Stock Index Futures Slip Ahead of U.S. JOLTs Report, China Credit Outlook Downgrade Weighs

December S&P 500 futures (ESZ23) are down -0.34%, and December Nasdaq 100 E-Mini futures (NQZ23) are down -0.51% this morning as investors weighed concerns over China’s debt burden and looked ahead to the latest reading on U.S. job openings as well as U.S. business activity data.

Moody’s Investors Service on Tuesday cut its outlook for Chinese sovereign bonds from stable to negative, highlighting growing global concerns regarding the level of debt in the world’s second-largest economy. “The downgrade reflects growing evidence that authorities will have to provide financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic, and institutional strength,” Moody’s said in a statement.

In Monday’s trading session, Wall Street’s major indices closed lower, with the tech-heavy Nasdaq 100 dropping to a 3-week low. Alaska Air Group Inc (ALK) slumped over -14% and was the top percentage loser on the benchmark S&P 500 after agreeing to acquire Hawaiian Holdings in a deal valued at $1.9 billion. Also, chip stocks retreated as U.S. Treasury yields gained ground, with Intel Corporation (INTC) falling more than -3% and Advanced Micro Devices Inc (AMD) sliding over -2%. In addition, NVIDIA Corporation (NVDA) dropped more than -3% amid indications of insider selling following data from Washington Service revealing that the company’s executives sold $180 million worth of stock last month. On the bullish side, 3M Company (MMM) gained more than +3% after Barclays upgraded the stock to Equal Weight from Underweight.

Economic data on Monday showed that U.S. factory orders fell -3.6% m/m in October, weaker than expectations of -2.8% m/m and the biggest decline in 3-1/2 years.

Meanwhile, U.S. rate futures have priced in a 99.9% chance of no hike at the Fed’s monetary policy committee meeting later this month and an 85.5% probability of no hike at the January FOMC meeting. Also, U.S. rate futures have priced in a 54.2% chance of a 25 basis point rate cut at the conclusion of the Fed’s March meeting.

On the earnings front, notable companies like AutoZone (AZO), MongoDB (MDB), and Toll Brothers (TOL) are set to report their quarterly figures today.

Today, all eyes are focused on U.S. JOLTs Job Openings data in a couple of hours. Economists, on average, forecast that October JOLTs Job Openings will come in at 9.300M, compared to the previous value of 9.553M.

Also, investors will likely focus on the U.S. ISM Non-Manufacturing PMI, which stood at 51.8 in October. Economists foresee the new figure to be 52.0.

The U.S. S&P Global Composite PMI will come in today. Economists expect November’s figure to be 50.7, compared to October’s value of 50.7.

The U.S. S&P Global Services PMI will also be closely watched today. Economists estimate that S&P Global Services PMI will come in at 50.8 in November, compared to 50.6 in October.

In the bond markets, United States 10-year rates are at 4.248%, down -0.91%.

The Euro Stoxx 50 futures are up +0.34% this morning as investors digested dovish comments from a European central banker as well as a slew of important regional economic data. Energy stocks gained ground on Tuesday, while mining and healthcare stocks underperformed. A survey on Tuesday showed that the decline in Eurozone business activity moderated last month, although it still indicates that the bloc’s economy is poised to contract again this quarter. Meanwhile, Eurozone bond yields retreated after European Central Bank board member Isabel Schnabel said that further interest rate hikes are “rather unlikely” due to a “remarkable” fall in inflation. In corporate news, Barclays Plc (BARC.LN) fell over -2% following the move by one of its largest shareholders, Qatar Holding, to sell approximately 510 million pounds ($644 million) worth of its stock. At the same time, Telefonaktiebolaget Lm Ericsson (ERICB.S.DX) surged more than +6% after securing a deal with AT&T to build a telecom network utilizing ORAN technology.

Spain’s Services PMI, Italy’s Services PMI, France’s Services PMI, Germany’s Services PMI, Eurozone’s Composite PMI, Eurozone’s Services PMI, U.K.’s Services PMI, and Eurozone’s PPI data were released today.

The Spanish November Services PMI arrived at 51.0, weaker than expectations of 51.5.

The Italian November Services PMI came in at 49.5, stronger than expectations of 48.2.

The French November Services PMI stood at 45.4, stronger than expectations of 45.3.

The German November Services PMI was at 49.6, stronger than expectations of 48.7.

Eurozone November Composite PMI has been reported at 47.6, stronger than expectations of 47.1.

Eurozone November Services PMI stood at 48.7, stronger than expectations of 48.2.

U.K. November Services PMI arrived at 50.9, stronger than expectations of 50.5.

Eurozone October PPI came in at +0.2% m/m and -9.4% y/y, compared to expectations of +0.2% m/m and -9.5% y/y.

Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.67% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.37%.

China’s Shanghai Composite today closed sharply lower as risk sentiment took a hit following Moody’s downgrade of the country’s credit outlook. Real estate, semiconductor, and computer stocks led the declines on Tuesday. Tech giants listed in Hong Kong also slumped. A private-sector survey showed on Tuesday that China’s services activity rose to a 3-month high in November, contrasting with an official index that unexpectedly fell into contraction. Meanwhile, Moody’s Investors Service on Tuesday lowered its outlook from stable to negative while retaining a long-term rating of A1 on the country’s sovereign bonds, highlighting growing global concerns regarding the level of debt in the world’s second-largest economy. In other news, foreign investors offloaded a net of 7.5 billion yuan ($1.05 billion) in Chinese shares on Tuesday, the biggest daily outflow since October 19th. Investor focus is now squarely on additional economic data later in the week, as well as the upcoming Politburo meeting and the annual Central Economic Work Conference.

The Chinese November Caixin Services PMI arrived at 51.5, stronger than expectations of 50.7.

“The rating downgrade risk is unlikely to reverse the debt issuances plan, which could help ease concern over the property sector and China’s sluggish growth,” said Ken Cheung, chief Asian FX strategist at Mizuho Securities.

Japan’s Nikkei 225 Stock Index closed sharply lower today, posting its most substantial decline in almost six weeks, attributed to a heavy sell-off in chip stocks driven by elevated U.S. Treasury yields. Chip-related stocks tumbled on Tuesday, with Advantest Corp plunging over -6%, Tokyo Electron falling about -4%, and Renesas Electronics Corp slipping more than -5%. Government data showed on Tuesday that core consumer inflation in Japan’s capital, Tokyo, declined more than anticipated in November, approaching the Bank of Japan’s 2% annual target. Separately, a business survey showed on Tuesday that Japan’s service activity grew at the slowest pace in a year in November, primarily due to an accelerating decline in new exports and softer demand. In corporate news, Sakura Internet Inc. climbed over +7% following a statement from Nvidia CEO Jensen Huang, who mentioned that the U.S. semiconductor giant would collaborate with Japanese companies such as Sakura Internet to build artificial intelligence factories in Japan. Also, ACSL Ltd gained more than +6% following the disclosure by activist investor Oasis Management of its 10.47% stake in the company. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +4.16% to 17.77.

The Japanese November Tokyo Core CPI has been reported at +2.3% y/y, weaker than expectations of +2.4% y/y.

The Japanese November au Jibun Bank Japan Services PMI came in at 50.8, weaker than expectations of 51.7.

Pre-Market U.S. Stock Movers

Gitlab Inc (GTLB) surged about +16% in pre-market trading after the company reported upbeat Q3 results and raised its FY24 guidance.

Robinhood Markets Inc (HOOD) climbed over +3% in pre-market trading after the company said its customers contributed about $1.4 billion of net deposits in November.

Adecoagro SA (AGRO) gained more than +2% in pre-market trading after BofA upgraded the stock to Buy from Neutral.

Livent Corp (LTHM) fell over -2% in pre-market trading after Piper Sandler downgraded the stock to Underweight from Neutral with a price target of $15.

Albemarle Corp (ALB) slid more than -2% in pre-market trading after Piper Sandler downgraded the stock to Underweight from Neutral with a price target of $128.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - December 5th

AutoZone (AZO), Ferguson (FERG), MongoDB (MDB), Toll Brothers (TOL), Core Main (CNM), Descartes Systems (DSGX), SentinelOne (S), Healthequity Inc (HQY), Asana (ASAN), Signet Jewelers (SIG), Box Inc (BOX), AeroVironment (AVAV), Dave & Buster’s Entertainment (PLAY), G-III Apparel (GIII), Powell Industries (POWL), Yext (YEXT), Phreesia (PHR), Americas Car-Mart (CRMT), Daktronics (DAKT), Stitch Fix (SFIX), J.Jill (JILL), Ooma Inc (OOMA), Lands’ End (LE).

More Stock Market News from Barchart

On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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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