Stock Market Update

The S&P 500 futures are up 27 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 72 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are up 145 points and are trading 0.3% above fair value.

Equity futures are higher ahead of the first session of the new month. The early bias follows Friday's late-session push higher, aided by pre-open gains in mega cap names. 

Market participants are waiting to see how the tariff concerns materialize. The previously announced 25% tariffs on Canada and Mexico go into effect tomorrow. Treasury Secretary Scott Bessent said in an interview, however, that Canada and Mexico should match US tariffs on imports from China, adding that this could be a path for Canada and Mexico to avoid US tariffs, according to Bloomberg.

The 10-yr yield is up two basis points to 4.25% and the 2-yr yield is up three basis points to 4.03%.

In corporate news:

• NVIDIA (NVDA 124.49, -0.43, -0.3%): China ordering new Nvidia (NVDA) chips despite restrictions, according to WSJ
• Amazon's (AMZN 214.27, +1.99, +0.9%): new Alexa products could expose artificial intelligence issues at Apple (AAPL), according to Bloomberg
• JPMorgan (JPM 265.60, +0.95, +0.4%): experiencing internal issues over pay, layoffs, and DEI policies, according to Barron's
• ON Semiconductor (ON 47.43, +0.38, +0.8%): interested in takeover of Allegro Microsystems (ALGM), according to Bloomberg

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mostly higher note while South Korea's KOSPI was closed for a holiday. Japan's Nikkei: +1.7%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: -0.1%, India's Sensex: -0.2%, South Korea's Kospi: HOLIDAY, Australia's ASX All Ordinaries: +0.9%.
  • In economic data:
    • China's February Manufacturing PMI 50.2 (expected 50.0; last 49.1) and Non-Manufacturing PMI 50.4 (expected 50.3; last 50.2). February Caixin Manufacturing PMI 50.8 (expected 50.4; last 50.1)
    • Japan's February Manufacturing PMI 49.0 (expected 48.9; last 48.7)
    • South Korea's February trade surplus $4.30 bln (expected surplus of $4.59 bln; last deficit of $1.86 bln). February Imports 0.2% yr/yr (expected -1.7%; last -6.4%) and Exports 1.0% yr/yr (expected 3.8%; last -10.2%)
    • India's February Manufacturing PMI 56.3 (expected 57.1; last 57.7)
    • Hong Kong's January Retail Sales -3.2% yr/yr (last -9.7%)
    • Australia's February Manufacturing PMI 50.4 (last 50.2). February MI Inflation Gauge -0.2% m/m (last 0.1%) and February ANZ Job Advertisements -1.4% m/m (last 1.3%). Q4 Business Inventories 0.1% m/m (expected 0.0%; last -0.7%). Q4 Company Gross Operating Profits 5.9% qtr/qtr (expected 1.7%; last -4.9%). February Commodity Prices -8.2% yr/yr (last -10.7%)
    • New Zealand's Q4 Terms of Trade Index 3.1% qtr/qtr (expected 1.5%; last 2.5%)
  • In news:
    • China's Manufacturing PMI (50.2; prior 49.1) returned into expansionary territory in February while Non-Manufacturing PMI 50.4 (prior 50.2) showed a small uptick in the pace of growth in the services sector.
    • Japan's Manufacturing PMI (49.0), however, remained in contraction for the eighth month in a row.
    • Global Times reported that China is considering countermeasures to impending U.S. tariffs, potentially targeting U.S. agricultural and food products.
• Major European indices trade in the green. STOXX Europe 600: +0.8%, Germany's DAX: +2.6%, U.K.'s FTSE 100: +0.8%, France's CAC 40: +1.4%, Italy's FTSE MIB: +1.0%, Spain's IBEX 35: +0.4%.
  • In economic data:
    • Eurozone's February Manufacturing PMI 47.6 (expected 47.3; last 46.6). Flash February CPI 0.5% m/m (last -0.3%); 2.4% yr/yr (expected 2.3%; last 2.5%). Flash February Core CPI 0.6% m/m (last -0.9%); 2.6% yr/yr (expected 2.5%; last 2.7%)
    • Germany's February Manufacturing PMI 46.5 (expected 46.1; last 45.0)
    • U.K.'s February Manufacturing PMI 46.9 (expected 46.4; last 48.3). January BoE Consumer Credit GBP1.74 bln (last GBP1.06 bln). January Mortgage Approvals 66,190 (expected 66,000; last 66,510) and January Net Lending to Individuals GBP5.947 bln (expected GBP4.700 bln; last GBP4.600 bln)
    • France's February Manufacturing PMI 45.8 (expected 45.5; last 45.0)
    • Italy's February Manufacturing PMI 47.4 (expected 46.6; last 46.3)
    • Spain's February Manufacturing PMI 49.7 (expected 51.3; last 50.9)
    • Swiss February Manufacturing PMI 49.6 (expected 48.3; last 47.5)
  • In news:
    • Final February Manufacturing PMI readings from the region's major economies were mostly better than expected, though they all pointed to a contraction in the sector with Spain (49.7) joining others below the 50.0 threshold after its flash February reading (50.9) showed slight growth.
    • Germany's Rheinmetall is up more than 10.0% on expectations that the EU will step up its funding of the war in Ukraine.
    • Standard & Poor's affirmed France's AA- rating but revised its outlook to Negative from Stable.