US EARLY MORNING: US equity futures are lower amid caution ahead of this week's key risk events (Fedspeak is heavy today, ahead of Powell on Friday; PCE and ISM due later in the week)

US PREMARKETS: APAC markets were mixed into month-end, European equities opened with a downside bias. US equity futures are lower, with underperformance in the Nasdaq 100 index. Newswire reports cite caution ahead of this week's risk events (which include inflation readings from both the US and Europe, as well as key survey data) and month-end. Treasury yields are a little higher, with the short-end underperforming as the curve bear-steepens slightly; today's docket is packed with Fed officials ahead of remarks due later in the week from Fed Chair Powell (Friday) and NY Fed President Williams (Thursday). Separately, the month-end extension for Treasuries is +0.11yrs according to Bloomberg/Barclays. The Dollar Index is little changed, sitting near three-month lows (Citi said month-end USD selling flows are likely to dominate according to its estimates). Crude futures are trading with some gains, as Thursday's OPEC+ confab comes into focus, and amid reports that the group is said to be looking at deepening oil production cuts despite its meeting being delated over quota disagreements. Today's docket is dominated by Fedspeak (see below). 

FEDSPEAK: This week's heavy slate of Fedspeak kicks-off today with remarks from Vice Chair Barr (voter) who will speak on the Community Reinvestment Act, Governor Bowman (voter) who will speak on monetary policy, Governor Waller (voter) will take part in a moderated discussion, Chicago Fed's President Goolsbee (2023 voter) who will give opening remarks, and the St Louis Fed interim President Paese who will comment on the FedNow Payments System (St Louis is on the 2025 voting rotation). Money market pricing has called the peak in rates this cycle, and are now pricing three full rate cuts by the end of next year, with a decent chance of a fourth too. However, Fed officials are likely to reiterate the message of 'higher-for-longer' and will be cautious about giving any credence to the idea of rate cuts any time soon. The Fed's discount rate minutes are also due for publication today (14:00EST/19:00GMT). Traders will also note that Fed Chair Powell is due to give remarks on Friday at a fireside chat with Governor cook (voter); the influential NY Fed President Williams (voter) is also due to speak this week (Thursday). PCE data (the Fed’s preferred gauge) and ISM data are also on the slate for this week.

TODAY’S AGENDA:

DAY AHEAD: The European Day features a heavy speaking slate, with BoE hawk Haskel, Riksbank's Floden, ECB President Lagarde (again) and the ECB chief economist Lane. The US day will see the release of the weekly RedBook (coinciding with the Black Friday week), house price data from the FHFA and CaseShiller, as well as the Conference Board's gauge of consumer confidence in November. The Fedspeak docket is very heavy today (see Fedspeak primer, above), featuring Barr, Bowman, Waller, Goolsbee - all voters. The Fed's Discount Rate minutes are also due for release in the afternoon. Afterhours, the API will release its weekly energy inventory data.

EQUITY NEWS:

INDUSTRIALS:

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  Airbus (EADSY), Boeing (BA) - Cathay Pacific Airways is leaning towards ordering approximately six Airbus A350 freighters to replace its aging 747 cargo jets, potentially marking a shift from earlier consideration of Boeing's 777-8F, Reuters reports, adding that Cathay's decision was seen as a key test for the two freighters because the airline operates the underlying 777 and A350 passenger models.


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  Universal Display Corporation (OLED) - Extends OLED material supply and licensing agreements with BOE Technology Group. These agreements enable the supply of UniversalPHOLED materials for BOE's OLED displays; financial details were not disclosed.


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  Deere & Co (DE) - A US judge ruled against Deere's attempt to dismiss lawsuits alleging the company unlawfully conspired to limit maintenance and repair services for crop farms and farmers, Reuters reports. The judge in Illinois stated the plaintiffs met legal requirements to proceed with their antitrust claims against the agricultural machinery maker.


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  Lockheed Martin (LMT) - Lockheed secured a USD 199.15mln contract for industrial engineering services related to Multiple Launch Rocket System Family of Munitions programmes, scheduled for completion by November 28, 2028.


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  Northrop Grumman (NOC) - Northrop received a USD 265mln increase in a contract for Ground/Air Task Oriented Radar support services. This modification brings the total contract ceiling to USD 514.3mln, covering various engineering, logistics, and technical efforts until September 2025.


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  Oshkosh Corporation (OSK) - Oshkosh Defense secured a USD 342mln US Army contract, partnering with Broshuis to produce 557 Medium Equipment Trailers over five years, extendable by two additional years under an IDIQ agreement.


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  Rolls Royce (RYCEY) - Said current trading was in-line with expectations, confirms guidance for FY23, with profit and cash forecast to be materially ahead of 2022. In Rolls-Royce Electrical, it is looking at options to exit in the short-run or reduce its position to minority, with intention to exit fully in the mid-term.

ENERGY:

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  Chevron (CVX) - Chevron is restoring operations at its Richmond, California refinery (245k BPD) after a power outage caused significant flaring. Flaring ceased, but intermittent activity may occur due to operational adjustments, Reuters said.


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  Seadrill Limited (SDRL) - Initiates USD 250mln shareholder return programme, and completed share repurchases totalling USD 213mln as of November 24th. SDRL also increased its share repurchase authorisation by an additional USD 250mln, taking the aggregate authorisation to USD 500mln.


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  Eni (E) - Wins USD 600mln case against Uniper (UN01 GY), as a result of an arbitration court ruling over an LNG support contract that expired in 2022, Reuters reports.

MATERIALS:

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  DuPont de Nemours (DD), 3M (MMM) - A US appeals court rejected a lower court's decision allowing 11.8mln Ohio residents to sue chemical manufacturers collectively for PFAS chemicals. The court ruled the lead plaintiff's complaint was too broad and lacked evidence linking the substances to specific defendants like 3M and DuPont.


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  ArcelorMittal (MT) - ArcelorMittal is to cut around 3,500 jobs in South Africa as growth slows, Bloomberg reports. Follows the announcement of winding-down broader long steel products operations at ArcelorMittal South Africa Ltd.


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  Sika (SXYAY) - Acquires 30% stake in Finnish start-up Co. specialising in innovative concrete floors, Concria Oyj. No terms disclosed.

COMMUNICATIONS:

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  Disney (DIS) - A report in Yahoo Finance claimed Disney's animated film "Wish" fell short at the Thanksgiving box office, earning USD 31.7mln over five days, below the expected USD 40-50mln range. The disappointment follows a recent Marvel film flop, as CEO Bob Iger aims to restructure the film division.


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  Meta Platforms (META) - A judge Monday denied Meta's attempt to challenge the FTC's 2020 privacy settlement revision, Bloomberg reported, resulting in downside to Meta's share price in late trading. Meta is considering its legal options and opposes the FTC's amendment efforts. Separately, CEO Mark Zuckerberg sold 28k shares for USD 9.56mln as part of an option expiry on November 22nd.


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  ByteDance (not listed) - TikTok owner ByteDance intends to shut down Nuverse gaming and withdraw from mainstream gaming, restructuring its gaming division after a review, Reuters reports.


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  Reddit (not listed) - Reddit is in talks for an IPO, potentially in Q1, Bloomberg reported. The San Francisco-based company eyes a valuation of up to USD 15bln.

TECH:

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  ZScaler (ZS) - Q2 adj. EPS 0.67 (exp. 0.49), Q2 revenue USD 497mln (exp. 474mln). Exec said it had a strong start to the FY. Sees Q2 EPS between 0.57-0.58 (exp. 0.51), and sees Q2 revenue between USD 505-507mln (exp. 497mln). Boosts FY24 revenue outlook to between USD 2.09-2.1bln (exp, 2.1bln) vs prior view of between USD 2.05-2.07, boosts its FY24 EPS outlook to between 2.45-2.48 (exp. 2.24) from 2.20-2.25, and affirms its calculated billings forecast of USD 2.52-2.56bln (exp. 2.55bln).


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  Kyndryl Holdings (KD), Amazon (AMZN) - Kyndryl and Amazon Web Services forged a multi-year agreement to create innovative AI and machine learning solutions, expedite cloud modernisation, and enhance Kyndryl's expertise in managing AWS services.


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  ServiceNow (NOW) - President and COO Chirantan Jitendra Desai sold 3,150 shares on November 24th at USD 671.844/shr.

CONSUMER:

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  Amazon (AMZN) - Said it is focused on addressing EU concerns over the iRobot (IRBT) deal; EU regulators warned that Amazon's (AMZN) USD 1.4bln acquisition of iRobot (IRBT) may restrict competition in the market.


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  Shein (not listed) - The Chinese global online fashion brand Shein has confidentially filed for a US IPO, WSJ reports. Goldman Sachs, JPMorgan Chase, and Morgan Stanley will lead the offering, potentially set for 2024, according to insiders.


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  Tesla (TSLA) - Tesla China now allows charging access for more non-Tesla vehicles at its charging stations. Separately, the US labour board dismissed claims that Tesla illegally terminated Autopilot software employees in New York to halt union activities, Reuters reported.


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  Toyota (TM) - Toyota is planning to sell a stake of around 10% in Denso (6902 JT) by year-end, in share sale worth around JPY 700bln, with Toyota accounting for almost half of the sale, Reuters reports.


• 
  Rivian (RIVN) - Rivian introduced an EV leasing option for its R1T pickup, available in 14 states, Electrek reports. The programme, targeting existing inventory, follows the automaker's recent demand strategy and was promptly launched after initial announcements.


• 
  H&R Block (HRB) - CFO Tony Bowen sold 46.9k shares on November 27th for a total USD 2.21mln.

FINANCIALS:

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  Barclays (BCS) - Explores plan to drop thousands of investment banking clients as part of a strategic overhaul aimed at boosting profits and cutting costs, according to the FT.


• 
  Synchrony Financial (SYF) - Synchrony to sell its Pets Best Insurance Services unit to Poodle Holdings in a cash and equity deal expected to result in recognition of a gain on sale, net of tax, of around USD 750mln.


• 
  Interactive Brokers (IBKR) - Has been approved to allow retail clients trading of cryptocurrencies in Hong Kong.

HEALTHCARE:

• 
  Novartis (NVS) - Guides mid-term Revenue +5% CAGR. Mid-term sales guidance upgrade to 5% CAGR (2022-27), with core operating income margin of +40% by 2027, driven by continued strong momentum of key growth drivers.


• 
  Hikma (HKMPY) - Receives US FDA ANDA supplement 6 approval for Deferiprone.


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  Argenx (ARGX) - Reports topline results from ADVANCE-SC study of VYVGART Hytrulo in primary immune thrombocytopenia. Study did not meet primary or secondary endpoints.

28 Nov 2023 - 09:30- Research Sheet- Source: Newsquawk