March S&P 500 E-Mini futures (ESH26) are trending up +0.05% this morning as investors await the all-important U.S. payrolls report for more cues on the path of interest rates this year.
Market participants also brace for a potential Supreme Court ruling on President Trump’s sweeping tariffs. Hundreds of companies have already queued up, hoping to reclaim their share of the billions of dollars in duties paid to date.
“Ahead of payrolls and the possible Supreme Court ruling on ‘Reciprocal Tariffs,’ markets are in cautious mode,” Vishnu Varathan, head of macro research, Asia ex-Japan at Mizuho Securities, wrote in a note.
In yesterday’s trading session, Wall Street’s major indices closed mixed. Shares of data storage companies slumped, with Seagate Technology Holdings (STX) sliding over -7% to lead losers in the S&P 500 and Nasdaq 100, and Western Digital (WDC) falling more than -6%. Also, software stocks retreated, with Datadog (DDOG) dropping over -7% and Autodesk (ADSK) slipping more than -5%. In addition, AbbVie (ABBV) fell over -3% after Wolfe Research downgraded the stock to Peer Perform from Outperform. On the bullish side, defense stocks climbed after President Trump called for U.S. military spending to increase to $1.5 trillion in 2027, with AeroVironment (AVAV) rising more than +8% and Huntington Ingalls Industries (HII) gaining over +6%.
The Labor Department’s report on Thursday showed that the number of Americans filing for initial jobless claims in the past week rose by +8K to 208K, compared with the 213K expected. Also, U.S. Q3 nonfarm productivity rose +4.9% q/q, in line with expectations, while unit labor costs fell -1.9% q/q, weaker than expectations of no change q/q. In addition, the U.S. October trade deficit unexpectedly narrowed to -$29.4 billion, stronger than expectations of -$58.1 billion and the lowest monthly level since 2009. Finally, U.S. consumer credit rose by $4.23 billion in November, weaker than expectations of $10.1 billion.
Fed Governor Stephen Miran said on Thursday that he is looking for 150 basis points of interest rate cuts this year to support the labor market. “I’m looking for about a point and a half of cuts. A lot of that is driven by my view of inflation,” Miran said. “Underlying inflation is running within the noise of our target, and that’s a good indication of where overall inflation is going to be in the medium term.”
Meanwhile, U.S. rate futures have priced in an 86.2% chance of no rate change and a 13.8% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.
Today, all eyes are focused on the U.S. monthly payroll report, which is set to be released in a couple of hours. Economists, on average, forecast that December Nonfarm Payrolls will come in at 66K, compared to the November figure of 64K.
“A stronger-than-expected print could trigger a short-term hawkish reaction, particularly with equities at record highs and economic data improving, reducing urgency for the Federal Reserve to commit to further easing,” according to ADSS's Neal Keane.
Investors will also focus on U.S. Average Hourly Earnings data. Economists expect the December figures to be +0.3% m/m and +3.6% y/y, compared to +0.1% m/m and +3.5% y/y in November.
The U.S. Unemployment Rate will be reported today. Economists anticipate that the December figure will tick down to 4.5% from 4.6% in November.
U.S. Building Permits (preliminary) and Housing Starts data for October will be released today. The figures were originally scheduled for release on November 19th, but were delayed due to the fallout from the government shutdown. Notably, the release will also incorporate the September figures. Economists expect October Building Permits to be 1.350 million and Housing Starts to be 1.330 million.
The University of Michigan’s U.S. Consumer Sentiment Index will be released today as well. Economists foresee the preliminary January figure coming in at 53.5, compared to 52.9 in December.
In addition, market participants will parse comments today from Minneapolis Fed President Neel Kashkari and Richmond Fed President Tom Barkin.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.192%, up +0.17%.
The Euro Stoxx 50 Index is up +0.93% this morning, hitting a new record high. Technology stocks led the gains on Friday, boosted in part by strong fourth-quarter revenue from TSMC, the world’s largest contract chipmaker. Mining stocks also climbed, led by a more than +8% surge in Glencore Plc (GLEN.LN) after it resumed buyout talks with Rio Tinto. The benchmark index is on track to post solid gains for the week. Data from Eurostat released on Friday showed that the Eurozone’s monthly retail sales rose more than expected in November, providing a boost to the economy in the final quarter of last year. Separately, data from statistics agency Destatis showed that German exports unexpectedly declined in November as shipments to other European Union countries and the U.S. fell, while industrial output surprisingly grew for a third consecutive month, supported by a rebound in car production. Investor focus is now squarely on the key U.S. jobs report and a potential U.S. Supreme Court ruling on the legality of tariffs imposed by President Trump. In corporate news, Asml Holding (ASML.NA) rose more than +4% after HSBC raised its price target on the stock.
Germany’s Exports, Germany’s Imports, Germany’s Industrial Production, France’s Industrial Production, and Eurozone’s Retail Sales data were released today.
The German November Exports unexpectedly fell -2.5% m/m, weaker than expectations of no change m/m.
The German November Imports rose +0.8% m/m, stronger than expectations of +0.2% m/m.
The German November Industrial Production unexpectedly rose +0.8% m/m, stronger than expectations of -0.6% m/m.
The French November Industrial Production fell -0.1% m/m, stronger than expectations of -0.2% m/m.
Eurozone’s November Retail Sales rose +0.2% m/m and +2.3% y/y, stronger than expectations of +0.1% m/m and +1.6% y/y.
Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.92%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.61%.
China’s Shanghai Composite Index closed higher today as signs of easing deflationary pressures in the world’s second-largest economy boosted sentiment. Materials stocks led the gains on Friday. The benchmark index posted its largest weekly percentage gain since November 2024. Data from the National Bureau of Statistics released on Friday showed that China’s consumer inflation picked up mildly in December, driven largely by higher food costs. For the full calendar year, inflation was zero, the lowest level since 2009, reinforcing expectations for further stimulus to support weak demand. Meanwhile, factory-gate prices fell slightly less than expected in December, marking a 39th consecutive month of declines but the smallest drop in more than a year. For the full year, the PPI fell 2.6%, indicating that Beijing’s efforts to rein in excess capacity have yet to fully alleviate deflationary pressures weighing on corporate profits. Lynn Song, chief Greater China economist at ING Bank NV, said, “Inflation remains relatively low and should not preclude further monetary easing this year.” Investor focus now shifts to China’s December trade and credit lending data, due next week, which will provide further clues about the health of the world’s second-largest economy. In corporate news, MiniMax Group, one of China’s largest generative AI startups, jumped over +109% in its Hong Kong debut on Friday after raising $619 million.
The Chinese December CPI rose +0.8% y/y, in line with expectations.
The Chinese December PPI fell -1.9% y/y, stronger than expectations of -2.0% y/y.
Japan’s Nikkei 225 Stock Index closed sharply higher today after the yen weakened against the dollar and Fast Retailing posted strong earnings. Fast Retailing jumped over +10% after the Uniqlo owner reported upbeat quarterly earnings and raised its full-year profit guidance, contributing 592 points to the Nikkei’s total 823-point gain. Also, automobile stocks climbed as a weaker yen boosted the value of overseas revenue. In addition, sentiment improved after China said it would not ban exports of so-called dual-use items to non-military Japanese firms. The benchmark index notched a strong weekly gain. On the economic front, government data showed that Japan’s annual household spending unexpectedly rose in November, rebounding from October’s steep decline and reflecting a gradual recovery in private consumption. Separately, preliminary data showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, rose to an 18-month high in November. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -13.46% to 26.37.
The Japanese November Household Spending rose +6.2% m/m and +2.9% y/y, stronger than expectations of +2.7% m/m and -1.0% y/y.
The Japanese November Leading Index stood at 110.5, stronger than expectations of 110.4.
Pre-Market U.S. Stock Movers
U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) rose about +0.8% in pre-market trading after the world’s biggest contract chipmaker reported better-than-expected Q4 revenue.
Chip stocks advanced in pre-market trading following upbeat Q4 revenue from TSMC, with Intel (INTC) rising over +2% and Micron Technology (MU) gaining more than +1%.
Rocket Companies (RKT) climbed over +7% and UWM Holdings (UWMC) advanced more than +5% in pre-market trading as the mortgage lenders were lifted by President Trump’s plan to buy $200 billion in mortgage bonds aimed at making housing more affordable.
Revolution Medicines (RVMD) surged over +15% in pre-market trading after the Financial Times reported that Merck was in talks to buy the company.
Qualcomm (QCOM) fell more than -1% in pre-market trading after Mizuho downgraded the stock to Neutral from Outperform with a price target of $175.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - January 9th
Platinum Group Metals (PLG), Environmental Tectonics (ETCC).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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