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29/08/22 Briefing

The S&P 500 futures are down 35 points and are trading 0.9% below fair value. The Nasdaq 100 futures are down 146 points and are trading 1.2% below fair value. The Dow Jones Industrial Average futures are down 254 points and are trading 0.7% below fair value.

A lower open is indicated with carryover momentum from Friday'sretreat. Market participants will be eyeing the S&P 500 50-day moving average (4,004) as the selling effort brings the market close to testing that level. 

Weakness also showed up in overseas markets with major Asian and European indices tracking lower in sympathy with Wall Street. The sentiment shift is rooted in an awareness that Fed Chair Powell tried to drive home the point that the Fed may have to be restrictive for longer to bring down inflation.

Also, Bitcoin is back under $20,000, down 0.9% to $19,815. Ethereum is down 2.4% to $1,448.

Separately, Iran nuclear deal talks are being extended a few more weeks amid disagreements, according to Bloomberg. WTI crude oil futures are up 0.5% to $93.55/bbl.

Treasury yields continue to rise. The 2-yr note yield is up five basis points to 3.45% while the 10-yr note yield is up seven basis points to 3.11%.

In corporate news:

  • Netflix (NFLX 220.53, -2.75, -1.23%): mulling $7-9 price tag for ad supported service, according to Bloomberg

  • Catalent (CTLT 90.10, -9.60, -9.63%): beats by $0.04, reports revs in-line; guides FY23 revs below consensus

  • Pinduoduo (PDD 66.44, +8.87, +15.41%): reports Q2 results; beats on EPS and revs

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei: -2.7%, Hong Kong's Hang Seng: -0.7%, China's Shanghai Composite: +0.1%, India's Sensex: -1.5%, South Korea's Kospi: -2.2%, Australia's ASX All Ordinaries: -2.1%.

    • In economic data:

      • China's July Industrial Profit -1.1% YTD (last 1.0%) o Japan's June Leading Index 100.9 (last 101.2) and Coincident Indicator 3.7% m/m (last 4.1%)

      • Australia's July Retail Sales 1.3% m/m (expected 0.3%; last 0.2%)

    • In news:

      • Bank of Japan Governor Kuroda said at the Jackson Hole Symposium that monetary easing needs to continue until wages and prices rise in a sustainable manner.

      • Officials from South Korea and China have reportedly agreed to establish a supply chain council.

      • China is reportedly tightening coronavirus restrictions in Hebei province.

  • Major European indices trade sharply lower while the U.K.'s FTSE is closed for a bank holiday. STOXX Europe 600: -1.3%, Germany's DAX: -1.3%, U.K.'s FTSE 100: CLOSED, France's CAC 40: -1.8%, Italy's FTSE MIB: -1.1%, Spain's IBEX 35: -1.3%.

    • No economic data

    • In news:

      • European Central Bank policymaker Schnabel repeated that inflation is at an uncomfortably high level and that central banks need to act forcefully to bring it down.

      • Separately, ECB policymaker Kazaks said that 50- and 75-bps rate hikes should be discussed in September.

      • France may implement a new tax on corporate profits.

U.S. equity futures:

  • S&P 500 Futures: -35 @ 4,023

  • DJIA Futures: -249 @ 32,031

  • Nasdaq 100 Futures: -138 @ 12,467


  • Europe: DAX -1.3%, FTSE CLOSED, CAC -1.8%

  • Asia: Nikkei -2.7%, Hang Seng -0.7%, Shanghai Composite +0.1%


  • Crude Oil +0.41 @ 93.47

  • Nat Gas  +0.135 @ 9.404

  • Gold -12.90 @ 1736.90

  • Silver -0.398  @ 18.348

  • Copper -0.1095 @ 3.5875

U.S. Summary:

  • Earnings/Guidance:

    • Catalent (CTLT) beats by $0.04, reports revs in-line; guides FY23revs below consensus

    • Pinduoduo (PDD) reports Q2 results

    • SelectQuote (SLQT) reports Q4 (Jun) results, misses on revs

  • General News:

    • Iran nuclear deal talks extended a few more weeks amid disagreements, according to Bloomberg

    • Ukraine warns there is a risk of hydrogen and radioactive leaks at the Zaporizhzhia nuclear plant. International Atomic Energy Agency plans to inspect the plant this week, according to Axios

    • Republicans are expected to win House majority with 226 seats, down 4 seats from last month's projection, according to CBS News

    • Senator Elizabeth Warren (D-MA) is concerned that Fed policies will result in recession, according to CNN

    • Latest coronavirus vaccines are expected to be available before human testing is completed. FDA approval is expected this week, according to the Wall Street Journal

    • Health officials are optimistic about decline in monkeypox cases, according to the Washington Post

    • Airlines are still cutting schedules amid labor shortages and other issues, according to the Wall Street Journal

    • 3M (MMM) issues statement regarding bankruptcy court decision; 3M separation of Food Safety business remains on track for targeted September 1closing

    • Abbott (ABT) reopens Michigan formula plant production, according to Reuters

    • Albemarle (ALB) concludes strategic review of Catalysts business; will retain under a separate, to-be-named entity and wholly owned subsidiary of Albemarle

    • Amarin (AMRN) reports new REDUCE-IT data showing VASCEPA/VAZKEPA (icosapent ethyl) reduced cardiovascular events in patients who are current or former smokers

    • Amgen (AMGN) presents new data at ESC 2022 showing long-term ldl-c lowering with REPATHA (evolocumab) was well-tolerated for more than 8 years

    • Amplify Energy (AMPY) settles with U.S. Attorney's Office to resolve matters associated with Southern California pipeline incident

    • Apple (AAPL) VR headset could be named "Reality," according to Bloomberg

    • Arlo Technologies (ARLO) CFO Gordon Mattingly to resign, appoints Kurt Binder as CFO, effective September 26

    • AstraZeneca (AZN): New data show FARXIGA significantly lowers the risk of cardiovascular death in patients with heart failure

    • Bristol-Myers (BMY) reports Late-Breaking Results From Phase 2 AXIOMATIC-SSP Study of Milvexian Shows Favorable Antithrombotic Profile in Combination With Dual Antiplatelet Therapy

    • CalAmp (CAMP) announces that CFO Kurt Binder is stepping down to pursue another opportunity

    • Dell (DELL) ends operations in Russia, according to Reuters

    • Digital World Acquisition Corp (DWAC): Truth Social is experiencing financial problems, according to the Washington Post

    • Disney (DIS) aiming to broadcast cricket events in India, according to the Wall Street Journal

    • ESS Inc. (GWH) names Vince Canino COO

    • Flex (FLEX) receives shareholder approval to purchase up to 20% of its shares, board has authorized management to continue its share repurchase plan in an amount not to exceed $1 bln

    • Goldman Sachs (GS) has been impacted by employee departures, according to the New York Post

    • Hill International (HIL) and GISI announce enhancements to their strategic merger agreement

    • Honda Motor (HMC): LG Energy Solution and HMC to form joint venture for EV Battery production in the U.S.

    • IDEAYA Biosciences (IDYA) announces achievement of first milestone in ongoing collaboration with GSK (GSK) for potential first-in-class pol theta helicase inhibitor development candidate

    • Johnson & Johnson (JNJ) unit presents Final analysis of Phase 2 GRIFFIN Study of DARZALEX

    • Life Time (LTH) CFO to retire; names Robert Houghton as CFO

    • Medtronic (MDT) Extravascular ICD meets global pivotal clinical trial's safety and effectiveness endpoints

    • Merck (MRK) to present new data at ESMO 2022 Congress from its broad oncology portfolio and promising pipeline, demonstrating commitment to improving long-term survival in multiple types of cancer

    • Meta (META) settles Cambridge Analytica lawsuit, according to the Wall Street Journal

    • Netflix (NFLX) mulling $7-9 price tag for ad supported service, according to Bloomberg

    • Petrobras (PBR) comments on pieces of news in the media

    • Raytheon Technologies (RTX) awarded a $182 mln US Army contract for surface-to-air missile systems

    • Silicon Labs (SLAB) announces that its board of directors has increased the authorization for the repurchase of the company's common stock by $200 mln

    • Teva Pharma (TEVA) receives EC marketing authorization for Ranivisio

    • Tyson Foods (TSN): China aiming to halt some meat imports from TSN, according to Bloomberg

    • Wendy's (WEN) has pulled sandwich lettuce from several hundred stores, according to Bloomberg

  • M&A:

    • Camping World (CWH) to acquire the Clear Creek RV Center dealerships located in Silverdale and Puyallup, Washington; terms not disclosed

    • DHT (DHT) announces sale of DHT Edelweiss

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