Producer Prices, Options and Earnings Drive Pre-Holiday Trading

It’s options expiry day and the last trading day before a long weekend in North America. US index futures have come down in the last few minutes since US economic reports came out.

Higher than expected US producer prices (0.9% vs street 0.6% and previous 1.0%) and lower than expected US housing starts (1.33M vs street 1.46M) provided more evidence of stagflation and once again weakened the case for near term US interest rate cuts. Consumer sentiment is due at 10:00 am EST.

Following this news, the US 10-year treasury note yield has climbed back up above 4.30%.  Dow futures are down 0.3%, while NASDAQ futures have gone from being up 0.5% just before the news, to being up 0.1%.  

Asia Pacific markets rallied last night led by a 2.5% bounce for Hong Kong and a 0.9% advance for Tokyo. In Europe today, the FTSE is up 1.4% on the back of a positive UK retail sales report (0.7% vs street -1.4%), while the Dax is up 0.5%.

Energy trading is mixed with US Crude Oil down 0.3% and Natural Gas up 1.4%. This reversal of recent trading action suggests profit taking or short covering ahead of the weekend. In metals action, Copper is up 1.7% likely getting a boost from improving sentiment toward China, while Gold is down 0.4% and trading just above $2,000/oz.   

Last night’s earnings reports were mixed. Companies beating the street included TC Energy ($1.35 vs street $1.11, up 2.6% premarket), Applied Materials ($2.13 vs street $1.90, up 11.2% premarket) and Coinbase ($1.04 vs street $0.02, up 15.0% premarket). On the other hand, Air Canada (-$0.12 vs street $0.00), Doordash (-$0.39 vs street -$0.13, down 7.3% premarket) and DraftKings (-$0.10 vs street +$0.08) posted disappointing numbers.

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