Global Footwear Stocks Skyrocketed on Upbeat Nike Results and Positive Guidance

S&P 500 and Nasdaq Composite futures both rallied about 0.4% and 0.7%, respectively, at the time of writing. The dollar took a breather from overnight declines, and most other G10 currencies traded in tight ranges. Treasuries were little changed, mirroring moves in European bond markets. Oil rose but gold retreated, while Bitcoin (BTCUSD) was flat after climbing more than 1.7% on Tuesday.

The U.S. Consumer Financial Protection Bureau slapped Wells Fargo (WFC) with the watchdog's largest-ever civil penalty as part of a $3.7 billion agreement to settle charges over widespread mismanagement of car loans, mortgages and bank accounts.

Corporatewise, Tesla (TSLA) dug out a new 52-week low of $140.60 with some reports indicating the search for a new CEO at Twitter could be drawn out and keep the Elon Musk distraction angle a factor for weeks or months in how the stock is viewed. Musk, who's currently CEO of both Tesla and privately held Twitter (along with other private companies like SpaceX), confirmed late Tuesday that he will step down as Twitter's chief executive. Shares of Tesla closed down 8.05% earlier Tuesday and ended up trading at a 25-month low. The stock has given back more than half of the pandemic gain and is down more than 65% during 2022.

Meanwhile, Nike (NKE) rallied after sliding past consensus marks with its FQ2 earnings report. A drop in revenue in Greater China (-3%) was more than offset by gains in Asia Pacific & Latin America (+19%), North America (+30%) and Europe, Middle East, & Africa (+11%). Footwear sales were up 25% to $8.50 billion, while apparel sales rose 4% to $3.8 billion. Nike Direct sales were up 16% to $5.4 billion on a reported basis and were up 25% on a currency-neutral basis. Gross margin fell 300 basis points to 42.9% of sales vs. 42.1% consensus. The margin drop, however, was primarily due to higher markdowns to liquidate inventory, as well as continued excessive U.S. dollar strength and elevated freight/logistics costs. Net income for the apparel giant was flat compared to a year ago at $1.3 billion. Nike ended the quarter with inventory up 43% YoY to $9.3 billion.

A complaint filed in a California federal court said Microsoft's (MSFT) $69 billion bid to buy "Call of Duty" maker Activision will unlawfully squelch competition in the video-game business.

European markets kicked off today's session on an upbeat note following the release of German consumer confidence forecast for January, which showed the worst may have been over. The employment outlook in Germany for the coming quarter looks positive, per the latest data from the Ifo economic institute. Meanwhile, the UK government continued public discussions about ongoing union strikes requesting pay raises.

As of 3:30 p.m. CET, the German DAX rose by 1.01%, while the British FTSE 100 added 0.88% and the French CAC 40 gained 1.31%. The Europe Stoxx 600 index climbed by 1.06%. Adidas (ADS.DE) and JD Sports (JD.L) led the rally on Nike's upbeat quarterly sales (read above).

The Bank of Japan shocked markets this morning with a surprise tweak to its bond yield controls that allows long-term interest rates to rise more, a move aimed at easing some of the costs of prolonged monetary stimulus. In a move explained as aimed at breathing life back into a dormant bond market, the BoJ decided to allow the benchmark 10-year bond yield a double more leeway of 50 basis points symmetrically of its 0% target, wider than the previous 25 basis point band.

Moreover, a proposal to bar U.S. government employees from using Chinese app TikTok on government devices appeared set to become law, threatening to deal a blow to the company's reputation and scare off advertisers even if it is unlikely to affect many users.

As a result, Asian shares tanked, while the yen and bond yields jumped following the decision, which caught offguard investors who had expected the BoJ to make no changes to its yield curve control (YCC) until Governor Haruhiko Kuroda steps down in April.