM Manufacturing Index (prior 46.9)

Earnings:

  • Monday (July 3)

  • Morning: None

  • Afternoon: None

  • Tuesday (July 4)

  • Morning: Closed for holiday

  • Afternoon: Closed for holiday

  • Wednesday (July 5)

  • Morning: None

  • Afternoon: None

  • Thursday (July 6)

  • Morning: None

  • Afternoon: LEVI

  • Friday (Jul 7) 

  • Morning: None

  • Afternoon: AZZ

 

Asia & Europe detail:

Asia: Nikkei +1.7%, Hang Seng +2.1%, Shanghai Composite +1.3%

Equity indices in the Asia-Pacific region began the week on a higher note. China's Caixin Manufacturing PMI remained in expansionary territory for the second consecutive month while Japan's Manufacturing PMI slipped back into contraction after one month of expansion. The Bank of Japan announced that the frequency and size of its bond purchases will not change in Q3. Japan and the EU are reportedly discussing a broadening of their maritime, cyberspace, and supply chain security cooperation. The Reserve Bank of Australia is expected to raise its cash rate by 25 bps to 4.35% overnight.

  • In economic data:

  • China's June Caixin Manufacturing PMI 50.5 (expected 50.2; last 50.9)

  • Japan's June Manufacturing PMI 49.8, as expected (last 50.6). Q2 Tankan All Big Industry Capex 13.4% (expected 10.1%; last 3.2%). Q2 Big Manufacturers Outlook Index 9 (expected 5; last 3) and Q2 Large Non-Manufacturers Index 23 (expected 22; last 20)

  • South Korea's June Nikkei Manufacturing PMI 47.8 (expected 49.4; last 48.4)

  • India's June Manufacturing PMI 57.8 (expected 58.0; last 58.7)

  • Hong Kong's May Retail Sales 18.4% yr/yr (expected 11.5%; last 15.0%)

  • Australia's May Building Approvals 20.6% m/m (expected 2.0%; last -6.8%) and Home Loans 4.0% m/m (last -3.0%). May Private House Approvals 0.9% m/m (last -3.8%) and June MI Inflation Gauge 0.1% m/m (last 0.9%). June Manufacturing PMI 48.2 (expected 48.6; last 48.4) and June Commodity Prices -21.5% yr/yr (expected -15.5%; last -22.2%)

  • New Zealand's May Building Consents -2.2% m/m (expected -1.8%; last -2.6%)

  • Singapore's Q2 URA Property Index -0.4% qtr/qtr (expected 2.3%; last 3.3%)

---Equity Markets---

  • Japan's Nikkei: +1.7%

  • Hong Kong's Hang Seng: +2.1%

  • China's Shanghai Composite: +1.3%

  • India's Sensex: +0.8%

  • South Korea's Kospi: +1.5%

  • Australia's ASX All Ordinaries: +0.6%

---FX---

  • USD/JPY: +0.3% to 144.72

  • USD/CNH: UNCH at 7.2630

  • USD/INR: -0.2% to 81.89

 

Europe: DAX unch, FTSE +0.3%, CAC +0.2%

Major European indices trade in positive territory. Final June Manufacturing PMI readings from Germany, France, Spain, Italy, Switzerland, and the U.K. remained in contractionary territory. Germany expects EUR16.6 bln of net new borrowing for 2024 and it is planning to spend 2% of GDP on defense, in-line with the NATO target.

  • In economic data:

  • Eurozone's June Manufacturing PMI 43.4 (expected 43.6; last 44.8)

  • Germany's June Manufacturing PMI 40.6 (expected 41.0; last 43.2)

  • U.K.'s June Manufacturing PMI 46.5 (expected 46.2; last 47.1)

  • France's June Manufacturing PMI 46.0 (expected 45.5; last 45.7). May Budget deficit EUR107.20 bln (last deficit of EUR83.70 bln)

  • Italy's June Manufacturing PMI 43.8 (expected 45.3; last 45.9)

  • Spain's June Manufacturing PMI 48.0 (expected 47.7; last 48.4)

  • Swiss June procure.chPMI 44.9 (expected 42.3; last 43.2) and June CPI 0.1% m/m (expected 0.2%; last 0.3%); 1.7% yr/yr (expected 1.8%; last 2.2%)

---Equity Markets---

  • STOXX Europe 600: +0.2%

  • Germany's DAX: UNCH

  • U.K.'s FTSE 100: +0.3%

  • France's CAC 40: +0.2%

  • Italy's FTSE MIB: +1.0%

  • Spain's IBEX 35: +0.5%

---FX---

  • EUR/USD: -0.1% to 1.0901

  • GBP/USD: -0.1% to 1.2677

  • USD/CHF: +0.5% to 0.8989

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