03/10/22 Briefing

The S&P 500 futures are up 18 points and are trading 0.6% above fair value. The Nasdaq 100 futures are up 25 points and are trading 0.3% above fair value. The Dow Jones Industrial Average futures are up 171 points and are trading 0.7% above fair value.

Equity futures indicate a higher open to start the new month following Friday's retreat. There's some mixed macro headlines in play this morning for market participants to digest. 

The UK's Finance Minister Kwarteng said the plan to cut taxes for high earners is going to be abandoned. That news provided some support for the pound (GBP/USD +0.3% to 1.1205) and the UK government bond market, which is also contending with S&P revising its outlook to negative on rising fiscal risks. Final September manufacturing PMI readings saw downward revisions from the preliminary estimates for the eurozone, Germany, the UK, and France.

Trading was light in Asia with China closed this week for a holiday. South Korea was also closed today for a holiday. Japan's finance minister talked about intervening again to support the yen if necessary.

OPEC+ is reportedly considering a production cut of over 1 million barrels per day at Wednesday's meeting, according to Bloomberg. 

On a related note, energy complex futures are mixed this morning. WTI crude oil futures are up 4.4% to $82.98/bbl and natural gas futures are down 3.0% to $6.57/mmbtu. 

In corporate news:

• Credit Suisse (CS 3.6800 -0.24 (-6.12%): attempts to reassure investors over its financial and liquidity condition after value of credit default swaps increased, according to FT

• Wells Fargo (WFC 40.71 +0.49 (+1.22%): upgraded to Buy from Neutral at Goldman

• Tesla (TSLA 251.80 -13.45 (-5.07%):  reports it produced over 365,000 vehicles and delivered over 343,000 vehicles in Q3 versus an estimate for 364,000 deliveries 

• Axsome Therapeutics (AXSM 48.00 +3.38 (+7.58%): announces Sunosi meets primary endpoint demonstrating improvement in cognitive function in the SHARP trial in cognitively impaired patients with excessive daytime sleepiness associated with obstructive sleep apnea

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region were mostly lower on Monday on thinner trading conditions as markets in China and South Korea were closed for holidays. Japan's Nikkei: +1.0%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: closed for holiday, India's Sensex: -1.1%, South Korea's Kospi: closed for holiday, Australia's All Ordinaries: -0.3%.

  • In economic data:

    • Japan's Q3 Tankan Large Manufacturers Index 8 (expected 11; prior 9); Q3 Large Non-Manufacturers Index 14 (expected 13; prior 13); September Manufacturing PMI 50.8 (expected 51.0; prior 51.5)

    • India's September Nikkei S&P Global Manufacturing PMI 55.1 (expected 55.8; prior 56.2)

    • Australia's September Final Manufacturing PMI 53.5 (expected 53.9; prior 53.8)

  • In news:

    • Chinese markets will be closed all week for the Golden Week holiday.

    • Japan's Nikkei (+1.0%) was a notable outperformer as the BOJ pressed ahead, as expected, with plan to buy an unlimited amount of 10-yr JGBs at 0.25%, and its finance minister talked about intervening again to support the yen if necessary.

    • Japan's Q3 Tankan Large Manufacturers Index was weaker than expected.

    • The Reserve Bank of Australia meets tonight (Tuesday in Australia) and is expected to raise its key policy rate by 50 bps to 2.85%.

• Major European indices are languishing to begin the week amid talk of a confidence crisis surrounding Credit Suisse, which has driven up prices for the bank's credit default swaps. STOXX Europe 600: -0.6%, Germany's DAX: -0.5%, U.K.'s FTSE 100: -0.6%, France's CAC 40: -0.8%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: +0.2%.

  • In economic data:

    • Eurozone's September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)

    • Germany's September Final Manufacturing PMI 47.8 (expected 48.3; preliminary 48.3)

    • UK's September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)

    • France's September Final Manufacturing PMI 47.4 (expected 47.8; preliminary 47.8)

    • Italy's September Final Manufacturing PMI 48.3 (expected 47.5; prior 48.0)

    • Spain's September Final Manufacturing PMI 49.0 (expected 49.2; prior 49.9)

  • In news:

    • Credit Suisse executives have downplayed the speculation and have highlighted "the strong capital base and liquidity position of the bank," according to CNBC.

    • Separately, UK Finance Minister Kwarteng said the plan to cut taxes for high earners is going to be abandoned. That news provided some support for the pound (GBP/USD +0.3% to 1.1187) and the UK government bond market, which is also contending with S&P revising its outlook to negative on rising fiscal risks.

    • On the economic front, final September manufacturing PMI readings saw downward revisions from the preliminary estimates for the eurozone, Germany, the UK, and France.

U.S. equity futures:

• S&P 500 Futures: +18 @ 3,604

• DJIA Futures: +171 @ 28,897

• Nasdaq 100 Futures: +16 @ 10,987

Overseas:

• Europe: DAX -0.5%, FTSE -0.6%, CAC -0.8%

• Asia: Nikkei +1.0%, Hang Seng -0.8%, Shanghai Composite CLOSED

Commodities:

• Crude Oil +3.40 @ 82.89

• Nat Gas  -0.203 @ 6.583

• Gold +1.45 @ 1673.45

• Silver +0.399  @ 19.438

• Copper -0.0480 @ 3.3645

U.S. Summary:

• Earnings/Guidance:

  • AMTD IDEA Group (AMTD) reports H1 results

  • BHP Group (BHP) in slide presentation says FY23 unit cost guidance of US$18-19/t FOB, decreasing to <US$17/t FOB in the medium term

  • InterDigital (IDCC) raises Q3 revs outlook

  • Li Auto (LI) reports September deliveries increased 62.5% yr/yr

  • Murphy Oil (MUR) in slide presentation sees Q3 production of 180-188 MBOEPD; sees FY22 production of 168-176 MBOEPD

  • NIO (NIO) reports Q3 deliveries increased 29.3% yr/yr

  • Robinhood Markets (HOOD) increases guidance for restructuring charges due to additional office closures

  • Tesla (TSLA) reports Q3 deliveries of over 343K vehicles

  • Vertiv (VRT) sees Q3 revs at lower end of guidance

  • XPeng (XPEV) reports Q3 deliveries increased 15% yr/yr

• General News:

  • President Biden signs bill to fund government through December 16which includes $12 bln in funding for Ukraine; Congress is now on recess through mid-November

  • Brazilian election will head to run off due to better than expected showing from President Jair Bolsonaro. Former President Luiz Lula da Silva secured the most votes, according to the Wall Street Journal

  • OPEC+ will consider production reduction by over 1 million barrels per day at Wednesday's meeting, according to Bloomberg

  • UK Chancellor of the Exchequer Kwasi Kwarteng announces UK will not proceed with removal of 45% tax rate

  • Russia retreated from eastern city of Lyman, Ukraine days after it annexed the region, according to the New York Times

  • IEA says natural gas markets expected to remain tight into 2023 as Russia further reduces supplies to Europe

  • 800K people in Florida are without power following Hurricane Ian and over 70 people are dead, according to CNN

  • Hurricane Ian will cost insurance companies $63 billion, according to Bloomberg

  • White House provides update on actions to respond to Hurricane Ian

  • President Biden wants gasoline producers to lower overseas exports, according to Bloomberg

  • Macau Gaming Inspection and Coordination Bureau reported September 2022 gross revs -49.6% yr/yr to HKD 2.962 bln versus -50.7% in August of 2022

  • United Kingdom: S&P outlook revised to negative on rising fiscal risks; 'AA/A-1+' ratings affirmed

  • Poland: S&P 'A-/A-2' foreign currency ratings affirmed; outlook stable

  • Bundesliga conducting investment discussions with private equity, according to Financial Times

  • ABB (ABB) completes Accelleron Spin-Off

  • Acacia Research (ACTG) provides update on strategic partnership with Starboard Value LP

  • Aecom Tech (ACM) selected to deliver first major works package for Melbourne Airport Rail as part of the Sunshine Systems Alliance consortium

  • Apellis (APLS) Announces 24-Month Phase 3 Post Hoc Results Showing Treatment with Pegcetacoplan Led to Preservation of Function in High-Risk Areas of the Retina in Patients with Geographic Atrophy (GA) at AAO Annual Meeting

  • Aura Biosciences (AURA) announces interim phase 2 data evaluating suprachoroidal administration of belzupacap sarotalocan for the first-line treatment of patients with early-stage choroidal melanoma presented at AAO 2022

  • Axsome Therapeutics (AXSM) announces Sunosi meets primary endpoint demonstrating improvement in cognitive function in the SHARP trial in cognitively impaired patients with excessive daytime sleepiness associated with obstructive sleep apnea

  • Bilibili (BILI) announces primary listing on the Main Board of The Stock Exchange of Hong Kong Limited

  • BioCardia (BCDA) presents positive CardiAMP cell therapy heart failure trial two-year data at HFSA Annual Meeting

  • Blue Apron (APRN) CFO resigns, appoints Mitchell Cohen as interim Chief Financial Officer; lowers Q3 revs outlook

  • Boeing (BA) awarded a US Air Force contract not-to-exceed a value of $188 mln related to F-15 Japan Super Interceptor Program

  • Caledonia Mining (CMCL) reports it is on track to hit target production of 73,000 to 80,000 ounces of gold in 2022

  • California Water (CWT) applauds California for passing SB 1469

  • Cal-Maine Foods (CALM) names Sherman Miller as CEO, succeeding Dolph Baker, who will retain role as Chairman of the Board of Directors

  • Clovis Oncology (CLVS): Phase 3 trial of Rubraca achieves primary endpoint in men with metastatic castration-resistant prostate cancer with BRCA or ATM Mutations

  • Credit Suisse (CS): Planned issue for the Credit Suisse Real Estate Fund Green Property postponed

  • Credit Suisse (CS) attempts to reassure investors over its financial and liquidity condition after value of credit default swaps increased, according to Financial Times

  • Cytokinetics (CYTK) Presents New Data From REDWOOD-HCM OLE in Late Breaking Clinical Trial Session at the HFSA Annual Scientific Meeting

  • Disney (DIS) reaches deal with Dish Network (DISH) to restore channels, according to the Wall Street Journal

  • Eagle Pharma (EGRX) announced that the FDA has granted Orphan Drug Designation to ENA-001 for the treatment of Apnea of Prematurity

  • Enanta Pharmaceuticals (ENTA) Initiates a Phase 2b Clinical Study of EDP-938 in High-Risk Adults with Respiratory Syncytial Virus

  • FEMSA (FMX) receives all regulatory clearances for the public tender offer for Valora

  • Fluor (FLR) awarded a $1.33 bln US Navy modification to previously awarded contract for Naval Nuclear Propulsion work

  • Gatos Silver (GATO) Provides Updates on Cerro Los Gatos Mineral Reserve, Mineral Resource and Life of Mine Plan

  • Horizon Pharma (HZNP) reports New Data Reveal Molecular Drivers of Thyroid Eye Disease (TED) May Remain Activated In Patients with Low Clinical Activity Score

  • IAMGOLD (IAG) reports Essakane mine continues normal operations following political developments in burkina faso

  • Incyte (INCY) announces agreement to acquire Medicxi-backed Villaris Therapeutics and Auremolimab, an Anti-IL-15R monoclonal antibody

  • Lexicon Pharma (LXRX) reports new analysis of SOLOIST-WHF Trial Underscores Sotagliflozin's Effect on Reducing Recurrent Heart Failure Events

  • Lockheed Martin (LMT) increases its quarterly dividend 7.1% to $3.00/share

  • Lockheed Martin (LMT) awarded a $350.4 mln US Navy contract modification to a previously awarded and announced unpriced letter contract relating to of missile production; awarded a $265.6 mln modification order against a previously issued US Navy basic ordering agreement

  • MeiraGTx (MGTX) reports Late-Breaking Phase 1/2 Data Demonstrates Safety Profile of Investigational Gene Therapy Botaretigene Sparoparvovec (AAV-RPGR) and Sustained Vision Improvement in Patients with X-Linked Retinitis Pigmentosa

  • Mesoblast (MESO) submits new information to FDA IND File in response to items in the CRL to the Remestemcel-L BLA for SR-aGVHD

  • Moderna (MRNA) refused China's request to reveal vaccination technology, according to Financial Times

  • Momentive Global (MNTV) names Alexander Lurie as interim CFO

  • NaaS Technology (NAAS) CFO Lei Zhao has resigned for personal reasons, effective immediately

  • Nevro (NVRO) Announces American Association of Clinical Endocrinology Clinical Practice Guideline Has Been Updated to Include High-Frequency 10 kHz Spinal Cord Stimulation to Treat Painful Diabetic Neuropathy

  • Omeros (OMER) announces royalty monetization transaction with DRI Healthcare Trust

  • Raytheon Technologies (RTX), Pratt and Whitney Military Engines awarded a $233 mln US Navy contract relating to F-35 Lightning II Program; awarded a $226 mln US Navy contract for AIM-9X Block II and Block II+ Systems

  • REGENXBIO (RGNX) Announces Additional Positive Interim Data from Trials of RGX-314 for the Treatment of Wet AMD

  • Scorpio Tankers (STNG) repurchased 224,000 shares in the open market at an average price of $42.24 as part of co's share repurchase program

  • Stanley Black & Decker (SWK) cut about 1,000 finance jobs, according to the Wall Street Journal

  • Theseus Pharmaceuticals (THRX) Nominates THE-349, a Fourth-Generation EGFR Inhibitor Development Candidate in Non-Small Cell Lung Cancer

  • Verisk Analytics (VRSK) estimates industry insured losses to onshore property for Hurricane Ian will range from $42-57 bln

  • Vertiv (VRT) announces that Rob Johnson, Chief Executive Officer, will retire from his position as CEO for health reasons effective December 31, 2022

  • Walgreens (WBA) to use robots to fill prescriptions, according to the Wall Street Journal

• M&A:

  • F45 Training Holdings (FXLV) confirms it received an unsolicited preliminary non-binding proposal from Kennedy Lewis Investment

  • Allegiance Bancshares (ABTX) closes merger with CBTX; to begin trading as Stellar Bancorp (STEL)

  • Algonquin Power & Utilities (AQN) to sell ownership interests in a portfolio of operating wind projects in the United States and Canada to InfraRed Capital Partners

  • AstraZeneca (AZN): Alexion has entered a definitive agreement to acquire Lexington, Mass.-based LogicBio Therapeutics

  • Blue Apron (APRN) entered into an Equity Distribution Agreement to issue/sell up to $14,999,425 of its Class A common stock

  • Con Edison (ED) sells renewable energy subsidiaries for $6.8 bln

  • FiscalNote Holdings (NOTE) has acquired the core operating assets and book of business of DT-Global Business Consulting; financial terms were not disclosed

  • Freshpet (FRPT) has hired bankers to explore a potential sale, according to Barron's

  • L3 Harris (LHX) near deal to purchase communications unit from Viasat (VSAT), according to Wall Street Journal

  • Myovant Sciences (MYOV) confirms receipt of preliminary, non-binding proposal from Sumitovant Biopharma and Sumitomo Pharma to acquire remaining shares for $22.75 per share

  • Redwire Corporation (RDW) acquires QinetiQ Space NV

  • Rockwell Automation (ROK) has signed a definitive agreement to acquire CUBIC; financial terms were not disclosed

  • Vodafone PLC (VOD) confirms discussions in relation to Vodafone UK and Three UK

• Syndicate: 

  • Amprius Technologies (AMPX) files for 16,825,366 share common stock offering by selling shareholder

  • DoubleVerify (DV) files 79,040,908 common stock offering by selling stockholders

  • Ligand Pharma (LGND) files mixed securities shelf offering; entered into $100 mln At-The-Market Equity Offering Sales Agreement

  • NextDecade (NEXT) files 15,454,160 common stock offering by selling stockholders

  • Vertex Energy (VTNR) files mixed securities shelf offering; also files for common stock offering by selling shareholders

  • Vigil Neuroscience (VIGL) files for 7,293,084 share common stock offering by selling shareholders, offering also includes warrants

  • Warrior Met Coal (HCC) files mixed securities shelf offering

  • Xos (XOS) files for 11,571,966 share common stock offering by selling shareholder

• IPOs:

  • Expected to Price:

    • No IPOs expected.

Gapping Up/Down

• Gapping up:

  • MYOV +28.2%, AXSM +9.3%, AMTD +8.4%, LXRX+8.3%, BP +4.1%, TTE +3.8%, USO +3.7%, HAL+3.6%, SHEL +3.3%, FLR +2.8%, SLB +2.8%, XLE+2.7%, OIH +2.7%, XOM +2.6%, PSX +2.6%, XOS+1.7%, IDCC +1.5%, FRPT +1.3%, RDW +1.3%, LMT+0.9%, STNG +0.9%

• Gapping down:

  • APRN -11.6%, CS -4.8%, ABB -4.7%, TSLA -4.7%, CLNN -4.3%, DV -1.5%, XPEV -1.5%, HCC -1.2%, AMPX -0.8%

Analyst Research (see Upgrades/Downgradescalendarfor full list):

• Upgrades

  • Box (BOX) upgraded to Overweight from Equal-Weight at Morgan Stanley; tgt raised to $34

  • CF Industries (CF) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $135

  • Deliveroo plc (DROOF) upgraded to Neutral from Underweight at JP Morgan

  • New Gold (NGD) upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt raised to $1.25

  • Qualtrics (XM) upgraded to Outperform from Neutral at Exane BNP Paribas; tgt $15

  • Sandvik AB (SDVKY) upgraded to Overweight from Equal-Weight at Morgan Stanley

  • Southwestern Energy (SWN) upgraded to Buy from Hold at Truist; tgt raised to $11

  • Wells Fargo (WFC) upgraded to Buy from Neutral at Goldman; tgt raised to $48

• Downgrades:

  • Citigroup (C) downgraded to Neutral from Buy at Goldman; tgt lowered to $47

  • DocuSign (DOCU) downgraded to Equal-Weight from Overweight at Morgan Stanley; tgt lowered to $47

  • Enfusion (ENFN) downgraded to Neutral from Buy at BofA Securities; tgt lowered to $15

  • Livent (LTHM) downgraded to Underperform from Neutral at BofA Securities; tgt lowered to $27

  • Mosaic (MOS) downgraded to Sector Perform from Outperform at RBC Capital Mkts; tgt lowered to $65

  • Ryan Specialty Group (RYAN) downgraded to Underweight from Neutral at JP Morgan; tgt $40

• Others:

  • Edison (EIX) initiated with a Neutral at Credit Suisse; tgt $64

  • Global Business Travel Group (GBTG) initiated with a Buy at Deutsche Bank; tgt $7.10

  • Roblox (RBLX) initiated with an Underperform at MoffettNathanson; tgt $19

  • Vacasa (VCSA) initiated with a Hold at Deutsche Bank; tgt $3

  • Vivid Seats (SEAT) initiated with a Hold at Deutsche Bank; tgt $9

Upcoming Events:

• Econ Data:

  • 09:45 ET: IHS Markit Manufacturing PMI - Final for Sep (Briefing.comConsensus NA; Prior 51.8)

  • 10:00 ET: ISM Manufacturing Index for Sep (Briefing.comConsensus 52.0%; Prior 52.8%)

  • 10:00 ET: Construction Spending for Aug (Briefing.comConsensus -0.2%; Prior -0.4%)

• Earnings

  • Tuesday (Oct 4)

    • Morning: AYI

    • Afternoon:  SGH

  • Wednesday (Oct 5)

    • Morning:  HELE LW RPM

    • Afternoon:  RGP

  • Thursday (Oct 6)

    • Morning: ANGO CAG STZ MKC

    • Afternoon:  ACCD LEVI

  • Friday (Oct 7) 

    • Morning:  TLRY

Asia & Europe detail:

Asia: Nikkei +1.0%, Hang Seng -0.8%, Shanghai Composite CLOSED

Equity indices in the Asia-Pacific region were mostly lower on Monday on thinner trading conditions as markets in China and South Korea were closed for holidays. Chinese markets will be closed all week for the Golden Week holiday. Japan's Nikkei (+1.0%) was a notable outperformer as the BOJ pressed ahead, as expected, with plan to buy an unlimited amount of 10-yr JGBs at 0.25%, and its finance minister talked about intervening again to support the yen if necessary. Japan's Q3 Tankan Large Manufacturers Index was weaker than expected. The Reserve Bank of Australia meets tonight (Tuesday in Australia) and is expected to raise its key policy rate by 50 bps to 2.85%.

• In economic data:

  • Japan's Q3 Tankan Large Manufacturers Index 8 (expected 11; prior 9); Q3 Large Non-Manufacturers Index 14 (expected 13; prior 13); September Manufacturing PMI 50.8 (expected 51.0; prior 51.5)

  • India's September Nikkei S&P Global Manufacturing PMI 55.1 (expected 55.8; prior 56.2)

  • Australia's September Final Manufacturing PMI 53.5 (expected 53.9; prior 53.8)

---Equity Markets---

• Japan's Nikkei: +1.0%

• Hong Kong's Hang Seng: -0.8%

• China's Shanghai Composite: closed for holiday

• India's Sensex: -1.1%

• South Korea's Kospi: closed for holiday

• Australia's All Ordinaries: -0.3%

---FX---

• USD/JPY: +0.3% to 145.12

• USD/CNH: +0.1% to 7.1470

• USD/INR: +0.4% to 81.807

Europe: DAX -0.5%, FTSE -0.6%, CAC -0.8%

Major European indices are languishing to begin the week amid talk of a confidence crisis surrounding Credit Suisse, which has driven up prices for the bank's credit default swaps. Credit Suisse executives have downplayed the speculation and have highlighted "the strong capital base and liquidity position of the bank," according to CNBC. Separately, UK Finance Minister Kwarteng said the plan to cut taxes for high earners is going to be abandoned. That news provided some support for the pound (GBP/USD +0.3% to 1.1187) and the UK government bond market, which is also contending with S&P revising its outlook to negative on rising fiscal risks. On the economic front, final September manufacturing PMI readings saw downward revisions from the preliminary estimates for the eurozone, Germany, the UK, and France.

• In economic data:

  • Eurozone's September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)

  • Germany's September Final Manufacturing PMI 47.8 (expected 48.3; preliminary 48.3)

  • UK's September Final Manufacturing PMI 48.4 (expected 48.5; preliminary 48.5)

  • France's September Final Manufacturing PMI 47.4 (expected 47.8; preliminary 47.8)

  • Italy's September Final Manufacturing PMI 48.3 (expected 47.5; prior 48.0)

  • Spain's September Final Manufacturing PMI 49.0 (expected 49.2; prior 49.9)

---Equity Markets---

• STOXX Europe 600: -0.6%

• Germany's DAX: -0.5%

• U.K.'s FTSE 100: -0.6%

• France's CAC 40: -0.8%

• Italy's FTSE MIB: +0.1%

• Spain's IBEX 35: +0.2%

---FX---

• EUR/USD: -0.2% to 0.9773

• GBP/USD: +0.3% to 1.1187

• USD/CHF: +0.3% to 0.9898