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US equity futures were already rolling over following yesterday’s momentum-driven rout, when a the latest report out of CNN (a polar opposite to the just as fake news from WaPo earlier this week, but fake nonetheless) claiming that Trump was “considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries” sent the dollar surging, all other G-20 currencies plunging, and sparked a broad selloff across risk assets. As of 8:00am ET, S&P futures were down 0.2%, bouncing from session lows of -0.4%, and reversing a gain of 0.4% earlier in the session; Nasdaq futures were hurting more, sliding 0.6% as many of the recent best performers were sold off hard, and none more so than quantum computers which were down about 20% as a group in premarket trading; the Mag7 was also largely red )Apple -0.5%, Nvidia +0.1%, Microsoft -0.09%, Alphabet -1%, Amazon -0.07%, Meta Platforms -0.9% and Tesla -1%). Europe’s Stoxx 600 Index lost 0.4% and Asian stocks slumped, with China tumbling as usual. Meanwhile, bonds extended their ongoing selloff, with the 10Y rising to 4.72% and triggering Goldman’s VaR shock threshold of a 60bps increase in 1 month. In the UK, 10-year bond yields rose to their highest since 2008 and the 30-year inflation-linked note is now yielding more than 2%, the most since the Truss crisis of 2022 as fears spread that Keir’s spending plans will spark a fiscal disaster.

In premarket trading Quantum stocks tumbled after Nvidia CEO Jensen Huang said that “very useful” quantum computers are likely decades away. Quantum Computing (QUBT) -20%, D-Wave Quantum (QBTS) -21%, Rigetti Computing (RGTI) -23%, IonQ (IONQ) -13%. Sana Biotechnology (SANA) soars 232% after the company reported positive data from a study of its treatment of type 1 diabetes. Here are some other notable premarket movers:

• AAR (AIR) rises 3% after the provider of aviation services and parts posted fiscal 2Q sales that soared past estimates.
• Flutter (FLUT) slips 2% after the gambling firm cut its guidance for US preliminary revenue 2024 due to the impact of US sports results in the fourth quarter.
• Health Catalyst (HCAT) climbs 5% as KeyBanc turned bullish, saying the stock’s valuation is deeply discounted.
• Jasper Therapeutics (JSPR) falls 41% after posting data from the Beacon study of briquilimab.
• Olo (OLO) slips 5% after Piper Sandler downgraded the restaurant software firm, flagging concern about the 2025 outlook amid executive changes and workforce cuts.
• Palo Alto Networks (PANW) declines 2% after the security software received a pair of analyst downgrades.

S&P 500 figures started spiking lower just after 6 a.m. New York time following a report from CNN that Trump is considering declaring a national economic emergency to push through his tariff plans. Europe’s Stoxx 600 Index lost 0.4% and bond yields increased.

“Higher Treasury yields are a cause for concern for equity investors, especially when combined with speculation on what Trump may do,” said Lilian Chovin, head of asset allocation at Coutts & Co. in London. “Our view is that markets can digest higher yields, provided they are driven by stronger growth rather than inflation. In the near term it will be a challenge for risk assets.”

Amundi SA, Europe’s largest asset manager, sees a “reasonable” chance that the yield on 10-year Treasuries will again test the key level of 5%, a milestone only reached a handful of times over the past two decades. Citigroup’s wealth division also said a return to 5% — while not its base case — would offer a “really appealing” level at which to add. The yield was just under 4.70% on Wednesday.

Meanwhile, equity traders are bracing for further volatility over the coming weeks. “These first trading days have been a good overview of what could happen this year,” said Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers. “Inflation, tariffs, Trump, growth, monetary policy — all these concerns could bring uncertainty.” Credit supply is also continuing after corporations and banks globally have raised roughly $111 billion this year through Tuesday. Spreads of corporate bonds remain near their lowest post-financial crisis level, despite the volatility in government debt.

In Europe stocks also reversed earlier gains, and what was a 0.4% rise has reversed into a 0.4% loss for the Stoxx 600 with financial services and banks leading gains. Here are the biggest movers Wednesday:

• Novo Nordisk gains as much as 2.4% after being upgraded to buy from neutral at UBS, which said shares in the Danish drugmaker are at an “attractive entry point” following an “overdone” selloff
• LSEG rises as much as 3.2% after making it on the list BofA’s “25 stocks for 2025” and the bank is adding it to a European list of top ideas, say analysts
• Vallourec jumps as much as 7.4%, after the French tube manufacturer announced it hit a target of zero net debt one year ahead of plan and is now ready to return capital to shareholders starting in 2025
• BCP shares advance 5.3%, rising to the highest level since May 2016, after JP Morgan raised the recommendation on the Portuguese lender to overweight from neutral on positive earnings momentum and generous payout
• Heidelberg Materials rally as much as 3.4% after analysts at BofA Global Research raised their price target on the building materials company, naming it one of its “25 stocks for 2025”
• Pluxee surges as much as 14% to the highest in four months after the employee benefits and motivation solutions firm beat analyst expectations for the first quarter
• European wind power-related stocks fall on Wednesday after President-elect Donald Trump said he would seek to prevent the construction of wind farms during his second term, threatening billions of dollars in planned projects
• Shell shares decline as much as 2% after 4Q trading update shows weakness across several divisions and may cause cuts in consensus expectations, RBC says in a note
• InterContinental Hotels Group slips as much as 1.6%, to trade at the lowest in six weeks, after Morgan Stanley downgraded the stock to underweight from equalweight
• Trigano falls as much as 7.9% in Paris, the most in about seven months, after the leisure-vehicle manufacturer reported a year-on-year revenue decline

Asian stocks dropped as concerns over a delay in further Federal Reserve interest-rate cuts weighed on sentiment. Tech shares tracked their US peers lower.

The MSCI Asia Pacific Index fell as much as 0.8%, with TSMC and Tencent among the biggest drags. A drop in US big tech after Nvidia’s product presentation failed to lift near-term prospects weighed on Asian chipmakers. Samsung Electronics bucked the trend after Nvidia’s founder expressed confidence in the Korean company.

In FX, the Bloomberg Dollar Spot Index rises 0.3% while the Swedish krona sits at the bottom of the G-10 FX leader board, falling 0.4% against the greenback after CPI surprised to the downside.

In rates, treasury futures saw continued downside pressure into early US session, reaching day’s lows amid bigger selloff in core European rates and after CNN reported that Trump was seeking an emergency declaration to push through tariffs. UK gilts led losses, with 10-year yields reaching highest level since 2008. US yields are cheaper by 1bp-3bp across maturities near session highs; 10-year, higher by 2.5bp near 4.71%, outperforms UK 10-year by about 7bp as persistent inflationary pressure continues to rattle UK markets; UK 10-year yield climbed more than 10bp to 4.789%. This week’s Treasury auction cycle concludes at 1pm New York time with $22 billion 30-year bond reopening; Tuesday’s 10-year note sale tailed slightly, by 0.2bp, as it drew highest yield since 2007. Corporate new-issue calendar is empty so far and expected to remain muted for the rest of the week after 33 offerings were priced on the past two days, topping dealers’ full-week forecasts for about $50 billion. Potential issuers today include refiner HF Sinclair, which held fixed-income investor calls Tuesday. US session includes December ADP employment change, weekly jobless claims and 30-year bond reopening poised to draw highest yield since 2007.

In commodities, oil prices advance, with WTI rising 0.8% to $74.80 a barrel. Spot gold adds $6 to $2,655/oz. Bitcoin falls below $96,000.

US economic data calendar includes December ADP employment change (8:15am), jobless claims (8:30am), November wholesale inventories (10am) and consumer credit (3pm). Fed speaker slate includes Waller at 8am; FOMC releases minutes from Dec. 18 meeting at 2pm

Market Snapshot

• S&P 500 futures up 0.2% to 5,968.50
• STOXX Europe 600 up 0.2% to 515.48
• MXAP down 0.6% to 180.83
• MXAPJ down 0.6% to 568.23
• Nikkei down 0.3% to 39,981.06
• Topix down 0.6% to 2,770.00
• Hang Seng Index down 0.9% to 19,279.84
• Shanghai Composite little changed at 3,230.17
• Sensex down 0.1% to 78,107.00
• Australia S&P/ASX 200 up 0.8% to 8,349.15
• Kospi up 1.2% to 2,521.05
• German 10Y yield up 3 bps at 2.51%
• Euro down 0.2% to $1.0322
• Brent Futures up 0.8% to $77.67/bbl
• Gold spot up 0.2% to $2,654.04
• US Dollar Index up 0.29% to 108.86

Top Overnight News

• China will subsidize more consumer products and boost funding for industrial equipment upgrades to boost domestic consumption. Meantime, the PBOC set its yuan reference rate at the strongest compared to estimates since April. BBG
• Yields on China’s 10-year sovereign debt hit record lows despite Beijing’s recent stimulus announcements, suggesting growing concern the nation will fail to avoid a deflationary spiral mirroring 1990s Japan. BBG
• The Bank of Japan will likely keep raising interest rates in the coming years as inflation appears on track to sustainably hit its 2% target, said former governor Haruhiko Kuroda. RTRS
• Samsung shares rose after Nvidia CEO Jensen Huang expressed confidence in the company’s ability to resolve technical issues producing a new type of memory chip for AI systems. BBG
• Europe is pushing back against Trump. Describing Greenland as European territory, French Foreign Minister Jean-Noel Barrot warned him against threatening the EU’s sovereign borders. And the EU’s industry chief called on the bloc to defend itself against protectionist measures. BBG
• German economic data for Nov falls short of expectations, including retail sales (-0.6% M/M vs. the Street +0.5%) and factory orders (-5.4% M/M vs. the Street -0.2%). BBG
• President-elect Donald Trump is considering declaring a national economic emergency to provide legal justification for a large swath of universal tariffs on allies and adversaries, four sources familiar with the matter told CNN, as Trump seeks to reset the global balance of trade in his second term. CNN
• Oil gained as an industry report pointed to a seventh weekly draw in US stockpiles. Inventories at the key hub in Cushing also slumped — by 3.1 million barrels — the API is said to have reported. That would be the biggest drop since August 2023 if confirmed by the EIA today. BBG
• Microsoft plans job cuts across the company soon, targeting underperforming employees. Business Insider

A more detailed look at global markets courtesy of Newsquawk

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