5 Nov 2013 AMC - Market staged a huge reversal after bearish start to the day
Market Summary
European
markets are now closed; stock markets across Europe performed as follows:
·
UK's FTSE: -0.3%
·
Germany's DAX: -0.3%
·
France's CAC: -0.8%
·
Spain's IBEX: -0.8%
·
Portugal's PSI: + 0.3%
·
Italy's MIB Index: -1.1%
·
Irish Ovrl Index: + 0.5%
·
Greece ATHEX Composite: -2.1%
S&P futures vs fair value:
-6.50. Nasdaq futures vs fair value: -11.50.
The S&P 500 futures are lower by 0.4%.
Markets across Asia ended mixed amid a rather uneventful trade. China's Shanghai Composite (+0.4%) ticked higher and Hong Kong's Hang Seng (-0.7%) fell amid a cautious session as hawkish comments from Chinese Premier Li Keqiang have investors wary ahead of this weekend's meeting between Chinese leaders as they look to map out a course for the world's second largest economy. Elsewhere, Japan's Nikkei (+0.2%) eked out a gain following comments from Bank of Japan head Haruhiko Kuroda reiterating the world's third largest economy will met its inflation target, and that more stimulus is readily available if needed. Also making news was the Reserve Bank of Australia, which opted to keep its Cash Rate unchanged at 2.50%, as expected. Notable was a statement from RBA Governor Glenn Stevens suggesting, "The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to needed to achieve balanced growth in the economy." Notable data was limited to China's HSBC Services PMI, which rose to 52.6 from 52.4.
The S&P 500 futures are lower by 0.4%.
Markets across Asia ended mixed amid a rather uneventful trade. China's Shanghai Composite (+0.4%) ticked higher and Hong Kong's Hang Seng (-0.7%) fell amid a cautious session as hawkish comments from Chinese Premier Li Keqiang have investors wary ahead of this weekend's meeting between Chinese leaders as they look to map out a course for the world's second largest economy. Elsewhere, Japan's Nikkei (+0.2%) eked out a gain following comments from Bank of Japan head Haruhiko Kuroda reiterating the world's third largest economy will met its inflation target, and that more stimulus is readily available if needed. Also making news was the Reserve Bank of Australia, which opted to keep its Cash Rate unchanged at 2.50%, as expected. Notable was a statement from RBA Governor Glenn Stevens suggesting, "The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to needed to achieve balanced growth in the economy." Notable data was limited to China's HSBC Services PMI, which rose to 52.6 from 52.4.
·
In Japan, the Nikkei closed +0.2% as trade halted its two-day skid. Nissan
Motor was a notable laggard, plunging 10.4% after issuing disappointing
guidance. Yahoo Japan finished among the leaders, posting an 8.7%
advance.
·
Hong Kong's Hang Seng shed 0.7% as sellers remained in control for a second
session. Property stocks were hit as Cheung Kong lost 1.9% and China Overseas
Land fell 1.3%. Energy plays Cnooc and China Shenhua Energy were among just a
handful of names to end in the green, tacking on 0.5% and 0.2%,
respectively.
·
In China, the Shanghai Composite added 0.4% as agricultural stocks led on
speculation more reform was coming to the space. Heilongjiang Agriculture and
Zhongken Agriculture both surged the limit, 10%.
Major European indices trade broadly
lower with Italy's MIB (-1.2%) and Spain's IBEX (-1.1%) leading to the downside
after the European Commission lowered its 2014 growth forecast to 1.1% from
1.2%. Core European bonds are on the defensive along with equities. Germany's
10-yr yield is higher by one basis point at 1.71% and the French 10-yr yield
has added three basis points to 2.18%. Among news of note, Italian Finance
Minister Fabrizio Saccomanni said a strong euro presents a risk to the
recovery, but he is not seeing any risk of deflation in the eurozone. However,
European Commissioner Olli Rehn offered some pushback, saying the euro
currently reflects its economic fundamentals. Economic data was limited.
Eurozone PPI ticked up 0.1% month-over-month (0.2% expected, 0.0% last) while
the year-over-year reading reflected a decline of 0.9% (-0.7% forecast, -0.8%
prior). Great Britain's Services PMI jumped to 62.5 from 60.3 (59.8 forecast).
Swiss CPI ticked down 0.1% month-over-month (0.1% consensus, 0.3% last) while
the year-over-year reading slipped 0.3% (-0.2% expected, -0.1% prior).
·
In Germany, the DAX is lower by 0.6% as exporters lag. BMW and Daimler hold
respective losses of 3.8% and 1.5%. Utilities have displayed relative strength
as E.ON and RWE both trade with gains near 1.0%.
·
Great Britain's FTSE sports a loss of 0.6% with financials showing relative
weakness. RSA Insurance Group has tumbled 6.7% after estimating large losses
related to recent wind damage in Europe and Canada. Meanwhile, Barclays and Royal
Bank of Scotland trade with losses close to 2.5% apiece.
·
In France, the CAC trades down 0.9%. Orange leads to the downside with a
loss of 4.4% after Bouygues launched a competing service package. EADS
outperforms with a gain of 1.2%.
·
Markets in Italy and Spain are
under pressure as banks weigh. In Italy, Banco Popolare is lower by 2.5% while
Spain's IBEX is pressured by Banco Popular Espanol (-3.3%) and CaixaBank
(-2.0%).
Market Internals
The Nasdaq closed up 3 (+0.08%) at 3940, the Dow closed down 21 (-0.13%) at 15618, and the S&P 500 closed down 5 (-0.28%) at 1763. Action came on slightly above average volume (NYSE 741 mln vs. avg. of 724; NASDAQ 1858 mln vs. avg. of 1719), with decliners outpacing advancers (NYSE 999/2098, NASDAQ 1076/1470) and new highs outpacing new lows (NYSE 134/32, NASDAQ 122/43).
Relative Strength:
Cocoa-NIB +3.24%, Natural Gas-UNG +0.99%, Copper Miners-COPX +0.93%, Clean Energy-PBW +0.89%, New Zealand-ENZL +0.88%, Biotechnology-IBB +0.7%, British Pound-FXB +0.43%, Egypt-EGPT +0.2%, Australia-EWA +0.11%, Japanese Yen-FXY +0.08%.
Relative Weakness:
Turkey-TUR -3.56%, Mexico-EWW -3.19%, Latin America 40-ILF -2.77%, South Africa-EZA -2.36%, Peru-EPU -2.14%, Oil and Gas Exploration-XOP -2.08%, Realty Majors-ICF -1.85%, Junior Gold Miners-GDXJ -1.64%, U.S. Home Construction-ITB -1.64%, Real Estate-IYR -1.51%.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing Market Summary: Stocks End
Mixed While Treasuries Slump
The major averages ended on a mixed note as the S&P 500 shed 0.3% while the Nasdaq added 0.1%.
Equities spent the entire session climbing off their early lows after weakness in Europe set the stage for a lower open. European indices hovered near their worst levels of the day at the outset of the U.S. session after the European Commission lowered its 2014 GDP forecast for the region to 1.1% from 1.2%. Similar to equities, core EU bonds also sold off as Germany's 10-yr yield added four basis points to 1.74% while the French 10-yr yield rose six basis points to 2.21%.
Although stocks began the U.S. session in negative territory, the buy-the-dip trade was at work once again, fueling a day-long rebound. The tech-heavy Nasdaq was able to eke out a modest gain thanks to the outperformance of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 207.11, +1.44) rose 0.7%, extending its year-to-date advance to 51.1%. Meanwhile, the traditional tech sector ended just below its flat line.
While most groups were able to rebound from their early lows, energy (-0.8%), financials (-0.5%), utilities (-0.8%), and telecom services (-1.9%) were not as fortunate.
The energy sector was pressured by crude oil, which slid 1.3% to $93.40 per barrel. Meanwhile, the financial space underperformed for the second consecutive day, trimming its quarter-to-date advance to 3.0%. Although the sector continues to hold a solid gain for the quarter, the remaining nine groups have all had a better showing since the start of October.
Only one other cyclical sector, consumer discretionary, ended north of its flat line. The group posted a razor-thin advance of 0.01% as quick-service restaurants masked broad losses among homebuilders. Restaurant names rallied in reaction to better-than-expected earnings from Red Robin Gourmet Burgers (RRGB 84.20, +7.44) while the iShares Dow Jones US Home Construction (ITB 22.20, -0.37) lost 1.6% as the increase in rates weighed.
Treasuries sold off during morning trade before regaining a small portion of their losses in the afternoon. The benchmark 10-yr yield rose six basis points to 2.67%, its highest since October 16.
Trading volume was just above average as 741 million shares changed hands on the floor of the New York Stock Exchange.
Today's data was limited to the October ISM Services Index, which climbed to 55.4 from 54.4 (54.0 Briefing.com consensus). The strength in the services sector is not a surprise. Recent employment reports have shown an uptick in services hiring; moreover, October marks the 46th consecutive month in which economic activity in the non-manufacturing sector has expanded.
Business activity strengthened in October, with the series index rising to 59.7 from 55.1. The new orders index showed continued expansion with a print of 56.8, yet that was the second straight month in which new orders activity decelerated. The aforementioned index was at 60.5 in August and 59.6 in September.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and September Leading Indicators will cross the wires at 10:00 ET.
The major averages ended on a mixed note as the S&P 500 shed 0.3% while the Nasdaq added 0.1%.
Equities spent the entire session climbing off their early lows after weakness in Europe set the stage for a lower open. European indices hovered near their worst levels of the day at the outset of the U.S. session after the European Commission lowered its 2014 GDP forecast for the region to 1.1% from 1.2%. Similar to equities, core EU bonds also sold off as Germany's 10-yr yield added four basis points to 1.74% while the French 10-yr yield rose six basis points to 2.21%.
Although stocks began the U.S. session in negative territory, the buy-the-dip trade was at work once again, fueling a day-long rebound. The tech-heavy Nasdaq was able to eke out a modest gain thanks to the outperformance of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 207.11, +1.44) rose 0.7%, extending its year-to-date advance to 51.1%. Meanwhile, the traditional tech sector ended just below its flat line.
While most groups were able to rebound from their early lows, energy (-0.8%), financials (-0.5%), utilities (-0.8%), and telecom services (-1.9%) were not as fortunate.
The energy sector was pressured by crude oil, which slid 1.3% to $93.40 per barrel. Meanwhile, the financial space underperformed for the second consecutive day, trimming its quarter-to-date advance to 3.0%. Although the sector continues to hold a solid gain for the quarter, the remaining nine groups have all had a better showing since the start of October.
Only one other cyclical sector, consumer discretionary, ended north of its flat line. The group posted a razor-thin advance of 0.01% as quick-service restaurants masked broad losses among homebuilders. Restaurant names rallied in reaction to better-than-expected earnings from Red Robin Gourmet Burgers (RRGB 84.20, +7.44) while the iShares Dow Jones US Home Construction (ITB 22.20, -0.37) lost 1.6% as the increase in rates weighed.
Treasuries sold off during morning trade before regaining a small portion of their losses in the afternoon. The benchmark 10-yr yield rose six basis points to 2.67%, its highest since October 16.
Trading volume was just above average as 741 million shares changed hands on the floor of the New York Stock Exchange.
Today's data was limited to the October ISM Services Index, which climbed to 55.4 from 54.4 (54.0 Briefing.com consensus). The strength in the services sector is not a surprise. Recent employment reports have shown an uptick in services hiring; moreover, October marks the 46th consecutive month in which economic activity in the non-manufacturing sector has expanded.
Business activity strengthened in October, with the series index rising to 59.7 from 55.1. The new orders index showed continued expansion with a print of 56.8, yet that was the second straight month in which new orders activity decelerated. The aforementioned index was at 60.5 in August and 59.6 in September.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET and September Leading Indicators will cross the wires at 10:00 ET.
·
Nasdaq +30.5% YTD
·
Russell 2000 +29.9% YTD
·
S&P 500 +23.6% YTD
·
DJIA +19.2% YTD
Commodities
Closing Commodities: Crude Oil Falls
1.3%, Precious Metals End Lower
·
A stronger dollar index following better-than-anticipated Oct ISM
Services data put pressure on precious metals and crude oil. The ISM Services
reading for Oct was 55.4, which was above the Briefing.com consensus estimate
of 54.0, and ahead of the 54.4 reading for Sept
·
Dec gold slipped to a session low of $1305.20 per ounce in morning
floor trade after trading as high as $1317.90 per ounce earlier in the session.
Unable to erase much of the loss, it settled 0.5% lower at $1308.10 per ounce
·
Dec silver also fell into negative territory, extending losses for
a fourth consecutive session. It brushed a session low of $21.60 per ounce and
eventually settled with a 0.3% loss at $21.64 per ounce
·
Dec crude oil fell deeper into negative territory after pulling
back from a session high of $94.30 per barrel. It touched a session low of
$93.07 per barrel and settled with a 1.3% loss at $93.40 per barrel
·
Dec natural gas, on the other hand, trended higher today. It
lifted from its session low of $3.40 per MMBtu set at pit trade open and broke
into positive territory by late morning action. It settled 0.6% higher at $3.47
per MMBtu.
NYMEX
Energy Closing Prices
Dec crude oil fell $1.19 to $93.40/barrel
·
Crude oil fell deeper into negative territory as the dollar index
traded higher. The energy component pulled back from its session high of $94.30
and touched a session low of $93.07. It eventually settled with a 1.3%
loss.
Dec natural gas rose 2 cents to $3.47/MMBtu
·
Natural gas, on the other hand, trended higher today. It lifted
from its session low of $3.40 set at pit trade open and broke into positive
territory by late morning action. It settled slightly below its session high of
$3.49, booking a gain of 0.6%.
Dec heating oil fell 2 cents to $2.86/gallon
Dec
RBOB gasoline fell 1 cent to $2.52/gallon
CBOT
Agriculture and Ethanol/ICE Sugar Closing Prices
·
Dec corn settled unchanged at $4.26/bushel
·
Dec wheat fell 6 cents to $6.57/bushel
·
Jan soybeans fell 5 cents to $12.51/bushel
·
Dec ethanol fell 2 cents to $1.62/gallon
·
Jan sugar (#16 (U.S.)) fell 0.02 of a penny to 21.58 cents/lbs
COMEX Metals Closing Prices
Dec gold fell $6.60 to $1308.10/ounce
·
Gold fell today as the dollar index gained strength on
better-than-anticipated Oct ISM Services data. The ISM Services reading for Oct
was 55.4, which was above the Briefing.com consensus estimate of 54.0, and
ahead of the 54.4 reading for Sep. The yellow metal slipped to a session low of
$1305.20 in morning floor trade after trading as high as $1317.90 earlier in
the session. Unable to erase much of the loss, it settled 0.5% lower.
Dec silver fell $0.06 to $21.64/ounce
·
Silver also fell into negative territory, extending losses for a
fourth consecutive session. It brushed a session low of $21.60 and eventually
settled with a 0.3% loss.
Dec
copper rose 1 cent to $3.26/lbs
Treasuries
Treasuries Slump to Three-Week Lows:
10-yr: -16/32..2.659%..USD/JPY: 98.55..EUR/USD: 1.3472
Treasuries Slump to Three-Week Lows:
·
Treasuries saw moderate selling pressure run yields to their
highest levels in three weeks.
·
The complex hovered little changed throughout the overnight
session and early on in U.S. trade before sliding to fresh lows ahead of this
morning's ISM Services beat (55.4 actual v. 54.0
expected).
·
Sellers managed to provoke a final leg lower following the data
before a choppy session enveloped afternoon trade.
·
A +2.9bp gain to 1.380% in the 5y erased the October 16/17 gap and
has action testing resistance at the level. Treasury bulls should see some
additional help as both the 50 and 100 dma aid resistance in the
vicinity.
·
The 10y rallied +6bps to finish @ 2.662%, reclaiming the 100 dma
while also closing the October 16/17 gap. The 2.700% area will be of interest
over the coming days as resistance there is helped by the 50 dma.
·
The long bond led to the downside as a -1 04/32 loss provoked a
+6.7bp advance to 3.758%. The selling ran the 30y back above its 50 dma
(3.727%), and has action testing trendline resistance off the August
highs. Click here to see an
intraday yields chart.
·
Selling swung the yield curve steeper as the spread between 2s and
10s widened to 235.5bps.
·
Precious metals ended mixed with gold -$4 @ $1311 and silver
unchanged near $21.70.
·
Data: MBA Mortgage Index (7) and leading indicators (10)
·
Fed Speak: Cleveland's Pianalto will be in Columbus, OH to discuss
housing and the economy (13:10).
Next Day In View
Economic Commentary
Economic Summary: ISM Services tops
expectations; Leading Indicators due out tomorrow at 10:00
Economic Data Summary:
Economic Data Summary:
·
October ISM Services 55.4 vs Briefing.com consensus of 54.0;
September was 54.4
o The strength in the
services sector is not a surprise. Recent employment reports have shown an
uptick in services hiring; moreover, October marks the 46th consecutive month
in which economic activity in the non-manufacturing sector has expanded.
Upcoming Economic Data:
·
Weekly MBA Mortgage Applications due out Wednesday at 7:00
(Briefing.com consensus of ; Last Week was 6.4%)
·
September Leading Indicators due out Wednesday at 10:00
(Briefing.com consensus of 0.6%; August was 0.7%)
Upcoming Fed/Treasury Events:
·
Richmond Fed President Jeffrey Lacker (not a voting FOMC member,
typically hawkish) to speak today at 13:15
·
San Francisco Fed President John Williams (not a voting FOMC
member, typically moderate) to speak today at 17:10
·
Cleveland Fed President Sandra Pianalto (will step down in 2013,
typically dovish) to speak tomorrow at 13:10
Other International Events of
Interest
·
The People's Bank of China moved to alleviate the ongoing
liquidity crunch by conducting its third consecutive liquidity injection in the
amount of CNY8 billion. The one-week Shanghai Interbank Offered Rate fell 19
basis points to 4.23%, but longer-term rates rose with the two-week rate
climbing almost six basis points to 4.56%.
·
The Reserve Bank of Australia left its key interest rate unchanged
at 2.5%, as expected. Separately, the AIG Services Index rose to 47.9 from
47.1.
·
China's HSBC Services PMI ticked up to 52.6 from 52.4.
On other news....
Currencies
Dollar Fights for Best Close in 1.5
Months: 10-yr: -15/32..2.659%..USD/JPY: 98.57..EUR/USD: 1.3472
The Dollar Index hovers near 80.70 as action has been confined to a tight range for much of the U.S. session. The Index held little changed near 80.55 ahead of this morning's ISM Services data before a strong reading sparked a test of the 80.80 area. Click here to see a daily Dollar Index chart.
The Dollar Index hovers near 80.70 as action has been confined to a tight range for much of the U.S. session. The Index held little changed near 80.55 ahead of this morning's ISM Services data before a strong reading sparked a test of the 80.80 area. Click here to see a daily Dollar Index chart.
·
EURUSD is -40 pips at 1.3475 as trade pushes lower for the sixth time in
seven days. Continued chatter regarding a possible ECB rate cut at
Thursday's meeting has led to selling pressure on the single currency,
but so far action has been able to hold support in the area helped by the 50
dma. Eurozone data is heavy tomorrow as retail sales and German factory orders
accompany Services PMI data from the region.
·
GBPUSD is +80 pips at 1.6050 after today's Services PMI report
posted the strongest reading in 16 years. The bid has lifted sterling
off its 50 dma, and has action testing resistance in the 1.6050 area. A move
through that level sets up a retest of 1.6150 resistance. Britain's
manufacturing production and NIESR GDP Estimate will cross the wires
tomorrow.
·
USDCHF is +30 pips at .9125 as action continues to probe the 50 dma. A
cooler than expected Swiss CPI report sparked today's advance, which has run
the pair higher for the fifth time in six days and has trade looking to retake
key .9200 resistance.
·
USDJPY is -5 pips at 98.55 as another sleepy session nears the close.
Early selling pushed trade to a low of 98.15, but steady buying over the course
of the session has trade back near the highs. Many are opting to remain
on the sidelines until the 97.00/99.00 range is broken. The latest
Bank of Japan monetary policy meeting minutes will be released this
evening.
·
AUDUSD is -15 pips at .9495 as sellers have retaken control following the
early bid. The hard currency managed to hit a session high of nearly .9540
after the Reserve Bank of Australia kept policy on hold, but
sellers began to emerge after RBA Governor Glenn Stevens insisted the
Aussie was ‘uncomfortably high.' Support in the .9400 area is helped
by the 50 dma.
·
USDCAD is +30 pips at 1.0455 as buyers are in control for a second
session. The 1.0480/1.0500 region is setting up as key resistance ahead of
tomorrow's Ivey PMI and building permits data.
Jason's Commentaries
Market started with huge bearish bias with futures down more than 0.4% right at the start. However, after the first 15mins of the opening bell, the market quickly found a bottom and staged a reversal since then. Volumes were slightly higher than average at 741m shares traded on the NYSE. Internals were pointing towards bearish side. Such divergence is pretty common ahead of the employment report. We're going to be have a sideways and volatile market before the employment report out to gyrate the market. However, there's a slight chance of a pricing to happen as the employment report is expected to be bad. Futures were up by 0.4% by 4am ET and i'll be expecting some sideways to upside to happen today.
Market Call: FLAT to upside
Date: 6 Nov 2013
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