Today’s Big Picture
Asian markets closed today’s trading mixed as Hong Kong’s Hang Seng declined 1.88%, Japan’s Nikkei fell 0.41%, Taiwan’s TAIEX lost 0.20% and India’s Sensex dropped 0.10% while South Korea’s KOSPI rose 0.02% and China’s Shanghai Composite closed up 0.66%. By mid-day trading, European equity indices are mixed and U.S. futures point to a positive market open later this morning.
Following yesterday’s market sell-off, reports that Russian Foreign Minister Sergei Lavrov will meet with U.S. Secretary of State Antony Blinken in Europe for talks next week are helping to ease some of the geopolitical tension. Blinken is also expected to meet with his counterparts at the Munich Security Conference this weekend, while President Biden hosts a call with the leaders of Canada, the UK, France, Germany, Italy, Poland, Romania, the EU, and NATO. While U.S. equities look to recover some of yesterday’s sell-off, given the back and forth this week regarding Russia and Ukraine, we could see traders take a more cautious stance today.
And a quick housekeeping note, due to the observance of Presidents Day on Monday, we will not be publishing Daily Markets and will be back on Tuesday, February 22.
Data Download
International Economy
Last night Japan released YoY CPI figures for January coming in at 0.50%, lower than both expectations of 0.60% and the previous release of 0.80%. YoY Core CPI was also released and showed an increasing deflationary trend printing at -1.10% as compared to the previous figure of -0.70%.
Other YoY January CPI updates include France (0.30%), Finland (4.40%), and Sweden (3.70%) with France meeting expectations and unchanged from the previous release and the two Nordic countries exceeding both expectations and previous releases.
January UK Retail Sales showed strong growth of 9.10% as compared to the 1.70% contraction in December presumably as the nation began to recover from the late fourth quarter omicron wave.
Domestic Economy
Following yesterday’s Housing Starts release that came in 52,000 lighter than expected, Existing Home Sales is scheduled to be released today at 10:00 AM ET. Estimates call for 6.1 million homes sold in January, 80,000 lower than the previous figure. Recent near-term highs in mortgage rates are undoubtedly putting pressure on this market so investors will be looking to see just how much rates will have affected the housing market as well as any housing adjacent industries.
The Senate passed a bill that would fund the federal government through March 11, and President Biden is expected to sign that bill today.
Markets
Following warnings that Russia could invade Ukraine in a matter of days and was building up troops close to Ukraine, renewed geopolitical tension quashed the notion of buying the dip yesterday resulting in the worst day of 2022 for equities. The S&P 500 dropped 2.1%, the Nasdaq Composite fell 2.9%, and the Russell 2000 shed 2.5% while the Dow Jones Industrial Average closed down 1.8%. Nine of the 11 S&P 500 sectors closed in negative territory, led lower by the information technology, communication services, and consumer discretionary sectors. Adding yesterday’s move lower into the mix, here’s how the major market indicators stack up on a year-to-date basis:
- Dow Jones Industrial Average: -5.6%
- S&P 500: -8.1%
- Nasdaq Composite: -12.3%
- Russell 2000: -9.7%
- Bitcoin (BTC-USD): -12.2%
- Ethereum (ETH-USD): -21.3%
Stocks to Watch
Before trading kicks off, Arbor Realty Trust (ABR), Barnes Group (B), Bloomin’ Brands (BLMN), Deere & Co. (DE), and DraftKings (DKNG) will be among the dozen or so companies reporting their quarterly results.
While Roku (ROKU) reported December quarter results that topped expectations, the company issued downside guidance for the current quarter and shared it sees ongoing supply chain disruptions impacting not only the global economy but the consumer TV electronics space in particular. For the current quarter, Roku is calling for revenue of $720 million vs. the $756 million consensus.
At its 2022 Investor Meeting, Intel (INTC) issued upside guidance for 2022 with EPS of $3.50 vs. the $3.48 consensus on revenue of $76 billion vs. the expected $75.5 billion. The company shared that as its investments begin to deliver faster growth, its gross margins are expected to expand from the 51%-53% range over the next three years to 54%-58% in 2025 and 2026.
Citing the inability to come to terms, Brazilian meatpacker JBS SA announced it has withdrawn a proposal to acquire the remaining shares of its U.S.-based subsidiary Pilgrim’s Pride (PPC).
Celanese Corp. (CE) will acquire DuPont’s (DD) mobility and materials arm for $11 billion in cash.
IPOs
There are no IPO offerings expected to price this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.
After Today’s Market Close
Not only is it Friday, but it’s the Friday before a long weekend that has US equity markets closed on Monday. As such, there are no companies slated to report their quarterly results after today’s market close. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Tuesday, Feb. 22
- Italy: CPI – January
- Germany: Business Expectations & Ifo Business Climate Index – February
- UK: CBI Industrial Trends Orders – February
- US: FHFA Housing Price Index – December
- US: S&P Case-Shiller Home Price Index – December
- US: Markit Economics Flash Manufacturing & Services PMI – February
- US: Consumer Confidence – February
Wednesday, Feb. 23
- Eurozone: CPI - January
- US: Weekly MBA Mortgage Applications
Thursday, Feb. 24
- US: 4Q 2021 GDP – Second Estimate
- US: Chicago Fed National Activity Index – January
- US: Weekly Initial & Continuing Jobless Claims
- US: New Home Sales – January
- US: Weekly EIA Natural Gas Inventories
- US: Weekly EIA Crude Oil Inventories
Friday, Feb. 25
- Japan: Tokyo CPI – February
- Germany: 4Q 2021 GDP
- Germany: Import Price Index – January
- France: PPI – January
- Eurozone: Business Climate, Business and Consumer Survey – February
- US: Durable Orders – January
- US: Personal Income & Spending – January
- US: PCE Price Index – January
- US: Pending Home Sales – January
- US: University of Michigan Consumer Sentiment Index (Final) – February
Thought for the Day
“When a child is learning how to walk and falls down 50 times, they never think to themselves, ‘Maybe this isn’t for me.’” ~ Unknown
Disclosures
- Deere & Co. (DE) is a constituent of the Foxberry Tematica Research Sustainable Future of Food Index
- Pilgrim’s Pride (PPC) is a constituent of the Tematica BITA Cleaner Living Index
- Intel (INTC) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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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