Markets Steady Ahead of U.S. Employment Data and Earnings Reports; Fed Comments Awaited

Headlines

1. U.S. stock futures are showing mixed movement as traders await important jobless claims data, upcoming earnings reports, and remarks from a Federal Reserve official.
2. Major indices ended lower yesterday, with notable declines in Super Micro Computer and Airbnb, while Fortinet and Axon Enterprise saw significant gains.
3. European and Asian markets also experienced fluctuations, with mixed results in China and Japan, as investors anticipate further economic data and central bank comments.

U.S. stock futures displayed modest changes this morning, with September S&P 500 E-Mini futures (ESU24) down by -0.10% and September Nasdaq 100 E-Mini futures (NQU24) up by +0.03%. This shift comes as market participants prepare for U.S. weekly jobless claims data and upcoming quarterly earnings reports, along with anticipated remarks from a Federal Reserve official.

In the previous trading session, major U.S. indices closed lower. Super Micro Computer (SMCI) fell over -20%, leading the S&P 500 and Nasdaq 100 declines, after the company reported weaker-than-expected fourth-quarter adjusted earnings per share. Similarly, Airbnb (ABNB) dropped more than -13% following mixed second-quarter results and below-expected third-quarter revenue guidance, along with a warning of reduced demand from U.S. vacationers. Charles River Laboratories (CRL) also saw a decline of over -12% after lowering its full-year 2024 forecast. On a positive note, Fortinet (FTNT) surged more than +25% following strong second-quarter results and an upward revision of its full-year revenue forecast. Axon Enterprise (NASDAQ:AXON) advanced by over +18% after reporting better-than-expected second-quarter results and increasing its 2024 revenue guidance.

Economic data from Wednesday revealed that U.S. consumer credit increased by +$8.93 billion in June, falling short of the +$9.80 billion expected. In the futures market, there is a 27.5% likelihood of a 25 basis point rate cut and a 72.5% chance of a 50 basis point rate cut at the September Federal Open Market Committee meeting.

Earnings reports are expected from several notable companies today, including Eli Lilly (NYSE:LLY), Gilead Sciences (NASDAQ:GILD), Datadog (NASDAQ:DDOG), Expedia (NASDAQ:EXPE), The Trade Desk (TTD), Take-Two Interactive (TTWO), Paramount Global (PARA), and Capri Holdings (NYSE:CPRI).

Investors will also be watching for U.S. Initial Jobless Claims data, with economists predicting a figure of 241,000 compared to last week's 249,000. Additionally, U.S. Wholesale Inventories data is anticipated, with a forecast of +0.2% month-over-month for June, down from +0.6% in May. A speech from Richmond Fed President Thomas Barkin is also on the agenda.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.913%, reflecting a decrease of -1.34%.

In Europe, Euro Stoxx 50 futures fell by -0.79% this morning, reversing some gains from the previous session as the market struggled to maintain its recovery. Technology and mining stocks led the decline. Investors are also awaiting German inflation data due on Friday for insights into Europe’s economic health. In corporate news, Entain Plc (ENT.LN) rose by over +9% after reporting better-than-expected second-quarter results and raising its full-year guidance. Deutsche Telekom Ag (DTE.D.DX) gained more than +1% after reporting an increase in second-quarter net profit and lifting its full-year free cash flow guidance.

Asian markets closed mixed, with China’s Shanghai Composite Index (SHCOMP) ending flat and Japan’s Nikkei 225 Stock Index (NIK) down by -0.74%. In China, the Shanghai Composite Index managed to stabilize, supported by positive sentiment from a citywide initiative in Shenzhen to address unsold housing inventories. Meanwhile, shipping and automobile stocks faced declines. BCA Research upgraded its ratings on Chinese offshore and onshore stocks, indicating potentially less downside compared to global peers. The National Association of Financial Market Institutional Investors is investigating rural commercial banks in Jiangsu province for possible government bond price manipulation. Chinese inflation data for July, scheduled for release on Friday, is anticipated for further economic insights.

In Japan, the Nikkei 225 Index declined following signals of potential additional monetary tightening from the Bank of Japan. Financial and technology stocks underperformed, while energy stocks saw gains. Japan’s current account surplus for June grew to 1,533.5 billion yen, and the Economy Watchers Current Index for July came in at 47.5, surpassing expectations. Corporate news included Lasertec’s +22% increase after forecasting a 25% rise in full-year net profit and Nitori Holdings’ +8% rise following a 7.5% increase in quarterly recurring profit. The Nikkei Volatility Index rose by +3.55% to 46.62.