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Morning Briefing for September 1st, 2023

Good morning, investors and market enthusiasts! Buckle up for a packed day in the financial world. As we kick off a new trading month, we have a plethora of market-moving news and data releases that could sway the markets in multiple directions. From earnings reports to economic indicators and central bank decisions, let’s dive into what you need to know today.

Market Open Outlook

U.S. equity futures point toward a higher open today, fueled by strong pre-open gains in stocks like lululemon athletica (LULU), Dell (DELL), and MongoDB (MDB). These companies not only beat earnings expectations but also offered promising guidance, lending a measure of support to the broader market. Additionally, the first day of a new trading month is often accompanied by inflows, creating an optimistic backdrop for today’s trading session.

Key Data Releases

Employment Situation Report

The tone of the market could pivot sharply with the release of the August Employment Situation Report at 8:30 a.m. ET. This report will offer insights into unemployment rates and non-farm payrolls, potentially influencing Federal Reserve policy and investor sentiment.

U.S. Manufacturing & Construction

  • 9:45 ET: The Final August S&P Global U.S. Manufacturing PMI is set for release. The prior reading stood at 47.0, indicating a contraction in the sector.
  • 10:00 ET: July Construction Spending and the August ISM Manufacturing Index will also be out. Market consensus expects an uptick in both indices compared to their prior readings.

Note: Manufacturing PMIs from the eurozone and Asia remained in contractionary territory in their final readings for August, signaling a global slowdown in manufacturing.

Central Bank Updates

People’s Bank of China

The PBoC has announced it will lower the foreign exchange reserve requirement ratio to 4.00% from 6.00%, effective September 15. Additionally, the bank confirmed speculation about rate cuts on some existing mortgages, effective September 25. These measures could have implications for global liquidity and currency markets.

Corporate Roundup

Earnings Highlights

  • Broadcom (AVGO): Beat estimates but shares dropped due to bearish Q4 guidance.
  • lululemon athletica (LULU): Strong performance in both earnings and comparable store sales, shares up by 2.3%.
  • MongoDB (MDB): Outperformed expectations, propelling the stock up by 5.4%.
  • Dell (DELL): Impressive earnings beat, stock surged by 9.5%.

Noteworthy Movers

  • PagerDuty (PD): Despite beating estimates, the stock fell by 11.7%.
  • Elastic (ESTC): Strong earnings pushed the stock up by 15.6%.
  • Vale S.A. (VALE): Upgraded to Overweight from Neutral at JP Morgan.
  • Charter (CHTR): Dispute with Disney could affect weekend viewership.
  • Li Auto (LI): August deliveries skyrocketed, boosting shares.
  • Walgreens Boots Alliance (WBA): CEO Rosalind Brewer steps down, affecting the stock.

Macro Perspectives

Federal Reserve and Interest Rates

After the release of jobs data, speculation is rife that the Federal Reserve may refrain from hiking interest rates this year. Treasury yields fell, and the chances of another rate hike this year have dipped below 50%.

Market Risks

While the Fed may be on pause, strategists like Michael Hartnett from Bank of America and economist Nouriel Roubini warn of potential pullbacks and overvaluations in stocks.

In Brief

  • Oil Prices: Oil has hit $85 a barrel for the first time since November.
  • Dollar Index: The dollar dropped 0.2%.
  • Corporate News: Tesla revamps Model 3, Amgen moves ahead with its takeover of Horizon Therapeutics, and more.




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