Here are five things you must know for Friday, September 9:
1. — Stock Futures Higher As Dollar Retreats
U.S. equity futures traded firmly higher Friday, while the dollar retreated and Treasury bond yields held steady, as investors drew comfort from both the certainty of Fed rate hikes and the prospects of a soft landing for the world’s biggest economy.
Federal Reserve Chairman Jerome Powell’s forty minute discussion with Cato Institute president Peter Goettler yesterday, his last public remarks before the September 21 policy meeting, essentially cemented the case for a third consecutive 75 basis point rate hike.
The consistency in Fed messaging, however, appears to be having its affect, with traders now less focused on the size of the September hike in favor of when and how Powell and his colleague will reach the so-called ‘terminal’ Fed Funds rate.
If that rate, expected to be north of 4%, proves restrictive enough to tame inflation, but not so high as to choke off growth prospects, the Fed will have engineered the so-called ‘soft landing’ necessary to allow for further corporate earnings growth.
Help in that respect came from an overnight jump in the euro, which rose to 1.018 against the greenback and pushed the U.S. dollar index 1.14% lower, to 108.456, against a basket of its global currency peers.
The moves were attributed to yesterday’s jumbo ECB rate hike, the biggest on record, and the unambiguously hawkish signaling from ECB President Christine Lagarde.
The softer dollar once again added to upward pressure on oil prices, offsetting reports that the White House is considering another release of crude from the Strategic Petroleum Reserve early next year.
WTI crude futures for October delivery were marked 88 cents higher on the session at $84.42 per barrel while Brent contacts for November, the global benchmark, added 89 cents to trade at $90.08 per barrel.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 30 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 235 point advance. Futures linked to the tech-focused Nasdaq are indicating a 120 point move to the upside.
In overseas markets, Europe’s Stoxx 600 benchmark gained 1.42% in early Frankfurt trading ahead of the ECB rate decision, while the region-wide MSCI ex-Japan index gained 1.6% to help world stocks rise to the highest level in more than a week.
2. — Britain Mourns Queen Elizabeth, King Charles To Address Nation
Britain will begin a twelve-day mourning period Friday to celebrate the life, and mark the passing, of Queen Elizabeth II, the nation’s longest-reigning monarch.
The Queen, who died peacefully in her sleep at Balmoral Castle in Scotland on Thursday at the age of 96, will be transported to London over the coming day and lie in state at Westminster Hall.
King Charles III will meet with Prime Minister Liz Truss on Friday, and address the nation later today, while a meeting of the Accession Council, which manages changes in the monarch, is expected to convene Saturday at St. James’s Palace.
A state funeral, slated for Westminster Abbey, is likely to take place on the tenth and final day of mourning, with attendance expected from Commonwealth Heads of State, most members of the Royal Family and senior members of the British government.
Big Ben will ring its chimes at 9am on the day of the funeral, with a two-minute national silence scheduled for noon.
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The London Stock Exchange, as well as banks, shops, businesses and restaurants will remain closed on the Day of Mourning, assuming it falls on a weekday, with union leaders noting the cancellation of any planned strike action over the ten-day period.
Her Majesty is expected to be buried near St. George’s Chapel at Windsor Castle, next to her father, King George VI, her mother, Queen Elizabeth the Queen Mother, her sister, Princess Margaret and her late husband, Prince Philip.
3. — Apple Overtakes Tesla As Market’s Most-Shorted Stock
Bets against Apple (AAPL) shares topped those against Tesla (TSLA) for the first time in more than two years this week, data from S3 Partners indicated late Thursday, amid what could be shifting fortunes for the world’s biggest tech stock.
Short interest in Apple shares was pegged at $16.30 billion, S3 data showed, making it the most bet-against stock on the S&P 500, compared to around $16.1 billion in short interest for Tesla.
Short sellers, who sell shares in a company they don’t own in the hope of buying them back at a cheaper price, have earned around $2.5 billion betting against Apple stock this year. Betting against Tesla, however, has been more lucrative, with short sellers up 4.24 billion on a mark-to-market basis.
Bets against both stocks, however, could be based on investor sentiment for the broader market, as opposed to weak fundamentals for either company, given that Apple and Tesla collectively comprise around 9.3% of the S&P 500’s total market value.
Apple shares were marked 0.8% higher in pre-market trading to indicate an opening bell price of $155.68, while Tesla gained 1.4% to $293.30 each.
4. — Kroger Earnings In Focus As Shoppers Navigate Food Inflation
Kroger Co. (KR) shares moved higher in pre-market trading ahead of the country’s biggest grocery chain’s second quarter earnings prior to the opening bell.
Analysts expect the group to see a big jump in sales, with revenues rising 8.55% to $34.59 billion, as inflation boosts the nominal value of food sales in markets around the country. Rising costs, however, particularly in terms of staff, are likely to keep earnings growth muted, with the Street forecasting a bottom line of 82 cents per share, just 2.5% north of last year’s second quarter tally.
Credit Suisse analysts, in fact, are worried that value-focused shoppers are moving to bigger all-in retailers such as Walmart (WMT) and Target (TGT) for their groceries in order to “shield themselves from hyperinflation”. The group lowered its price target on Kroger by $5, to $55 per share, ahead of Friday’s earnings.
Kroger shares were marked 2.56% higher in pre-market trading to indicate an opening bell price of $49.60 each.
5. — DocuSign Soars After Q2 Earnings Beat, Solid Outlook
DocuSign Inc. DOCU shares surged higher in pre-market trading after the online signature vending group posted stronger-than-expected second quarter earnings and a solid near-term outlook.
DocuSign which has been struggling to hold investor interest as pandemic-era restrictions bring more and more professionals back to the office, earned 44 cents per share over the three months ending in July, topping Street forecasts on a non-GAAP basis by around 2 cents per share.
The group also notched a 22% gain in revenues, which hit $622.2 million, and said full-year sales would likely rise to between $2.47 and $2.48 billion, thanks in part to an expanded partnership with Microsoft (MSFT) which will see the tech giant using DocuSign’s products and services in its contract management workflows.
“We enter this next phase with a clear set of vital few deliverables for our people initiatives and product roadmap, while driving sustainable and profitable growth at scale,” said interim CEO Maggie Wilderotter. “We have a $50 billion market opportunity, an industry leading digital agreement platform, strong market position, and an experienced leadership team.”
DocuSign shares were marked 17% higher in pre-market trading to indicate an opening bell price of $67.79 each.
