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Morning Briefing: August 25th, 2023

Market Overview

After a rather lackluster trading day yesterday, there’s a subtle hint of optimism in the futures market this morning. The market’s performance on the previous day was marred by concerns about Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole Symposium, scheduled for 10:05 a.m. ET. Anticipation is thick in the air, with many hoping that Powell might temper his hawkish stance, providing some relief to investors.

Stimulus Moves in China

Chinese authorities are making concerted efforts to bolster their stock market, with measures such as a substantial cut in the stamp duty on stock trading by up to 50%. Moreover, financial institutions are being urged to augment their stock investments. Despite these aggressive moves, the Shanghai Composite did not reap the expected benefits, witnessing a dip of 0.6% and wrapping up the week with a loss of 2.2%.

Bond Market Dynamics

The bond market is showing some movements, with the 2-year note yield inching up by two basis points, now standing at 5.03%. Meanwhile, the 10-year note yield remains static at 4.24%.

Today’s Economic Agenda

  • 10:00 ET: Release of the August University of Michigan Consumer Sentiment (Final Version).
  • 10:05 ET: All eyes on Fed Chair Powell’s much-anticipated speech at Jackson Hole, focusing on the economic outlook.

Corporate Spotlight

  • Netflix (NFLX): Shares are up by 0.6%. The streaming giant receives a boost as Loop Capital upgrades its rating from Hold to Buy, while also revising the price target to $500 from $425.
  • Marvell Technology (MRVL): Despite the stock sliding by 3.4%, the tech company managed to outperform expectations by $0.01 with revenues meeting the forecast. Their guidance for Q3 remains on track.
  • Ulta Beauty (ULTA): The beauty company’s shares are up by 0.8%, following an earnings beat by $0.17 and surpassing revenue expectations.
  • Affirm Holdings (AFRM): With a stock surge of 7.2%, the company has exceeded earnings expectations by $0.18 and reported revenues above the consensus.
  • Hawaiian Electric Industries (HE): The company faces a lawsuit from Maui County over alleged negligence linked to fires. It also announced the suspension of its quarterly dividend and has drawn $200 million from existing credit facilities.
  • Intuit (INTU) & Workday (WDAY): Both tech companies surpassed earnings and revenue expectations, though their stock performance diverges.
  • Gap, Inc. (GPS) & Nordstrom (JWN): Both retail giants reported earnings surpassing estimates but had mixed stock performances.
  • Domo (DOMO): The software company reported in-line earnings but saw a sharp stock decline of 32.0% following its forecast for Q3 and FY24.

European Stocks & U.S. Futures

European stocks and U.S. futures experienced slight gains as investors eagerly await Powell’s speech. Contracts on the S&P 500 are up by 0.3%, signaling a potential rebound from yesterday’s downtrend. The Stoxx 600 in Europe also shows promise, marking its first weekly rise in a month. Key contributors to these gains are surges in commodity shares, spurred by rising oil and iron ore prices.

The Tech Struggle

The Nasdaq 100’s performance has been a roller coaster this week. Despite a notable sales forecast from Nvidia, the tech-heavy index plunged by over 2% yesterday. With the looming question of interest rate trajectories, tech stocks are under particular scrutiny. The general sentiment suggests that if the “higher-for-longer” interest rates persist, tech stocks could face significant challenges.

Commodities in Focus

In the commodities sector, iron ore is on track for its most significant weekly jump since June, just in time for China’s peak construction season next month. Meanwhile, oil prices are making a comeback, trimming weekly losses.

Closing Notes

As the day progresses, the spotlight will undoubtedly be on Powell’s speech and its potential ramifications for the market. The Jackson Hole Symposium could set the tone for the coming weeks, especially concerning interest rate policies. Investors and market watchers alike are bracing themselves for what could be a defining moment in 2023’s financial landscape.




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