The S&P 500 futures are down 34 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 128 points and are trading 1.3% below fair value. The Dow Jones Industrial Average futures are down 243 points and are trading 0.7% below fair value.
The early disposition leans negatively with growth concerns continuing to act as a headwind. Those concerns have shown up in a flattening Treasury yield curve and the euro trading at a 20-year low against the dollar (EUR/USD currently 1.0295).
Other macro factors at work in keeping a lid on bullish sentiment include reports that the eurozone's Sentix Economic Confidence Index saw its lowest reading on Monday (-26.4) since May 2020, South Korea had its highest inflation print (6.0% yr/yr) since 1998, the Yangtze Delta region has seen a rise in COVID cases, and oil and gas workers in Norway have gone on strike over pay.
Separately, the Reserve Bank of Australia raised its key policy rate by 50 basis points, as expected, to 1.35%, another crypto lender, Vauld, has paused customer withdrawals, Russia is shutting down the Nord Stream 1 pipeline for summer maintenance work, and the Biden Administration is said to be close to rolling back tariffs on some Chinese imports.
Coming off the holiday weekend, there are a lot of moving headline parts with respect to macro factors, yet the market-moving corporate news is sparse.
The 2-yr note yield and the 10-yr note yield are both yielding 2.89%.
In corporate news:
Occidental Petroleum (OXY 60.91, +0.47, +0.8%): 10% owner Berkshire Hathaway (Warren Buffett) bought 9,887,040 shares worth ~$582.4mln
Cowen Group (COWN 27.78, +3.74, +15.6%): Toronto-Dominion Bank (TD) is considering possible bid for COWN, according to Bloomberg
Tesla (TSLA 674.06, -7.73, -1.1%): In the second quarter, co produced over 258,000 vehicles and delivered over 254,000 vehicles; June 2022 was the highest vehicle production month in Tesla's history
Reviewing overnight developments:
Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. Japan's Nikkei +1.0%; Hong Kong's Hang Seng +0.1%; China's Shanghai Composite unchnaged; India's Sensex -0.2%; South Korea's Kospi +1.8%; and Australia's All Ordinaries +0.3%.
In economic data:
China's June Caixin Services PMI 54.5 (expected 49.7; last 41.4)
Japan's June Services PMI 54.0 (last 54.2). May Overtime Pay 5.5% yr/yr (last 5.9%). May Overall Wage Income 1.0% (last 1.3%)
South Korea's June CPI 0.6% m/m (expected 0.5%; last 0.7%); 6.0% yr/yr (expected 5.9%; last 5.4%)
India's June Nikkei Services PMI 59.2 (expected 58.7; last 58.9)
Singapore's May Retail Sales 1.8% m/m (last 1.1%); 17.8% yr/yr (last 12.1%)
Australia's June AIG Construction Index 46.2 (last 50.4) and June Services PMI 52.6 (last 53.2). May Retail Sales 0.9% m/m, as expected (last 0.9%)
New Zealand's Q2 NZIER Business Confidence -65% (last -40%)
In news:
A former Bank of Japan chief economist said that he expects the BoJ to increase its inflation forecast and maintain ultra-loose policy.
South Korea's CPI increased at its fastest yr/yr pace since late 1998 in the June reading.
The Biden administration is expected to reverse tariffs on imports from China.
The Reserve Bank of Australia raised its cash rate by 50 bps to 1.35%, as expected.
Major European indices trade in the red amid ongoing worries about global growth. STOXX Europe 600 -0.5%; Germany's DAX -1.0%; UK's FTSE 100 -0.9%; France's CAC 40 -1.1%; Italy's FTSE MIB -0.7%; and Spain's IBEX 35 -0.4%.
In economic data:
Eurozone's June Services PMI 53.0 (expected 52.8; last 56.1)
Germany's June Services PMI 52.4, as expected (last 55.0)
U.K.'s June Services PMI 54.3 (expected 53.4; last 53.4)
France's June Services PMI 53.9 (expected 54.4; last 55.0). May Industrial Production 0.0% m/m (expected 0.2%; last -0.3%)
Italy's June Services PMI 51.6 (expected 51.5; last 53.7)
Spain's June Services PMI 54.0 (expected 53.5; last 56.5)
In news:
Dutch farmer protests against stricter environmental rules grew over the weekend.
Norwegian oil and gas workers went on strike, demanding higher pay.
NATO allies signed accession protocols for Finland and Sweden.
European Central Bank policymaker De Guindos said that the size of the September rate hike will depend on the updated medium-term inflation outlook.
U.S. equity futures:
S&P 500 Futures: -28 @ 3,797
DJIA Futures: -236 @ 30,861
Nasdaq 100 Futures: -111 @ 11,475
Overseas:
Europe:
Asia: Nikkei +1.0%, Hang Seng +0.1%, Shanghai Composite UNCH
Commodities:
Crude Oil -0.46 @ 107.97
Nat Gas -0.367 @ 5.503
Gold -2.75 @ 1798.75
Silver +0.010 @ 19.677
Copper -0.0845 @ 3.4825
U.S. Summary:
Earnings/Guidance:
CME Group (CME) reports Q2 and June 2022 market statistics; Average daily volume increased 25% to 23.1 million contracts during the second quarter
Exxon Mobil (XOM) sees Russia production impact of negative $100-200 mln in Q2
Niu Technologies (NIU) reports Q2 sales volume declined 17.4% yr/yr
Tesla (TSLA) reports Q2 production of 258,580 vehicles
General News:
Biden administration planning reversal of tariffs on imports from China, according to MarketWatch
Likelihood of U.S. recession increases, according to Bloomberg
Bank of England releases Financial Stability Report; global economic conditions have worsened
British lenders told to brace for economic storm, according to Reuters
Russia claims victory in Luhansk province, according to Reuters
NATO expansion begins, according to Bloomberg
President Biden plans to block new offshore oil drilling in the Atlantic and Pacific oceans, while allowing limited expansion in Gulf of Mexico and Alaska's south coast, according to the Wall Street Journal
European Securities and Markets Authority (ESMA) published the results of its fourth stress test exercise of Central Counterparties
Adagio Therapeutics (ADGI) announces that industry and infectious disease veteran David Hering, who has been serving as the company's interim chief executive officer and chief operating officer, has been named permanent CEO and a director on the company's Board of Directors
American Water Works (AWK) submits rate review request; applies for new revenue to fund infrastructure and service improvements
AmerisourceBergen (ABC) and two other distributors enter into agreement with Oklahoma to resolve opioid-related claims
Anebulo Pharmaceuticals (ANEB) Announces Positive Topline Data for ANEB-001 from a Phase 2 Clinical Trial for Acute Cannabinoid Intoxication
Arrowhead (ARWR) initiates Phase 1/2a studies for two pulmonary candidates ARO-MUC5AC and ARO-RAGE
Atlas Technical Consultants (ATCX) receives $18 mln contract with Caltrans
Bright Green (BGXX) CEO Ed Robinson stepping down
BWX Technologies (BWXT) awarded contract by Bruce Power valued at ~CA$130 mln in support of Bruce Power's Major Component Replacement Project
BYD (BYDDY) takes lead in global EV sales, according to Financial Times
CureVac (CVAC) files patent infringement lawsuit in Germany against BioNTech (BNTX)
Digital World Acquisition Corp (DWAC) has been subpoenaed in federal criminal probe
Dyne Therapeutics (DYN): FDA lifts clinical hold, clears IND application to initiate clinical trial of DYNE-251
Enochian Biosciences (ENOB) discovers that former scientific advisor altered two different sets of animal data
Estee Lauder (EL) Too Faced brand is shutting down its Tmall Global flagship, according to Womens Wear Daily
Fulcrum Therapeutics (FULC) enrolls first patient in pivotal global Phase 3 clinical trial of Losmapimod
Gold Royalty (GROY) receiving royalty payments related to Newmont's Borden Mine
Healthcare Trust of America (HTA) reports portfolio leased rate increased by 0.3% since Q1
Intercept Pharma (ICPT) announced that the transaction between Intercept and Advanz Pharma has now closed
IVERIC bio (ISEE) and DelSiTech Ltd announce an exclusive global license agreement for new formulations of Zimura; ISEE to make upfront payment of 1.25 mln
KalVista Pharmaceuticals (KALV) Presents New Data for Sebetralstat and its Oral Factor XIIa Inhibitor Program
Lockheed Martin (LMT) awarded a $192 mln US Navy contract modification related to Australia Surface Combatant program
lululemon athletica (LULU) plans to introduce the brand to more communities around the world by opening two new stores and a local e-commerce site in Spain
Nevro (NVRO): Newly Released Clinical Data Demonstrates Substantial Improvement in Overall Health-Related Quality of Life in Patients with Painful Diabetic Neuropathy Treated with Nevro HFX Spinal Cord Stimulation Therapy
New Fortress Energy (NFE) and Apollo Funds agree to form a new joint venture for LNG Maritime Infrastructure; transaction valued at approximately $2 billion
New Fortress Energy (NFE) announces agreement with CFE to expand supply of natural gas to Baja; announces agreement with Pemex to complete Lakach Offshore Gas Field
Northrop Grumman (NOC) awarded a $338 mln US Navy contract related to H-1 avionics and weapons
Occidental Petro (OXY) 10% owner Berkshire Hathaway (Warren Buffett) bought 9,887,040 shares worth ~$582.4mln
Petrobras (PBR) signed an agreement with the ANP
PyroGenesis (PYR) Canada confirms delivery of plasma torch to one of the world's largest producers of iron ore for use in induration furnace
Sanofi (SNY): FDA approves Sanofi's licensure request for vaccine approval for the upcoming 2022-2023 flu season
Scholar Rock (SRRK) to Present Phase 3 SAPPHIRE Trial Design at the 17th International Congress on Neuromuscular Diseases (ICNMD 2022)
Seagen (SGEN) Announces Results from Pivotal MOUNTAINEER Trial Demonstrating Clinically Meaningful Antitumor Activity of TUKYSA (tucatinib) in Combination with Trastuzumab in Previously Treated HER2-Positive Metastatic Colorectal Cancer
Sonoco Products (SON) is expanding post-consumer recovery and recycling opportunities for paper cups in bales of mixed paper to be used as raw material at its Hartsville, S.C., paperboard mill to produce new paperboard
TC Energy (TRP) agreed with Mexico to build a $5 bln gas pipeline in Veracruz, according to Reuters
Telus (TU) announced the investment of $23 billion in network infrastructure, operations, and spectrum across Ontario over the next four years and has committed to investing $70 billion overall across Canada by 2026
Tesla's (TSLA) lithium supplier facing probe, according to Financial Times
TSMC (TSM) supplier forecasts higher chip prices, according to Bloomberg
Vermilion Energy (VET) receives TSX approval for normal course issuer bid
M&A:
AST SpaceMobile (ASTS) sells majority stake in NanoAvionics
AstraZeneca (AZN) to acquire TeneoTwo and its clinical-stage T-cell engager
Booking Holdings (BKNG): UK CMA is investigating the anticipated acquisition by Booking Holdings Inc of certain activities of Etraveli Group AB
China Petroleum (SNP) acquires trillion cubic meters of shale gas resources in Southwestern Sichuan, China
Cowen Group (COWN): Toronto-Dominion Bank (TD) is considering possible bid for COWN, according to Bloomberg
Eaton (ETN) acquires 50% stake in Jiangsu Huineng Electric Co., Ltd.'s circuit breaker business
FEMSA (FMX) to acquire Valora Holding AG
Group 1 Auto (GPI) has closed on the disposition of its Brazil operations
HEXO (HEXO) shareholders approve note transaction with Tilray (TLRY)
KKR (KKR): Consortium led by KKR expected to bid for Deutsche Telekom unit, according to Bloomberg
GCM Grosvenor (GCMG) and Blue Wolf Capital acquire Hallcon Corporation
Healthcare Realty (HR): Independent Proxy Advisory Firm ISS Recommends Healthcare Realty Trust Shareholders Vote for Proposed Transaction With Healthcare Trust of America
Hecla Mining (HL) acquires Alexco Resource (AXU)
Nelnet (NNI) acquires solar construction firm GRNE Solutions; terms of the deal not disclosed
Ring Energy (REI) acquires Stronghold's Permian Basin assets
Tupperware (TUP) divests Nutrimetics
Syndicate:
Acumen Pharmaceuticals (ABOS) files for $200 mln mixed securities shelf offering
Alpha Teknova (TKNO) files for $225 mln mixed securities shelf offering
atai Life Sciences N.V. (ATAI) files for $300 mln mixed securities shelf offering
CEL-SCI Corp (CVM) files for $150 mln mixed securities shelf offering
Centessa Pharmaceuticals (CNTA) files for $350 mln mixed securities shelf offering
Century Therapeutics (IPSC) files for $500 mln mixed securities shelf offering
ChargePoint (CHPT) files for $1 bln mixed securities shelf offering
DarioHealth (DRIO) files for 226,586 share common stock offering by selling shareholder related to warrants
Earthstone Energy (ESTE) files for 19,417,476 share common stock offering by selling shareholders
JAKKS Pacific (JAKK) files for 2 mln share common stock offering
Monte Rosa Therapeutics (GLUE) files for $300 mln mixed securities shelf offering
Newegg Commerce (NEGG) files for $300 mln mixed securities shelf offering; also files for 60 mln share common stock offering by selling shareholder
Office Properties Income Trust (OPI) files mixed securities shelf offering
Ondas Holdings (ONDS) files for 780,000 share common stock offering by selling shareholder
POINT Biopharma (PNT) files for $400 mln mixed securities shelf offering
Verve Therapeutics (VERV) files for $400 mln mixed securities shelf offering
IPOs:
Priced to Trade:
No IPOs expected.
Gapping Up/Down
Gapping up:
COWN +12.2%, OCFT +10.8%, ASTS +7.7%, TUP+6.3%, DRIO +5.9%, VET +4.2%, QD +3.2%, CVM+2.4%, OXY +1.3%, HTA +1.1%, SGEN +1%, ICPT+0.9%, TRP +0.7%, ABC +0.6%
Gapping down:
NIU -6.2%, ATAI -6%, PHG -3.3%, SRRK -3.2%, BGXX-2.7%, DWAC -1.7%, CHPT -0.6%, ABOS -0.6%, IWM-0.6%, QQQ -0.6%, IPSC -0.5%, NEGG -0.5%, VERV-0.5%, SPY -0.5%
Analyst Research (see Upgrades/Downgradescalendarfor full list):
Upgrades
Anheuser-Busch InBev (BUD) upgraded to Buy from Neutral at Citigroup
Antero Resources (AR) upgraded to Buy from Hold at Truist; tgt raised to $50
Excelerate Energy (EE) upgraded to Overweight from Equal Weight at Wells Fargo; tgt $29
Universal Music Group N.V. (UMGNF) upgraded to Conviction Buy from Buy at Goldman
Downgrades:
Aegon N.V. (AEG) downgraded to Underperform from Neutral at Exane BNP Paribas
Aveanna (AVAH) downgraded to Hold from Buy at Truist
Burberry plc (BURBY) downgraded to Neutral from Outperform at Exane BNP Paribas
HP Inc. (HPQ) downgraded to In-line from Outperform at Evercore ISI; tgt lowered to $36
NovoCure (NVCR) downgraded to Underperform from In-line at Evercore ISI
PerkinElmer (PKI) downgraded to In-line from Outperform at Evercore ISI; tgt $150
Sony (SONY) downgraded to Neutral from Buy at Citigroup
Talaris Therapeutics (TALS) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $8
Others:
NetEase (NTES) initiated with an Outperform at Macquarie; tgt $129
Shopify (SHOP) initiated with a Mkt Perform at JMP Securities
Symbotic (SYM) initiated with a Buy at Needham; tgt $18
Symbotic (SYM) initiated with an Outperform at Raymond James; tgt $18
Teradyne (TER) initiated with a Neutral at JP Morgan; tgt $120
Upcoming Events:
Econ Data:
10:00 ET: Factory Orders for May (Briefing.comConsensus 0.5%; Prior 0.3%)
Earnings:
Thursday (Jul 7)
Morning: HELE
Afternoon: LEVI WDFC
Asia & Europe detail:
Asia: Nikkei +1.0%, Hang Seng +0.1%, Shanghai Composite UNCH
Equity indices in the Asia-Pacific region ended Tuesday on a mostly higher note. A former Bank of Japan chief economist said that he expects the BoJ to increase its inflation forecast and maintain ultra-loose policy. South Korea's CPI increased at its fastest yr/yr pace since late 1998 in the June reading. The Biden administration is expected to reverse tariffs on imports from China. The Reserve Bank of Australia raised its cash rate by 50 bps to 1.35%, as expected.
In economic data:
China's June Caixin Services PMI 54.5 (expected 49.7; last 41.4)
Japan's June Services PMI 54.0 (last 54.2). May Overtime Pay 5.5% yr/yr (last 5.9%). May Overall Wage Income 1.0% (last 1.3%)
South Korea's June CPI 0.6% m/m (expected 0.5%; last 0.7%); 6.0% yr/yr (expected 5.9%; last 5.4%)
India's June Nikkei Services PMI 59.2 (expected 58.7; last 58.9)
Singapore's May Retail Sales 1.8% m/m (last 1.1%); 17.8% yr/yr (last 12.1%)
Australia's June AIG Construction Index 46.2 (last 50.4) and June Services PMI 52.6 (last 53.2). May Retail Sales 0.9% m/m, as expected (last 0.9%)
New Zealand's Q2 NZIER Business Confidence -65% (last -40%)
---Equity Markets---
Japan's Nikkei: +1.0%
Hong Kong's Hang Seng: +0.1%
China's Shanghai Composite: UNCH
India's Sensex: -0.2%
South Korea's Kospi: +1.8%
Australia's ASX All Ordinaries: +0.3%
---FX---
USD/JPY: +0.2% to 136.03
USD/CNH: +0.2% to 6.7053
USD/INR: +0.5% to 79.28
Europe: DAX -1.0%, FTSE -0.9%, CAC -1.1%
Major European indices trade in the red amid ongoing worries about global growth. Dutch farmer protests against stricter environmental rules grew over the weekend. Norwegian oil and gas workers went on strike, demanding higher pay. NATO allies signed accession protocols for Finland and Sweden. European Central Bank policymaker De Guindos said that the size of the September rate hike will depend on the updated medium-term inflation outlook.
In economic data:
Eurozone's June Services PMI 53.0 (expected 52.8; last 56.1)
Germany's June Services PMI 52.4, as expected (last 55.0)
U.K.'s June Services PMI 54.3 (expected 53.4; last 53.4)
France's June Services PMI 53.9 (expected 54.4; last 55.0). May Industrial Production 0.0% m/m (expected 0.2%; last -0.3%)
Italy's June Services PMI 51.6 (expected 51.5; last 53.7)
Spain's June Services PMI 54.0 (expected 53.5; last 56.5)
---Equity Markets---
STOXX Europe 600: -0.5%
Germany's DAX: -1.0%
U.K.'s FTSE 100: -0.9%
France's CAC 40: -1.1%
Italy's FTSE MIB: -0.7%
Spain's IBEX 35: -0.4%
---FX---
EUR/USD: -1.2% to 1.0294
GBP/USD: -0.9% to 1.1998
USD/CHF: +0.5% to 0.9654