Stock Market Update

Equity futures point to a slightly lower open this morning following yesterday's rally in which the S&P 500, Nasdaq Composite, and DJIA all set record intraday and closing highs. The move came as a spike in initial jobless claims solidified the market's expectations for 25-basis point rate cuts at the October and December FOMC meetings, in addition to a rate cut in September, which had already been fully expected.

Macro catalysts this morning are relatively quiet, with the release of the preliminary September University of Michigan Consumer Sentiment Index at 10:00 a.m. ET the only notable economic data point. 

On the trade front, Bloomberg reports that U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will hold trade talks in Madrid ahead of a potential summit between President Trump and Chinese President Xi Jinping later this year.  

In corporate news:

• Adobe (ADBE 361.20, +10.65, +3.0%) beat EPS expectations by $0.13, beat revenue expectations, and guided Q4 EPS expectations above consensus with revenues in-line. 
• Apple (AAPL 229.29, -0.74, -0.3%) delays the iPhone Air launch in China over pending eSIM regulatory approval, according to The South China Morning Post.
• Microsoft (MSFT 507.25, +6.24, +1.25) seeks to acquire an equity stake of at least $100 billion in OpenAI, according to Bloomberg.
• Separately, the EC has accepted commitments offered by Microsoft to address competition concerns related to Teams.
• Paramount Skydance (PSKY 17.53, +0.07, +0.4%) and Warner Bros. Discovery (WBD 17.22, +1.03, +6.37) face hurdles relating to the proposed deal that sent both names higher yesterday, according to Bloomberg. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific ended the week on a mostly higher note with Japan's Nikkei (+0.9%) and South Korea's Kospi (+1.5%) hitting fresh records. Japan's Nikkei: +0.9%, Hong Kong's Hang Seng: +1.2%, China's Shanghai Composite: -0.1%, India's Sensex: +0.4%, South Korea's Kospi: +1.5%, Australia's ASX All Ordinaries: +0.6%.

In news:

• The U.S. and Japan reaffirmed their commitment to allowing the market to determine exchange rates.
• The Chinese government will assist local governments with more than $1 trillion in bills. Securities Times expects the People's Bank of China to resume buying bonds in Q4.

In economic data:

• China's August New Loans CNY590.0 bln (expected CNY700.0 bln; last -CNY50.0 bln), August Outstanding Loan Growth 6.8% yr/yr (expected 6.9%; last 6.9%), and August total social financing CNY2.57 trln (expected CNY2.46 trln; last CNY1.13 trln)
• Japan's July Industrial Production -1.2% m/m (expected -1.6%; last 2.1%) and Capacity Utilization -1.1% m/m (last -1.8%)
• India's August CPI 2.07% yr/yr (expected 2.10%; last 1.61%)
• New Zealand's August Business PMI 49.9 (last 52.8). August Electronic Card Retail Sales 0.7% m/m (last 0.2%); 0.9% yr/yr (last 1.7%)

Major European indices are on course for a mostly lower finish to the week. STOXX Europe 600: -0.1%, Germany's DAX: -0.1%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.4%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: -0.5%.

In news:

• The U.K. reported no growth for July and a sharp drop in Industrial Production (-0.9% m/m), fueling concerns about stagflation taking hold.
• European Central Bank policymaker Patsalides cautioned that the next policy change could be a rate hike, and that there is no current need for action unless there is a shock. However, other ECB policymakers hinted at the potential for another cut by the end of the year.

In economic data:

• Germany's August CPI 0.1% m/m, as expected (last 0.3%); 2.2% yr/yr, as expected (last 2.0%)
• U.K.'s July GDP 0.0% m/m, as expected (last 0.4%); 1.4% yr/yr (expected 1.5%; last 1.4%). July Construction Output 0.2% m/m (expected -0.2%; last 0.3%); 2.4% yr/yr (expected 1.9%; last 1.5%). July Industrial Production -0.9% m/m (expected 0.0%; last 0.7%); 0.1% yr/yr (expected 1.1%; last 0.2%). July Manufacturing Production -1.3% m/m (expected 0.1%; last 0.5%); 0.2% yr/yr (expected 1.6%; last 0.0%). July trade deficit GBP22.24 bln (expected deficit of GBP21.60 bln; last deficit of GBP22.16 bln) o France's August CPI 0.4% m/m, as expected (last 0.2%); 0.9% yr/yr, as expected (last 1.0%)
• Italy's Q2 Unemployment Rate 6.3% (expected 6.1%; last 6.1%)
• Spain's August CPI 0.0% m/m, as expected (last -0.1%); 2.7% yr/yr, as expected (last 2.7%). August Core CPI 2.4% yr/yr, as expected (last 2.3%)