US EARLY MORNING: Equity futures tilt lower as yields resume higher; weekly claims data and Challenger layoffs due today, before Friday's jobs data

US PRE-MARKETS: Wednesday's action was characterised by a soft ADP jobs data and an ISM services survey lending support to Treasuries, which in turn helped the equity complex, but this dynamic has proved somewhat fleeting, with US equity futures tilting lower on Thursday, as the slow creep higher in yields resumes. The Dollar Index is flat, and crude futures are posting modest gains. Today's focus will again be on the labour market, with weekly claims data and Challenger layoffs data due before Friday's BLS jobs report (note: this week's claims data does not coincide with the BLS data, but will provide a more timely glimpse at labour market conditions).

TODAY’S AGENDA:

DAY AHEAD: The US day sees Challenger Layoffs data for September, ahead of Friday's NFP report; weekly claims data are also due. On the speaker's slate, Fed's Barr (voter), Kashkari (voter), Barkin (2024), Daly (2024), and Mester (2024) are scheduled to speak. On the supply front, Spain will sell EUR 5.5-6.5bln of 2029, 2033 and 2042 debt; France will sell EUR 9-10.5bln of 2033, 2043, and 2054 debt. The Treasury will announce auction sizes for next week’s 3yr, 10yr and 30yr sales.

EQUITY NEWS:

CONSUMER:

• 
  Amazon (AMZN) - Amazon is shutting down its live-audio app Amp, which allowed users to play music and talk like radio DJs, Bloomberg reports.


• 
  Alibaba (BABA) - Belgium's intelligence service is reportedly monitoring Alibaba's logistics hub in Liege, Europe. It is concerned about potential espionage or interference activities by Chinese entities, including Alibaba, due to China's data-sharing laws, FT reports. Alibaba denies any wrongdoing.


• 
  Automakers - Negotiations between the UAW union and Ford (F) are progressing as the automaker offers improved pay increases, Reuters reports citing sources. UAW President Shawn Fain will update members at Ford, GM (GM), and Stellantis (STLA) on Friday, with uncertainty about whether further strikes will be called or if progress will delay them.


• 
  Ford Motor (F) - Ford is informing around 400 workers at its Livonia Transmission and Sterling Axle Plant to get ready for layoffs due to the ongoing UAW strike, with 350 at Livonia and 50 at Sterling Axle affected, Detroit Free Press reports.


• 
  Rivian (RIVN) - Rivian plans to sell USD 1.5bln in convertible green bonds due 2030, which led to an 8% drop in its stock price in after-hours trading.


• 
  McDonald's (MCD) - McDonald's raises quarterly dividend +10% to USD 1.6/shr, reflecting confidence in its growth strategy. This marks the 47th consecutive year of dividend increases, emphasising its commitment to returning value to shareholders, it said.


• 
  Costco (COST) - September net sales +6.0% Y/Y at USD 22.75bln (prev. +5.0% Y/Y); Total Company Comparable sales ex-gasoline and foreign exchange +3.7%; Canada +8%, US +2.7%.


• 
  Clorox (CLX) - Preannounced Q1 adj. EPS between -0.40 to 0.00 (exp. 1.36), and said revenue was expected to decrease by between 28-23% Y/Y; will provide update on Q1 earnings call in November. Expects to experience ongoing, but lessening, operational impacts in Q2 as it makes progress in returning to normalized ops. Expects to begin to benefit from restocking of retailer inventories as it ramps up fulfilment in Q2. Impact of cyber security attack also includes lower cost absorption in cost of products sold and operating expenses.

TECH:

• 
  Cloud Names, Amazon (AMZN), Microsoft (MSFT) - UK regulator notes Amazon (AWS) and Microsoft are the leading providers of cloud infrastructure services in the UK. An Ofcom market study uncovers features that could limit competition; high fees for transferring data out, committed spend discounts and technical restrictions are making it difficult for business customers to switch cloud provider or use multiple providers. Ofcom says that if left unchecked, competition could deteriorate in a critical digital market for the UK economy. Follows reports earlier in the week that said Ofcom was to push for a CMA investigation into Amazon and Microsoft dominance of UK cloud market.


• 
  Foxconn (2317 TW), Apple (AAPL) - Apple supplier Foxconn said Q4 was expected to grow significantly compare to Q3; with H2 a traditional peak season for the ICT industry, operations will ramp up sequentially. New product launch in September led to a strong revenue growth compared to prev. quarter, but the revenue experienced a decline YoY due to a high base.


• 
  Apple (AAPL), Alphabet (GOOG) - Apple considered making DuckDuckGo the default search engine for Safari's private mode but ultimately decided against it, Bloomberg reports, citing transcripts from the US government's antitrust trial against Google, where DuckDuckGo and Apple executives testified.


• 
  Alphabet (GOOG) - A US appeals court rejected Google's attempt to prevent Texas and other states from moving their antitrust lawsuit against Google from New York to Texas, Reuters reports, where Google is accused of antitrust violations related to digital advertising dominance.


• 
  BlackBerry (BB) - BlackBerry is dividing its Internet of Things and cybersecurity units, plans to take its IoT business public in a subsidiary IPO next fiscal year, Reuters reports. This move follows a trend of companies separating units to streamline their corporate structures and provide clearer evaluations for investors.


• 
  MongoDB (MDB) - Director Dwight Merriman sold 5,000 shares at USD 339.28/shr between October 2-3rd, for a total USD 1.7mln.


• 
  NetApp (NTAP) - President Cesar Cernuda sold 22K shares for a total transaction USD 1.67mln.

COMMUNICATIONS:

• 
  AT&T (T), TPG Inc. (TPG) - AT&T is considering its options for its 70% stake in DirecTV, including selling, adding an investor, or dividend recapitalisation, Bloomberg reports. Adds that DirecTV has struggled with subscriber losses in recent years. A deal is not imminent, and discussions are in early stages. AT&T co-owns DirecTV with TPG.


• 
  Disney (DIS) - Disney is offering discounts on children's tickets at its US theme parks in early 2024, aiming to boost attendance amid lower numbers and rising costs, although Disney plans substantial investments in its park division in the coming decade, CNBC reports.


• 
  Pinterest (PINS) - Piper Sandler said it was  more confident in Pinterest's advertising product improvements after observing positive results in September. Said that outbound clicks doubled M/M, cost per click -60%.

HEALTHCARE:

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  Weight Loss Drugs, Walmart (WMT) - Walmart said it has seen changes in shopping habits among people taking appetite-suppressing drugs like Ozempic and Wegovy. The supermarket has observed a slight reduction in purchases, including fewer units and calories in their shopping baskets, but it's too early to draw definitive conclusions about the impact.


• 
  AbbVie (ABBV) - Sees Q3 EPS (including impact of acquired IPR&D and milestones expenses) at between USD 2.76-2.86 (exp. 2.88), while FY adj. diluted EPS is seen between USD 10.86-11.06 (exp. 11.07).

ENERGY:

• 
  ExxonMobil (XOM) - The energy giant expects Q3 operating profits to be lifted by higher oil, gas and fuel prices. Said changes in industry margins will positively impact Q3 energy products earnings by between USD 0.9-1.1bln Q/Q. Sees change in liquids prices to positively impact Q3 upstream earnings by USD 0.9-1.3bln Q/Q. Sees change in industry margins to negatively impact Q3 chemical products earnings by USD 0.6-0.4bln. Sees change in has prices to positively impact Q3 upstream earnings by USD 0.2-0.6bln. Sees change in unsettled derivates to impact Q3 energy products earnings by negative 0.6-0.2bln.


• 
  Chevron (CVX) - Australia's offshore alliance says Chevron reneged on commitment given to FWC to incorporate recommendations into company's EBA's for wheatstone and Gorgon facilities; members called a meeting at 19:00 tonight for all members on a day shift or off-facility. Chevron Spokesperson said it had accepted the recommendation of the fair work commission; continues to work with all parties to finalise the drafting process based on the recommendation.


• 
  Suncor Energy (SU), TotalEnergies (TTE) - Suncor Energy is buying TotalEnergies' Canadian operations for USD 1.07bln, Reuters reports. This includes a 31.2% stake in the Fort Hills oil sands mining project in Alberta, allowing Suncor to fully own it and secure a stable bitumen supply.

INDUSTRIALS:

• 
  Resources Connection (RGP) - Q1 EPS 0.09 (vs 0.53 Y/Y), Q1 revenue USD 170.2mln (exp. 170.1mln). Says it experienced continued uncertainty in the macroenvironment, but H2 will be stronger. North America markets were most impacted by client hesitancy to spend; international business showed resiliency. Sees Q2 sales between USD 160-165mln (exp. 177.9mln).


• 
  Dover (DOV) - Entered into a definitive agreement to acquire the business of FW Murphy Production Controls for USD 530mln in cash.


• 
  ITT (ITT) - Announced the election of Nazzic Keene and Kevin Berryman to its Board of Directors. Also announced that the Board has approved a USD 1bln share repurchase authorisation.

MATERIALS:

• 
  Toshiba (TOSYY) - Toshiba is exploring an alliance with Furuya Metal to secure a stable supply of iridium, a rare metal crucial for making clean hydrogen through water electrolysis. The goal is to reduce the cost of manufacturing catalysts while cutting iridium use by 90%. This partnership aims to lower the risk of price fluctuations in the iridium market.


• 
  Espec - Japanese EV battery tester Espec plans to double its battery testing equipment to 80 units, spending USD 5.4mln, as demand for electric vehicle battery testing grows. This move is in response to increased EV production and government support for domestic manufacturing, Nikkei reports.

FINANCIALS:

• 
  Citigroup (C) - Citi is undergoing a major reorganisation, and managers are evaluating staff to decide who will remain, be reassigned, or laid off, Reuters reports. Changes will be announced in November as part of the restructuring.

05 Oct 2023 - 09:30- Fixed IncomeData- Source: Newsquawk