US EARLY MORNING: US equity futures are slightly lower ahead of JOLTs and services ISM data

US PRE-MARKETS: APAC stocks declined after a mostly negative lead from Wall Street; European equities followed suit. US equity futures are trading lower, with the Nasdaq-100 leading the downside. Newswires are framing the action as a pause after the recent upside in global stocks, ahead of key data this week, including the US jobs report on Friday. Treasuries have caught a bid amid the soft risk tone, with yields up across the curve, with the belly and long-end leading; the curve shape is largely unchanged, however. Treasuries may also be seeing some sympathy with European peers, with EGBs firming after hawkish ECB policymaker Schnabel said further rate rises were unlikely given the slowdown in inflation seen in November. Today’s focus is on JOLTs data and ISM Services data.

TODAY’S AGENDA:

• 
  DAY AHEAD: The European morning will see the release of final services and composite PMI data for November. The ECB’s survey of consumer expectations for October is due. Eurozone producer prices for October will also be released in the morning. Final US composite and services PMIs from S&P Global will be released ahead of the Services ISM, where the headline is expected to slightly tick up to 52.0 from 51.8. JOLTs data will be eyed ahead of Friday’s official jobs report (note: the JOLTs data is for October, while Friday’s NFP results will be for November). Weekly RedBook data will be out before the open. Dairy focussed traders will be on the lookout for the GDT auction results out of NZ. On the speaker's slate, ECB's Tuominen (supervisory portfolio) will speak on bank resolution, while the Fed's Gibson (supervision) will speak on financial innovation. Towards the end of the US Day/beginning of the APAC session, RNBZ's chief economist Conway will give remarks on the economic outlook. Afterhours, the API will release its gauge of weekly energy stocks; this week, the street looks for headline crude stocks to draw -2.3mln, distillates are expected to build 1mln, while gasoline is seen building 1.2mln.


• 
  RECAP - CHINA PMI: The Caixin Services PMI rose in November to 51.5 (exp. 50.7, prev. 50.4), while the Composite PMI rose to 51.6 (prev. 50.0). Analysts noted that the Caixin services gauge rose, contrasting with the decline in the official PMI data released last week, while the composite measure rose for the first time in six months. "At face value, the average of the official and Caixin composite surveys suggests that the economy made some headway in November," Capital Economics said, "but they still point to a marked slowdown in recent months which may not be the case in practice – the hard data have held up better than survey-based measures lately."


• 
  RECAP - RBA: RBA kept its Cash Rate Target unchanged at 4.35%, as expected, and reiterated forward guidance that further tightening may be required to ensure inflation returns to the target in a reasonable timeframe depending upon data and its assessment of evolving risks. The central bank also repeated it remains resolute in its determination to return inflation to target, will do what is necessary, and noted that there are still significant uncertainties around the outlook, adding that the limited information received on the domestic economy since the November meeting has been broadly in line with expectations. Analysts at Westpac said the RBA's decision allows it time to evaluate the impact of recent rate hikes. It anticipates that the central bank's cautious stance, aiming to assess inflation's return to target by February. Any unexpected upward trends in inflation will likely prompt further policy action, but Westpac leans towards the belief that the RBA's rate hikes might have reached their peak.

EQUITY NEWS:

MACRO:

• 
  China (MCHI) - Moody's changes China's outlook to negative from stable; affirmed A1 rating. Moody's said the change in outlook reflects rising evidence that financial support will be provided by the government and wider public sector to financially-stressed regional and local governments and State-Owned Enterprises, posing broad downside risks to China's fiscal, economic and institutional strength. The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsising of the property sector. Moody's said that these trends underscore the increasing risks related to policy effectiveness, including the challenge to design and implement policies that support economic rebalancing while preventing moral hazard and containing the impact on the sovereign's balance sheet.

COMMUNICATIONS:

• 
  AT&T (T), Ericsson (ERIC), Nokia (NOK) - AT&T selected Ericsson to construct a telecom network employing ORAN tech, aiming to cover 70% of US wireless traffic by late 2026; will drop Nokia. ORAN aims to reduce costs by using cloud-based software and diverse suppliers, unlike proprietary equipment from Nokia, Ericsson, and Huawei.

TECH:

• 
  Foxconn (HNHPF), Apple (AAPL) - Foxconn cancelled the first shift for Apple iPhone production at an Indian facility in Chennai after weather disruption, though operations are likely to resume after first shift cancellation, sources said.


• 
  GitLab (GTLB) - Shares surged 14% in afterhours following Q3 earnings beat, and raised guidance. Q3 EPS 0.09 (exp. -0.01), Q3 revenue USD 149.7mln (exp. 141.5mln). Sees Q4 EPS between USD 0.08-0.09 (exp. -0.01), and sees Q4 revenue between USD 157-158mln (exp. 150.2mln). Boosts FY24 EPS outlook to 0.12-0.13 (prev. saw down 5-8c, exp. -0.06), and lifted its FY24 revenue outlook to between USD 573-574mln (prev. saw USD 555-557mln, exp. 558mln).

CONSUMER:

• 
  Tesla (TSLA) - Tesla faces a class action lawsuit alleging overcharging in its insurance scheme, where "fake" crash warnings from Autopilot led to increased premiums based on the company's "Safety Score" system, utilising real-time driving data, Electrek reports.


• 
  Renault (RNLSY) - To invest an additional BRL 2bln in Brazil, will target a new SUV.

ENERGY:

• 
  Kinder Morgan (KMI) - Announces 2024 financial guidance: sees FY24 EPS at USD 1.21/shr (exp. 1.11), EBITDA at around USD 8bln (exo. 7.63bln). Anticipates a dividend of 1.15/shr (exp. 1.13). Said its balance sheet has substantial capacity for share buybacks. Forecasts have upside potential since it does not include the recently announced acquisition of NextEra Energy Partners' STX Midstream assets.


• 
  TotalEnergies (TTE) - Signed three cooperation agreements with Brazil's Petrobras, Azerbaijan's Socar, and Angola's Sonangol for methane detection and measurement.


• 
  OMV (OMVKY) - To enter negotiations with bidders for potential SapuraOMV stake sale, expects a high three-digit million Dollar figure based on offers received so far.

MATERIALS:

• 
  Fluor (FLR), Dow (DOW) - Fluor secured two contracts from Dow worth over USD 3bln for constructing a net-zero emissions ethylene cracker in Alberta, part of Dow's Path2Zero initiative aiming to reduce greenhouse gas emissions while expanding production.

INDUSTRIALS:

• 
  Landstar (LSTR), Beacon Building Products (BECN) - Frank A. Lonegro named President and CEO from February, joining from Beacon Building Products. Beacon reitered its  FY23 adj. EBITDA view between USD 910-930mln, continues to expect to exceed Ambition 2025 revenue and shareholder return targets in 2023.


• 
  Airbus (EADSY) - The jet maker may need Government backing for a new aircraft programme to replace the Airbus A320 jets, FT reports. Separately, YTD deliveries reportedly reach 623 airplanes, according to Reuters, which also noted that analysts say Airbus FY deliver target looks increasingly manageable after it missed and eventually abandoned its goal last year amid supply issues.

HEALTHCARE:

• 
  Novo Nordisk (NVO) - Will study data around obesity and the Select trial to understand who develops obesity and what characterises them, in the context of potentially designing the first drugs to prevent obesity, FT reports.


• 
  McKesson (MCK) - Teamsters at McKesson in Sacramento voted for a strike if a fair contract isn't reached before December 10th, the union announced, adding that company resistance to a proposed health care plan is a key point of contention in negotiations.


• 
  Roche (RHBBY) - Roche announces positive Phase III results for inavolisib combination in people with advanced hormone receptor-positive, HER2-negative breast cancer with a PIK3CA mutation.


• 
  Abcam (ABCM), Danaher (DHR) - The acquisition of Abcam by Danaher has been approved by the UK High Court of Justice, will conclude December 6th.

FINANCIALS:

• 
  KeyCorp (KEY) - Lowers its Q4 non-interest income outlook to between down 5-8% (prev. saw up 1-3%). KEY Sees Q4 loans down 1-3% Q/Q, sees Net Interest Income as "relatively stable".


• 
  Barclays (BCS) - Sees Qatar selling about 362mln shares in the bank, offering price guidance between 141.00-142.98p per share, according to Bloomberg. This will see Qatar Investment Authority cutting its stake to 2.4% from 5%).


• 
  Robinhood (HOOD) - Robinhood saw a 75% surge in crypto trading volumes in November M/M vs October. Bitcoin rose 8%. Equity and options trading remained steady. Saw around USD 1.4bln of net deposits in November (+1bln vs October). Detailed November data to be released soon.

05 Dec 2023 - 09:30- EquitiesData- Source: Newsquawk