US EARLY MORNING: US equity futures are a touch firmer and yields are stable ahead of JOLTs data

US PRE-MARKETS: US equity futures are trading a little above neutral. Recent jitters have been attributed to the continued rising yield environment, which some desks pin on the increased uncertainty around the monetary policy outlook, given pockets of resurging inflation and rising energy prices which threatens to keep central banks hawkish. Treasury yields are around unchanged levels, while the Dollar Index is a little above flat, trading above the 107.00 handle. Today's focus will be on the JOLTs data for August; while stale, it is considered to be one of the Fed's preferred inflation gauges, and gives a good handle on the tighteness of labour market conditions. The data will help inform expectations for Friday's BLS official jobs data. Elsewhere on today's slate, the IBD/TIPP sentiment survey will also be eyed.

GS SAYS FOCUS ON REGIONAL DIVERSIFICATION, VALUE AND DIVIDENDS: Goldman Sachs' highlights the evolving landscape of equity markets. Despite concerns about inflation and rising interest rates, global equity markets have largely remained flat. The year began with fears of economic deterioration, but optimism about avoiding a recession and peaking inflation led to a modest rally. The tech sector, especially in the US, has been a standout performer, driven by AI-related growth potential. However, this rally has been concentrated in a few leading companies, leaving many other stocks with limited gains. "While the leading technology stocks have already enjoyed spectacular returns this year, they remain relatively defensive in the face of higher cost of capital, and we do not think AI is in a bubble," the bank writes. Equity risk premia have fallen, making equities more vulnerable to rising interest rates. GS suggested its clients focus on regional diversification, and on quality and dividend-paying stocks. "We like owning a combination of deep value companies or dividend payers," it says, "in an environment of flatter index returns the power of compounding growth through dividends (or reinvested cash flows) should become more important." Goldman still sees the need for caution, as the impact of rising capital costs may persist despite expectations of improved earnings in 2024.

TODAY’S AGENDA:

• The European morning is thin in terms of scheduled data releases. Monpol remarks are due from the ECB chief economist Lane, and ECB's Valimaki (who is filling in for Rehn). Ahead of Friday's September jobs report in the US, JOLTs data for August will be eyed today, which will give a gauge on labour market tightness. The IBD/TIPP survey is also on today's docket, along with the weekly Redbook data. On the speaker's front, Fed's Mester and Bostic - both voters next year - are due to give remarks. Our full daily schedule is here; a pdf version can be accessed here.

EQUITY NEWS:

COMMUNICATIONS:

• 
  Meta Platforms (META) - Meta is thinking about offering ad-free versions of Facebook and Instagram in the EU for around USD 10 per month on desktop, and about USD 13 on mobile due to app store fees, WSJ reports. Users would still be able to access free versions with personalised ads.


• 
  Disney (DIS) - Disney+ will start cracking down on password-sharing next month, Variety reports, and reserves the right to terminate violators' accounts.

CONSUMER:

• 
  General Motors (GM), Ford (F) - The UAW made a counteroffer to GM's contract proposal, but GM said it still has significant differences to work through, Automotive News reports. The details of the counteroffer and the status of negotiations were not disclosed. Elsewhere, Ford said it was temporarily laying off 330 workers in Chicago and Ohio due to impact of UAW strike.


• 
  Tesla (TSLA) - Reintroduced base Model Y RWD priced at USD 43,990 in the US.


• 
  Brown-Forman (BF.B) - Board approves USD 400mln share repurchase plan.


• 
  American Outdoor Brands (AOUT) - Board approves stock repurchases of up to USD 10mln.

INDUSTRIALS:

• 
  Boeing (BA) - The jet maker’s supplier schedule lays out plans to increase 737 production rate to a record of at least 57 per month in July 2025, Reuters reports, and it could increase 737 output to about 42/month in December 2023, about 47/month in June 2024 and about 52/month in December 2024.


• 
  Delta (DAL) - Delta Air Lines found unauthorised parts in a few of its jet engines, but it's a small fraction of its fleet. Other major US airlines like American, United, and Southwest also found similar fake parts from AOG Technics Ltd. It's being investigated by regulators.

MATERIALS:

• 
  US Steel (X), Algoma Steel (ASTL) - Algoma extends iron ore purchase agreement with US Steel for two years, with a possible third year. This secures the iron ore needed for Algoma's shift to electric arc steelmaking, a part of their sustainable steel production transformation.

HEALTHCARE:

• 
  Novo Nordisk (NVO), Mylan (VTRS) - Novo Nordisk successfully defended its patents for the active ingredient in its weight-loss drugs, Ozempic and Wegovy, against challenges from Viatris' Mylan Pharmaceuticals unit. The US Patent and Trademark Office's board ruled in Novo Nordisk's favour.


• 
  Sanofi (SNY), Johnson & Johnson's (JNJ) - Sanofi announces agreement for potential first-in-class vaccine against extraintestinal pathogenic E. coli; agreement is with Johnson & Johnson's Janssen unit.


• 
  Takeda (TAK) - Takeda is voluntarily withdrawing EXKIVITY (mobocertinib) globally for a specific type of lung cancer, due to the drug not meeting its primary goal in a Phase 3 trial.


• 
  Hologic (HOLX) - CEO tells CNBC core business is strong, growing at a double digit rate.

TECH:

• 
  ASML (ASML NA) - Biden administration reportedly warned Beijing to expect updated rules curbing shipments of AI chips and chipmaking tools to China as soon as early October, Reuters reports; the rules could hit ASML because its systems contain US parts and components.


• 
  MongoDB (MDB) - Jim Scharf has been appointed MongoDB's CTO, overseeing the company's engineering, set its technical direction, and manage product development. He comes from Amazon Web Services (AMZN).


• 
  Oddity Tech (ODD) - CFO is pleased with the company's strong Q3 performance, expects even better results in Q4. Will provide FY outlook in November.

FINANCIALS:

• 
  Visa (V) - Visa is launching a USD 100mln initiative to invest in companies working on generative AI technology for commerce and payments.


• 
  Lloyds Banking Group PLC (LYG), Blackrock (BLK) - UK bank Lloyds has selected Blackrock’s iShares for an ETF service which will provide retail investors with 16 UK-listed ETFs, FT reports.


• 
  Bank OZK (OZK) - Bank OZK lifts quarterly dividend to USD 0.37/shr (prev. 0.36/shr).

REAL ESTATE:

• 
  WeWork (WE) - Has elected to withhold aggregate interest payments of about USD 37.3mln payable in cash and USD 57.9mln payable in form of additional PIK notes. Says it has liquidity to make interest payments and may decide to do so in the future. As part of its strategic plan, the company is focused on rationalising its real estate footprint and improving capital structure. Said it had a 30-day grace period to make interest payments before such non-payment constitutes a default with respect to notes. Continues to take action to implement strategic plan.

03 Oct 2023 - 09:30- EquitiesData- Source: Newsquawk