Editorial StaffStock futures mixed as bond yields rise, oil prices tumble; Week Ahead: Jobs data in focus as recession signals flash red; Apple shares slump amid reports of iPhone production cuts; Tesla shares slip as Shanghai lockdown closes gigafactory and Will Smith slaps Chris Rock, marring Oscars 2022.
1. — Stock Futures Mixed As Bond Yields Rise, Oil Prices Tumble
U.S. equity futures traded mixed Monday, while Treasury bond yields extended their march higher and oil prices slumped, as investors looked to navigate a series of signals suggesting slower near-term growth while pricing-in positive developments from peace talks between Russia and Ukraine.
Benchmark 10-year Treasury note yields held firmly above the 2.5% mark in overnight trading, while the yield on five year notes rose past 30-year bonds, another ‘inversion’ of the yield curve that suggests near-term recession pressures in the world’s biggest economy.
Part of that pressure is the result of the Federal Reserve’s aggressive stance on interest rate hikes as it seeks to tame the fastest inflation in forty years, with traders betting on half-point moves higher in the Fed Funds rate at the next three Fed meetings in May, June and July.
That has the dollar index trading at the highest level against a basket of its global peers since May of 2020, and has helped push Japan’s yen to the lowest level against the greenback in more than seven years.
At the same time, China’s decision to introduce a two-phased, nine-day lock-down in Shanghai, one of it’s most populated cities, as part of an effort to control the ongoing surge in coronavirus infections, has pushed oil prices sharply lower in overnight trading, while adding to concerns over the impact on global supply chains.
WTI crude futures for May delivery were marked $4.35 lower and changing hands at $109.55 per barrel while Brent crude contracts for the same months were last seen $4.17 lower at $116.48 per barrel.
Meanwhile, Ukrainian President Volodymyr Zelenskiy has said he is will to compromise on the status of the Donbas region in eastern Ukraine, while adopting a ‘neutral’ stance in terms of territorial integrity, ahead of peace talks with Russia slated for later this week in Istanbul.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average indicating a 30 point opening bell gain while contracts linked the S&P 500, which is down 4.68% for the year, are priced for a 2.5 point dip and those linked to the tech-focused Nasdaq are looking at a 45 point opening bell pullback.
2. — Week Ahead: Jobs Data In Focus As Recession Signals Flash Red
America’s job market will take center-stage in terms of economic data this week with key releases on both the level of unfilled positions in the world’s biggest economy and what could be a crucial reading on new additions to close out the week.
Friday’s March non-farm payroll report is expected to show that American employers added a net new 475,000 jobs to the economy, with the headline unemployment rate holding at 3.8%. What may prove more pertinent, however, is the pace of gains in terms of average hourly earnings, which flatlined last month but could rebound sharply — adding to inflationary pressures — as companies race to fill the more than 11 million unfilled positions in the nation’s job market.
Further details on that will come Tuesday from the Job Openings and Labor Turnover Survey Tuesday, as well as payroll processing group ADP’s National Employment report on Wednesday.
Beyond the job market, a handful of S&P 500 companies will report earnings this week, including Walgreens Boots (WBA) – and Micron Technology (MU) – as investors brace for the March quarter reporting season, which is expected to show a sharp decline in corporate profit growth, from a rate of 32.1% over the fourth quarter of last year to just 6.4% for the first three months of the year.
3. — Apple Shares Slump Amid Reports of iPhone Production Cuts
Apple (AAPL) – shares slumped lower in pre-market trading following a report from the Nikkei business newspaper that suggested the world’s biggest tech company is planning to cut some of its iPhone production rates.
Slowing demand, surging inflation and supply chain disruptions have combined to trigger a potential 20% cut in iPhone SE production, Nikkei reported, a level that translates to between 2 million and 3 million units next quarter.
Cuts in the low-cost 5G enabled smartphone, which was unveiled only weeks ago, will also be paired with reductions in AirPod production and a trimming of units for the new iPhone 13 suite of handsets, Nikkei reported.
Apple shares were marked 2% lower in pre-market trading to indicate an opening bell price of $171.20 each.
4. — Tesla Shares Slip As Shanghai Lockdown Closes Gigafactory
Tesla (TSLA) – shares edged lower in pre-market trading following China’s move to introduce a two-phased lockdown in Shanghai that will suspend output at its key international gigafactory for at least four days.
Shanghai, a city with a population of more than 26 million, ordered a snap nine-day lockdown over the weekend amid China’s broader struggle to contain the resurgence of coronavirus infections in the world’s second-largest economy.
Tesla sold around 116,360 China-made cars over the first two months of the year, according to official trade data, most of which were bound for export to markets in Europe and Asia.
Founder and CEO Elon Musk also told his 77 million Twitter followers Sunday that he “supposedly” has Covid for a second time, but noted he has “almost no symptoms”.
Tesla shares were marked 0.6% lower in pre-market trading to indicate an opening bell price of $1,004.50 each.
5. — Will Smith Slaps Chris Rock, Marring Oscars 2022
In perhaps one of the more bizarre, and certainly unsettling, scenes in live U.S. television history, Academy Award-winning actor Will Smith attacked Chris Rock on the stage of this year’s Oscars, slapping the comedian in the face in apparent retaliation for a joke made at the expense of his wife, Jada Pinkett-Smith.
The attack was followed by a presentation to Smith of his first Academy Award Best Actor for the portrayal of Richard Smith, father and coach of tennis legends Venus and Serena, in the film King Richard.
“I wanna apologise to the Academy, I wanna apologise to all my fellow nominees … art imitates life,” Smith tearfully told the audience in Los Angeles as he accepted his award. “I look like the crazy father, just like they said about Richard Williams, but love will make you do crazy things.”
The incident marred yet another attempted re-boot of the Oscars, which have seen a steady decline in viewers over the past decade, but had hoped to capitalize on the return of movie-goers to cinemas following two years of Covid-induced restrictions and production shutdowns in Hollywood and elsewhere.
