Daily Game Plan

by Contributor
on April 1, 2024

TODAY’S GAME PLAN:  from the trading
desk, this is not research

DATA/HEADLINES: 
ET 9:45 a.m.: US March S&P Global Manufacturing PMI (F), 10:00 a.m.: US March ISM Manufacturing, US Feb. Construction Spending, 11:30 a.m.: US to sell $70 billion 13-week and $70 billion 26-week
bills

TODAY’S HIGHLIGHTS and News:  

  • Tesla raised the price of its Model Y vehicles by $1,000 each. Its Long Range now sells for just short of $50,000.
  • Avian influenza was discovered in dairy herds in Michigan and Idaho, indicating the virus is spreading into new states.
  • Zach Edey leads Purdue past Tennessee and into its first Final Four since 1980.

 

 

Global shares were broadly higher with optimism prevailing despite last week’s inflation figures. The data, released during the market holiday on Friday, revealed
that the core personal consumption expenditures price index, increased by 0.3% in February. This growth rate was slower than the previous month but aligned with economist expectations, reinforcing the belief that the Federal Reserve will likely cut interest
rates later this year. Global markets are also receiving a lift from positive sentiment in China, as recent data indicates that factory activity in March surpassed expectations. Meanwhile, Treasuries were steady in thin trading, with many markets closed for
holidays.

 

EQUITIES:  

US stock futures edged higher, driven by optimism surrounding the economy and interest rates as the second quarter begins. Nvidia Corp., Advanced Micro Devices Inc. and Microsoft
Corp. advanced in pre-market trading, pointing to a strong open in tech stocks. AT&T fell premarket after saying personal data from about 7.6 million current account holders and 65.4 million former customers was leaked onto the dark web. Fidelity’s Blue Chip
Growth Fund cut the value of its position in X by 5.7% in February, implying a 73% drop since Elon Musk’s 2022 purchase. Nikola rose as much as 16%, set to extend gains for a record-setting ninth consecutive session.
UPS edged 2% higher after securing an air cargo contract from the United States Postal Service. Conversely, FedEx slipped 2%.Torrid Holdings (CURV) jumps 16% following its fourth-quarter net sales
and adjusted EBITDA beating the average analyst estimates, reported late Thursday. Earnings today include PVH.

 

Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.1%, Russell 2000 +0.4%, DJI +0.1%

 

All major EU/UK equity exchanges are closed today. Few regional stock exchanges that are open, including Egypt, Israel, Morocco, Romania, Turkey, Saudi Arabia, UAE.

 

 

Asia’s stock indexes were mixed on the first trading day of the second quarter The MSCI Asia Pacific Index declined as much as 0.7%, with Toyota and Mitsubishi UFJ Financial
among the biggest drags. Investors sold Japanese shares following a record-breaking rally and bought into Chinese equities, taking profit on the first day of Japan’s new fiscal year after the Nikkei 225 Stock Average capped its strongest quarter in almost
15 years. Stock markets were closed for holidays in Australia, New Zealand, and Hong Kong. Mainland China stocks closed higher following a rebound in domestic manufacturing activity that reinforced the view that economic growth is gaining traction. Benchmarks
in Taiwan and Indonesia fell, while those in India, the Philippines, and Singapore advanced. CSI 300 +1.6%, Kospi +0.04%. Nikkei 225 -1.4%, Sensex +0.5%, Singapore +0.2%.   

FIXED INCOME: 
 

The US Treasury yield curve remained steeper compared to Thursday’s close, widening further during Asian trading hours. This was driven by the release of February PCE deflators
and remarks from Fed Chair Powell, maintaining expectations for rate cuts in the year. Front-end yields increased by about 2 basis points, contributing to a steepening of the yield spread between 2-year and 10-year yields by nearly 3 basis points, and between
5-year and 30-year yields by more than 3 basis points. The 10-year yields rose to approximately 4.21%, while 30-year yields dropped by almost 3 basis points to around 4.37%.

 

METALS: 
   

Gold lifted to fresh record highs as expectations for easier U.S. monetary policy and upbeat China data underpin its rally. Core personal consumption expenditures index, the Fed’s preferred
gauge of underlying inflation, cooled in February and provided a further boost to gold. Later this week, investors will get a further chance to gauge the outlook for the US economy and central bank policy, with monthly payrolls expected to increase by at least
200,000 for a fourth straight month. Spot gold +0.8%, silver +0.5%.

 

 

ENERGY:   

 

Oil pared earlier gains on Monday; prices were higher amid expectations of tighter supply from OPEC+ cuts and attacks on Russian refineries while upbeat Chinese manufacturing
data supported the outlook for improving demand. Russia is planning to reduce daily diesel exports from key western ports in April to the lowest in five months, after Ukrainian drone attacks on refineries and seasonal maintenance sharply lowered crude processing
rates. WTI flat, Brent -0.1%, US Nat Gas -0.3%, RBOB -0.4%

 

 

CURRENCIES:   

In currency markets, the dollar index was mixed against its G-10 counterparts amid limited activity due to holiday closures in major Asian and European markets. Asset
managers reduced net dollar shorts to the lowest levels since September 2022. USDJPY fluctuated, with Japanese officials signaling readiness to address excessive currency movements. In economic news, both China’s official and Caixin manufacturing PMIs for
March exceeded economists’ expectations.US$ Index +0.08%, GBPUSD -0.07%, EURUSD -0.06%, USDJPY -0.01%, AUDUSD -0.06%, NZDUSD -0.05%.

 

 

Data sources: Bloomberg, Reuters, CQG

 

  • Upgrades
    • Azul (AZUL4
      BZ) ADRs Raised to Outperform at Itau BBA
    • Devon (DVN)
      Raised to Overweight at Wells Fargo; PT $59
    • Nuvalent (NUVL)
      Raised to Outperform at Leerink; PT $110
    • Premier
      Financial Corp       (PFC) Raised to Outperform at Hovde
      Group
    • Suzano (SUZB3
      BZ) ADRs Raised to Outperform at CICC; PT $14.40
  • Downgrades
  • Initiations
    • Acushnet (GOLF)
      Rated New Hold at Baptista Research; PT $72.10
    • BioNTech (BNTX)
      ADRs Rated New Outperform at Baptista Research; PT $109
    • Bloom
      Energy       (BE) Rated New Outperform at Evercore ISI;
      PT $21
    • Cameco (CCO
      CN) Reinstated Buy at Goldman; PT C$74
    • Compass
      Pathways       (CMPS) ADRs Rated New Overweight at Morgan
      Stanley
    • Crocs (CROX)
      Rated New Overweight at Barclays; PT $167
    • Deckers
      Outdoor       (DECK) Reinstated Overweight at Barclays;
      PT $1,110
    • EQB
      Inc       (EQB CN) Reinstated Outperform at CIBC; PT C$100
    • Five
      Below       (FIVE) Rated New Outperform at Baptista Research;
      PT $212.90
    • GMS (GMS)
      Rated New Underperform at Baptista Research; PT $101.50
    • Griffon (GFF)
      Rated New Hold at Baptista Research; PT $82.70
    • Kohl’s (KSS)
      Rated New Hold at Baptista Research; PT $32.50
    • LCI
      Industries       (LCII) Rated New Hold at Baptista Research;
      PT $131.50
    • Leggett
      & Platt       (LEG) Rated New Hold at Baptista Research;
      PT $20
    • MDC
      Holdings       (MDC) Rated New Underperform at Baptista
      Research
    • Mobileye (MBLY)
      Rated New Outperform at Haitong Intl; PT $35.05
    • Modine (MOD)
      Rated New Hold at Baptista Research; PT $102.70
    • NexGen
      Energy       (NXE CN) Rated New Sector Outperform at Scotiabank
    • NEXTracker (NXT)
      Rated New Outperform at Daiwa; PT $63
    • Nordstrom (JWN)
      Rated New Outperform at Baptista Research; PT $24
    • On
      Holding       (ONON) Rated New Overweight at Barclays; PT
      $38
    • Riot
      Platforms Inc       (RIOT) Rated New Outperform at ATB Capital;
      PT $20
    • Skechers
      USA       (SKX) Rated New Overweight at Barclays; PT $71
    • Steven
      Madden       (SHOO) Rated New Hold at Baptista Research;
      PT $46
    • Tencent
      Music       (TME) ADRs Rated New Buy at Baptista Research;
      PT $17.80
    • Tri
      Pointe Homes       (TPH) Rated New Hold at Baptista Research;
      PT $40.10
    • TSMC (2330
      TT) ADRs Rated New Buy at Huatai Research; PT $172.91
    • Unity
      Software       (U) Rated New Neutral at Edgewater
    • Visteon (VC)
      Rated New Outperform at Baptista Research; PT $143.60
    • Wendy’s (WEN)
      Rated New Outperform at Baptista Research; PT $21

 

 

 

 

 

 

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