Daily Game Plan

by Contributor
on April 30, 2024

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

DATA/HEADLINES:  ET 8:30 US 1Q Employment Cost Index,
9:00 US Feb. FHFA House Price Index,
9:45 US April MNI Chicago PMI, 10:00 US April Conf. Board Consumer Confidence,
10:30
Dallas Fed Services Activity

TODAY’S HIGHLIGHTS and News:  

  • US and Mexico Drop Joint Bid to Host FIFA 2027 Women’s World Cup
  • Walmart’s Vizio Acquisition to Undergo Full FTC Antitrust Probe
  • Chiefs Sign Travis Kelce to 2-Year Extension Through 2027 Season

 

 

Global stocks dipped slightly on Tuesday as investors awaited earnings reports from several megacap companies and anticipated the Federal Reserve’s
interest rate decision. The Fed’s meeting, ending Wednesday, may offer clues about potential rate cuts later this year. In Japan, BOJ accounts suggest Japan probably intervened in the FX market yesterday, buying around 5.5 trillion yen. Officials have declined
to say whether they stepped in. The US dollar strengthened, while oil held its recent significant drop and gold fell.

 

EQUITIES: 

 

US equity futures were slightly lower, poised to halt recent gains as investors balanced strong corporate results with concerns over persistent
inflation, which could prolong the delay in monetary easing. In pre-market trading, Blend Labs saw a notable 20% surge in shares following a $150 million investment by Haveli Investments in convertible preferred stock with a zero percent coupon. Eli Lilly’s
shares climbed as first-quarter profit tops estimates amid strong sales of Mounjaro, Zepbound. Conversely, Chegg shares dropped by 13% after the online educational platform forecasted second-quarter total net revenue below the average estimate. Coursera shares
fell by 14%, nearing a one-year low, following a downward revision of full-year revenue and adjusted EBITDA forecasts, prompting analysts to lower price targets. NXP Semiconductors shares rose by 3% after reporting better-than-expected first-quarter adjusted
earnings per share and providing second-quarter forecasts largely exceeding average analyst expectations. Paramount Global saw its shares decline in premarket trading as investors focused more on the Skydance deal than the company’s quarterly results, amidst
CEO Bob Bakish’s potential replacement as the board discusses a potential change in control. Elsewhere, Elon Musk said two senior Tesla execs will leave, along with hundreds of employees, the Information reported. Earnings include Amazon, Eli Lilly, AMD, Super
Micro, PayPal, McDonald’s, Coca-Cola, Starbucks, 3M, ADM, Super Micro Computer, Pinterest. Eaton Corp +2.0%, PayPal +8%, Super Micro Computer -1.2%, Newmont Corp -2.1%, Tesla -2.3%, Stellantis -2.4%, MicroStrategy -4.3%.

 

Coca-Cola -0.5% – Q1 2024 Adj EPS $0.72 Beats $0.70 Estimate, Sales $11.300B Beat $11.010B Estimate. PayPal Holdings +8%, Q1 2024 Adj EPS $1.08
Misses $1.22 Estimate, Sales $7.70B Beat $7.51B

Futures ahead of the data: E-Mini S&P -0.1%, Nasdaq -0.1%, Russell 2000 -0.4%, DJI -0.05%

European shares dipped slightly on Tuesday amid mixed earnings reports from major companies like Mercedes-Benz and HSBC, alongside anticipation for economic data such
as April’s euro zone inflation figures. The STOXX 600 index slipped by 0.2%, potentially marking its first monthly decline in six months due to factors like record-high interest rates, Middle East tensions, and uncertainty surrounding the European Central
Bank’s monetary policy stance. While miners and energy sectors are poised to be the month’s top performers, financial services and insurers are experiencing declines. On the day, the automobile sector saw a 1.5% decrease, with Mercedes-Benz, Stellantis, and
Volkswagen all experiencing losses due to various challenges in their first-quarter earnings reports. Investors are closely monitoring euro zone inflation and GDP data, with many ECB policymakers signaling a probable rate cut in June. Notable stock movements
include HSBC rising 2.9% after announcing quarterly results and a CEO change. The bank said Chief Executive Officer Noel Quinn is stepping down, an unexpected move that will pave the way for the next stage of HSBC’s growth plans. Logitech advanced 9.2% following
strong financial results. Prudential dropped 4.7% due to declining sales in its Chinese joint venture. Stoxx 600 -0.4%, DAX -0.4%, CAC -0.1%, FTSE 100 +0.5%.

Asian stocks rose for a third consecutive day, led by Japanese shares, as the yen stabilized following recent volatility. The MSCI Asia Pacific Index increased by up
to 1.1%, with notable gains in industrial shares like Hitachi and Toyota Motor. Japan’s Topix Index surged by over 2% upon reopening after a holiday. Traders are vigilant regarding yen movements following its recent rebound from a 34-year low, with potential
intervention speculation looming. In Hong Kong, shares edged higher after Chinese leaders pledged to address the nation’s housing surplus and hinted at rate cuts, contributing to the Hang Seng Index’s longest winning streak in three years. Investors are closely
monitoring the upcoming Federal Reserve policy meeting, anticipating a steady interest rate stance but a potentially more hawkish tone on monetary policy. Several regional markets will be closed for Labor Day. Specific stock movements include China Vanke’s
decline due to a first-quarter net loss, Otsuka HDS’s surge on surpassing analyst estimates for first-quarter operating income, and Trent shares rallying to a record high following better-than-expected quarterly profits. Hang Seng Index +0.1%, CSI 300 -0.5%,
Taiwan -0.5%, Kospi +0.2%, Topix +2.1%, Philippines -1%, Vietnam +0.3%. Singapore +0.3%, Sensex -0.2%, ASX 200 +0.3%.

FIXED INCOME: 
 

Treasuries saw a slight decrease in prices across the curve, reversing some of Monday’s gains, particularly noticeable in bunds after the first estimate of the euro-zone’s
first-quarter growth rate exceeded expectations. Additionally, a series of regional inflation readings pushed intermediate German yields up by approximately 3 basis points. In the US, yields dipped by 0.5 to 1.5 basis points across the curve, with losses more
pronounced in intermediate maturities, resulting in a 1 basis point steepening of the 2s10s spread. Wednesday will see the Treasury announce its quarterly refunding, expected to align with its January guidance of no further increases.

METALS: 
   

Gold prices declined, potentially marking the third consecutive month of gains, as investors shifted their focus to the upcoming Federal Reserve
rate decision meeting, where policymakers are anticipated to adopt a more hawkish stance. While higher rates typically have a negative impact on gold, the metal has surged over 12% this year, driven by strong demand from Asian markets, particularly China,
and heightened geopolitical tensions across regions like Ukraine and the Middle East. Central banks also significantly increased their gold purchases in the first quarter, according to the World Gold Council. Elsewhere, Copper was on track for its biggest
monthly rally in more than two years. Spot gold -1%, silver -2%, Copper +1.7%

 

 

ENERGY:   

 

Crude oil prices rebounded slightly following one of their largest drops in nearly two weeks, with traders assessing the potential impact of a
potential cease-fire in the Middle East on regional political tensions. Recent reports suggest that the gap between Israel and Hamas regarding the release of hostages has narrowed, with a deal appearing close. Crude prices experienced volatility in April,
initially surging to their highest levels since October due to Iran’s attack on Israel. However, ongoing conflicts in the Middle East and Ukraine, alongside supply constraints from OPEC+, have supported prices. Nonetheless, uncertainty surrounding US monetary
policy and weakness in certain fuel markets like diesel are tempering these bullish factors. WTI +0.4%, Brent +0.3%, US Nat Gas +2.2%, RBOB -0.1%

 

CURRENCIES:   

In currency markets, the dollar strengthened against all G-10 currencies, supported by month-end flows and anticipation of the upcoming Federal
Reserve policy decision. The Dollar rebounded by 0.2%, partially reversing its decline from Monday, amid expectations of a hawkish pivot by Fed Chair Jerome Powell at the upcoming meeting. USDJPY climbed to a high of 156.99, with attention on potential Ministry
of Finance intervention and upcoming BOJ forecasts. Euro initially weakened despite support from positive first-quarter economic data in the euro zone, with traders favoring put spreads ahead of the Fed decision. Antipodean currencies, particularly AUDUSD,
led losses in the G-10 following a recent rally, partly attributed to disappointing retail sales data for March.US$ Index +0.2%, GBPUSD -0.2%, EURUSD +0.2%, USDJPY -0.2%, AUDUSD -0.6%, USDCHF -0.2%

 

 

 

Spot Bitcoin -2.8%, Ethereum -5.5%.

 

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

 

Data sources: Bloomberg, Reuters, CQG

 

 

 

 

 

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