Observations + Charts
Europe & US futures trading higher so far.
Asia traded mixed with China rallying on constructive eco news when Japan ended weaker on BOJ comments.
Mainland China higher snapping 4d of losses on PBOC comments and better credit data.
Hong Kong underperformed as it partly mark-to-market Friday's losses in China post heavy rainstorm.
NKY closed sharply lower on BOJ comments. 3rd d of declines.
Something to keep an eye on.. Japan and China's share of US Treasury holdings declined to the lowest on record.
Europe trading a bit higher; with SXXP trading back >200dma.
Quiet macro calendar in Europe but busy week ahead with ECB meeting Thursday.
EU commissions cuts EZ GDP forecasts for 2023 and 2024.
EU Cyclicals flat-to-down so far while Value and high divi baskets +70/50bps respectively.
All sectors in the green with no major theme leading so far..
EU Miners higher lifted by a strong run in copper, iron ore boosted by Chinese credit data and dollar weakness.
DXY -43bp (this would be the biggest drop since Tues 8/29). Brent prices -40bp (but they remain >$90). US nat gas -160bp but +760bs in EU. Gold +40bp.
US futures higher w/ESU3 +16.25, HIWU3 +69.00, RTYU3 +8.20 and NQU3 +83.00.
Stocks are kicking off the week in a good mood, with solid gains in Europe and the US (while Asia was mixed). There isn’t a single reason for the rally, although some dovish US headlines (soft landing optimism, more evidence the Fed is finished, easing job market strains, etc.), growth green shoots in China (the CPI/PPI and bank lending data from China were relatively decent), additional China stimulus/support steps (insurers will have an easier time buying stocks while the gov’t issued a strongly-worded warning against CNY weakness), more M&A activity (SJM is near a deal to buy TWNK after winning a heated auction with GIS according to the WSJ), and a high-profile tech upgrade (TSLA shares are spiking in pre-market trading on a MS upgrade) are all contributing to the optimism. On the IPO front, reports suggest Arm could price at/above the high-end of its indicated range while Instacart will propose a valuation far below its peak from a few years ago. Not everything is bullish today – natural gas prices in Europe continue to spike given the Australian LNG supply risks (as Chevron workers remain on strike), at least one of the Detroit 3 auto OEMs will probably be hit with a strike later this week, and 10yr yields are spiking in Japan following some relatively hawkish rhetoric out of the BOJ.
The main events on today’ calendar will be sell-side conference presentations (JPM’s Jamie Dimon speaks at 1pmET at the Barclays conf.) and earnings (Oracle reports after the close).