US EARLY MORNING: Index futures are trading lower

US futures are lower as European peers don’t take to the constructive tone overnight and on Wall Street yesterday. The world’s largest clothing retailer Inditex gave a constructive update. Auctions are in focus, with the US, Germany and UK selling 10yr lines today. Thursday’s ECB and Friday’s US CPI are the next major macro catalysts.

US index futures are lower (NQ -0.3%, YM -0.4%, ES -0.4%, RTY -0.5%), as European peers trade mixed, despite a constructive lead from both Wall Street and APAC sessions. Treasuries are bear-steepening, with yields higher by 1-4bps, with most underperformance in the belly ahead of today’s 10yr supply from the US (we also get 10yr auctions in Germany and in the UK today), and following yesterday’s soft 3s sale. Once again, the docket for the session is thin; MBA mortgage applications data will be eyed to see how higher rates are impacting mortgage demand; the measure has slipped for the last three weeks, as it has been doing for most of Q1 and Q2. Weekly DoE energy inventory data will also be in focus after API data released Tuesday was said to show a surprise build for crude stocks, while gasoline and distillate inventories rose by more than anticipated. Thursday’s ECB meeting is the next big macro event, and could have implications for North American traders (via the EUR and Bund channels, which can influence USD and Treasuries, which could in turn shift equity sentiment) – our preview for the event is here; Newsquawk’s Adam Linton will also be discussing the ECB meeting on a panel appearance later today (you can tune in here at 13:30EDT-16:00EDT Eastern /18:30BST-21:00BST London time). Our full Day Ahead can be accessed here.

EQUITY NEWS:

CONSUMER CYCLICAL:

• 
  Inditex (IDEXY) - The World’s largest clothing retailer reported profits rose in Q1, surpassing pre-pandemic levels. Q1 sales +36% at EUR 6.7bln; EBIT +82% at EUR 1bln. Will provision all expected expenses for FY22 in its Russian and Ukraine businesses. CEO said sales growth in the US was still strong, the region remains its second largest market. 2022 CapEx seen at circa. EUR 1.1bln.


• 
  Hasbro (HAS) - Activist investor Alta Fox is set to lose its challenge against the Hasbro board, Reuters reported, after pushing for the toymaker to spin off its Wizards of the Coast and Digital Gaming unit; Alta Fox was also critical how Hasbro was managing its capital.


• 
  Nike (NKE) - Nike’s Running Club app will terminate services in mainland China from July 8th. NKE did not give a reason, but reports suggest that it planned to launch an enhanced, localised app for the Chinese market.


• 
  O-I Glass (OI) - Raised Q2 EPS outlook to above 0.65 (exp. 0.58, prev. 0.55-0.60). Exec said Q2 was progressing very well, where glass container shipments are up approximately 1% QTD through May, which is consistent with its expectations of low, single digit growth. Also noted a more favourable operating performance and higher net price. Added that it was not updating its FY outlook, but will evaluate when reporting Q2 results in August.


• 
  Casey’s General Stores, Inc. (CASY) - Q4 EPS USD 1.60 (exp. 1.59), Q4 revenue USD 3.46bln (exp. 3.46bln), Q4 inside same-store sales +5.2%, inside margin 39.4%; Q4 fuel same-store gallons sold +1.5%, fuel margin 36.2c/gallon. Boosts quarterly dividend +9% to 0.38/shr. Sees FY23 same-store inside sales +4-6%, and sees a maintained an inside margin of around 40%. Total operating expenses expected to increase 9-10%.


• 
  Goodyear Tire & Rubber Company (GT) - Goodyear voluntarily recalls more than 170k of the out-of-production tires that prompted lawsuits, NYT reports, following an NHTSA investigation which reviewed claims Goodyear tires installed on some RVs led to crashes that killed or injured people.

TECH:

• 
  Taiwan Semiconductor Manufacturing Company Limited (TSM), Chip Names - TSMC said it was expediting investment to build capacity for advanced and speciality chips to support client demand; added that development for its 2nm chips was on schedule. Has no firm plans to build fabs in Europe at present, is continuing to assess expansion plans in various regions in which the primary factor is customer need and Europe has fewer customers.


• 
  Samsung (SMSN) - Has reduces work hours and cuts phone output in Vietnam, according to Bloomberg which cited a report in the Economic Times.


• 
  Nvidia (NVDA), Intel (INTC) - Nvidia has chosen Intel’s next-generation Xeon Scalable processor (Sapphire Rapids) for its upcoming DGX H100 AI system to showcase its flagship H100 GPU, according to The Register.


• 
  Western Digital (WDC) - Western Digital has struck a deal with activist investor Elliott Management, according to the WSJ, and will consider strategic alternatives, including a separation into businesses focused on traditional hard drives for computers and flash memory.


• 
  Teradyne, Inc. (TER) - Greg Smith appointed President, Mark Jagiela will continue as the CEO.


• 
  Verint Systems Inc. (VRNT) - Q1 adj. EPS 0.52 (exp. 0.47), Q1 revenue USD 217.9mln (exp. 215.4mln). Exec noted strong cloud momentum in Q1, and strength across all key metrics; expects cloud momentum to continue, raises its annual guidance for cloud revenue growth to up 32-34%. Behind our strong momentum is our focus on helping brands close the engagement capacity gap with our highly differentiated customer engagement cloud platform. Backs FY23 EPS outlook of USD 2.50 at the midpoint (exp. 2.51), and backs FY23 revenue view of USD 940mln, +/- 2% (exp. 943.6mln).


• 
  Lyft, Inc. (LYFT) - President told CNBC that it was planning on building a hybrid network of autonomous and driver vehicles; its vehicle fleet will remain largely commandeered by drivers even as the company continues to develop its autonomous driving capabilities. Exec also noted that it was seeing good momentum, and the number of rides was +20% vs 2019 levels, adding that he was confident on the outlook.


• 
  DiDi (DIDI) - In talks to purchase one-third of Sinomach, a Chinese EV manufacturer, according to Reuters which cites sources.


• 
  DocuSign (DOCU), Microsoft (MSFT) - DocuSign deepens relationship with Microsoft “to accelerate how people collaborate and come to agreement in the anywhere economy.”


• 
  Smartsheet Inc. (SMAR) - Fell almost 6% after hours. Q1 adj. EPS -0.18 (exp. -0.19), Q1 revenue USD 168.3mln (exp. 162.6mln). Exec noted a solid start to the year, and it was continuing to see significant expansion, especially in the enterprise tier. Sees Q2 adj. EPS between -0.21 and -0.19 (exp. -0.17), and Q2 revenue is seen between USD 180-181mln (exp. 179.5mln). Raised FY23 adj. EPS outlook to -0.67 to -0.59 (exp. -0.66, prev. -0.67 to -0.59), and lifted its FY23 revenue outlook to USD 756-761mln (exp. 752mln, prev. 750-755mln).


• 
  Paycom (PAYC) - Boosts and extended ongoing stock buyback programme to USD 550mln from around USD 166.8mln.


• 
  Guidewire Software, Inc. (GWRE) - Slipped over 2% after results. Q3 adj. EPS -0.26 (exp. -0.27), Q3 revenue USD 197.4mln (exp. 187.7mln). Sees Q4 revenue between USD 226-232mln (exp. 230.5mln). Raised FY22 revenue outlook to USD 794-800mln (exp. 788mln, prev. 784-792mln).

ENERGY:

• 
  API Inventories - Weekly data from the American Petroleum Institute reportedly showed crude stocks +1.85mln (exp. -1.9mln), inventories at the Cushing hub -1.84mln, gasoline stocks +1.82mln (exp. +1.1mln), and distillates +3.38mln (exp. +1.1mln), according to Citi.


• 
  Northern Oil and Gas, Inc. (NOG) - To acquire interests in Williston Basin for USD 170mln. Raised 2022 CapEx outlook to USD 405-470mln (prev. 350-415mln), and raised its 2022 annual production outlook to 73k-77l BOEPD.


• 
  Aker BP (AKERBP), Lundin Energy (LNEGY) - Aker expects Lundin merger to complete on June 30th.


• 
  International Seaways, Inc. (INSW) - Boosts quarterly dividend to 0.12/shr (prev. 0.06).

INDUSTRIALS:

• 
  Tesla Inc (TSLA) - The automaker accused a California’s Department of Fair Employment and Housing of rushing to sue the company without conducting proper investigations, according to US News, which said it was an attempt to go on the offensive as it faces claims of widespread race bias.


• 
  Nikola Corporation (NKLA) - Urges stockholders to vote for proposals to increase the number of authorized shares of common stock.


• 
  Renault (RNLSY) - Is implementing a share buyback programme for up to 1.26mln shares.


• 
  Volkswagen (VWAGY) - Skoda Auto will renew auto shipments to Ukraine in June.

FINANCIALS:

• 
  Credit Suisse (CS) - Sees a likely loss in its investment banking division alongside the Group in Q2, and is accelerating cost initiatives across the group. CS said that market conditions in Q2 have remained “challenging,” and also highlighted “weak customer flows and ongoing client deleveraging, notably in the APAC region”. The bank said it would provide further details at its June 28th investor “Deep Dive”. There are also reports that CS is weighing new rounds of job cuts following the profit warnings, Bloomberg said.


• 
  UniCredit (UNCRY) - Received four binding offers for its leasing unit, with Bain, CRC, BPCE and HPS Investment Partners reportedly interested, according to Milano Finanza.


• 
  Spanish Banks - ECB’s Supervision Council President Enria said Spanish banks have a “quite solid” capital position, Expansion reported.

HEALTH CARE:

• 
  Regeneron Pharmaceuticals, Inc. (REGN), Sanofi (SNY) - FDA approves Dupixent for children aged 6 months to 5 years old.


• 
  AstraZeneca (AZN) - Evusheld significantly prevented COVID-19 disease progression or death in TACKLE Phase III treatment trial.


• 
  Roche (RHHBY) - European Commission approves Roche’s first-in-class bispecific antibody Lunsumio for people with relapsed or refractory follicular lymphoma.


• 
  Novavax (NVAX) - FDA advisory committee recommends EUA of Novavax COVID-19 vaccine for people aged 18 years old and above.


• 
  Bayer (BAYRY) - Bluerock Therapeutics establishes a European site for cell therapy innovation; initial focus on the ongoing BRT-DA01 clinical trial for Parkinsons.

08 Jun 2022 - 09:32- Fixed IncomeResearch Sheet- Source: Newsquawk