US and European index futures rose on Wednesday amid confidence in the support of central banks, outweighing concerns about the problems that may arise this fall amid a new outbreak of the coronavirus pandemic in many countries Treasuries yields also jumped ahead of the publication of a batch of reports from the US, including ADP data.
Today the US is going to unveil the ADP Employment Change report. On Friday, the Nonfarm Payrolls report is on tap. Importantly, Fed Chairman Jerome Powell, in his long-awaited speech last week, stressed that the central bank may begin to slow down its asset purchases in 2021, although even after that it would not rush to raise key rates. There were no comments about the timing of the tapering of the bond-buying program, which was bullish for the stock market.
Futures for the S&P500 and Nasdaq 100 extended gains today. The Stoxx Europe 600 recovered from losses seen on Tuesday. Travel companies and firms operating in the retail sector became the biggest gainers. Investors are sure that the world's central banks will continue to inject money into the economy to accelerate economic growth. Recent hawkish comments by European Central Bank officials that they are factoring in for curbing the pace of bond-buying programs have also encouraged traders to make new purchases.
Francois Villeroy de Gallo, a member of the Governing Council of the European Central Bank, recently said that the governing bodies should take into account more favorable financing conditions in the region when they make the next decision on the pace of emergency bond purchases. Thus, he hints that a slowdown in growth rates may be inevitable. "On monthly volumes, we are looking at the favorable financing conditions, and we should underline that they are more favorable than at our June meeting. We have to decide the monthly volumes for the fourth quarter," Villeroy said. Any changes in the program dubbed PEPP would not amount to tapering like that announced by Fed Chair Jerome Powell on Friday, according to Villeroy, who is also the governor of the Bank of France. It seems that the ECB is likely to be coherent with the principle that has led it to purchase assets at a significantly higher pace to ensure conditions supported a recovery in the euro area.
Now, let us have a look at the US stocks in premarket.
Food manufacturer Campbell Soup exceeded all its targets and showed excellent figures in its report for the last quarter, earning 55 cents per share and beating forecasts by 7 cents. The company also published a profit forecast for the 2022 fiscal year of $2.75 - $2.85 per share, compared with an estimate of $ 2.87. The shares rose more than 1% in the premarket.
PVH reported adjusted quarterly earnings of $2.72 per share, which was above the consensus forecast of $1.20. The clothing manufacturer's revenue also exceeded forecasts. The company that owns the Tommy Hilfiger and Calvin Klein brands has upwardly revised its annual forecast. Its shares in the premarket jumped by 7.8%.
The manufacturer of chips for cars, Ambarella, also showed good performance. Its shares soared by 9.1% in the premarket after its quarterly profit was better than economists' forecasts. Revenue also exceeded analysts' forecasts.
Philips swelled by 2.3% in the premarket after it received permission from the FDA to start repairing and replacing its DreamStation respiratory devices. In June, a Dutch technology company revoked to 4 million devices to eliminate a potential toxicity problem with sound-proof foam.
It is recommended to pay attention to companies related to green energy. Given that Joe Biden's new infrastructure development plan also affects this area, investing in companies such as Sunrun may be quite profitable. Shares of Sunrun, which operates in the field of solar energy, jumped by 3.6% in the premarket after two positive reviews from analysts. In the JPMorgan Chase report, the estimate changed from "hold" to "buy".
Judging by the technical analysis, the S&P 500 index may demonstrate a deeper downward correction to the level of 4,513 and even return to the support level of 4,480. If today it moves without changes, it is likely to close above 4,500. If so, it my even approach 4,600 and 4,750.
