4 Oct 2013 AMC
Market Summary
European
Markets Closing Prices
European
markets are now closed; stock markets across Europe performed as follows:
·
UK's FTSE: + 0.1%
·
Germany's DAX: + 0.3%
·
France's CAC: + 0.9%
·
Spain's IBEX: + 1.4%
·
Portugal's PSI: + 0.5%
·
Italy's MIB Index: + 1.6%
·
Irish Ovrl Index: + 0.4%
·
Greece ATHEX Composite: + 3.4%
Before Market Opens
S&P futures vs fair value:
+1.50. Nasdaq futures vs fair value: +4.00.
The S&P 500 futures continue to hover near their highs with a gain of 0.2%.
Markets across Asia ended mixed amid a lack of meaningful news and data out of the region. The Bank of Japan opined overnight, opting to keep policy on hold. Notable, however, were comments from Governor Haruhiko Kurdoa, who suggested a prolonged budget/debt ceiling showdown on Capitol Hill could have a "severe" impact on global markets. Japan's Nikkei (-0.9%) lagged the rest of the region as concerns over the progress of negotiations on Capitol Hill weighed (Japan is one of the top holders of U.S. debt). Chinese banks remained closed for Golden Week. Data from the region was limited to a jump in the Philippines inflation rate (2.7% actual versus 2.1% previous); Malaysia's trade surplus widening to MYR7.11 billion (MYR4.70 billion expected, MYR2.86 billion previous); and India's HSBC Services PMI falling to 44.6 from 47.6.
The S&P 500 futures continue to hover near their highs with a gain of 0.2%.
Markets across Asia ended mixed amid a lack of meaningful news and data out of the region. The Bank of Japan opined overnight, opting to keep policy on hold. Notable, however, were comments from Governor Haruhiko Kurdoa, who suggested a prolonged budget/debt ceiling showdown on Capitol Hill could have a "severe" impact on global markets. Japan's Nikkei (-0.9%) lagged the rest of the region as concerns over the progress of negotiations on Capitol Hill weighed (Japan is one of the top holders of U.S. debt). Chinese banks remained closed for Golden Week. Data from the region was limited to a jump in the Philippines inflation rate (2.7% actual versus 2.1% previous); Malaysia's trade surplus widening to MYR7.11 billion (MYR4.70 billion expected, MYR2.86 billion previous); and India's HSBC Services PMI falling to 44.6 from 47.6.
·
In Japan, the Nikkei closed lower by 0.9% as trade closed on the 50- and
100-day moving averages. Exporters lagged the broader market as Panasonic and
Sharp gave up 3.2% and 3.3%, respectively.
·
Hong Kong's Hang Seng shed 0.3% amid a quiet trade. China Mobile gave up 2.9%
on reports the company was considering cutting its carrier fees.
·
In China, the Shanghai Composite was closed.
Major European indices hover near
their highs with Italy's MIB (+1.2%) pacing the advance. The first half of the
session has been generally quiet with just three data points crossing as
Eurozone PPI was unchanged month-over-month (0.1% expected, 0.2% prior) and
Germany's PPI slipped 0.1% month-over-month (0.1% forecast, -0.1% previous)
while the year-over-year reading fell 0.5% (0.1% consensus, 0.5% last). In news
of note, the European Stability Mechanism chief Klaus Regling said he expects
Greece to require a third bailout package.
·
Germany's DAX is little changed as financials lead while producers of basic
materials lag. Allianz and Commerzbank hold respective gains of 0.9% and 2.6%
while K+S trades down 2.5% and Lanxess holds a loss of 1.5%.
·
In Great Britain, the FTSE is higher by 0.1%. Standard Life is the top index
performer as it trades with a gain of 3.1%. Consumer names lag with Tesco and
TUI Travel both down near 0.6%.
·
France's CAC trades up 0.6% with bank shares contributing to the strength.
Credit Agricole is higher by 1.4% and Societe Generale sports a gain of
1.9%.
·
In Italy, the MIB holds a gain of 1.2% as 36 of 40 components trade in
positive territory. Banca Popolare, Mediobanca, and Unicredit are all up
between 2.7% and 5.9%. Telecom Italia is the weakest performer, down 0.8%.
Market Internals
Leaders and Laggards
Technical Updates
Commentaries
Closing Market Summary: Stocks Climb While
Budget Deal Remains Elusive
The S&P 500 advanced 0.7%, ending the week with just a slim loss of 0.1%. Meanwhile, the Nasdaq (+0.9%) outperformed to extend its weekly gain to 0.7%. For its part, the Dow lagged throughout the week and despite today's gain of 0.5%, it ended the week lower by 1.3%.
Equities climbed throughout the session while showing little concern over the lack of progress in the Capitol Hill stalemate. A brief afternoon hiccup ensued after House Speaker John Boehner made the headlines with his "This isn't some damn game!" comment, referencing the shutdown. The Speaker's emphatic remark was made in reaction to an article in The Wall Street Journal, which quoted a senior administration official as saying "We are winning...It doesn't really matter to us [how long the shutdown lasts] because what matters is the end result."
While the end result of the shutdown remains unclear, today's end result for equities was crystal clear. The major averages settled near their highs as all ten sectors registered gains.
The Nasdaq was the top performing index with biotechnology making a significant contribution. The iShares Nasdaq Biotechnology ETF (IBB 212.50, +2.34) finished higher by 1.1%, also giving a boost to the health care sector (+1.1%). Meanwhile, the traditional technology sector (+0.5%) underperformed as top components traded in mixed fashion.
Elsewhere, the materials space (+1.4%) had the best showing as chemical producers and steelmakers climbed. Dow Chemical (DOW 39.99, +1.22) advanced 3.2% and the Market Vectors Steel ETF (SLX 45.43, +0.40) added 0.9%. Miners sat out today's rally as the Market Vectors Gold Miners ETF (GDX 24.19, -0.07) shed 0.3%. On a related note, gold futures slipped 0.5% to $1305.10 per troy ounce.
The other commodity-linked sector—energy (+0.9%)—outperformed throughout the session while crude oil added 0.5% to $103.78 per barrel.
Also of note, the industrial sector (+0.5%) lagged in each of the past two sessions, and that was the case once again today. Transportation companies ended in-line with the sector (Dow Jones Transportation Average +0.5%) while defense contractors kept the group from logging additional gains. The PHLX Defense Index added just 0.3%.
With regards to countercyclical sectors, health care finished among the leaders while the remaining defensive groups—consumer staples, telecom services, and utilities—underperformed with modest gains of 0.2% apiece.
Treasuries spent the session in a steady retreat as the benchmark 10-yr yield increased four basis points to 2.65%
Trading volume was well below average as 597 million shares changed hands on the floor of the NYSE.
On Monday, the August Consumer Credit report will be released at 15:00 ET.
The S&P 500 advanced 0.7%, ending the week with just a slim loss of 0.1%. Meanwhile, the Nasdaq (+0.9%) outperformed to extend its weekly gain to 0.7%. For its part, the Dow lagged throughout the week and despite today's gain of 0.5%, it ended the week lower by 1.3%.
Equities climbed throughout the session while showing little concern over the lack of progress in the Capitol Hill stalemate. A brief afternoon hiccup ensued after House Speaker John Boehner made the headlines with his "This isn't some damn game!" comment, referencing the shutdown. The Speaker's emphatic remark was made in reaction to an article in The Wall Street Journal, which quoted a senior administration official as saying "We are winning...It doesn't really matter to us [how long the shutdown lasts] because what matters is the end result."
While the end result of the shutdown remains unclear, today's end result for equities was crystal clear. The major averages settled near their highs as all ten sectors registered gains.
The Nasdaq was the top performing index with biotechnology making a significant contribution. The iShares Nasdaq Biotechnology ETF (IBB 212.50, +2.34) finished higher by 1.1%, also giving a boost to the health care sector (+1.1%). Meanwhile, the traditional technology sector (+0.5%) underperformed as top components traded in mixed fashion.
Elsewhere, the materials space (+1.4%) had the best showing as chemical producers and steelmakers climbed. Dow Chemical (DOW 39.99, +1.22) advanced 3.2% and the Market Vectors Steel ETF (SLX 45.43, +0.40) added 0.9%. Miners sat out today's rally as the Market Vectors Gold Miners ETF (GDX 24.19, -0.07) shed 0.3%. On a related note, gold futures slipped 0.5% to $1305.10 per troy ounce.
The other commodity-linked sector—energy (+0.9%)—outperformed throughout the session while crude oil added 0.5% to $103.78 per barrel.
Also of note, the industrial sector (+0.5%) lagged in each of the past two sessions, and that was the case once again today. Transportation companies ended in-line with the sector (Dow Jones Transportation Average +0.5%) while defense contractors kept the group from logging additional gains. The PHLX Defense Index added just 0.3%.
With regards to countercyclical sectors, health care finished among the leaders while the remaining defensive groups—consumer staples, telecom services, and utilities—underperformed with modest gains of 0.2% apiece.
Treasuries spent the session in a steady retreat as the benchmark 10-yr yield increased four basis points to 2.65%
Trading volume was well below average as 597 million shares changed hands on the floor of the NYSE.
On Monday, the August Consumer Credit report will be released at 15:00 ET.
Commodities
CBOT
Agriculture and Ethanol/ICE Sugar Closing Prices
·
Dec corn settled 4 cents higher at $4.43/bushel
·
Dec wheat fell 3 cents to $6.86/bushel
·
Nov soybeans rose 10 cents to $12.96/bushel
·
Nov ethanol rose 1 cent to $1.68/gallon
·
Nov sugar (#16 (U.S.)) fell 0.52 of a penny to 21.00 cents/lbs
COMEX
Metals Closing Prices
Dec gold fell $6.90 to $1310.20/ounce
·
Gold extended yesterday's losses as a stronger dollar index
weighed on prices. It rallied to a session high of $1326.00 in early morning
pit trade but quickly fell back into the red. It brushed a session low of
$1305.10 and settled with a 0.5% loss, bringing the week's losses to
2.1%.
Dec silver fell $0.02 to $21.75/ounce
·
Silver also retreated into negative territory after trading as
high as $21.93 in morning floor action. It settled 0.1% lower, booking a 0.3%
loss for the week.
Dec
copper rose 3 cents to $3.30/lbs
NYMEX
Energy Closing Prices
·
Nov crude oil rose $0.49 to $103.78/barrel
·
Nov natural gas rose 1 cent to $3.51/MMBtu
·
Nov heating oil remained unchanegd at $3.00/gallon
·
Nov RBOB gasoline fell 2 cents at $2.61/gallon
Treasuries
Treasuries Slide as Government Shutdown Reaches
Fourth Day: 10-yr: -11/32..2.652%..USD/JPY: 97.41..EUR/USD: 1.3553
Treasuries booked modest losses as money moved out of the complex amid the government shutdown and mixed economic data. By week's end, the government shutdown reached its fourth day, with no end in sight, as politicians on both sides of the aisle continued to point fingers but showed no urgency to get a deal done. Look for the finger pointing and name calling to intensify over the coming days as October 17 is the likely day of a default if Congress is unable to come to terms on a debt ceiling deal. This week's data was mixed as Chicago PMI (55.7 actual v. 53.7 expected) and the ISM Index (56.2 actual v. 55.0 expected) topped estimates while ADP Employment Change (166K actual v. 170K expected) and ISM Services (54.4 actual v. 57.2 expected) missed. Construction spending, factory orders, nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and average workweek were all delayed due to the government shutdown.
This week's selling produced a modest rise in yields with the long end seeing a 6 bp advance. The 10-yr yield tacked on 5 bps to finish Friday's session at 2.652%. The benchmark yield tested 2.600% support several times over the course of the week, but that area held strong as sellers defended the level. Interestingly, it was the 1-month bill yield that saw the biggest jump as traders began to price in the possibility of a default. The yield ended the week up 9 bps at 0.110% after hitting a high of 0.190%. Selling swung the yield curve steeper as the 2-10-yr spread widened to 232.5 bps. Elsewhere, precious metals ended the week mixed as gold fell $30 to $1309 and silver held steady near $21.70. Monday's data is limited to consumer credit (15).
On other news....
Currencies
Treasuries booked modest losses as money moved out of the complex amid the government shutdown and mixed economic data. By week's end, the government shutdown reached its fourth day, with no end in sight, as politicians on both sides of the aisle continued to point fingers but showed no urgency to get a deal done. Look for the finger pointing and name calling to intensify over the coming days as October 17 is the likely day of a default if Congress is unable to come to terms on a debt ceiling deal. This week's data was mixed as Chicago PMI (55.7 actual v. 53.7 expected) and the ISM Index (56.2 actual v. 55.0 expected) topped estimates while ADP Employment Change (166K actual v. 170K expected) and ISM Services (54.4 actual v. 57.2 expected) missed. Construction spending, factory orders, nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, and average workweek were all delayed due to the government shutdown.
This week's selling produced a modest rise in yields with the long end seeing a 6 bp advance. The 10-yr yield tacked on 5 bps to finish Friday's session at 2.652%. The benchmark yield tested 2.600% support several times over the course of the week, but that area held strong as sellers defended the level. Interestingly, it was the 1-month bill yield that saw the biggest jump as traders began to price in the possibility of a default. The yield ended the week up 9 bps at 0.110% after hitting a high of 0.190%. Selling swung the yield curve steeper as the 2-10-yr spread widened to 232.5 bps. Elsewhere, precious metals ended the week mixed as gold fell $30 to $1309 and silver held steady near $21.70. Monday's data is limited to consumer credit (15).
On other news....
Currencies
Dollar
Retakes 80.00: 10-yr: -10/32..2.652%..USD/JPY: 97.42..EUR/USD: 1.3554
The
Dollar Index trades on session highs near 80.15 and remains on track to end its
five-day skid. Today's advance has lifted the Index off its worst level in
eight months, and has action nearing a test of near-term resistance in the
80.30 area. Click here to see a
daily Dollar Index chart.
·
EURUSD is -70 pips at 1.3550 as trade slips off its best levels since the
beginning of February. Today's weakness has the single currency probing support
that has held up over the past two weeks or so, and comes after four straight
days of gains.
·
GBPUSD is -125 pips at 1.6030 as sellers remain in control for a second
session. The two-day slide has erased close to 200 pips, and comes amid a
recent slowdown in data out of the UK. A breakdown of the 1.6000 level sets up
a test of 1.5700 support that is aided by the 50-day moving average.
·
USDCHF is +85 pips at .9075 as trade rallies off 19-month lows.
Today's bid has erased a week worth of losses, and has action nearing .9100
resistance. Look for a test of .9250 resistance, which is helped by the 50-day
moving average, if bulls are able to retake that level. On Monday, Swiss data
is limited to foreign currency reserves.
·
USDJPY is +25 pips at 97.45 as trade has reversed into the green after
holding the 97.00 area. Overnight, the Bank of Japan opted to hold
policy unchanged, deciding to let the recent action work its way through
the system. Resistance comes into play near 98.00.
·
AUDUSD is +40 pips at .9430 as bulls are in control for the fourth time
in five days. Traders continue to eye the .9500 region as a breakout sets up a
potential test of the 200-day moving average (.9810). Australian banks are
closed Monday for Labor Day.
·
USDCAD is -25 pips at 1.0300 as trade slides for a third session. Today's
weakness comes despite the disappointing Ivey PMI (51.9 actual
v. 52.6 expected, 51.0 previous) as sellers continued to defend resistance in
the area. Canada's building permits will cross the wires on Monday.
Weekly Analysis
Week 38
Technical Updates
Briefing's Commentaries
Week in Review: Stocks Chop as Federal Government Shuts
The S&P 500 fell 0.6% on Monday as political uncertainty in Washington caused participants to reduce their risk exposure. In Washington, the federal government headed for a midnight shutdown following a game of political ping pong between the House of Representatives and the Senate. The two legislative bodies spent the day exchanging competing bill proposals with the House seeking to make changes to Obamacare while the Senate refused to engage in debate that would jeopardize funding for the health care law. All ten sectors settled in the red with consumer staples (-1.1%) leading to the downside. Meanwhile, other countercyclical groups ended mixed. Health care (-0.3%) and utilities (-0.1%) outperformed while telecom services (-0.6%) finished in-line.
Tuesday's session saw the S&P 500 start the fourth quarter on an upbeat note, climbing 0.8%. Stocks made the bulk of their advance during the opening 90 minutes before spending most of the afternoon near their highs. Late afternoon trade saw some profit-taking, but a final-minute surge sent the indices back to their highs as equities appeared unconcerned with the first day of the government shutdown. All ten sectors posted gains as equities drew strength from typical start-of-quarter inflows. The Nasdaq was the top performing index of the third quarter (+10.8%) and its relative strength continued into the first session of Q4. The index advanced 1.2% with support from its largest component. Apple (AAPL 483.03, -0.38) rose 2.4% after activist investor Carl Icahn said, in a tweet, that he pushed for a $150 billion buyback during his dinner meeting with Chief Executive Officer Tim Cook.
On Wednesday, the S&P 500 shed 0.1% after spending most of the session in a steady climb off its opening low. Sellers were in control early on, but gave way to dip buyers after headlines indicated President Obama would meet with Congressional leaders at the White House in the evening in hopes of bridging some of the gaps that are preventing a budget agreement from being reached. Six of ten sectors finished in the red with energy (+0.3%) ending in the lead as crude oil advanced 1.8% to $103.89 per barrel.
The S&P 500 fell 0.9% on Thursday as the government shutdown continued for the third day without any strong indications a resolution to the stalemate may be on the horizon. Even though stocks appeared largely unconcerned during the first two days of the shutdown, the Thursday session featured a reminder from the Treasury, saying the consequences of a default could be worse than the events of 2008. Equities retreated throughout the morning before finding support in the early afternoon following an article in The New York Times indicating Speaker of the House John Boehner told Republicans he would not allow a default to take place. The story was followed by a statement from the Speaker's office, which said this has always been Mr. Boehner's stance.
Next Week In View
Monday
·
Westlake Securities New Frontiers in Energy Conference
o Scheduled to
appear: LEI, MILL, EXXI, RNET, GEOS, EPL, IO, HERO, TGE, MIND
·
GTEC 2013: Canada's Government Technology Event
o Scheduled to
appear: TU, ACN, SAP, CA, FIO, IBM, DELL, ACN, CRM, CSCO, BBRY, SAP, CSCO,
MSFT, DELL, VMW
·
2013 Akamai Edge Conference
o Scheduled to
appear: AKAM, VZ, RL, ADSK, FDX, TD, INTC, EBAY, IBM, QCOM, IBM
Tuesday
·
12th Annual BIO Investor Forum
o Scheduled to
appear: CPRX, GALE, PTN, INO, ZIOP, MSTX, OXGN, CNAT, OMED, HZNP, IMNP.PK,
NBS
·
2013 Distributed Sun Solar Network Summit
o Scheduled to
appear: PCG, GE, C, MOS, SUNE, HASI
·
BoJ Meeting Minutes at 18:50
Wednesday
·
Nike (NKE) Analyst Day
·
Fed's Evans to speak at 10:00
·
Hewlett-Packard (HPQ) Analyst Meeting
·
FOMC Minutes at 14:00
Thursday
·
BoE Rate Decision at 7:00
·
Fed's Bullard at 9:45
·
Fed's George at 18:30
Friday
·
American College of Gastroenterology 2013 Annual Scientific
Meeting and Postgraduate Course
o Scheduled to
appear: NPSP
Economic Commentaries
Economic Data Summary:
·
This September Employment Situation Report was not released today
due to ongoing Government shutdown
Fed/Treasury Events
Summary:
·
House Speaker Boehner said issue right now is the CR; all they are
asking for is an appointment of conferees; reiterates goal is not to shut down
government; does not believe we should default on debt
·
NY Fed's Dudley (voter, dove) does not comment on economy or
momentary policy in his speech today.
·
Minneapolis Fed's Kocherlakota (2014 voter, dove) said that QE cut
is not warranted amid slow job growth; says QE buffer against government
shutdown
Upcoming Economic Data:
·
August Consumer Credit due out Monday at 15:00 (Briefing.com
consensus of ; July was $10.4 bln)
Other International
Events of Interest
·
The Bank of Japan maintained its policy stance, leaving its key
interest rate unchanged at 0-0.1%.
Jason's Commentaries
One week after the US Government shutdown... and there's no resolution to the political standoff. Obama refused to negotiate with the republicans over debt ceiling, Republicans insisting to scarp Obamacare and John Boehner wants to bypass the Republicans to raise the debt ceiling... what a mess in the politics right now. Now the whole world is watching the US government whether they will be defaulting on their debt which will have a huge impact in the economy.
The market managed to gain a decent 0.5% on Friday, after a huge drop on Thursday. Volumes were weak at 570m shares traded on the NYSE. The bulls had an easy time to push the market up with such weak volumes. Materials, Energy and Healthcare were the strongest leaders in the market on Friday. On the technical perspective, we're having a very volatile period right now, where the range is above 50points for the past few days already. If the range gets too wide, we're likely to break out in a massive fashion... Just awaiting the economic catalyst. On the open of Monday, the futures is already down 1% at 630am ET. That is quite a huge drop from the closing on Friday. With no significant progress in the US shutdown, people are getting nervous about the possible default that might happen. If you're in the market, stay safe... For those who are not in the market, stay tune to the market and enjoy the volatility. Seems like a very red day in the market on Monday.
Market Call: DOWN
Date: 7 Oct 2013
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