Stock Market Update

Equity futures point to a modestly higher opening after an underwhelming low-volume session yesterday. 

The major averages finished mixed, but "flat" would be a better descriptor of the action that saw the indices stay in a tight range near their unchanged levels. 

Today's action promises to have at least a handful of catalysts, the most notable coming in the form of the 10:00 a.m. ET release of the September PCE Index (Briefing.com consensus 0.3%). Though the data is older due to the government shutdown, it will be the last inflation report the market receives before next week's FOMC decision.

Contrary to former comments from Fed Chair Jerome Powell, the market is now viewing a December rate cut as a foregone conclusion, with the CME FedWatch tool assigning an 87.2% probability to 25 basis point cut next week.

Particular attention will be paid to the movement of January's rate cut odds, which stand at just 25.1% currently.

On the corporate front, the bidding war for Warner Bros. Discovery (WBD 25.02, +0.48, +2.0%) has come to a close, with Netflix (NFLX 100.85, -2.37, -2.3%) emerging as the victor after recent reports recently suggested the company was a frontrunner. 

In corporate news:

• Hewlett Packard Enterprise (HPE 20.95, -1.95, -8.5%) beat EPS expectations by $0.04, missed revenue expectations, guided Q1 EPS above consensus, guided revenues below consensus, raised its FY26 EPS guidance, and reaffirmed its FY26 revenue guidance.
• Humana (HUM 258.83, +5.81, +2.3%) was upgraded to Buy from Hold at Jefferies, with a target of $313.
• Netflix (NFLX 100.85, -2.37, -2.3%) has entered into a definitive agreement to acquire Warner Bros. Discovery (WBD 25.02, +0.48, +2.0%) for $27.75 per share.
• Tesla (TSLA 454.44, -0.04, -0.0%) to introduce a lower-cost vehicle in Europe, according to Reuters. 

Reviewing overnight developments: 

Equity indices in the Asia-Pacific region had a mostly higher finish to the week. Japan's Nikkei: -1.1%, Hong Kong's Hang Seng: +0.6%, China's Shanghai Composite: +0.7%, India's Sensex: +0.5%, South Korea's Kospi: +1.8%, Australia's ASX All Ordinaries: +0.2%.

In news:

• JGBs faced more pressure with yields on the 20-yr and shorter tenors hitting fresh highs for the year even though the Household Spending report for October (-3.5% m/m; expected 0.7%) showed a sharp unexpected drop in spending. The report had little impact on the market's rate hike expectations.
• In addition, there was press speculation that a December hike from the Bank of Japan could be followed by more rate hikes next year.
• State-owned banks in China are reportedly purchasing dollars at their fastest pace in 14 months to counter recent yuan strength.
• The Reserve Bank of India left its policy rate at 5.25%, as expected.

In economic data:

• Japan's October Household Spending -3.5% m/m (expected 0.7%; last -0.7%); -3.0% yr/yr (expected 1.1%; last 1.8%). October Leading Index 110.0 (expected 109.3; last 108.6) and Coincident Indicator 0.5% m/m (expected 1.8%; last 1.7%)
• South Korea's October Current Account surplus $6.81 bln (last surplus of $13.47 bln)
• Singapore's October Retail Sales 2.3% m/m (last -1.7%); 4.5% yr/yr (last 2.7%)

Major European indices trade in the green after the release of slightly better-than-expected growth and employment figures for Q3. STOXX Europe 600: +0.4%, Germany's DAX: +0.6%, U.K.'s FTSE 100: flat, France's CAC 40: +0.2%, Italy's FTSE MIB: +0.3%, Spain's IBEX 35: +0.1%.

In news:

• French President Macron said that he is looking to eliminate trade restrictions between France and China.
• German Chancellor Merz is struggling to convince his coalition members to support a pension bill that has faced heavy opposition.

In economic data:

• Eurozone's Q3 GDP 0.3% qtr/qtr (expected 0.2%; last 0.1%); 1.4% yr/yr, as expected (last 1.5%). Q3 Employment Change 0.2% qtr/qtr (expected 0.1%; last 0.1%); 0.6% yr/yr (expected 0.5%; last 0.7%)
• Germany's October Factory Orders 1.5% m/m (expected 0.3%; last 2.0%)
• U.K.'s November Halifax House Price Index 0.0% m/m (expected 0.2%; last 0.5%); 0.7% yr/yr (last 1.9%)
• France's October Industrial Production 0.2% m/m (expected -0.1%; last 0.7%). October trade deficit EUR3.9 bln (expected deficit of EUR6.8 bln; last deficit of EUR6.4 bln). October Current Account surplus EUR1.10 bln (last deficit of EUR1.60 bln)
• Italy's October Retail Sales 0.5% m/m (expected 0.4%; last -0.4%); 1.3% yr/yr (last 0.7%)
• Spain's October Industrial Production 1.2% yr/yr (last 1.5%)