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27/11/23 Briefing

Updated: Nov 28, 2023




The S&P 500 futures are down 6 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 12 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 52 points and are trading 0.1% below fair value.

This current disposition puts the cash market on track for a modestly lower start at the opening bell coming off four consecutive weeks of gains. It won't be regarded as surprising simply because the extent of gains since late October has fostered a sense that the market is due for a period of consolidation. However, the resilience to selling efforts -- and the additional gains that continue to be achieved -- have also created some seasonality momentum and a fear of missing out on further gains that have continued to provide support for the market.

The corporate news flow coming off the weekend has been limited, but that will change as the week progresses. For now, most of the attention is on retail sales activity during Black Friday, Small Business Saturday, and, now, Cyber Monday.

In other developments, Israel and Hamas followed through with hostage/prisoner releases over the weekend, and China reported a 7.8% year-to-date decline in industrial profits in October.

Today's lone economic release is the October New Home Sales Report (Briefing.com consensus 720,000; Prior 759,000).

In corporate news:

  • Amazon.com (AMZN 147.81, +1.07, +0.7%): delivery business is now ahead of UPS (UPS) and FedEX (FDX), according to The Wall Street Journal

  • Foot Locker (FL 22.38, -0.94, -4.0%): downgraded to Sell from Neutral at Citigroup

  • Graphic Packaging (GPK 22.63, -0.19, -0.8%): downgraded to Market Perform from Strong Buy at Raymond James

  • Mondelez (MDLZ 72.48, +0.86, +1.2%): upgraded to Outperform from Sector Perform at RBC Capital Markets

  • Teva Pharmaceutical (TEVA 9.76, +0.21, +2.2%): upgraded to Buy from Neutral at UBS

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a lower note while India's Sensex was closed for a holiday. Japan's Nikkei -0.5%, Hong Kong's Hang Seng -0.2%, China's Shanghai Composite -0.3%, South Korea's Kospi unchanged, and Australia's ASX All Ordinaries -0.7%.

    • In economic data:

      • China's October Industrial Profit -7.8% YTD (last -9.0%)

      • Hong Kong's October trade deficit $25.8 bln (last deficit of $64.6 bln). October Imports 2.6% m/m (last -0.4%) and Exports 1.4% m/m (last -5.3%)


  • In news:

    • Moody's downgraded China Vanke to Baa3, one notch above junk, with a Negative outlook

    • The Chinese government is reportedly considering new support measures for homebuilders, including unsecured short-term loans

    • Bank of England's executive director of markets, Andrew Hauser, was appointed to be the next deputy governor of the Reserve Bank of Australia

    • Reserve Bank of New Zealand's shadow board recommends no change to the official cash rate this month



  • Major European indices trade mostly in the red. Germany's DAX -0.2%, U.K.'s FTSE 100 -0.3%, France's CAC 40 unchanged, Italy's FTSE MIB -0.2%, and Spain's IBEX 35 +0.3%.

    • In economic data:

      • U.K.'s November CBI Distributive Trades Survey -11 (expected -30; last -36)

      • France's October jobseeker total 2.821 mln (last 2.812 mln)


  • In news:

    • There is growing speculation that Germany's GDP will contract in 2024 after the country's constitutional court ruled that pandemic-related funds were reallocated illegally, which will restrain the government's ability to use special funds

    • ECB policymaker Muller said that inflation is clearly slowing and that another rate hike should not be necessary

    • British Prime Minister Sunak announced GBP29.5 bln worth of private sector investments and there was speculation that he is looking for additional tax cuts in the spring



U.S. equity futures:

  • S&P 500 Futures -6 @ 4,561

  • DJIA Futures: -52 @ 35,376

  • Nasdaq 100 Futures: -12 @ 16,008

Overseas:

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

  • Asia: Nikkei -0.5%, Hang Seng -0.2%, Shanghai Composite -0.3%

Commodities:

  • Crude Oil -0.92 @ 74.62

  • Nat Gas -0.116 @ 2.883

  • Gold +9.60 @ 2012.60

  • Silver +0.419 @ 24.760

  • Copper -0.0220 @ 3.7670

Earnings/Guidance:

  • Cerence ( CRNC 4.54% ) misses by $0.06, beats on revs; guides Q1 revs above consensus; guides FY24 revs in-line

News:

  • Israel and Hamas looking to extend pause in fighting as more hostages get released (EIS), according to Bloomberg

  • Mastercard SpendingPulse says US Black Friday retail sales up 2.5% yr/yr

  • President Biden announces new actions to strengthen america's supply chains, lower costs for families, and secure key sectors

  • Data from China indicates that recent respiratory cases are from known viruses, not from a new novel pathogen (FXI), according to NY Times

  • House Intelligence Committee Chairman Mike Turner says Ukraine and Israel aid are unlikely to be passed before the end of the year, according to Bloomberg

  • President Biden will not attend COP28 climate summit in Dubai, according to NY Times

  • Beijing bourse advised large shareholders to refrain from selling, according to Reuters

  • Amazon ( AMZN 1.41% ) delivery business is now ahead of UPS (UPS) and FedEX (FDX), according to The Wall Street Journal

  • Aris Mining Corporation ( ARMN 3.46% ) increases Segovia gold mineral reserves by +75% to 1.3 moz and announces plant expansion to increase production rate

  • Elliott Investment Management wants changes at Crown Castle ( CCI 5.21% ), according to The Wall Street Journal

  • FREYR Battery ( FREY 4.91% ) announces new organizational structure and leadership changes

  • Genelux ( GNLX 8.02% ) receives FDA Fast Track designation for Olvi-Vec in platinum resistant/refractory ovarian cancer

  • Krystal Biotech ( KRYS 1.35% ) announces that the Company's Marketing Authorization Application to the European Medicines Agency's Committee for Medicinal Products for Human Use for VYJUVEK for the treatment of dystrophic epidermolysis bullosa has been validated and is now under CHMP review

  • A new complaint alleges that Meta (META) collected data from children under 13, according to NY Times

  • Novo Nordisk A/S ( NVO 0.62% ): GAM Investments' Niall Gallagher aiming to lower stake in NVO, according to Bloomberg

  • Pagaya ( PGY 5.84% ) CFO departs; Evangelos Perros appointed Interim CFO

  • Regeneron Pharma ( REGN 0.08% ) and Sanofi (SNY) reports Dupixent significantly reduced COPD Exacerbations in Second Positive Phase 3 Trial, Accelerating FDA Submission

  • Shopify ( SHOP 4.62% ) announces a Black Friday record with a combined $4.1 billion in sales from businesses worldwide

  • Tesla ( TSLA 0.65% ) could face ban on self driving technology in Britain, according to Telegraph

  • Veeva Systems ( VEEV 0.64% ) announced that GSK will be one of the first top biopharma companies to migrate to Veeva Vault CRM

  • Walt Disney ( DIS 1.03% ) animated musical comedy "Wish" had a disappointing box office debut, according to The Wall Street Journal

  • Xenon Pharmaceuticals ( XENE 9.56% ) announces topline results from Phase 2 proof-of-concept X-NOVA Clinical Trial of XEN1101 in major depressive disorder

M&A:

  • Barclays PLC ( BCS 0.48% ) in discussions to purchase mortgage book from Metro Bank, according to Sky News

  • Choice Hotels ( CHH 1.03% ) preparing to nominate directors to Wyndham Hotels & Resorts (WH) Board in order to solve stalemate in M&A deal, according to Reuters

  • KKR ( KKR 0.38% ) announces that investment funds managed by KKR have acquired Potter Global Technologies from Gryphon Investors; financial terms were not disclosed

  • Petrobras ( PBR 1.01% ) announces termination of contract to sell LUBNOR refinery

  • Theseus Pharmaceuticals ( THRX 4.42% ) confirms receipt of Expression of Interest from Foresite Capital, LLC and OrbiMed Advisors LLC and unsolicited proposal from Concentra Biosciences LLC

Syndicate:

  • Arvinas ( ARVN 10.70% ) announces oversubscribed $350 million private placement

  • Perfect Corp. ( PERF 16.00% ) announces commencement of self tender offer to purchase up to 16,129,032 class a ordinary shares for an aggregate purchase price of up to $50 mln

IPOs:

  • No IPOs expected to price.

Gapping Up/Down

  • Gapping up:

    • PERF +19.6%, THRX +13%, SHOP +3.4%, DNA +2.1%, SNY +1.5%, REGN +1.4%, AMZN +0.6%, WH +0.5%, PHG +0.5%


  • Gapping down:

    • PGY -5.8%, MESO -5.3%, FL -4.3%, GEHC -2.9%, PBR -0.7%, FREY -0.6%


Analyst Research (see Upgrades/Downgrades calendar for full list):

  • Upgrades

    • Carnival (CCL) upgraded to Buy from Hold at Melius Research; tgt $19

    • Johnson Matthey plc (JMPLY) upgraded to Buy from Neutral at BofA Securities

    • Mondelez (MDLZ) upgraded to Outperform from Sector Perform at RBC Capital Markets

    • Teva Pharmaceutical (TEVA) upgraded to Buy from Neutral at UBS


  • Downgrades:

    • Afya (AFYA) downgraded to Neutral from Overweight at JP Morgan; tgt raised to $23

    • BASF AG (BASFY) downgraded to Underweight from Equal-Weight at Morgan Stanley

    • Canadian Nat'l Rail (CNI) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $121

    • Canadian Pacific (CP) downgraded to Hold from Buy at Deutsche Bank; tgt lowered to $77

    • Corteva (CTVA) downgraded to Hold from Buy at Berenberg; tgt lowered to $52

    • Entain Plc (GMVHY) downgraded to Sell from Buy at Goldman

    • Foot Locker (FL) downgraded to Sell from Neutral at Citigroup; tgt $18

    • GE HealthCare (GEHC) downgraded to Sell from Neutral at UBS; tgt lowered to $66

    • Graphic Packaging (GPK) downgraded to Mkt Perform from Strong Buy at Raymond James

    • Jazz Pharma (JAZZ) downgraded to Neutral from Buy at UBS; tgt lowered to $135

    • Lucid Group (LCID) downgraded to Hold from Buy at Needham


  • Others:

    • Amkor (AMKR) initiated with a Buy at Melius Research, tgt $35

    • Casella Waste (CWST) initiated with an Overweight at Wells Fargo; tgt $95

    • Genelux (GNLX) initiated with a Buy at H.C. Wainwright; tgt $35


Econ Data:

  • 10:00 ET: October New Home Sales (Briefing.com consensus 720,000; Prior 759,000)

Earnings:

  • Monday (Nov 27)

    • Morning: CRNC

    • Afternoon: ZS


  • Tuesday (Nov 28)

    • Morning: PDD

    • Afternoon: AZEK CRWD FLNC HPE INTU LESL NTAP SPLK WDAY


  • Wednesday (Nov 29)

    • Morning: BILI DLTR DCI FTCH FL HRL ROAD PDCO VSTS WOOF

    • Afternoon: ARWR CRDO CRM FIVE LZB NCNO NTNX OKTA PSTG PVH SNOW SNPS VSCO ZUO


  • Thursday (Nov 30)

    • Morning: ASO AMWD BIG CBRL FRO KR RY TITN TD

    • Afternoon: AMBA DELL DOMO ESTC PD IOT MRVL PATH ULTA ZUMZ


  • Friday, (Dec 1)

    • Morning: GCO

    • Afternoon: None



Asia & Europe detail:

Asia: Nikkei -0.5%, Hang Seng -0.2%, Shanghai Composite -0.3%

Equity indices in the Asia-Pacific region began the week on a lower note while India's Sensex was closed for a holiday. Moody's downgraded China Vanke to Baa3, one notch above junk, with a Negative outlook. Separately, the Chinese government is reportedly considering new support measures for homebuilders, including unsecured short-term loans. Bank of England's executive director of markets, Andrew Hauser, was appointed to be the next deputy governor of the Reserve Bank of Australia. Reserve Bank of New Zealand's shadow board recommends no change to the official cash rate this month.

  • In economic data:

    • China's October Industrial Profit -7.8% YTD (last -9.0%)

    • Hong Kong's October trade deficit $25.8 bln (last deficit of $64.6 bln). October Imports 2.6% m/m (last -0.4%) and Exports 1.4% m/m (last -5.3%)


---Equity Markets---

  • Japan's Nikkei: -0.5%

  • Hong Kong's Hang Seng: -0.2%

  • China's Shanghai Composite: -0.3%

  • India's Sensex: HOLIDAY

  • South Korea's Kospi: UNCH

  • Australia's ASX All Ordinaries: -0.7%

---FX---

  • USD/JPY: -0.3% to 149.05

  • USD/CNH: +0.2% to 7.1590

  • USD/INR: UNCH at 83.32

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

Major European indices trade in the red while Spain's IBEX (+0.3%) outperforms with construction names contributing to the strength. There is growing speculation that Germany's GDP will contract in 2024 after the country's constitutional court ruled that pandemic-related funds were reallocated illegally, which will restrain the government's ability to use special funds. European Central Bank policymaker Muller said that inflation is clearly slowing and that another rate hike should not be necessary. British Prime Minister Sunak announced GBP29.5 bln worth of private sector investments and there was speculation that he is looking for additional tax cuts in the spring.

  • In economic data:

    • U.K.'s November CBI Distributive Trades Survey -11 (expected -30; last -36)

    • France's October jobseeker total 2.821 mln (last 2.812 mln)


---Equity Markets---

  • STOXX Europe 600: -0.2%

  • Germany's DAX: -0.2%

  • U.K.'s FTSE 100: -0.3%

  • France's CAC 40: UNCH

  • Italy's FTSE MIB: -0.2%

  • Spain's IBEX 35: +0.3%

---FX---

  • EUR/USD: +0.2% to 1.0954

  • GBP/USD: +0.3% to 1.2639

  • USD/CHF: -0.3% to 0.8797

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