Today’s Big Picture
Asia-Pacific equity markets finished the day mixed. Taiwan’s TAIEX closed 1.00% lower on a broad decline led by Consumer Services names, Japan’s Nikkei declined 0.49%, and South Korea’s KOSPI came close to even, dropping a mere 0.03%. Australia’s ASX All Ordinaries 0.49% advanced, India’s SENSEX rose 0.71%, and China’s Shanghai Composite closed 1.23% higher. Hong Kong’s Hang Seng posted a 1.88% gain on a broad rally led by Health Services, and Electronic Technology names. European markets are mixed in midday trading and U.S. futures point to a positive open.
Stocks look to recover following yesterday’s move lower, potentially melting up into the end of the 2Q 2023 this Friday. Challenging that, investors will be watching for any developments in Russia following the recent and seemingly brief rebellion as well as comments from a cast of central bankers at the European Central Bank’s Forum on Central Banking tomorrow. The final update of the week and the quarter will be the core Price Consumption Expenditure (PCE) price index data for May that will be released before the market open on Friday.
While the Fed continues to maintain its position of being data dependent and has called for additional rate hikes, Fed fund futures currently have just a single 25 basis point hike priced into the back half of the year. Once again, the market may need to revisit its fed funds expectation for the balance of 2023 as more data is released. As we move into July and 3Q 2023, the June quarter earnings season will get underway, putting the focus on earnings growth prospects for 2H 2023.
Data Download
International Economy
At the World Economic Forum's annual meeting in Tianjin, Chinese Premier Li Qiang shared China was still on track to reach its annual growth target of around 5% and sees Q2 growth as being faster than Q1’s 4.5% rate.
Consumer confidence in Italy jumped to 108.6 in June 3 from 105.1 in the previous month, surpassing market expectations of 105.5 to notch the highest reading since February 2022. However, the manufacturing confidence index in Italy decreased to 100.3 in June, the lowest since January 2021, from a downwardly revised 101.2 in May. The June figure missed the 101 market expectation and showed expectations for production (3.6 vs 4.1 in May) and assessments on order books (-12.8 vs -10.8) worsened MoM.
Domestic Economy
We have several pieces of May economic data being reported as well as two pieces of housing price data for April. At 8:30 AM ET, May Durable Goods Orders will be published, and the consensus calls for a 1% decline vs. April.
The FHFA Housing Price Index and S&P Case Shiller Home Price Index will both be published at 9 AM ET but they are expected to show conflicting findings for April. While the consensus view for the FHFA Housing Price Index sees a 3.1% increase YoY, the S&P Case Shiller data is expected to show a 2.6% YoY decline.
At 10 AM, a preliminary look at June Consumer Confidence will be released, and it is expected to show an uptick to 104 vs. May’s 102.3 figure. Also at 10 AM ET, May New Home Sales data will be published and the consensus sees a slight drop to 0.675 million units vs. 0.683 million in April.
U.S. natural gas futures rose to their highest level in nearly four months yesterday as sizzling temperatures are expected to boost cooling demand while liquefied natural gas exports are seen increasing in the coming weeks.
U.S. Treasury Secretary Janet Yellen plans to visit Beijing in early July for the first high-level economic talks with her new Chinese counterpart.
Markets
Sectors were mixed in trading yesterday as Real Estate (2.23%) and Energy (1.80%) showed some leadership but while those two sectors showed strong performance, they account for only 4.0% and 2.3%, respectively, of overall markets. Consumer Discretionary (-1.28%), Communication Services (-1.00%), and Technology (-0.72%) combine to make up almost 50% of the weight of the S&P 500 and it was those sectors that drove performance yesterday. The Dow came close to flat, down 0.04%, the S&P 500 gave back 0.45% and the Nasdaq Composite closed 1.16% lower. The Russell 2000 was the outlier as it gained 0.09% at the close. United Parcel Service (UPS) rose 2.04% yesterday after it was reported the company seems to be playing hardball with the Teamsters Union over current contract negotiations.
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: 1.71%
- S&P 500: 12.74%
- Nasdaq Composite: 27.41%
- Russell 2000: 3.52%
- Bitcoin (BTC-USD): 82.48%
- Ether (ETH-USD): 55.10%
Stocks to Watch
Before U.S. equity markets begin trading today, Korn/Ferry (KFY), Schnitzer Steel (SCHN), and Walgreens Boots Alliance (WBA) are expected to report their quarterly results.
Shares of Robinhood (HOOD) moved higher in aftermarket trading last night after reports the company would cut ~7% of its full-time staff in its third round of layoffs in just over a year. This latest round of layoffs comes less than a week after Robinhood agreed to acquire credit-card startup X1 in a $95 million cash deal.
At Snowflake Summit 2023, Snowflake (SNOW) and NVIDIA (NVDA) announced that they are partnering to provide businesses of all sizes with an accelerated path to create customized generative AI applications using their own proprietary data, all securely within the Snowflake Data Cloud.
Delta Air Lines (DAL) is expected to detail its medium and long-term business strategy at its investor day.
Amazon's (AMZN) cloud computing division would invest $7.8 billion through 2030 in Ohio to expand its data center operations.
Meta Platforms (META) revealed its WhatsApp Business application has now more than 200M users on its platform, up from about 50M nearly three years ago. The company shared that soon WhatsApp Business app users will be able to create Facebook and Instagram ads which click to WhatsApp without needing a Facebook account.
Volkswagen AG (VWAGY) is developing a new entry-level electric car with a price point that could start at under $22,000.
Thomson Reuters Corporation (TRC) signed a definitive agreement to acquire Casetext, a California-based provider of technology for legal professionals, for $650 million cash. The move is expected to support Thomson Reuters' current AI roadmap and advance recent initiatives.
American Equity Investment Life Holding (AEL) received at $55 per share offer from Brookfield Reinsurance (BNRE) as Brookfield looks to acquire all of the outstanding shares of common stock of AEL that it doesn’t already own.
After Today’s Market Close
AeroVironment (AVAV) and Jefferies (JEF) are slated to report their quarterly results after equities stop trading. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, June 28
- Germany: GfK Consumer Climate Index - June
- US: Weekly MBA Mortgage Applications
- US: Weekly EIA Crude Oil Inventories
Thursday, June 29
- Japan: Retail Sales – May
- UK: Bank of England Consumer Credit – May
- Eurozone: Business and Consumer Survey – June
- Germany: Consumer Price Index - June
- US: Weekly Initial & Continuing Jobless Claims
- US: GDP (Third Estimate) – 1Q 2023
- US: Pending Home Sales – May
- US: Weekly EIA Natural Gas Inventories
Friday, June 30
- China: Manufacturing and Non-Manufacturing PMI – June
- UK: Business Investment, GDP – 1Q 2023
- Eurozone: Consumer Price Index - June
- US: Personal Income & Spending, PCE Price Index – May
- US: The University of Michigan Consumer Sentiment Index (Final) – June
Thought for the Day
“If you don’t have time to do it right, when will you have time to do it over?” ~John Wooden
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Chris Versace
Christopher (Chris) Versace is the Chief Investment Officer and thematic strategist at Tematica Research. The proprietary thematic investing framework that he’s developed over the last decade leverages changing economic, demographic, psychographic and technology landscapes to identify pronounced, multi-year structural changes. This framework sits at the heart of Tematica’s investment themes and indices and builds on his more than 25 years analyzing industries, companies and their business models as well as financial statements. Versace is the co-author of “Cocktail Investing: Distilling Everyday Noise into Clear Investing Signals” and hosts the Thematic Signals podcast. He is also an Assistant Professor at NJCU School of Business, where he developed the NJCU New Jersey 50 Index.
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Mark Abssy
Mark Abssy is Head of Indexing at Tematica Research focused on index and Exchange Traded Product development. He has product development and management experience with Indexes, ETFs, ETNs, Mutual Funds and listed derivatives. In his 25 year career he has held product development and management positions at NYSE|ICE, ISE ETF Ventures, Morgan Stanley, Fidelity Investments and Loomis Sayles. He received a BSBA from Northeastern University with a focus in Finance and International Business.
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