Daily Game Plan

by Contributor
on June 26, 2024

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

TODAY’S ECONOMIC DATA:  10:00ET New Home Sales; 1:00ET 5-Year Note Auction;

HIGHLIGHTS and News:  

  • WikiLeaks founder Julian Assange pleads guilty to conspiracy after 5 years in prison
  • Seth Binzer, lead singer of Crazy Town, dies at 49
  • DHS identifies over 400 migrants brought to U.S. by an ISIS-affiliated human smuggling network

Global shares were mixed, after Nvidia’s rebound offset weakness. The tech-driven rally led by Nvidia’s rebound, appears to be losing momentum after Federal Reserve
Governor Michelle Bowman tempered expectations for interest rate cuts. S&P 500 futures inched lower while Nasdaq 100 futures pared gains. European stocks reversed early gains, with car makers and travel stocks declining. In Asian trading, Japan’s Nikkei jumped
1.3% buoyed by strong demand for technology shares. The yen breached 160 per dollar, raising intervention speculation. Oil rose ahead of U.S. inventory data, while gold dipped.

EQUITIES:

 

US equity futures were wavering, with S&P 500 futures inching lower and Nasdaq 100 futures paring gains. Nvidia and other tech stocks show premarket
gains but concerns about concentration risk in equity indexes persist. In pre-market trading, FedEx shares surged 14% after the company reported strong quarterly results, provided an optimistic forecast for fiscal 2025, and announced plans to buy back up to
$2.5 billion in stock. Nvidia climbed more than 2%, adding to Tuesday’s 7% gain. Rivian Automotive stock soared 38% following news of a joint venture with Volkswagen, which plans to invest up to $5 billion in the electric vehicle maker by 2026, signaling strong
confidence in Rivian’s business. Conversely, Aptiv shares fell 5.7% after Piper Sandler downgraded the stock to underweight, expressing concerns that the Volkswagen-Rivian partnership could undermine Aptiv’s core strategy. Other notable movers included Savara,
which jumped 24% after announcing positive results from a pivotal clinical trial, and Lucid Group, which rose 8.8% in sympathy with Rivian’s gains.

 

Futures ahead of the bell: E-Mini S&P -0.1%, Nasdaq flat, Russell 2000 -0.4%, DJI -0.2%.

European gauges edged lower, paring earlier gains as investors anticipated further interest rate cuts from the region’s central bank. Deliveroo Plc rallied on takeover
speculation following a report of failed talks with DoorDash Inc., while Atos SE remained volatile amid ongoing bailout discussions. ECB Governing Council member Olli Rehn suggested that investor expectations for two more rate cuts in 2024 were reasonable,
emphasizing the need to balance inflation control with economic support. Despite recent volatility due to political turmoil in France, strategists remain optimistic about the market’s outlook, citing resilient economic growth and the prospect of rate cuts.
Stoxx 600 -0.4%, DAX -0.2%, CAC -0.8%, FTSE 100 -0.2%. 

Asian equities advanced for a second day, driven by a rebound in tech shares following Nvidia’s rally in the US. The MSCI Asia Pacific Index rose up to 0.4%, with TSMC
and SK Hynix leading the gains. Chipmakers closely tied to Nvidia saw significant increases, with South Korea’s SK Hynix rising 4.2% and Japan’s Advantest Corp. adding 6.6%. The tech sector’s recovery comes after a three-day decline, with benchmarks gaining
in Japan, South Korea, and mainland China. However, Australian stocks slid due to higher-than-expected inflation data, bolstering the case for the Reserve Bank to resume raising interest rates. Chinese onshore stocks recovered from an intraday loss as traders
anticipated an upcoming meeting of top officials, which may unveil new measures to boost consumption and revive the sluggish stock market. Additionally, persistent trade tensions and the US moving closer to limiting American investment in China have kept overall
market sentiment in check. Nikkei +1.3%, Hang Seng +0.1%, CSI 300 +0.6%, ASX 200 -0.7%.

FIXED INCOME: 
 

Treasury yields were higher across the curve on Wednesday, maintaining losses seen during Asian trading hours following a selloff in Australian
government bonds. The Australian bond selloff was triggered by higher-than-expected May inflation data, increasing the likelihood of the Reserve Bank of Australia resuming interest rate hikes. The U.S. Treasury market now focuses on a $70 billion 5-year note
auction later today, following strong demand for Tuesday’s 2-year sale. The 10-year Treasury yield is up about 3 basis points to 4.28%.

 

METALS: 

Gold slipped following hawkish comments from Federal Reserve policymaker Michelle Bowman. Bowman flagged upside risks to the inflation outlook and reiterated the need
to keep borrowing costs elevated. Her comments dampened investor expectations for imminent monetary easing. Spot gold -0.5%, silver -0.1%.

 

ENERGY:   

 

Oil prices edged higher as traders anticipate the release of U.S. inventories data later today. Analysts expect a decline in U.S. crude inventories,
contradicting the American Petroleum Institute’s report of a slight increase. The market remains optimistic about summer demand growth and the impact of OPEC+ production cuts, though some caution persists. WTI +0.6%, Brent +0.5%, US Nat Gas -2.5%, RBOB +0.4%

 

 

CURRENCIES:   

In currency markets, the yen remained close to cycle lows against the US dollar, with USDJPY nearing the critical 160 level. Meanwhile, the Australian dollar rallied,
climbing as much as 0.6% to a two-week high after May’s consumer price index rose 4% year-on-year, surpassing expectations. This led to a 19-basis point increase in the yield on 3-year bonds and raised the probability of a rate hike at the Reserve Bank of
Australia’s next meeting to 30%. The euro faced pressure, declining up to 0.3% against the dollar, as traders awaited speeches from ECB officials.US$ Index +0.3%, GBPUSD -0.3%, EURUSD -0.3%, USDJPY +0.4%, AUDUSD +0.1%, NZDUSD -0.4%, USDCHF +0.3%.

 

 

 

Spot Bitcoin -0.8%, Ethereum -1%.

 

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

 

  • Upgrades
  • Downgrades
    • Accenture (ACN)
      Cut to Equal-Weight at Morgan Stanley; PT $300
    • Aptiv (APTV)
      Cut to Underweight at Piper Sandler; PT $63
    • Dlocal (DLO)
      Cut to Neutral at Goldman; PT $8
    • MediaAlpha (MAX)
      Cut to Hold at TD Cowen; PT $13
    • Sarepta (SRPT)
      Cut to Neutral at Citi; PT $176
    • Slate
      Office       (SOT-U CN) Cut to Underperform at RBC; PT 30 Canadian cents
      • Cut
        to         Underperform at CIBC
      • Cut
        to         Reduce at Cormark Securities
      • Cut
        to         Sell at TD Cowen; PT 25 Canadian cents
    • Teradyne (TER)
      Cut to Sell at CFRA
    • Viavi (VIAV)
      Cut to Neutral at Rosenblatt Securities Inc; PT $8.25
  • Initiations

 

 

 

 

Data sources: Bloomberg, Reuters, CQG

 

 

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