Stock Market Update

Equity futures point to a modestly higher open this morning after the major averages finished higher across the board but well off of session highs in yesterday's action. An upbeat earnings report from Taiwan Semiconductor Manufacturing (TSM) provided the spark for a rally in chipmakers and other AI-related names, though the afternoon saw mega-caps face significant selling pressure. 

A slate of banking names also posted solid earnings reports, which boosted the financial sector (a laggard this week). The market is currently receiving another batch of earnings from regional banking names this morning. 

The market will also hear from Fed Governor Michelle Bowman (voting FOMC member) and Fed Vice Chair Phillip Jefferson (voting FOMC member) today. Recent Fed commentary has been largely unsurprising, with most officials calling for the Fed to hold rates steady for the time being.

The major averages come into today's session with modest week-to-date losses, while the smaller cap Russell 2000 (+1.9% week-to-date) and S&P Mid Cap 400 (+1.7% week-to-date) have outperformed. 

In corporate news:

• Oil field services companies are eager to get back into Venezuela, according to The Wall Street Journal. 
• PNC Financial Services Group (PNC 222.00, +6.96, +3.2%) beat EPS expectations by $0.68, beat on revs, guided Q1 revs above consensus, and guided FY26 revs above consensus.
• Regions Financial (RF 27.22, -1.30, +4.6%) missed EPS expectations by $0.04 and reported revenues in-line. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a mixed finish to the week with Japan's Nikkei (-0.3%) inching down from record territory while South Korea's Kospi (+0.9%) cruised to another record high, extending its January gain to 14.9%. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: -0.3%, India's Sensex: +0.2%, South Korea's Kospi: +0.9%, Australia's ASX All Ordinaries: +0.5%.

In news:

• The Japanese yen extended this week's rise off an 18-month low against the dollar after Japan's Finance Minister Katayama hinted at a potential joint intervention with the U.S. Treasury.
• The Bank of Japan is not expected to announce a rate hike next week, but expectations for a rate increase in April are on the rise.
• NTT and Honda priced upcoming bonds while Credit Agricole priced its Samurai bonds.
• Japan's CDP and Komeito parties have established an alliance aimed at blocking Prime Minister Takaichi's LDP from gaining outright majority in the Lower House.
• The U.S. reached an agreement with Taiwan on a quota system for chip tariffs.

In economic data:

• Singapore's December trade surplus SGD2.205 bln (last surplus of SGD6.777 bln). December non-oil exports -9.4% m/m (expected -4.5%; last 7.1%); 6.1% yr/yr (expected 10.0%; last 11.5%)
• New Zealand's December Business PMI 56.1 (last 51.4). December FPI -0.3% m/m (last -0.4%)

Major European indices are on track for a lower finish to the week. STOXX Europe 600: -0.1%, Germany's DAX: -0.4%, U.K.'s FTSE 100: UNCH, France's CAC 40: -0.7%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: -0.1%.

In news:

• Germany's final CPI report for December showed a dip below the 2.0% target.
• Spreads between yields on Germany's 10-year bund and corresponding instruments from Spain and Italy have hit their tightest levels since 2008 thanks to improving fiscal situations in Spain and Italy combined with prolonged weakness in the German economy.

In economic data:

• Germany's final December CPI 0.0% m/m, as expected (last -0.2%); 1.8% yr/yr, as expected (last 2.3%)
• Italy's December CPI 0.2% m/m, as expected (last -0.2%); 1.2% yr/yr, as expected (last 1.1%)