9 Sep 2013 AMC

9 Sep 2013 AMC

Market Summary 

Before Market Opens

The S&P 500 futures continue to trade higher by 0.2%.

It was a sea of green across Asia as all of the major bourses ended with gains. China's Shanghai Composite (+3.4%) posted a strong advance after the latest trade data showed exports jumped 7.2% year-over-year (5.5% expected). Imports were light, posting a 7.0% year-over-year increase. However, the Shanghai Composite was not the top gainer as that title went to Thailand's SET (+3.6%). Elsewhere, Japan's Nikkei (+2.5%) surged following the revised second quarter reading of 3.8% year-over-year (2.6% expected), and on word Tokyo would host the 2020 Olympics. The Australian election saw the conservatives take power for the first time in six years as Tony Abbott was elected prime minister. India's Sensex was closed for Ganesh Chaturthi. Data from the rest of the region saw Australia's home loans rise 2.4% month-over-month (2.2% expected) and its ANZ Job Advertisements slip 2.0% month-over-month while Taiwan's trade surplus widened to TWD135 billion (TWD94 billion previous). 

·         In Japan, the Nikkei gained 2.5% as trade ended at its best level in five weeks. Real estate and construction stocks outperformed on news of the Tokyo Olympics with Mitsui Fudosan gaining 5.7% and Kajima Corp adding more than 8.0%. 

·         Hong Kong's Hang Seng added 0.6% as trade gained for the seventh time in eight sessions. Property developers were mixed as Hang Lung Properties rose 1.8% and Cheung Kong shed 0.6%. Meanwhile, mainland financials gained with ICBC and Bank of Communications tacking on 2.1% and 4.6%, respectively. 

·         In China, the Shanghai Composite settled higher by 3.4% as trade posted its biggest advance of 2013. Financials rallied sharply on hopes they would soon be able to issue preferred shares. Shanghai Pudong and Agricultural Bank of China both ended up the daily limit, 10%. 

Most major European indices trade lower while Italy's MIB outperforms (+0.2%) as a parliamentary committee has begun debating whether PDL leader Silvio Berlusconi should be allowed to remain in the Senate after he was found guilty of tax fraud. The deliberations are expected to extend past today and Mr. Berlusconi's party has threatened to withdraw from Senate should their leader be banned from holding office. Participants received a handful of data as Eurozone Sentix Investor Confidence rose to 6.5 from -4.9 (-2.8 expected) and Swiss unemployment held steady at 3.2% on a seasonally-adjusted basis (3.2% expected). In addition, the unadjusted rate also remained unchanged at 3.0% (3.0% forecast) while retail sales rose 0.8% year-over-year (3.2% expected, 2.3% prior). 

·         Germany's DAX is off 0.1%. Financials are among the advancers with Commerzbank and Muenchener Re up 0.9% and 3.2%, respectively. On the downside, utility providers E.ON and RWE are both down near 2.0% apiece. 

·         Great Britain's FTSE is lower by 0.5% as energy names lead to the downside. BG Group and Royal Dutch Shell are down 4.6% and 1.3%, respectively. Miners have shown strength as Glencore Xstrata and Fresnillo hold respective gains of 0.9% and 3.0%. 

·         In France, the CAC trades down 0.6% wing consumer names pacing the decline. Drug maker Sanofi and food producer Danone are both down near 1.9%. Bank shares are among the leaders with Credit Agricole and Societe Generale both up close to 1.0% apiece.

European markets are now closed; stock markets across Europe performed as follows:

·         UK's FTSE: -0.3%

·         Germany's DAX: 0.0%

·         France's CAC: -0.2%

·         Spain's IBEX: -0.3%

·         Portugal's PSI: -0.4%

·         Italy's MIB Index: + 1.2%

·         Irish Ovrl Index: -0.1%

·         Greece ATHEX Composite: + 4.1%

 

Market Internals

Market Internals -Technical-
The Nasdaq closed up 46 (+1.26%) at 3706, the S&P 500 closed up 17 (+1.00%) at 1672, and the Dow closed up 141 (+0.94%) at 15063. Action came on mixed volume (NYSE 639 mln vs. avg. of 688; NASDAQ 1617 mln vs. avg. of 1536), with advancers outpacing decliners (NYSE 2464/615, NASDAQ 1924/619) and new highs outpacing new lows (NYSE 150/26, NASDAQ 148/16). 

Relative Strength: 
Thailand-THD +6.28%, Turkey-TUR +6.09%, Indonesia-IDX +5.38%, Poland-EPOL +4.42%, U.S. Home Construction-ITB +4.34%, Malaysia-EWM +3.65%, Homebuilders-XHB +3.41%, Coal-KOL +2.95%, Biotechnology-XBI +2.90%, Copper Miners-COPX +2.86%.

Relative Weakness: 
Volatility-VXX -3.72%, Heating Oil-UHN -1.79%, Gasoline-UGA -1.79%, Gold Miners-GDX -1.29%, Grains-JJG -1.22%, Japanese Yen-FXY -0.48%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Begin Week on Upbeat Note
The S&P 500 settled higher by 1.0% as trade managed to regain its 50-day moving average (1666/1667) for the first time in two weeks. 

Equities climbed from the open, bolstered by reassuring economic reports out of China and Japan, headlines suggesting a strike against Syria could possibly be avoided, and the notion that the relatively disappointing employment report on Friday has lowered the probability of a big tapering announcement at the September 17-18 FOMC meeting. 

Overnight, China reported a larger-than-expected trade surplus of $28.61 billion as imports grew 7.0% (11.3% expected) and exports increased 7.2% (6.0% forecast). Elsewhere, Japan saw its second quarter GDP revised up to 0.9% quarter-over-quarter from 0.6% and Tokyo received the nod to host the 2020 Olympics. 

Growth-sensitive sectors paced the advance with materials ending in the lead. The sector rose 1.5% as steelmakers rallied in reaction to the data from Asia. The Market Vectors Steel ETF (SLX 45.00, +1.21) jumped 2.8%. Fertilizer names also registered solid gains after Russian President Vladimir Putin said the ongoing potash dispute with Belarus needs to be resolved. Mosaic (MOS 44.31, +2.15) ended higher by 5.1%. 

Other commodity-related sectors also displayed strength. Industrials (+1.2%) were bolstered by broad gains among transportation companies and machinery producers. The Dow Jones Transportation Average rose 1.4% and Dow component Caterpillar (CAT 85.59, +2.20), who does a significant amount of business in China, advanced 2.6%. 

The energy sector (+1.0%) also outperformed even as crude oil fell 1.4% to $109.04 per barrel. Crude futures slid to their lows after reports indicating Russia has urged Syria to put its chemical weapons under international control were followed by headlines suggesting Syria has welcomed the proposal. The reports contributed to some cautious optimism hoping that a diplomatic solution remains within the realm of possibilities. 

With regard to other cyclical sectors, technology (+1.3%) displayed strength throughout the day. The largest sector component, Apple (AAPL 506.17, +7.95), gained 1.6% ahead of tomorrow's product refresh. Elsewhere, discretionary shares finished in-line with the S&P, which overshadowed the broad gains among homebuilders. The iShares Dow Jones US Home Construction ETF (ITB 21.78, +0.90) spiked 4.3%. 

Countercyclical sectors lagged across the board as consumer staples, health care, telecom services, and utilities added between 0.2% and 0.8%. 

Treasuries finished near their highs as participants speculated whether the August employment report was weak enough to prevent the data-dependent Fed from lowering the pace of its asset purchases at the September 17/18 FOMC meeting. The benchmark 10-yr yield ended lower by four basis points at 2.90%. 

Participation in today's session was limited as less than 650 million shares changed hands on the floor of the New York Stock Exchange. 

According to the Federal Reserve, consumer credit increased by $10.4 billion in July. This followed the prior month's increase of $11.9 billion, and was lower than the $13.0 billion that had been broadly expected among economists polled by Briefing.com. 

There is no economic data of note scheduled to be reported tomorrow.

Commodities

Closing Commodities: Crude Sells Off Below $109 In Electronic Trade

·         Oct crude oil traded lower today following headlines suggesting Syria has welcomed Russia's proposal for Syria to put its chemical weapons under international control. The energy component pulled back from its session high of $110.20 per barrel set at floor trade open and settled with a 0.9% loss at $109.53 per barrel. In electronic trade, crude is selling off and is now just below $109/barrel.

·         Oct natural gas, on the other hand, traded higher. It picked up momentum as it headed into the close after chopping around near the $3.57 per MMBtu level for most of the session. It settled at its session high of $3.61 per MMBtu, or 2.3% higher.

·         Dec gold brushed a session high of $1390.90 per ounce but lost momentum in late morning action and spent the remainder of the session chopping around near the unchanged line. It settled 20 cents lower at $1386.50 per ounce despite a weaker dollar index.

·         Dec silver spent its entire session in negative territory, touching a session low of $23.52 per ounce. Although it traded up to a session high of $23.83 per ounce in late morning action, it pulled back as the session progressed and settled with a 0.8% loss at $23.72 per ounce.

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

	·         Dec corn fell 4 cents to $4.64/bushel  ·         Dec wheat fell 7 cents to $6.41/bushel  ·         Nov soybeans fell 16 cents to $13.55/bushel  ·         Oct ethanol settled unchanged at $1.88/gallon  ·         Nov sugar (#16 (U.S.)) rose 0.02 of a penny to 21.09 cents/lbs

NYMEX Energy Closing Prices

·         Oct crude oil fell $1.01 to $109.53/barrel 

o    Crude oil traded lower today following headlines suggesting Syria has welcomed Russia's proposal for Syria to put its chemical weapons under international control. The energy component pulled back from its session high of $110.20 set at pit trade open and settled with a 0.9% loss. 

·         Oct natural gas rose 8 cents to $3.61/MMBtu 

o    Natural gas, on the other hand, spent its entire floor session in positive territory. It chopped around near the $3.57 level for most of the session with momentum picking up heading into the close. It eventually settled at its session high, or 2.3% higher. 

·         Oct heating oil fell 4 cents to $3.12/gallon 

·         Oct RBOB gasoline fell 5 cents to $2.80/gallon

Treasuries

Treasuries Post Solid Gains: 10-yr: +09/32..2.909%..USD/JPY: 99.58..EUR/USD: 1.3256
Treasuries booked solid gains as the complex rallied for a second session. Today's advance was unusual in the sense that it came on the back of a quiet day for economic data, a condition that usually leads to selling across the complex. The complex gained ahead of the noon hour, buy buying= was thwarted as a headline crossed indicating Syria welcomed the Russian proposal that Syria put its chemical weapons under international control. That would mark the top for the session as light selling took hold for the remainder of the session. Treasuries still posted sound gains despite the afternoon slide as a solid bid pushed yields down as much as a 6.5 bps. The 5-yr yield continued its recent outperformance to the downside, finishing at 1.704% but managing to hold 1.700% support. Likewise, the 10-yr yield shed 4 bps to end at 2.897% while holding support in the area. Curve flattening took hold as the 2-10-yr spread narrowed to 246 bps. Elsewhere, precious metals ended mixed with gold flat at $1386 and silver down $0.20 near $23.70. Tuesday's data is light with just the JOLTS - Job Openings being released (10). Treasury will auction $31 bln 3-yr notes.

Next Day In View 

Economic Commentary

Consumer Credit Continues to Grow by Double-Digits
Consumer credit increased by $10.4 bln in July, down from a downwardly revised $11.9 bln (from $13.8 bln) in June. Credit has expended by more than $10 for each of the previous three months. The Briefing.com consensus expected consumer credit to increase by $13.0 bln. Consumer credit is a volatile measure that often goes through sizable revisions before the final data are released three months later. It is unlikely that future revisions will show a contraction in July. Revolving credit fell by $1.8 bln in July to $849.8 bln after dropping by $3.8 bln in June. Nonrevolving credit rose by $12.8 bln to $2002.3 bln in July. That was down from a $15.7 bln increase in June. Nonrevolving credit has expanded for the past 23 consecutive months and 37 out of the last 38 months.

On other news.... 

Northrop Grumman awarded ~$219 mln Air Force contract (93.51 +0.39)
Co was awarded a $219,147,421 firm-fixed and cost-type contract for Joint Threat Emitter (JTE) follow-on production. This contract provides for JTE first article and production units, and associated drawings, technical orders, retrofit kits, provisioning, and software. Work will be performed at Buffalo, N.Y., with an expected completion date of March 2016.






Currencies 

Dollar Breaks 82.00 Support: 10-yr: +12/32..2.893%..USD/JPY: 99.57..EUR/USD: 1.3270
The Dollar Index holds on session lows near 81.70 as sellers have been in control throughout the session. Today's selling has dropped the Index below 82.00 support and has action probing the 200-day moving average (81.75). Click here to see a daily Dollar Index chart. 

·         EURUSD is +90 pips at 1.3265 as action holds just off session highs. Today's advance comes on little news, but will be watched closely as action probes 1.3250 resistance. Eurozone data is limited to French industrial production. 

·         GBPUSD is +75 pips at 1.5710 as the pair looks likely to end with its fifth gain in the past six sessions. Traders continue to watch the 1.5720 level as a close above there would mark the best since February. 

·         USDCHF is -65 pips at .9310 as sellers remain in control for a second day. The two-day slide has erased close to 150 pips while pushing action below the 50-, 100-, and 200-day moving averages. 

·         USDJPY is +50 pips at 99.60 as action gains for the seventh time in nine sessions. News of a strong upward revision to Q2 GDP (3.8% YoY) combined with Tokyo winning the rights to host the 2020 Olympics has been a driver of today's trade. The minutes from the latest Bank of Japan meeting are due out this evening along with Tertiary Industry Activity. 

·         AUDUSD is +55 pips at .9235 as action looks likely post its best close in one and a half months. Traders continue to monitor.9300 as resistance at the level dates back to June. A breakout opens up a potential test of the 100-day moving average (.9420). Australian data includes MI Inflation Expectations and NAB Business Confidence. China's fixed asset investment and industrial production are due out tonight. 

·         USDCAD is -50 pips at 1.0365 as trade holds on session lows. Action broke down to its worst levels of the session following the strong Canadian building permits (20.7% MoM actual v. 4.4% MoM expected). Trade has since held in a tight range on session lows. Near-term support comes into play near 1.0350 and is helped by the 100-day moving average.

Jason's Commentaries


It was totally unexpected... a 140 points on the Dow... without much economic data coming out, possibly due to China's better than expected trade surplus. Market started with an upbeat and continued all the way to the closing bell. Considering that Friday was flat to the upside, and monday had an 140 gain, the bullishness is coming back into the market. However, volumes were only standing at 637m shares traded on the NYSE. The Nasdaq Composite broke into a higher high. Over in the S&P500 components, the materials were the biggest leader in the market last night with a 1.51% gain on the overall sector. It's time to get bullish =D 

Market Call: Flat to upside

Date: 10 Sep 2013