TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 1:00ET 20-Year Bond Auction; 2:00ET FOMC Meeting Minutes
HIGHLIGHTS and News:
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UK NAVY: VESSEL NEAR YEMEN REPORTS FURTHER ATTACK BY PROJECTILE
Global shares paused after a weeks-long rebound towards record highs, leaving the dollar languishing at 2024 lows as investors hoped for clearer clues on Friday from
the Federal Reserve on the magnitude of future interest rate cuts. A Gaza cease-fire deal is on the edge of collapse, Politico reported, citing US and Israeli officials. Iran will “calibrate” its response to the killing of a Hamas leader in Tehran to avoid
affecting the negotiations. An unidentified merchant ship came under attack in the Red Sea and is no longer under the command of its crew, according to the UK Navy. Elsewhere, Morgan Stanley downgraded Mexican stocks to underweight following the judicial
reform proposal sent to Congress.
EQUITIES:
US equity futures edged higher as investors awaited an annual review of US jobs data as well as Federal Reserve meeting minutes for further clues on interest rate cuts. Fed minutes due
later today, PMI data due Thursday; market focus is also on the annual recalibration of US payrolls. Target jumped pre-market after ending a string of sales declines in the second quarter. Macy’s lowered its sales forecast, missing estimates. TJX reports later
today. Walmart raised about $3.6 billion selling its entire stake in JD.com as it winds down an eight-year partnership. The shares were sold at an 11% discount to yesterday’s close. Wall Street will scour Fed minutes today for clues on the path of interest
rates and when the central bank will complete its current course of QT. Fed’s Bowman is still cautious about changing policy stance, saying this morning that inconsistencies in the latest employment report warrant caution.
Futures ahead of the bell: E-Mini S&P +0.2%, Nasdaq +0.2%, Russell 2000 +0.5%, DJI +0.2%
In pre-market trading, Target (TGT) rises 12% after ending a string of sales declines in the 2Q, citing improved discretionary spending. Arch Resources (ARCH) gains 3% after agreeing
to be bought by Consol Energy (CEIX) for $2.3 billion as the transition to greener fuels threatens the industry’s long-term outlook. BigBear.ai (BBAI) surges 26% after the artificial intelligence software developer said it received an award as a subcontractor
to Concept Solutions. JD.com ADRs (JD) drops 7% after Walmart raised about $3.6 billion by selling its stake in the Chinese e-commerce firm. Keysight Technologies (KEYS) rises 12% after the measurement instruments company issued a 4Q forecast range with a
midpoint that came in ahead of the analyst consensus. Macy’s (M) falls 7% after slightly missing analysts’ estimates for its quarterly revenue and lowering its outlook for sales during the rest of the year. Stronghold Digital Mining (SDIG) soars 60% after
Bitfarms Ltd. agreed to acquire the company. Vector Group (VGR) gains 7% after the discount cigarette maker agreed to be acquired by JT Group for about $2.4 billion.
European gauges edged higher ahead of Federal Reserve minutes and US payrolls revisions due today as investors anticipate clues about the timing of interest rate cuts. The Euro Stoxx
600 grinds marginally higher with basic resources and automotive sectors leading the gains, while REIT stocks were the biggest laggards. Among individual movers, Alcon Inc. dropped as its second-quarter sales undershot expectations, while Demant A/S advanced
after Morgan Stanley analysts upgraded the stock twice to overweight. Stoxx 600 +0.3%, DAX +0.5%, CAC +0.5%, FTSE 100 +0.2%. Basic Resources +1.35%, Autos +1.25%, Food & Bev +0.8%. REITs -1%, Telecomm -0.15%.
Asian stocks were mostly lower, dragged by losses in some large technology and financial shares. The MSCI Asia Pacific Index dropped 0.5%, after gaining nearly 4% over the previous three
sessions. TSMC, Commonwealth Bank and JD.com were the biggest contributors to the gauge’s slide. Hong Kong was among the worst-performing markets in the region, with JD.com leading a rout in the tech sector on Walmart’s sale of its stake in the Chinese e-commerce
company. China’s tech stocks slumped on concerns over the country’s consumption outlook. Japan’s export growth accelerated to 10.3% year on year in July, largely reflecting the weaker yen and broadly matching estimates. Taiwan -0.8%, Hang Seng Index -0.7%,
Philippines -0.6%, CSI 300 -0.3%, Nikkei 225 -0.3%. Vietnam +0.9%, Thailand +0.7%, Kospi +0.2%, ASX 200 +0.15%, Sensex +0.1%.
FIXED INCOME:
Treasury yields edged higher across the curve, partially reversing Tuesday’s gains, as investors anticipate the release of revised US labor data. The 10-year yield
rose to around 3.82%, with most curve spreads remaining within 1 basis point of Tuesday’s close. The release of the July FOMC meeting minutes at 2pm EST is in focus today, which may provide further insights into the Fed’s monetary policy stance. The BLS will
release its preliminary estimate of next year’s annual benchmark revision today at 10 am EDT.
METALS:
Gold edged lower from a record high ahead of Friday’s speech by Federal Reserve Chair Jerome Powell, which may offer clues on how rapidly the central bank will cut
interest rates. Bullion remains over $2,500 an ounce after hitting successive all-time highs in recent sessions. It touched a fresh one of $2,531.75 on Tuesday as the dollar fell on speculation that Powell will flag steep rate reductions when he gives his
address at Jackson Hole on Friday. Spot gold -0.15%, silver +0.6%, copper +0.75%.
ENERGY:
Oil prices stabilized after a brief decline, with traders closely monitoring weekly US stockpile data and ongoing diplomatic efforts for a cease-fire between Israel
and Hamas. The American Petroleum Institute reported a slight increase in crude inventories, with official figures expected later. Despite U.S. Secretary of State Antony Blinken’s efforts, a cease-fire agreement remains elusive, though options markets suggest
reduced concerns over Middle East hostilities. WTI +0.15%, Brent +0.2%, US Nat Gas +0.6%, RBOB -0.15%
CURRENCIES:
In currency markets, the dollar is snapping a three-day decline, as investors look ahead to an annual review of US jobs data as well as Federal Reserve meeting minutes.
USDJPY outperforms as investors wait for speeches from BOJ and Federal Reserve chiefs for clues on the policy outlook. US$ Index +0.05%, GBPUSD +0.02%, EURUSD -0.1%, USDJPY +0.45%, AUDUSD -0.1%, USDNOK +0.1%, USDCHF +0.05%.
Spot Bitcoin -0.01%, Spot Ethereum -0.6%. TETHER TO LAUNCH NEW STABLECOIN PEGGED TO UAE DIRHAM. This aims to tap into the growing demand for Gulf currencies and
offer an alternative to the U.S. dollar.
- Upgrades
- BrightView (BV) Raised to Buy at Jefferies; PT $17
- Consensus Cloud (CCSI) Raised to Buy at BTIG; PT $30
- Corning (GLW) Raised to Outperform at Mizuho Securities; PT $47
- Dada Nexus (DADA) ADRs Raised to Neutral at Citi; PT $1.50
- Texas Instruments (TXN) Raised to Buy at Citi; PT $235
- Woodward (WWD) Raised to Buy at Truist Secs; PT $187
- Downgrades
- Aadi Bioscience Inc (AADI) Cut to Hold at TD Cowen
- Altus Power (AMPS) Cut to Equal-Weight at Morgan Stanley; PT $4
- Asur (ASURB MM) ADRs Cut to Hold at HSBC; PT $305
- BRP Inc. (DOO CN) Cut to Hold at Stifel Canada; PT C$97
- Cut to Sector Perform at National Bank; PT C$100
- Cementos Pacasmayo (CPACASI1 PE) ADRs Cut to Underweight at JPMorgan; PT $6
- Chewy (CHWY) Cut to Market Perform at Raymond James
- GAP Airports (GAPB MM) ADRs Cut to Hold at HSBC; PT $174
- Iteris (ITI) Cut to Neutral at B Riley; PT $7.20
- OMA (OMAB MM) ADRs Cut to Hold at HSBC; PT $77
- Palo Alto Networks (PANW) US Cut to Neutral at President Capital Management; PT $385
- Sonoco (SON) Cut to Underweight at Wells Fargo; PT $52
- Starbucks (SBUX) Cut to Sell at DZ Bank; PT $85
- Tilt Holdings (TILT CN) Cut to Neutral at Zuanic
- Triumph Group (TGI) Cut to Hold at Truist Secs; PT $15
- Vipshop (VIPS) ADRs Cut to Hold at CLSA; PT $12
- Initiations
- Clearside Biomedical (CLSD) Rated New Buy at Chardan Capital Markets
- Finning International (FTT CN) Reinstated Sector Outperform at Scotiabank
- Latam Airlines (LTM CI) Reinstated Neutral at Citi; PT $26.50
- Rated New Overweight at Barclays; PT $34
- Rated New Buy at Deutsche Bank; PT $36
- MicroStrategy (MSTR) Rated New Overweight at Cantor; PT $194
- Toromont Industries (TIH CN) Reinstated Sector Perform at Scotiabank
- TransMedics (TMDX) Rated New Buy at Needham; PT $208
- TWFG (TWFG) Rated New Outperform at William Blair
- Wajax (WJX CN) Reinstated Sector Outperform at Scotiabank; PT C$29
Data sources: Bloomberg, Reuters, CQG
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