Tuesday 24 September 2013

24 Sep 2013 AMC


24 Sep 2013 AMC
Market Summary 



European Markets Closing Prices
European markets are now closed; stock markets across Europe performed as follows:
·         UK's FTSE: + 0.2%
·         Germany's DAX: + 0.3%
·         France's CAC: + 0.6%
·         Spain's IBEX: + 0.6%
·         Portugal's PSI: -0.1%
·         Italy's MIB Index: + 0.9%
·         Irish Ovrl Index: + 0.4%
·         Greece ATHEX Composite: + 2.6%


Before Market Opens

S&P futures vs fair value: -0.20. Nasdaq futures vs fair value: +8.50.
The major averages are poised to begin today's session with modest gains. The S&P 500 futures trade higher by 0.1% after spending the bulk of pre-market action in negative territory. Meanwhile, Nasdaq futures (+0.3%) have stayed out of the red throughout the morning. 

Shares of Apple (AAPL 494.40, +3.76) have contributed to the strength of Nasdaq futures. The largest tech stock is seeing an extension of yesterday's advance with a Susquehanna upgrade to ‘Positive' from ‘Neutral' contributing to the early strength. 

In other notable pre-market movers, Applied Materials (AMAT 17.36, +1.37) trades up 8.5% after announcing plans to merge with Tokyo Electron. 

Today's economic data pointed to continued gains in housing prices as the July Case-Shiller 20-city Index rose 12.4% against the 12.0% increase expected by the Briefing.com consensus. Meanwhile, the FHFA Housing Price Index improved by 1.0%. 

The September Consumer Confidence report will be released at 10:00 ET.





Market Internals





Market Internals -Technical-
The Nasdaq closed up 3 (+0.08%) at 3768, the S&P 500 closed down 4 (-0.26%) at 1697, and the Dow closed down 67 (-0.43%) at 15335. Action came on above average volume (NYSE 694 mln vs. avg. of 674; NASDAQ 1733 mln vs. avg. of 1570), with advancers outpacing decliners (NYSE 1696/1357, NASDAQ 1387/1114) and new highs outpacing new lows (NYSE 145/26, NASDAQ 167/18). 

Relative Strength: 
Greece-GREK +2.71%, Egypt-EGPT +2.13%, U.S. Home Construction-ITB +1.82%, Lithium-LIT +1.43%, Homebuilders-XHB +1.25%, Rare Earths-REMX +1.09%, 20+ Year Treasuries-TLT +1.08%, Austria-EWO +0.48%, Italy-EWI +0.28%, Brazilian Real-BZF +0.27%.

Relative Weakness: 
Indonesia-IDX -3.35%, Natural Gas-UNG -2.80%, Thailand-THD -2.26%, Chile-ECH -1.95%, Malaysia-EWM -1.53%, China 25 Index-FXI -1.38%, Copper-JJC -1.26%, Silver Miners-SIL -0.96%, Realty Majors-ICF -0.86%, Technology-Software-IGV -0.84%.





Leaders and Laggards









Technical Updates









Briefing's Commentaries 



Closing Market Summary: Stocks End Near Lows as Financials Weigh
The S&P 500 settled lower by 0.3%, registering its fourth consecutive loss. Small caps outperformed the benchmark average as the Russell 2000 added 0.2%. 

Stocks slipped during the opening hour in reaction to a below-consensus consumer confidence report for September. Gains in the stock market were unable to thwart pessimism in the labor market as the September Consumer Confidence Index fell to 79.7 from an upwardly revised 81.8 (from 81.4) in August. The Briefing.com consensus expected the Consumer Confidence Index to drop to 80.0. 

Consumer confidence typically follows changes in equity prices, labor market conditions, gasoline prices, and media reports. While the equity market had a banner month for most of September, concerns about future labor growth weighed more heavily on consumer attitudes. 

Despite the opening slip, the S&P recovered swiftly, but was unable to hold the 1,700 level into the close as financials and technology weighed. 

The financial sector (-0.6%) underperformed for a second consecutive day with JPMorgan Chase (JPM 50.32, -1.14) leading to the downside. The stock fell 2.2% after The New York Times revealed the Department of Housing and Urban Development sought a $20 billion settlement in a mortgage-backed securities issuance case against the bank. This followed yesterday's reports, which said prosecutors in California are set to announce charges against JPMorgan Chase in this case. 

Elsewhere, the technology sector ended lower by 0.3% as many top components lagged while chipmakers rallied. Oracle (ORCL 33.64, -0.30), Microsoft (MSFT 32.46, -0.29), and Visa (V 193.34, -2.90) lost between 0.9% and 1.5% while the PHLX Semiconductor Index advanced 0.7% afterApplied Materials (AMAT 17.44, +1.45) announced plans to merge with Tokyo Electron. 

Even though the S&P ended in the red, there were some pockets of strength among cyclical sectors like industrials and consumer discretionary. 

Industrials (+0.3%) finished in the lead thanks to all-around support. The largest sector component, General Electric (GE 24.32, +0.04) advanced 0.2% and transportation companies also outperformed. The Dow Jones Transportation Average added 0.1%. 

Meanwhile, the discretionary sector (+0.1%) saw homebuilders rally after KB Home (KBH 17.76, +0.73) and Lennar (LEN 36.01, +1.47) reported bottom-line beats. Housing stocks also drew strength from continued gains in home prices as the July Case-Shiller 20-city Index rose 12.4% (Briefing.com consensus 12.0%) and the FHFA Housing Price Index improved by 1.0%. The iShares Dow Jones US Home Construction ETF (ITB 22.66, +0.41) gained 1.8%. 

Also aiding homebuilders was indirect support from the continued retreat in yields. Treasuries ended near their highs with the 10-yr yield down six basis points at 2.65%. This marked the lowest level for the benchmark yield since mid-August. 

Trading volume was a bit below average as 674 million shares changed hands on the floor of the New York Stock Exchange. 

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET; August durable orders will be released at 8:30 ET; and August new home sales will cross at 10:00 ET. 

The U.S. Treasury will auction $35 billion in 5-yr notes.








Commodities




Closing Commodities: Gold Declines For A Third Session, Natural Gas Drops 3.1%
·         Nov crude oil fell for a fourth consecutive session as tension eased in the Middle East. Iran has agreed to talks on Thursday over its nuclear program with representatives from six world powers, including the U.S. The energy component fell as low as $103.30 per barrel in morning floor trade and settled with a 0.5% loss at $103.11 per barrel, slightly below its session high of $103.22 per barrel
·         Oct natural gas registered a third consecutive session of losses as it trended lower in negative territory. It pulled back from its session high of $3.58 per MMBtu and closed 3.1% lower at its session low of $3.49 per MMBtu
·         Precious metals also struggled in negative territory today as the dollar index traded in the black
·         Dec gold fell for a third consecutive session, slipping to a session low of $1305.50 per ounce. It managed to erase some of the loss and settled at $1316.70 per ounce, or 0.8% lower
·         Dec silver slipped to a session low of $21.33 per ounce in morning pit trade and inched slightly higher as the session progressed. It eventually settled at $21.58 per ounce, booking a loss of 1.3%





COMEX Metals Closing Prices
  Dec gold fell $10.60 to $1316.70/ounce 
·         Gold fell for a third consecutive session as the dollar index traded in positive territory. The yellow metal fell to a session low of $1305.50 but managed to erase some of the loss and settled 0.8% lower. 
  Dec silver fell $0.29 to $21.58/ounce 
·         Silver also traded in the red. It slipped to a session low of $21.33 in morning pit trade and inched slightly higher as the session progressed. It eventually settled with a 1.3% loss. 
  Dec copper fell 4 cents to $3.26/lbs



CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
·         Dec corn fell 4 cents to $4.49/bushel 
·         Dec wheat rose 4 cents to $6.58/bushel 
·         Nov soybeans rose 4 cents to $13.12/bushel 
·         Oct ethanol fell 6 cents to $1.83/gallon 
·         Nov sugar (#16 (U.S.)) rose 0.03 of a penny to 20.99 cents/lbs





NYMEX Energy Closing Prices
  Nov crude oil fell $0.47 to $103.11/barrel 
·         Crude oil declined for a fourth consecutive session as tension eased in the Middle East. Iran has agreed to talks with representatives from six world powers, including the U.S., on Thursday over its nuclear program. The energy component fell as low as $102.30 in morning floor trade. It settled slightly below its session high of $103.22, booking a loss of 0.5%. 
  Oct natural gas fell 11 cents to $3.49/MMBtu 
·         Natural gas fell for a third consecutive session, trending lower in negative territory. It pulled back from its session high of $3.58 and closed with a 3.1% loss at its session low. 
  Nov heating oil settled unchanged at $2.96/gallon 
  Nov RBOB gasoline rose 3 cents to $2.65/gallon

Treasuries


Yields Fall to Six-Week Lows: 10-yr: +13/32..2.659%..USD/JPY: 98.80..EUR/USD: 1.3475
Treasuries gained for the fourth time in five days, pushing yields to their lowest levels in six weeks. The complex held some gains into the U.S. open as worries of a government shutdown and the yet to be resolved debt ceiling debate fueled an overnight bid. Trade saw little reaction to this morning's stronger than expected Case-Shiller 20-city Index (12.4% actual v. 12.0% expected), but ticked to its best levels of the session following the slight consumer confidence miss (79.7 actual v. 80.0 expected). Buyers would remain in control, running trade to session highs after the in-line $33 bln 2-yr note auction. The auction drew 0.348% and a light 3.09x bid/cover as both indirect (24.0%) and direct (21.8%) bids were just shy of their 12-auction averages. Primary dealers were left with 54.2% of the supply. A gain of more than one point in the long bond led the advance, and pushed the 30-yr yield down 7 bps to 3.672%. Meanwhile, the 10-yr yield slid 6 bps to 2.653%, breaking cleanly below the 50-day moving average for the first time since early May. Today's move has traders shifting their focus to support in the 2.600% area. Aggressive flattening developed along the yield curve as the 2-10-yr spread narrowed to 232.5 bps. Elsewhere, precious metals recouped most of their early losses as gold fell $4 to $1323 and silver shed $0.10 to near $21.75. Wednesday's data includes the weekly MBA Mortgage Index (7), durable orders, durable orders ex-transportation (8:30), and new home sales (10). Treasury will hold a $35 bln 5-yr note auction.






Next Day In View 


Economic Commentary


On other news.... 



Fed Releases rules on Basel III Implementation
The Federal Reserve Board on Tuesday issued two interim final rules that clarify how companies should incorporate the Basel III regulatory capital reforms into their capital and business projections during the next cycle of capital plan submissions and stress tests. 

 Rules to implement the Basel III capital reforms in the United States were finalized in July, and will be phased-in beginning in 2014 or 2015, depending on the size of the banking organization. The planning horizon for the next capital planning and stress testing cycle runs from the fourth quarter of 2013 through the fourth quarter of 2015. Thus, the next capital planning and stress testing cycle, which begins October 1, overlaps with the implementation of the Basel III capital reforms. 

The Board's first interim final rule applies to bank holding companies with $50 billion or more in total consolidated assets. The rule clarifies that in the next capital planning and stress testing cycle, these companies must incorporate the revised capital framework into their capital planning projections and into the stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act using the transition paths established in the Basel III final rule. This rule also clarifies that for the upcoming cycle, capital adequacy at large banking organizations would continue to be assessed against a minimum 5 percent tier 1 common ratio calculated in the same manner as under previous stress tests and capital plan submissions, ensuring consistency with those previous exercises. 

 The second interim final rule provides a one-year transition period for most banking organizations with between $10 billion and $50 billion in total consolidated assets. These companies this fall are conducting their first company-run stress test under the Board's rules implementing the Dodd-Frank Act. These companies will be required to calculate their stress test projections using the Board's current regulatory capital rules during the upcoming stress test to allow time to adjust their internal systems to the revised capital framework. 

The interim final rules also clarify that companies will not be required to use the advanced approaches in the Basel III capital rules to calculate their projected risk-weighted assets in a given capital planning and stress testing cycle unless the companies have been notified by September 30 of that year, prior to the start of that capital planning and stress testing cycle. The interim final rules are effective immediately. 

The Federal Reserve will accept comments on the interim final rules through November 25, 2013, and the rules could be revised later in response to comments.






Currencies 




Dollar Gains for Fourth Day: 10-yr: +16/32..2.655%..USD/JPY: 98.86..EUR/USD: 1.3484
The Dollar Index holds onto small gains near 80.55 amid a rather uneventful trade. Action has been confined to a 10 cent range since early this morning as a lack of meaningful news and data has produced a lackluster session. Today's advance has the greenback on track for a fourth straight day of gains, with bulls looking to retake key support in the 80.80/81.00 area. Click here to see a daily Dollar Index chart.
·         EURUSD is -10 pips at 1.3480 as trade slips off seven-month highs. The single currency has been able to shrug off chatter of an Italian downgrade, but action still remains on track for a third day of losses. Near-term support comes into play near 1.3400. GfK German Consumer Climate will cross the wires tomorrow. 
·         GBPUSD is -35 pips at 1.6005 as sellers remain in control for the third time in four sessions. Early weakness saw sterling test the 1.5950 level, but that level managed to hold as selling exhausted following the BBA Mortgage Approvals miss (38.2K actual v. 38.6K expected).The 1.5700 area is home to the first meaningful level of support. British data is limited to CBI Realized Sales. 
·         USDCHF is +15 pips at .9125 as buyers are in control for a second day. Traders are watching the .9135 area closely as a breakout opens up a potential retest of the important .9175/.9200 level. 
·         USDJPY is +10 pips at 98.90 amid another uneventful day for the pair. Action throughout the month of September has been rather lackluster with trade bookended by 98.00/100.00. That area is also home to both the 50- and 100-day moving averages, which are responsible for today's range. 
·         AUDUSD is -25 pips at .9400 as a choppy session nears the close. Important has been the hard currency's ability to hold support in the .9300 area that is helped by the 100-day moving average (.9320). A run above .9500 sets up a potential test of the 200-day moving average (.9850). The Reserve Bank of Australia's Financial Stability Review is due out tonight. 
·         USDCAD is +15 pips at 1.0300 as trade tests resistance in the area. The pair dropped to session lows near 1.0270 following this morning's better than expected core retail sales (1.0% MoM actual v. 0.6% MoM expected), but minor support in the area was able to hold causing bulls to retake control.







Jason's Commentaries


A 4th consecutive loss in the S&P500 and Dow Jones already, was expecting the market to bounce a little on the support and now Dow has broken the 15400 support level. I'm expecting some downside to come. Financials were leading the drop last night, dropping over 2% after sought for compensation over MBS issuance during the Financial crisis. Citi was lagging the market on Monday over possible drop in Q3 revenues. And we've got JP Morgan facing such problem. If JP Morgan is facing such problem, I reckon the authorities are likely to target other financials as well. As financials were the main laggard in the market last night, we've got industrials gaining 0.36% after being led by stocks like Boeing. Volume were at 673m shares traded and it was rather a flat day last night. However, the retracement is going to short and quick.



Market Call: FLAT to downside
Date: 25 Sep 2013

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