Wednesday 12 March 2014

12 March 2014 AMC- Market went through a very volatile session after bearish start


12 March 2014 AMC- Market went through a very volatile session after bearish start
Market Summary 




European Markets Closing Prices
European markets are now closed; stock markets across Europe performed as follows:
·         UK's FTSE: -1.0%
·         Germany's DAX: -1.3%
·         France's CAC: -1.0%
·         Spain's IBEX: -0.9%
·         Portugal's PSI: -1.6%
·         Italy's MIB Index: -0.3%
·         Irish Ovrl Index: -1.1%
·         Greece ATHEX Composite: 0.0%



Before Market Opens


S&P futures vs fair value: -8.70. Nasdaq futures vs fair value: -18.30.
The S&P 500 futures have recently notched fresh lows, and now trade nine points below fair value.

Markets across Asia ended mostly lower amid ongoing concerns over the health of the Chinese economy. Elsewhere, the Bank of Thailand cut its key rate 25 basis points to 2.00%, as expected. In economic data, Japan's BSI Manufacturing Index (12.5 versus 11.3 expected) and Tertiary Industry Activity (0.9% month-over-month versus 0.7% expected) outpaced estimates while Household Confidence (38.3 versus 40.3 expected) missed. Also of note, Australia's Westpac Consumer Sentiment (-0.7%) and home loans (0.0% month-over-month versus 0.8% expected) fell short of estimates while South Korea's unemployment rate jumped to 3.9% (3.2% previous). 
·         Japan's Nikkei lost 2.6%, closing at a one-week low as the strong yen weighed. Exporters saw notable losses as Toyota fell 2.0% and Panasonic lost 2.2%. 
·         Hong Kong's Hang Seng fell 1.7% to a one-month low. Belle International led the decline, tumbling 9.4%, after announcing its first-ever decline in same store sales as a publicly traded entity. 
·         China's Shanghai Composite shed 0.2% as trade dipped back below the 2000 mark. Energy shares were a drag as Sinopec and PetroChina gave up 4.8% and 2.2%, respectively.
Major European indices hover near their lows while Italy's MIB (-0.2%) outperforms. Economic data was relatively scarce. Eurozone Industrial Production slipped 0.2% month-over-month (0.5% expected, -0.4% prior) while the year-over-year reading increased 2.1% (1.9% consensus, 1.2% last). Spain's CPI was unchanged on a monthly and annualized basis. Both readings were expected to come in at -0.1%. Also of note, French Non-Farm Payrolls ticked up 0.1%, as expected (0.1% last). 
·         In France, the CAC is lower by 1.5% with exporter Renault leading the retreat. The stock trades lower by 3.0%. Financials also lag with BNP Paribas, Credit Agricole, and Societe Generale down between 1.5% and 1.9%. Industrial equipment manufacture Alstom is the lone advancer, trading higher by 2.3%. 
·         Germany's DAX holds a loss of 1.4%. Similar to France, carmakers and financials lag. BMW, Daimler, Commerzbank, and Deutsche Bank are all down between 1.7% and 2.3%. Defensive names outperform with E.On and Deutsche Telekon both up 0.5%. 
·         Great Britain's FTSE trades down 1.1%. Consumer names G4S and British American Tobacco hold respective losses of 6.9% and 3.3% while insurer Prudential outperforms with a gain of 2.6% after beating on earnings and hiking its dividend. 
·         Italy's MIB outperforms with a loss of 0.2% as it hovers just below its 2014 high. Financials lead with Banca di Milano Scarl, BMPS, and Unicredit up 6.6%, 5.0%, and 0.9%, respectively.



Asia

·         Markets across Asia ended mostly lower amid ongoing concerns over the health of the Chinese economy
·         The Bank of Thailand cut its key rate 25bps to 2.00%, as expected
·         Japan's BSI Manufacturing Index (12.5 actual v. 11.3 expected, 9.7 previous) and tertiary industry activity (0.9% MoM actual v. 0.7% MoM expected) outpaced estimates
·         Australia's Westpac Consumer Sentiment (-0.7%) and home loans (0.0% MoM actual v. 0.8% MoM expected) fell short of estimates
·         South Korea's unemployment rate jumped to 3.9% (3.2% previous)
·         Japan's Nikkei (-2.6%) closed at a one-week low as the strong yen weighed
·         Hong Kong's Hang Seng (-1.7%) fell to a one-month low
·         China's Shanghai Composite (-0.2%) dipped back below the 2000 mark
·         India's Sensex (+0.2%) remains just off record highs
·         Australia's ASX (-0.6%) rallied into the close, halving its losses



Market Internals





Market Internals -Technical-
The Nasdaq closed up 16 (+0.37%) at 4323, the S&P 500 closed up 1 (+0.03%) at 1868, and the Dow closed down 11 (-0.07%) at 16340. Action came on near average volume (NYSE 646 mln vs. avg. of 700; NASDAQ 1999 mln vs. avg. of 1968), with advancers outpacing decliners (NYSE 1807/1318, NASDAQ 1468/1144) and new highs outpacing new lows (NYSE 54/44, NASDAQ 54/16).

Relative Strength: 
Junior Gold Miners-GDXJ +3.94%, Silver Miners-SIL +2.94%, Turkey-TUR +2.1%, Utilities-XLU +1.26%, Taiwan-EWT +1.14%, Semiconductors-SMH +1.11%, Metals and Mining-XME +1.01%, South Africa-EZA +0.94%, Middle East and Africa-GAF +0.92%, India-INP +0.9%.

Relative Weakness: 
Sugar-SGG -3.63%, Cocoa-NIB -2.09%, Natural Gas-UNG -1.89%, Russia-RSX -1.65%, Lithium-LIT -1.63%, Eastern Europe-ESR -1.62%, Oil-USO -1.28%, Austria-EWO -1.28%, Japan-EWJ -0.96%, Vietnam-VNM -0.9%.






Leaders and Laggards









Technical Updates









Briefing's Commentaries 


Closing Market Summary: Stocks End Little Changed Despite Cautious Start
The major averages ended the Wednesday session on a mixed note. The Nasdaq (+0.4%) and Russell 2000 (+0.3%) posted modest gains while the Dow Jones Industrial Average (-0.1%) finished in the red. For its part, the S&P 500 (+0.03%) settled just above its flat line.

Stocks began the day in the red, but spent the first two hours of action in a steady climb off their lows. The cautious start took place amid broad-based weakness across major European markets where Germany's DAX, Great Britain's FTSE, and France's CAC all posted losses close to 1.0% apiece.

In addition to the weakness in Europe, losses among major Asian indices also weighed on the early sentiment. On that note, markets in Japan, South Korea, and Hong Kong fell 2.6%, 1.7%, and 1.7%, respectively, while China's Shanghai Composite (-0.2%) outperformed.

Even though China was an area of relative strength, jitters regarding the health of the country's financial system remained palpable. Copper futures continued yesterday's tumble overnight, but were able to regain those losses in the morning. The red metal added one cent, ending at $2.961/lb.

Although copper did not send the same warning signal as yesterday, gold futures and Treasuries reflected a measure of caution. Gold jumped 1.8% to $1370.60/ozt while Treasuries climbed steadily, ending on their highs. Bolstered by a solid 10-yr reopening, the benchmark note added 14 ticks, sending its yield lower by five basis points to 2.72%. The retreat in Treasury yields, gave a boost to the rate-sensitive utilities sector (+1.3%), which was the top performer among the 10 sectors.

Six of ten groups ended in the red while technology (+0.2%), energy (+0.04%), and consumer staples (+0.1%) fared a bit better than the broader market.

Technology drew strength from chipmakers (PHLX Semiconductor Index +0.9%) while the energy sector was underpinned by Chevron (CVX 115.65, +1.14). The stock rallied 1.0% after being added to the US Focus List at Credit Suisse. The staples sector benefitted from gains among food producers.

While the broader market did not move much during afternoon action, the same could not be said for shares of Herbalife (HLF 60.57, -4.82), which fell 7.4% after the company received a Civil Investigative Demand from the Federal Trade Commission. Herbalife responded to the notice, saying they welcome the inquiry due to ‘tremendous amount of misinformation in the marketplace.'

Also of note, the daylong underperformance of three influential sectors—consumer discretionary (-0.1%), financials (-0.1%), and industrials (-0.2%)—kept the S&P 500 from pulling away from its flat line. Notably, the discretionary sector was pressured by apparel retailers after Express (EXPR 16.05, -2.19) missed on earnings and lowered its guidance well below analyst estimates. The stock plunged 12.0%.

Participation was on the light side with 646 million shares changing hands at the NYSE floor.

Another item of note that remained on the backburner, but has the potential to make a quick return to the forefront is the situation in Crimea.

This morning, Polish Prime Minister Donald Tusk and German Chancellor Angela Merkel held a joint press conference, announcing the European Union will sign parts of an association deal with Ukraine next week. In addition, Chancellor Merkel said the EU is set to impose additional sanctions on Moscow after Russian officials chose not to take part in a diplomatic contact group. This comes ahead of Sunday's referendum on Crimea joining the Russian Federation. With the referendum nearing, U.S. Secretary of State John Kerry will be in London tomorrow in hopes of meeting with Russian Foreign Minister Sergei Lavrov.

As the session drew to its close, President Obama, who met with Ukraine's acting Prime Minister Arseniy Yatseniuk in Washington, said 'We will stand with Ukraine and consider Russian incursion into Crimea against the law'

Economic data was limited to the weekly MBA Mortgage Index, which fell 2.1% to follow last week's increase of 9.4%.

Tomorrow, weekly initial claims, February retail sales, and February import/export prices will be released at 8:30 ET while January business inventories will cross the wires at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the February Treasury budget, which was originally scheduled for today. 
·         Nasdaq Composite +3.5% YTD 
·         Russell 2000 +2.7% YTD 
·         S&P 500 +1.1% YTD 
·         Dow Jones Industrial Average -1.4% YTD










Commodities





Closing Commodities: Copper Closes Below $3/Lb, WTI Crude Oil Drops 2%, Ending Below $98/Barrel
·         Precious metals traded higher today as a weaker dollar index boosted prices.Apr gold rose for a third consecutive session and climbed as high as $1371.30 per ounce in late afternoon pit trade. It settled at $1370.60 per ounce, booking a gain of 1.8%.
·         May silver came off its session low of $20.95 per ounce set moments after floor trade opened. It touched a session high of $21.43 per ounce and settled with a 2.6% gain at $21.36 per ounce.
·         Apr crude oil fell for a third consecutive session following weaker-than-anticipated inventory data. The EIA reported that for the week ending Mar 7, crude oil inventories had a build of 6.18 mln barrels when a smaller build of 2.0-2.2 mln barrels was expected. In addition, the government announced plans to sell 5 mln barrels of sour crude from the SPR to test system capabilities. The energy component dipped to a session low of $97.55 per barrel and settled at $97.99 per barrel, or 2.0% lower.
·         Apr natural gas extended yesterday's losses as it pulled back from its session high of $4.59 per MMBtu set at pit trade open. It fell as low as $4.45 per MMBtu and settled with a 2.4% loss at $4.49 per MMBtu


COMEX Metals Closing Prices

  • Apr gold rose $24.10 to $1370.60/oz 

    • Gold rose for a third consecutive session as the dollar index traded lower. The yellow metal brushed a session high of $1371.30 in late afternoon pit trade and settled just below that level, booking a gain of 1.8%. 

  • May silver rose $0.54 to $21.36/oz 
    • Silver also traded higher today as it came off its session low of $20.95 set moments after floor trade opened. It touched a session high of $21.43 and settled with a 2.6% gain.
  • May copper rose 1 cent to $2.96/lbs



  • NYMEX Energy Closing Prices
      Apr crude oil fell $2.00 to $97.99/barrel
    ·         Crude oil fell for a third consecutive session following weaker-than-anticipated inventory data. The EIA reported that for the week ending Mar 7, crude oil inventories had a build of 6.18 mln barrels when a smaller build of 2.0-2.2 mln barrels was expected. In addition, the government announced plans to sell 5 mln barrels of sour crude from the SPR to test system capabilities. The energy component dipped to a session low of $97.55 and settled with a 2.0% loss. 
      Apr natural gas fell 11 cents to $4.49/MMBtu 
    ·         Natural gas extended yesterday's losses as it pulled back from its session high of $4.59 set at pit trade open. It fell as low as $4.45 and settled with a 2.4% loss. 
      Apr heating oil fell 3 cents to $2.93/gallon 
      Apr RBOB settled unchanged at $2.96/gallon

    CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
    ·         May corn rose 5 cents to $4.89/bushel 
    ·         May wheat rose 25 cents to $6.83/bushel 
    ·         May soybeans fell 24 cents to $13.88/bushel 
    ·         Apr ethanol rose 9 cents to $2.37/gallon 
    ·         May sugar (#16 (U.S.)) rose 0.02 of a penny to 22.08 cents/lbs




    Treasuries


    Treasuries See Third Day of Gains: 10-yr: +13/32..2.719%..USD/JPY: 102.66..EUR/USD: 1.3906
    ·         Treasuries finished near their highs as money continued to flow into the complex for a third straight session. Click here to see an intraday yields chart.
    ·         An overnight bid developed as ongoing concerns over the health of the Chinese economy and uncertainty over the situation in Ukraine sparked a flight into safety. 
    ·         A morning absent of tradable data caused action to drift into the $21 bln 10y reopening. 
    ·         The solid $21 bln 10y reopening auction drew 2.729% (2.743% when issued) and a strong 2.92x bid/cover (12-auction average 2.68x). A strong direct showing (27.5%) helped offset the average indirect bid (43.4%), leaving primary dealers (29.1%) with their smallest takedown in a year.
    ·         Post-auction buying ran maturities back up to their highs, where they would spend the remainder of the session.
    ·         Longer dated yields saw the biggest impact from today's bid, sliding -4bps
    ·         The 30y pressed back below its 200 dma, ending the session @ 3.667%. The yield on the long bond has fallen in each of the past two sessions (the rest of the complex has seen three days of declines) after climbing for five straight days. 
    ·         A -4bp drop in the 10y pushed the benchmark yield down to 2.726%. Today's buying dropped action back below the 100 dma, setting up a likely retest of the 200 dma (2.671%).
    ·         The 5y lagged, ending -2.7bps @ 1.585%. The 1.575% area will be of interest over the coming days as support there is helped by the 50 dma. 
    ·         A flatter curve developed as the 2-10-yr spread narrowed to 236bps
    ·         Precious metals went off near their highs with gold +$22 @ $1369 and silver +$0.50 @ $21.31. 
    ·         Data: Initial and continuing claims, retail sales, import/export prices (8:30), business inventories (10), and the Treasury budget (14). 
    ·         Auction: $13 bln 30y bond reopening.






    Next Day In View 


    Economic Commentary


    Economic summary: Mortgage applications fall; Retail Sales tomorrow at 8:30; Stanley Fischer Nomination Hearing tomorrow at 10:00
    Economic Data Summary:
    ·         Weekly MBA Mortgage Applications -2.1% (Last Week was +9.4%)
    Upcoming Economic Data:
    ·         Februiary Treasury Budget due out today at 14:00 (Briefing.com consensus of -$195 bln; was -$203.5 bln)
    ·         Weekly Initial Cliams due out Thursday at 8:30 (Briefing.com consensus of 329K; Last Week was 323K)
    ·         Weekly Continuing Claims due out Thursday at 8:30 (Briefing.com consensus of 2.925 M ; Last Week was 2.907 M )
    ·         February Retail Sales due out Thursday at 8:30 (Briefing.com consensus of 0.2%; January was -0.4%)
    ·         February Retail Sales Ex-Auto due out Thursday at 8:30 (Briefing.com consensus of 0.2%; January was 0.0%)
    ·         February Export Prices Ex-Ag due out Thursday at 8:30 (January was 0.2%)
    ·         February Import Prices Ex-Oil due out Thursday at 8:30 (January was 0.3%)
    ·         January Business Inventories due out Thursday at 10:00 (Briefing.com consensus of 0.3%; December was 0.5%)
    Upcoming Fed/Treasury Events:
    ·         Fed Vice Chair Stanley Fischer Nomination Hearing tomorrow at 10:00
    ·         The Treasury is scheduled to auction off new debt this week. Results for each auction will be announced at 13:00
    o    Wednesday: $21 bln in 10 year notes
    o    Thursday: $13 bln in 30 year bonds

    On other news.... 






    News
    ·         Alibaba.com (ALBCF.PK) has purchased stake in ChinaVision for $804 mln, which will provide it with movie and TV content
    ·         Apple (AAPL) plans to open small stores in India, according to reports
    ·         Apple (AAPL) has appealed decision by Court to reject Samsung (SSNLF) sales ban, according to report
    ·         Archer-Daniels (ADM) announced plans to construct a soy protein production complex in Campo Grande, Mato Grosso do Sul, Brazil, representing an investment of ~US$250 MLN
    ·         Venturebeat has indicated that reports that Facebook's (FB) Sandberg will join Disney (DIS) are false
    ·         Pfizer (PFE) presents detailed results from Landmark Community-Acquired Pneumonia Immunization Trial in Adults (CAPiTA) evaluating efficacy of Prevenar 13; study findings demonstrate that Prevenar 13 can prevent vaccine-type community-acquired pneumonia
    ·         Toyota Motor (TM) to give Japan workers 0.8% increase in monthly pay, according to reports
    ·         Reuters reporting in Press Digest column that Macau will not increase casino licenses






    Northrop Grumman awarded a $750 mln Missile Defense Agency in-scope contract modification(122.42 +0.65)
    Co was awarded A $750,000,000 in-scope contract modification to previously awarded indefinite-delivery/indefinite-quantity contract to increase the estimated contract maximum from $2,500,000,000 to $3,250,000,000. The contract remains a ten (10) year contract with an ordering period from Nov. 21, 2005 through Nov. 21, 2015. The contract is a hybrid omnibus contract performing predominantly research, development, test and evaluation services for the development of the Ballistic Missile Defense System's Command, Control, Battle Management, and Communications; the support infrastructure including all information technology; facilities; ground and flight test; warfighter wargames and exercises; modeling and simulation; several operational cells including the Ballistic Missile Defense Network Operations and Security Center, the Joint Functional Command Component for Integrated Missile Defense, and the 100th Missile Defense Brigade.



    Currencies 




    Dollar Readies for Lowest Close Since Late-October: 10-yr: +12/32..2.725%..USD/JPY: 102.65..EUR/USD: 1.33904
    ·         The Dollar Index holds on session lows near 79.55 as selling persists for a second session. Click here to see a daily Dollar Index chart.
    ·         Today's weakness has pushed the Index below 79.80 support, and has action on track for its lowest close since late-October
    ·         EURUSD is +45 pips @ 1.3905 as trade readies for its best close since October 2011. The single currency has seen a bid develop during U.S. trade as risk assets have recovered the majority of their early losses. Trade has ignored today's disappointing industrial production data as a steady bid has been in place since the miss. 
    ·         GBPUSD is -5 pips @ 1.6610 as trade continues to fight to regain the flat line. Sterling has broke key 1.6600 support amid this morning's weakness, but has regained the level as traders move into riskier assets. 
    ·         USDCHF is -35 pips @ .8745 as trade remains on track to post its lowest close since November 2011. Data and news remain absent on the Swiss calendar, causing traders to take their cues from the action occurring in the euro. 
    ·         USDJPY is -25 pips @ 102.70 as sellers remain in control for a second session. The 102.50 level will be under the microscope in the coming days as some decent support rests in the vicinity. Japanese data is limited to core machinery orders. 
    ·         AUDUSD is +5 pips @ .8980 as action hovers near the best levels of the session. The hard currency traded all the way down to .8925 as worries over the health of the Chinese economy linger, but action bounced off the 50 dma as buyers stepped in to defend the key level. Australian data is heavy as MI Inflation Expectations accompany employment change and the unemployment rate. China's industrial production and fixed asset investment will cross the wires tonight. 
    ·         USDCAD is +10 pips @ 1.1115 amid a quiet day for data and news. An early bid probed 1.1150, but the pair was unable to hold onto those gains. Traders continue to monitor the 1.1185 mark as any close above there would be the highest since July 2009.







    Jason's Commentaries


    The market last night was exceptionally funky. Started with such bearishness as Asia and Europe was being dragged down by China's contracting economy. However, the market fought back straightaway within the next 2 hours back to the neutral point. However the market had some volatile session after which. Internals were showing lots of divergence. Volumes as expected was at 657.8m shares traded on the NYSE. Volumes is thin, waiting for some catalyst to push the market either up or down. The strongest sector is staples while the financials and industrials were down by 0.19 and 0.18% respectively.  With the market being in such a volatile period, it seems that we are likely to break out. With copper tanking like mad, the chances of the market heading down is increasing.




    Market Call: FLAT and volatile
    Date: 13 March 2014

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