Daily Markets: Rebounding Oil Prices Weigh on Stocks

Today’s Big Picture

Asia-Pacific equity indexes ended today’s session slightly positive with the exception of India’s Sensex which slid 0.72%. Korea’s KOSPI was essentially flat returning 0.05% while Australia’s ASX All Ordinaries and Japan’s Nikkei advanced 0.18% and 0.19%, respectively. The Shanghai exchange was again closed for the Qingming Festival, joined by Taiwan’s equity markets, and Hong Kong’s markets were closed to mark the country’s National Day holiday. By mid-day trading, major European equity indices are down across the board, and U.S. futures point to a soft market open later this morning.

The combination of higher Treasury yields and the rebound in oil prices is weighing on equities this morning as investors continue to monitor the yield curve. While investors wait for the latest edition of the Federal Reserve meeting minutes due tomorrow afternoon, they will be digging through March Service economy data for further notes on inflation and what that may mean for the Fed’s next monetary policy meeting. Later today, the United Nations Security Council will meet to discuss Russia's alleged war crimes in Bucha and President Volodymyr Zelenskyy will address the Council. At least for now, there appears to be little question that the duration of both the Russia-Ukraine war and related sanctions are set to switch from a short- to a mid-term headwind for the global economy as we enter the second quarter.

Data Download

International Economy

Following last Thursday’s release of European Manufacturing PMI figures, today saw the release of a number final March Services PMI figures for the region. March Services PMI for Germany (56.1) was adjusted up 1.1 points from the preliminary release, France (57.4) held steady while Italy (52.1) and Spain (53.4) were revised downward slightly. Again, revisions up or down are indications of the strength of growth but the thing to watch for with PMI figures is if they cross below 50, which indicates a contraction.

March final Eurozone Services PMI was revised upward slightly to 55.6 and with that release, the final Composite PMI for March was calculated at 54.9 also revised slightly higher from the preliminary figure. UK March final Services PMI was also released and printed at 62.6 revised higher from the preliminary 61 figure. French MoM Industrial production surprised to the downside showing a contraction of 0.90% as opposed to estimates of 0.25% and the previously reported 1.80%. 

Last night saw the release of February Japanese growth in Real Household Consumption (1.10%) & Income (-0.10%) with both coming in lower than previous readings. March Services PMI came in higher than February at 49.4 but still registered a slight contraction. 

Domestic Economy

Shortly after U.S.-listed stocks begin trading, we’ll get a double look at how the Services economy fared in March courtesy of the now rebranded S&P Global Services PMI and ISM’s Non-Manufacturing Index. S&P Global’s March Services PMI is expected to remain unchanged at 58.9 while ISM’s Service Index is forecasted to rise to 58.5 in March from 56.5 the prior month. 

Markets

The S&P 500 rose 0.8% yesterday as money flowed back into growth stocks, which fueled the day’s outperformance by the Nasdaq Composite which closed 1.9% higher. The Dow Jones Industrial Average rose a more muted 0.3% in comparison while the small-cap laden Russell 2000 inched ahead 0.2%. Including yesterday’s moves, here’s how the major market indicators stack up on a year-to-date basis:

• Dow Jones Industrial Average: -3.9%
• S&P 500: -3.9%
• Nasdaq Composite: -7.1% 
• Russell 2000: -6.7%
• Bitcoin (BTC-USD): -2.4%
• Ether (ETH-USD): -6.7%

Stocks to Watch

Before trading kicks off for U.S.-listed equities, Acuity Brands (AYI), Cognyte Software (CGNT), and Lindsay Corp. (LNN) are expected to report their latest quarterly results. Investors should also be on the lookout for those that pre-announced their March quarter results.

Consumer authentication company PopID and Visa (V) will launch facial verification payment acceptance in the Middle East region.

Thryv (THRY) Chairman and CEO Joe Walsh is expected to unveil his vision for the decade of small business automation and the future trajectory of SaaS revenues later today at the company’s Investor Day. The company is targeting SaaS revenue of $1 billion by 2027 and $4 billion by 2032 vs. $206-$208 million in 2022. 

Lion Electric (LEV) announced the receipt for an order of 50 all-electric LionC school buses from Autobus Campeau in Quebec, with deliveries to begin by 1Q 2023.

ChargePoint (CHPT) shared Antara Capital will invest $300 million in the company through the purchase of convertible senior notes to support its growth initiatives.

Farfetch (FTCH) and Neiman Marcus Group announced a global strategic partnership and investment, including expanding Bergdorf Goodman’s e-commerce capabilities and reach.

Equinix (EQIX) acquired West African data center and connectivity solutions provider MainOne for an enterprise value of $320 million. This deal came after Alphabet (GOOGL) subsidiary Google recently landed the first high-speed data cable in Togo, bringing high-speed web access to that country and much of Western Africa.

Change Healthcare (CHNG) and health services company Optum agreed to extend their merger agreement to December 31, 2022.

Citi (C), the largest SPAC underwriter last year, has reportedly put a temporary hold on underwriting initial public offerings for SPACs until companies can determine legal liabilities with new SEC proposed rules that were announced last week.

IPOs

Cloud software company Allvue Systems (ALVU) and cloud-based communications company Intermedia Cloud Communications (INTM) are expected to price their IPO offerings this week.

Infinite Group (IMCI) has filed to uplist its shares to Nasdaq in tandem with a $15 million initial public offering in part to fund its planned acquisition of cybersecurity company Pratum.

Biotech company QSAM Biosciences (QSAM) plans to uplist its shares to Nasdaq and hold a $12 million IPO offering to help fund development of its bone cancer therapy CycloSam.

Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

Array Tech (ARRY) and SMART Global (SGH) will be reporting their quarterly results, but we will also be watching for those that pre-announce their March quarter results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Wednesday, April 6

• China: Markit/Caixin Services PMI – March
• Germany: Manufacturing Orders & Turnover – February
• UK: CIPS Construction PMI – March
• Eurozone: Retail Sales - February
• US: Weekly MBA Mortgage Applications 
• US: Weekly EIA Crude Oil Inventories 
• US: Federal Reserve FOMC Minutes 

Thursday, April 7

• Japan: Leading Index (Preliminary) – February
• Germany: Industrial Production - February
• US: Weekly Initial & Continuing Jobless Claims 
• US: Weekly EIA Natural Gas Inventories
• US: Consumer Credit – February

Friday, April 8

• China: New Yuan Loans & Loan Growth - March
• US: Wholesale Inventories – February

Thought for the Day

“Worrying is like paying a debt you don’t owe.” ~ Mark Twain

Disclosures

• Cognyte Software (CGNT) is a constituent of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Equinix (EQIX) is a constituent of the Tematica BITA Digital Infrastructure & Connectivity Index
• VISA (V) 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.

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