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Futures flat, Toyota sales, SoftBank windfall - what's moving markets

Published 27/12/2023, 10:12
© Reuters

Investing.com -- U.S. stock futures traded largely flat Wednesday, with traders consolidating the year's strong gains in the final week of the year. SoftBank received a hefty windfall in the form of T-Mobile US shares, while Toyota detailed a record November for global sales. The Chinese economy showed signs of life, while the crude market continued to look at the turmoil in the Middle East.

1. Futures flat in final trading week 

U.S. stock futures traded largely unchanged Wednesday, consolidating after recent gains in the final trading week of the year.

By 05:00 ET (10:00 GMT), the Dow futures contract was up just 3 points, S&P 500 futures had dipped by 1 point, and Nasdaq 100 futures had rise by 2 points.

The three main indices closed higher on Tuesday as traders returned to Wall Street following the Christmas break, although volumes were low. The blue-chip Dow Jones Industrial Average gained 160 points, or 0.4%, the broad-based S&P 500 index also rose 0.4% and the tech-heavy Nasdaq Composite climbed 0.5%.

These gains add to what has already been a strong year, as investors gained confidence that the Federal Reserve would start cutting interest rates next year, having largely succeeded in getting inflation under control without causing a recession.

With just three sessions left in 2023′s trading year, the DJIA and S&P 500 are poised to end 2023 higher by 13% and 24%, respectively, while the Nasdaq Composite has jumped an impressive 44%.

2. SoftBank receives T-Mobile stake windfall

SoftBank Group (TYO:9984) announced overnight that it would receive shares in T-Mobile US (NASDAQ:TMUS) worth some $7.59 billion as part of the conditions set out in the merger  agreement of its U.S. telco Sprint and T-Mobile.

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The news drove shares in the Japanese conglomerate up more than 4%, their  biggest gain in more than a month. 

Softbank’s stock has underperformed the wider market this year, with the group trading at a discount of around 45.5% to the value of its assets, after reporting its fourth straight quarterly loss last month following the bankruptcy of once high-flying flexible office space provider WeWork. 

3. China’s industrial profits surged in November

Signs are growing that a series of pro-growth measures to aid a patchy post-COVID recovery may be having the desired impact in China, increasing the probability of the government's growth target of around 5% for this year being achieved.

China’s industrial profits rose 29.5% in November, gaining for a fourth month, as overall manufacturing improved. On an annual basis, earnings shrank 4.4%, a further narrowing from the 7.8% decline in January to October.

That said, the economic recovery remains shaky amid persistent property sector weakness, rising deflationary pressures and soft global demand, suggesting more stimulus may still be needed.

4. Toyota heads towards sales record in 2023

Toyota (NYSE:TM), the world’s largest automaker, received a late Christmas present this week after data showed its global production jumped 11% in November to a record level.

Domestic sales for the month shot 27% higher, sales in both the United States and China increased by 17%, while those in Europe climbed 15%. This puts the auto giant on course for global sales of more than 10 million in 2023 - also a record. 

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Toyota struggled last year from the global supply chain disruptions and had to announce a recall of 1.1 million vehicles earlier this month on the back of safety concerns that dated back decades.

5. Oil consolidates with Red Sea shipping in focus

Oil prices edged lower Wednesday, after the previous session’s sharp gain as traders continue to monitor shipping in the Red Sea amid broader Middle East tensions.

By 05:00 ET, the U.S. crude futures traded 0.2% lower at $75.41 a barrel, while the Brent contract dropped 0.1% to $80.75 per barrel. 

Both the benchmark contracts gained over 2% on Tuesday as further attacks by Yemen's Iran-backed Houthi militia on ships in the Red Sea prompted more fears of shipping disruptions.

However, major shipping firms such as Maersk and France's CMA CGM have resumed passage through the Red Sea following the deployment of a multinational task force to the region, while Germany's Hapag-Lloyd is expected to decide whether to resume shipments later Wednesday.

The crude market also received a boost Tuesday with the news that the United States has agreed to purchase three million barrels of oil to help replenish the Strategic Petroleum Reserve.

The Biden administration had conducted sales last year, including a record one of 180 million barrels, to help control oil prices after Russia’s invasion of Ukraine.

The first weekly estimate of U.S. crude stockpiles, from the industry body American Petroleum Institute, is due later in the session, a day later that usual following the Christmas holiday.

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