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Today’s Big Picture

Asia-Pacific equity indexes ended today’s session mixed as Japan’s Nikkei and China’s Shanghai Composite were up modestly at 0.10% and 0.17%, respectively while both Hong Kong’s Hang Seng and Taiwan’s TAIEX fell 0.56%, India’s Sensex dropped 1.02% and Australia’s ASX All Ordinaries declined 1.54%. South Korea’s KOSPI led the way down, losing 1.65% on the day. 

By mid-day trading, major European equity indices are down, except the UK, which is up about 1.00% on Prime Minister Boris Johnson surviving a vote of no confidence yesterday, which is essentially like an impeachment except it can be called at any time and happens in a single vote. The big difference is if a prime minister loses, he is effectively out of office. If Parliament cannot agree on a substitute, then a general election is held to pick a successor. U.S. futures point to a weak market open later this morning as we drift through a modicum of earnings reports and scant economic data until this afternoon’s April Consumer Credit Report. What’s revealed in that report could raise concerns over the economic engine that is consumer spending.

Data Download

International Economy

The preliminary April reading for Japan’s Leading Economic Index came in at 102.9, up from 100.8 the prior month and ahead of the expected 101 reading. 

Australia’s central bank on Tuesday raised interest rates by the most in 22 years and flagged more tightening to come as it battles to restrain surging inflation.

German factory orders continued to fall in April, contracting 2.7% following the 4.2% drop in March, missing the expected 1.5% gain for the month. 

The S&P Global/CIPS UK Services PMI for May came in at 53.4, well below the prior month’s final reading of 58.9, but better than the expected 51.8. Paired with the recently reported Manufacturing PMI, the final May Composite PMI for the UK registered 53.1, a sharp move lower from April’s 58.2 reading. 

The June Sentix Investor Confidence for the Eurozone improved to -15.8 vs. May’s -22.6 figure and the expected June reading of -20.0.

Domestic Economy

We have another quiet morning on the U.S. economic data front, but at 3 PM ET the April Consumer Credit report will be published. Following the surges reported in February and March, particularly for the revolving credit category that includes credit cards, should we see further increases in the April data, concerns are likely to emerge over consumer disposable income amid prospects for even higher borrowing costs ahead. 

Markets

While equities looked to start yesterday off in a positive fashion, that early rally faded during the day, leaving the major market indicators to close the day up modestly. The yield on the 10-year Treasury note, natural gas futures finished the day up 9.8% at $9.34/mmbtu (million British Thermal Units) and WTI crude finished the day down 0.8% at $118.21/bbl. Including yesterday’s moves, here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -9.42%
• S&P 500: -13.53%
• Nasdaq Composite: -22.91%
• Russell 2000: -15.83%
• Bitcoin (BTC-USD): -38.1%
• Ether (ETH-USD): -53.2%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Cracker Barrel (CBRL), Dave & Buster’s (PLAY), G-III Apparel (GIII), JM Smucker (SJM), and United Natural Foods (UNFI) are expected to report their quarterly results. 

Target (TGT) warned its profits will take a short-term hit as it marks down unwanted items, cancels orders and takes aggressive steps to get rid of extra inventory. Target anticipates its operating margin rate for the current quarter will be around 2% vs. the ~5.3% level it guided to less than three weeks ago. 

United Microelectronics (UMC) reported its May sales rose 42.1% YoY to NT$24.43 billion.

Henry Schein (HSIC) announced it will acquire Condor Dental from MCCB Holding Sarl, a healthcare holding company. Condor’s 2021 sales were ~$18 million, the majority of which were from dental consumable merchandise. 

Kohl’s (KSS) announced its Board of Directors has entered exclusive negotiations with Franchise Group (FRG), a holding company of a collection of market-leading and emerging brands, for a period of three weeks in relation to FRG’s proposal to acquire Kohl’s for $60.00 per share.

ACI Worldwide (ACIW) announced a definitive agreement to divest its corporate online banking solutions to One Equity Partners.

Pearson Plc (PSO) announced it will sell its local K12 Courseware businesses in Italy and Germany to Sanoma Corporation.

IPOs

No new IPOs are expected to start trading this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Casey’s General Store (CASY), Guidewire Software (GWRE), Smartsheet (SMAR), and Verint Systems (VRNT) are expected to report their quarterly results after equities stop trading today. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Wednesday, June 8

• Japan: 1Q 2022 GDP
• Japan: Economy Watchers Current Index – May
• Germany: Industrial Production – April
• Eurozone: Employment Change, GDP – 1Q 2022
• Italy: Retail Sales – April

Thursday, June 9

• China: Imports/Export – May
• European Central Bank Interest Rate Decision

Friday, June 10

• Japan: PPI – May
• China: CPI, PPI – May
• Italy: Industrial Production – April
• US: Consumer Price Index – May
• US: Consumer Sentiment and Inflation Expectations – June

Thought for the Day

“Everybody’s life is a soap opera. Everybody’s life is a country western song, depends on who’s writing it.” ~ Dolly Parton 

Disclosures

• Target (TGT) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.