Stock Market Update

The stock market is staring down another lower open with futures on the S&P 500 trading 29 points below fair value.

Equity futures are signaling a weak start after a night that saw gains in Asian equities, followed by a more mixed showing in Europe. Japanese bonds garnered some overnight attention after some JGBs extended their losses from Tuesday, reflecting poor demand for obligations with long maturities.

In Europe, the U.K.'s CPI (1.2%; expected 1.1%) was hotter than expected in April, weighing on expectations for a June rate cut from the Bank of England.

Once again, the U.S. session will be free of top-tier data, but the U.S. Treasury will sell $16 bln in 20-yr bonds this afternoon.

Treasuries are lower with the 30-yr yield (+6 bps to 5.03%) rising past 5.000% to its high from yesterday while the 10-yr yield is up six basis points at 4.54%.

In U.S. corporate news:

• Target (TGT 94.69, -3.43, -3.5%): retailer missed Q1 expectations and lowered its sales guidance for the year.
• VF Corp (VFC 12.47, -1.96, -13.6%): beat Q4 EPS expectations on below-consensus revenue.
• Canada Goose (GOOS 9.60, +0.68, +7.6%): beat Q4 expectations.
• Dycom (DY 206.33, +12.71, +6.6%): beat Q1 expectations and issued above-consensus revenue guidance for Q2 and FY26.
• UnitedHealth (UNH 300.85, -20.73, -6.5%): HSBC downgraded the stock to Reduce from Hold with a $270 target.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note. Japan's Nikkei -0.6%, Hong Kong's Hang Seng +0.6%, China's Shanghai Composite +0.2%.
  • In economic data:
    • Japan's April trade deficit JPY115.8 bln (expected surplus of JPY227.1 bln; last surplus of JPY559.4 bln). April Imports -2.2% yr/yr (expected -4.5%; last 1.8%) and Exports 2.0% yr/yr, as expected (last 4.0%)
    • Australia's April MI Leading Index 0.0% m/m (last -0.2%)
    • New Zealand's April trade surplus NZD1.426 bln (expected surplus of NZD670 mln; last surplus of NZD794 mln). April Credit Card Spending 0.5% yr/yr (last 0.7%)
  • In news:
    • Japan's government is reportedly willing to accept a tariff reduction rather than an exception.
    • Chinese press speculated that the People's Bank of China will continue lowering its loan prime rate.
    • South Korea's exports through the first 20 days of May were down 2.4% yr/yr.
• Major European indices trade near their flat lines. Germany's DAX -0.1%, U.K.'s FTSE -0.1%, and France's CAC -0.6%.
  • In economic data:
    • U.K.'s April CPI 1.2% m/m (expected 1.1%; last 0.3%); 3.5% yr/yr (expected 3.3%; last 2.6%). April Core CPI 1.4% m/m (expected 1.2%; last 0.5%); 3.8% yr/yr (expected 3.6%; last 3.4%). April House Price Index 6.4% yr/yr (expected 5.2%; last 5.4%)
  • In news:
    • European Central Bank Vice President de Guindos said that the ECB is not rushing to cut rates due to worries about persistent wage growth.
    • The U.K.'s deputy prime minister called for higher taxes in a memo sent to Chancellor Reeves.