Today’s Big Picture
Asia-Pacific equity markets ended today’s session predominantly higher spurred on by not only the first dip in China’s Covid case count but the government’s pledge to bolster vaccination rates among its senior population. While we're not likely to see a major covid policy shift in China, easing restrictions and rising vaccination rates would point to China’s much-expected economic re-opening is on the approach path. Hong Kong’s Hang Seng led the way, rising 5.2% followed by the 2.3% and 1.0% gains, respectively for China’s Shanghai Composite and South Korea’s Kospi. Both India’s Sensex and Australia’s ASX All Ordinaries closed 0.3% higher on the day while Japan’s Nikkei, the lone decliner, shed 0.5%. By mid-day trading, European equity indices are mostly positive and U.S. futures point to a positive open following yesterday’s sell-off.
While we have another modest day for U.S. economic data, markets are waiting for Fed Chair Powell’s speech tomorrow to confirm the path of slower interest rates lies ahead. What Powell has to say about the expected terminal rate for the Fed Funds rate is another matter and one that is likely to become the new focus for economists and investors, especially as they eye the yield curve and what it may signal about a potential recession.
Data Download
International Economy
Retail sales in Japan expanded by 4.3% YoY in October, less than the market consensus of +5% and slower than September’s 4.8% increase. Despite the slower gains, October marked the eighth straight month of increase in retail sales.
Consumer credit in the UK rose slower than expected in October, rising by GBP 0.769 billion vs. the GBP 0.9 billion consensus. Borrowing in October was split between GBP 0.4 billion on credit cards, which increased from GBP 0.1 billion in September, and GBP 0.4 billion through other forms of consumer credit such as car dealership finance and personal loans.
The economic sentiment indicator in the Euro Area rose 1.0-point MoM to 93.7 in November. While that marks the first sequential increase following eight consecutive months of declines, the indicator remained close to its lowest level in the last two years.
At 8 AM ET, the preliminary November CPI reading for Germany will be published and the consensus forecast has it rising 10.4% YoY, unchanged vs. October.
Domestic Economy
At 9:00 AM ET, in addition to the FHFA Housing Price Index for September, we will also get the latest from the S&P Case-Schiller Home Price Index. Both figures are expected to post MoM declines as the current interest rate environment continues to pressure home prices.
10:00 AM ET will see the latest release of U.S. Consumer Confidence for November with expectations looking for 99.9 as compared to the previously reported 102.5.
President Joe Biden called on lawmakers to approve a labor deal that would avert a “potentially crippling national rail shutdown” as early as December 9. Speaker Nancy Pelosi said the House would vote this week on a tentative agreement.
The U.S. Bureau of Reclamation warned California cities and industrial users receiving water from the Central Valley Project to prepare for a fourth year of drought and possibly “extremely limited water supply” during 2023.
Markets
Coming into this week, one that is chock full of economic data, the S&P 500 was staring down key technical resistance in the form of the 200-day moving average at 4,504. Renewed concern over China’s covid-19 policies as well as hawkish remarks from St. Louis Fed President James Bullard weighed on stocks yesterday. Bullard shared markets could be underpricing the risk that the Fed may be more aggressive with rate hikes next year. In response, major U.S. equity indices finished the day lower, and all 11 S&P 500 sectors closed in the red with losses ranging from 0.3% (consumer discretionary) to 2.8% (real estate).
Here’s how the major market indicators stack up year-to-date:
- Dow Jones Industrial Average: -3.0%
- S&P 500: -13.7%
- Nasdaq Composite: -28.7%
- Russell 2000: -18.5%
- Bitcoin (BTC-USD): -65.1%
- Ether (ETH-USD): -68.3%
Stocks to Watch
Before trading kicks off for U.S.-listed equities, Hibbett (HIBB) and Shaw Communications (SJR) will be among the handful of companies reporting their latest quarterly results.
Nestle (NSRGY) boosted its 2022 organic sales growth forecast to 8%-8.5% vs. its prior view of 7%-8% and expects to deliver an annual, constant currency EPS growth in the range of 6%-10% over the 2022-2025 period.
Microchip (MCHP) reaffirmed its December quarter guidance with revenue in the range of $2.135-$2.177 billion vs. the $2.16 billion consensus. With its backlog remaining “strong” and its end markets “resilient,” the company reiterated sequential revenue growth expectations for its March quarter.
UnitedHealth (UNH) also updated its outlook for the current year with EPS of $21.85-$22.05 in 2022 vs. the $22.03 consensus on revenue of $324 billion vs. the $323.27 billion consensus. However, for 2023 the company issued mixed guidance with EPS of $24.40-$24.90 vs. the $24.95 consensus. Revenue for next year, however, is expected to be stronger than the consensus forecast of $352.95 billion, coming in between $357-360 billion.
During its Apollo Day autonomous driving technology event, Baidu (BIDU) announced plans to build the world's largest autonomous ride-hailing service area in 2023. Currently, Baidu's autonomous ride-hailing platform, Apollo Go, covers more than 10 cities in China including all first-tier cities. During 3Q 2022 alone, Apollo Go completed more than 474,000 rides.
ExteNet Systems and T-Mobile (TMUS) entered into an exclusive agreement to deploy digital wireless infrastructure in large sports, entertainment, hospitality, and transportation venues.
Toyota Motor (TM) shared it produced 771,382 vehicles in October, up 23% YoY but down from a record of 887,733 the prior month. The company also warned of an uncertain outlook due to Covid and semiconductor shortages.
Royal Bank of Canada (RY) reached an agreement to acquire HSBC (HSBC) Canada for C$13.5 billion ($ 10.1 billion) in cash.
Shares of Nexstar Media Group (NXST) rose in after-market trading on news it would replace Sabre (SABR) in the S&P MidCap 400 index. SABR shares are moving to the SmallCap 600 index to replace Flagstar Bancorp (FBC), which is set to be acquired by New York Community Bancorp. (NYCB).
IPOs
As we head into the holiday season the near-term IPO calendar is fairly light so there are no significant IPOs slated 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
CrowdStrike (CRWD), Hewlett Packard Enterprises (HPE), Intuit (INTU), NetApp (NTAP), and Workday (WDAY) are among the names expected to report quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar.
On the Horizon
Wednesday, November 30
- China: Composite PMI - November
- Germany: Import Price Index - October
- Eurozone: CPI - November
- US: Weekly MBA Mortgage Applications
- US: ADP Employment Change Report - November
- US: GDP - Second Estimate 3Q 2022
- US: Chicago PMI - November
- US: Pending Home Sales - October
- US: JOLTs Job Openings - October
- US: Weekly EIA Crude Oil Inventories
- US: Fed Beige Book
Thursday, December 1
- Japan: au Jibun Bank Japan Manufacturing PMI - November
- Taiwan: S&P Global Taiwan Manufacturing PMI - November
- China: Caixin China General Manufacturing PMI - November
- Eurozone: S&P Global Eurozone Manufacturing PMI - November
- JPMorgan Global Manufacturing PMI - November
- US: Challenger Job Cuts Report - November
- US: Weekly Initial & Continuing Jobless Claims
- US: Personal Income & Spending - October
- US: PCE Price Index - October
- US: S&P Global Manufacturing PMI - October
- US: ISM Manufacturing Index - November
- US: Construction Spending - October
- US: Weekly EIA Natural Gas Inventories
Friday, December 2
- Germany: Import/Exports - October
- Eurozone: PPI - October
- US: Employment Report - November
Thought for the Day
“Hope your Cyber Monday wasn’t followed by Buyer’s Remorse Tuesday.” ~ Anonymous
Disclosures
- CrowdStrike (CRWD) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy 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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