4 Dec - Market remains volatile as economic data shakes the market

21 Feb 2014 AMC - Market facing resistance with tech lagging

Jason's Commentaries

As expected, the market remained highly volatile, sideways as economic data continues to bombard the market.

Firstly, the Australian market decides to hold their rates at record low at 2%. Secondly, the Chinese's manufacturing came in slightly better than expected but on a contracting streak, ECB reduces deposit rate to -0.3% and the employment data came in fantastic and finally the OPEC meeting happening on Friday.

The main blow to the market was the ECB's decision and the employment data. ECB's decision caused the market to dive on Thursday but the outstanding job report at 211k jobs generated manage to turn the tide around. The market is likely to stay sidelined or possibly pricing into the rate hike decision on 16 Dec. We could see some profit taking on Monday and some volatility the next few days. If nothing major is happening, i would think that market will end up higher the next week, potentially below 2115 points on the S&P500.

Volumes remained healthy but there might be a switch to defensive mode as the Consumer Staples led the rally on Friday, followed by the Tech and Financials.

Currently the market is on a standby mode, potentially having their holidays and awaiting the Fed decision.



Market Summary 

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

• UK's FTSE: -0.6%
• Germany's DAX: -0.3%
• France's CAC: -0.3%
• Spain's IBEX: -0.1%
• Portugal's PSI: -0.6%
• Italy's MIB Index: + 0.1%
• Irish Ovrl Index: + 0.3%
• Greece ASE General Index: -1.6%

Before Market Opens 

S&P futures vs fair value: +9.00. Nasdaq futures vs fair value: +14.00.

The S&P 500 futures trade nine points above fair value.

Markets in the Asia-Pacific region ended the week on a mostly lower note. Most regional indices saw downward pressure that echoed the negative sentiment seen in the global equity markets following yesterday's ECB's monetary policy update. This was particularly the case in Japan. The Nikkei closed over 2.0% lower with strength in the yen (post ECB release) taking its toll on the majority of exporters. There was some positive data for the Japanese economy with the release of October Average Cash Earnings rising to a 6-month high at +0.7%, while exceeding the +0.5% expectation. This had little impacts on the markets today, however, it should be noted the BOJ has cited this as a key metric in helping assess monetary policy. In China, the session was free of economic data with volume in the Shanghai Composite (-1.7%) on the lower end of the norm.

• In economic data:
  • Japan's Average Cash Earnings +0.7% year-over-year (consensus 0.4%; prior 0.4%), October Overtime Pay +1.2% year-over-year (last 1.4%), and November Household Confidence 42.6 (expected 41.8; previous 41.5)
  • Australia's October Retail Sales +0.5% month-over-month, as expected (previous +0.4%)
  • New Zealand's ANZ Commodity Price Index -5.6% month-over-month (previous 7.1%)

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• Japan's Nikkei declined 2.2% on a day that saw all of its sectors ending in negative territory. Energy names outperformed the broader market, with only a 0.4% decline on the back of stronger oil prices overnight. Consumer Discretionary names paced the way lower with the sector declining 2.6%. There were not many positive stock specific stories to note either. Shares of Nissan Motor fell 2.4% after the co released November sales in China. Sharp outperformed the Nikkei, but still closed out the day 0.8% lower after the co announced it is looking to cut LCD inventories.
• Hong Kong's Hang Seng ended the day down 0.8%, but managed to finish at its high. After the market opened ~1% lower, trading was range-bound with no catalysts to help the index attract aggressive buyers. Among the stocks dragging the broader market lower were shares of CIFI Holdings Group lost 1.1% after the company reported its November metrics, while CITIC Dameng Holdings dropped 1.8% after issuing cautious guidance. On a more positive note, Geely Automobile Holdings managed to gain 0.2% after the co released its November sales update
• China's Shanghai Composite declined 1.7% after opening ~0.5% lower and failing to find any stability as the session advanced. China Vanke closed down 0.4% after the co released its November results. On the opposite end, China Railway Group posted a 1.5% gain after the announced an asset swap agreement.

Major European indices have climbed off their lows, making for a mixed session. In news, the Bank of France has lowered its growth and inflation outlook, expecting GDP growth of 1.4% in 2016 (down from 1.8%) and 1.6% in 2017 (down from 1.9%). Meanwhile, harmonized inflation is expected to increase 1.0% in 2016 (down from 1.4%) and 1.5% in 2017 (down from 1.7%).

• Economic data was limited:
  • Eurozone Retail PMI 48.5 (previous 51.3)
  • Germany's October Factory Orders +1.8% month-over-month (expected 1.2%; previous -0.7%)
  • Spain's October Industrial Production +4.0% year-over-year (consensus 3.6%; last 3.7%)
  • Swiss November CPI -0.1% month-over-month (expected -0.1%; previous 0.1%); -1.4% year-over-year (consensus -1.3%; last -1.4%)

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• Germany's DAX is lower by 0.4% with health care names leading the retreat. Fresenius, Merck, and Bayer show losses between 1.6% and 2.8%. Financials trade in mixed fashion with Commerzbank up 0.2% while Deutsche Bank is lower by 0.3%. On the upside, Volkswagen outperforms, spiking 1.6%.
• In France, the CAC has climbed 0.1% with financials and consumer names contributing to the strength. AXA, Carrefour, Credit Agricole, and Louis Vuitton have added between 0.2% and 4.2% while growth-sensitive Safran, Bouygues, and Lafarge are down between 1.2% and 2.4%.
• UK's FTSE remains lower by 0.1% with roughly 60% of its components in the red. Carnival, InterContinental Hotels, Pearson, and Unilever have pressured the index with losses between 1.0% and 2.8%. On the flip side, miners and energy names outperform with Royal Dutch Shell, BP, Anglo American, Glencore, and BHP Billiton up between 1.3% and 2.3%.

Read more: http://www.briefing.com/Platinum/InDepth/InPlayFull.htm#ixzz3tYcvtQki

Market Internals
Market Internals

Dow up to 17848 (+2.12%). S&P500 up to 2092 (+2.05%). Nasdaq up to 5142 (+2.08%). Action came on lower than average volume (NYSE 1002 mln vs. avg. of 940; NASDAQ 1883 mln vs. avg. of 1911), with advancers outpacing decliners (NYSE 2060/1083, NASDAQ 1865/995) and new lows outpacing new highs (NYSE 44/197, NASDAQ 58/108).

Relative Strength:

Gold Miners -GDX +4.67%, S Physical Platinum Shares-PPLT +4%, Junior Gold Mine-GDXJ +3.72%, Global X Silver Miners -SIL +3.37%, Silver Trust-SLV +3.12%, Israel Capped Inve-EIS +2.2763%, All Peru Capped ET-EPU +2.26%, Indonesia -IDX +2.15%, S&P Retail -XRT +1.69%, Provident Financial Services-PFS +1.61%

Relative Weakness:

iPath S&P 500 VIX Short Term Fu-VXX -8.54%, Capital XVI JP M-AMJ -3.39%, S&P Oil & Gas Explor & Pro-XOP -2.63%, United States Oil -USO -2.545%, TR Russia -RSX -2.518%, Global X Colombia -GXG -2.2%, S&P Middle East & Africa E-GAF -2.105%, Oil Services -OIH -1.85%, Turkey Investable -TUR -0.91%, South Africa -EZA -0.8%

Read more: http://www.briefing.com/Platinum/InDepth/InPlay.htm#ixzz3tYbYcdCv

Leaders and Laggards

 

Technical Updates

 

 




 
 
 
 

Commentaries 

Closing Market Summary: Stocks Erase Week's Losses After Better Than Expected Employment Situation Report

The stock market enjoyed a broad rally on Friday that lifted the S&P 500 (+2.1%) back above its 200-day moving average (2,065). The daylong surge helped the benchmark index turn this week's loss into a slim gain of 0.1%.

Equities charged out of the gate and doubled their gains during afternoon action even though the November Employment Situation report came in ahead of expectations (211,000; Briefing.com consensus 196,000), which is unlikely to get in the way of the Federal Reserve's rate hike plans.

Interestingly, Treasuries stumbled immediately after the release of today's data, but they followed that move with a charge to new session highs. The 10-yr note ended near its best level of the session, pressuring its yield four basis points to 2.27%. Meanwhile, the Dollar Index (98.35, +0.43) climbed 0.4%, erasing a portion of its 2.3% loss from yesterday.

Nine of ten sectors ended the day in the green while energy (-0.6%) spent the day in negative territory with crude oil contributing to the weakness. WTI crude settled near its low, surrendering 2.4% to $40.08/bbl. The energy component fell from the $41.50/bbl level this morning in reaction to reports that OPEC has agreed to increase its daily production target to 31.5 million barrels from 30.0 million; however, the official OPEC statement released in the late morning did not specify a production target. For the week, crude oil lost 3.9% while the energy sector fell 4.6%.

On the flip side, nine groups posted gains with eight adding 1.4% or more. Top-weighted sectors traded comfortably ahead of their peers with technology (+2.5%), financials (+2.7%), and health care (+2.4%) holding the lead into the close. The technology sector rallied thanks to relative strength in large cap names like Apple (AAPL 119.03, +3.83),Alphabet (GOOGL 779.21, +11.01), and Microsoft (MSFT 55.91, +1.71) while high-beta chipmakers underperformed intraday, but the PHLX Semiconductor Index rallied into the close to end the day higher by 1.9%.

Elsewhere among cyclical sectors, the industrial space (+1.5%) spent the day behind the broader market due to relative weakness among transport stocks. The Dow Jones Transportation Average climbed 0.8%, but railroad names struggled with Norfolk Southern (NSC 92.06, -1.05) falling 1.1% after rejecting an unsolicited offer from Canadian Pacific (CP 134.49, -6.42).

Today's daylong charge invited above-average participation with nearly a billion shares changing hands at the NYSE floor.

Economic data included Nonfarm Payrolls and Trade Balance:

• Nonfarm payrolls increased by 211,000 (Briefing.com consensus 196,000)
  • October nonfarm payrolls revised to 298,000 from 271,000
• Private sector payrolls increased by 197,000 (Briefing.com consensus 185,000)
  • October private sector payrolls revised to 304,000 from 268,000
• Unemployment rate was 5.0% (Briefing.com consensus 5.0%) versus 5.0% in October
  • The U6 unemployment rate, which accounts for the total unemployed plus persons marginally attached to the labor force and the underemployed, was 9.9% versus 9.8% in October
  • Average hourly earnings increased 0.2% (Briefing.com consensus 0.2%) after increasing 0.4% in October
  • The average workweek was 34.5 hours (Briefing.com consensus 34.5) versus 34.6 hours in October
  • The labor force participation rate was 62.5% versus 62.4% in October
• The US trade deficit widened to $43.90 billion from an upwardly revised $42.50 billion (from -$40.80 billion) in September while the Briefing.com consensus expected the trade deficit to be $43.0 billion
  • October exports were $184.10 billion, which was $2.70 billion less than September exports. October imports were $228.00 billion, which was $1.30 billion less than September imports

Monday's data will be limited to the 15:00 ET release of the October Consumer Credit report.

• Nasdaq Composite +8.6% YTD
• S&P 500 +1.6% YTD
• Dow Jones Industrial Average +0.1% YTD
• Russell 2000 -1.5% YTD

Week in Review: Stocks Wobble

The stock market began the trading week on a modestly lower note with the S&P 500 surrendering 0.5% after spending the day in a 13-point range. The Monday session marked the end of November, a month during which the S&P 500 added 0.1% while the Nasdaq Composite (+1.1%) outperformed. Equities held slim gains at the start of the trading day, but the early strength faded quickly, sending the S&P 500 below its flat line where the index remained into the afternoon. The S&P 500 tried to stage a rebound during afternoon action, but that move was followed by a slip to new lows. The benchmark index settled near its worst level of the day, masking gains in five of ten sectors. For instance, energy (+0.4%) and technology (+0.1%) outperformed from the start, but their strength could not lift the overall market. The energy sector settled in the lead even though crude oil surrendered a solid intraday gain to end lower by 0.2% at $41.63/bbl. For the month, WTI crude tumbled 10.7% while the energy sector lost 0.8%.

On Tuesday, the stock market began December on an upbeat note with the S&P 500 climbing 1.1% while the Nasdaq Composite (+0.9%) settled just behind. All in all, the session was very quiet as the S&P 500 marked its high during the opening hour and inched above that level during afternoon action. The index briefly slipped from the morning high after economic data showed that the ISM Index (48.6; Briefing.com consensus 50.4) registered its first contractionary reading (below 50) in 36 months. The disappointing report was met with a spike in Treasuries that sent the 10-yr note to a fresh high. The benchmark instrument settled on its best level of the day, pressuring its yield six basis points to 2.15%. All ten sectors posted gains with heavily-weighted groups like health care (+1.7%), technology (+1.1%), consumer discretionary (+1.0%), and financials (+1.3%) ending in the lead.

The market ended the midweek session on a broadly lower note with the S&P 500 sliding 1.1% while the Nasdaq (-0.6%) settled a bit ahead. Equity indices spent the first 90 minutes of the session near their flat lines, but the energy sector (-3.1%) struggled from the start and accelerated its retreat into the afternoon, which dragged down the entire market. Meanwhile, the remaining groups held up relatively well at the start, but they could not resist the pressure, which intensified as the session wore on. Interestingly, the selling in the market accelerated shortly after Fed Chair Janet Yellen concluded her speech at the Economic Club of Washington with the remarks being perceived as a sign that the Fed is ready to raise rates at the December policy meeting.

Equities ended Thursday on a woeful note after global investors reduced their equity exposure in reaction to an underwhelming policy statement from the European Central Bank. The S&P 500 lost 1.4%, falling below its 200-day moving average (2,065), while the Nasdaq Composite (-1.7%) underperformed. The key indices held slim gains at the open, but that proved to be a mirage as the market marched lower throughout the day after the European Central Bank made a slight adjustment to its interest rate corridor (deposit facility rate down to -0.3% from -0.2%, marginal lending facility unch at +0.3%, and main refinancing rate unch at +0.05%), but did not increase the size of its asset purchases, thus disappointing a global equity complex that was hungry for more stimulus. The euro responded by having its best day of the year, soaring nearly 450 pips off its intraday low against the dollar to 1.0950. In turn, the Dollar Index (97.79, -2.25) plunged 2.3% to early November levels.

Read more: http://www.briefing.com/Platinum/InDepth/InPlay.htm#ixzz3tYbdsf7Y

Commodities

Closing Commodities: WTI Falls Following OPEC, Closes At $40

• The dollar index remained in positive territory, which helped weigh on select commodities
• However, precious metals climbed higher and remain near today's highs
• Feb gold finished up today's session +2.2% at $1084.40/oz, while Mar silver +3.1% at $14.52/oz
• Oil prices slid lower today following OPEC's meeting and decision to raise its oil output ceiling target
• Jan crude fell $2.00/barrel off of today's high to close at $40.00/barrel in pit trading. Crude oil finished at $40.07.
• Jan nat gas ended flat at $2.18/MMBtu

Energy closing prices: WTI oil falls following OPEC decision closes right at $40.00/barrel

• January crude oil futures fell $1.09 (-2.6%) to $40.00/barrel
• January natural gas closed unchanged at $2.18/MMBtu
• RBOB Gasoline closed $0.01 lower at $1.28/gallon
• Heating oil futures closed $0.01 lower at $1.35/gallon

 Agricultural closing prices

• March corn closed $0.05 higher at $3.81/bushel
• March wheat closed $0.06 higher at $4.84/bushel
• January soybeans closed $0.09 higher at $9.06/bushel
• March Sugar #11 closed $0.10 cents lower at 15.48 cents/lb
•  

 Metals closing prices

• February gold ended today's session $22.90 higher (+2.2%) at $1084.40/oz
• March silver closed today's session $0.43 higher (+3.1%) at $14.52/oz
• March copper closed $0.03 at $2.08/lb

Treasuries

Treasury Market Summary

Treasuries Shake off Positive Data to Finish Higher

• The U.S. Treasury complex gained back some of Thursday's losses in a curve-flattening rally. The November employment report showed that the U.S. economy added 211K nonfarm jobs, beating the Briefing.com consensus of 196K, and featured a 27K-job upward revision to the October number (298K versus 271K initial estimate). Hourly earnings were stagnant, but this is still a heady pace of job growth and shows that October was not a fluke. Particularly because the employment report data series is very volatile and subject to large revisions, the confirmation that October was a very strong month for the economy was reassuring. Since Treasuries got battered on Thursday, they did find a relief rally today, but there was little in the jobs data to support bullishness on Treasuries
• Yield Check:
  
  • 2-yr: -1 bp to 0.94%
  • 5-yr: -3 bps to 1.71%
  • 10-yr: -4 bps to 2.27%
  • 30-yr: -4 bps to 40.11%

Read more: http://www.briefing.com/Platinum/InDepth/InPlay.htm#ixzz3tYbwgWWA




On other news.... 























Currencies 

Currency Market Summary

Dollar Finds Relief Rally

• The U.S. Dollar Index rallied 0.73% to 98.34 today, making back some of Thursday's ECB rate decision-inspired losses
  
  • The U.S. economy added 211K nonfarm payrolls in November after adding 298K in October (revised up from 271K). The Briefing.com consensus for November was 196K
  • Hourly earnings grew 0.2%, in line with estimates. In October, hourly earnings grew 0.4%
  • The trade deficit widened to -$43.9 in October from -$40.8 bln in September. The Briefing.com consensus was -$43 bln
• EUR/USD: -0.62% to $1.08718
  
  • German factory orders grew 1.8% m/m in October, beating expectations. Factory orders declined an upwardly revised 0.7% (from -1.7%) in September
  • Industrial production in Spain grew by a better-than-expected 4.0% in the year to October, improving on the downwardly revised 3.7% (from 3.8%) y/y growth in September
• GBP/USD: -0.24% to $1.5105
• USD/CHF: +0.58% to 0.9981
  
  • Switzerland's consumer price index fell 0.1% m/m in November, in line with expectations. The fall reversed a 0.1% rise in October
• USD/JPY: +0.52% to 123.17
  
  • Average cash earnings in Japan grew 0.7% in the year to October, beating both expectations and the downwardly revised 0.4% (from 0.6%) growth in September
  • Household confidence in Japan climbed to a better-than-expected 42.6 in November from 41.5 in October
• USD/CAD: +0.31% to 1.3381
  
  • The Canadian economy lost 35.7K jobs in November, reversing the gain of 44.4K in October and missing analyst estimates
  • The unemployment rate unexpectedly inched up to 7.1% from 7.0% in October
• AUD/USD: unch at $0.7340
  
  • Australian retail sales grew 0.5% m/m in October, in line with estimates and slightly higher than the 0.4% growth in September
• NZD/USD: +0.74% to $0.6741
  
  • The ANZ Commodity Price Index fell 5.6% m/m in November after gaining 6.9% in October
• USD/RUB: +0.79% to 68.08
  
  • Russia's consumer price index gained 15.0% in the year to November after gaining 15.6% y/y in October

Read more: http://www.briefing.com/Platinum/InDepth/InPlay.htm#ixzz3tYbzToFG

Next Week In View










Economic Commentaries

Economic Summary: Nonfarm Payrolls top expectations; Unemployment remains at 5%

Economic Data Summary:

• November Nonfarm Payrolls 211K vs Briefing.com consensus of 196K; October was 271K
• November Nonfarm Private Payrolls 197K vs Briefing.com consensus of 185K; October was 268K
• November Unemployment Rate 5.0% vs Briefing.com consensus of 5.0%; October was 5.0%
• November Hourly Earnings 0.2% vs Briefing.com consensus of 0.2%; October was 0.4%
• November Average Workweek 34.5 vs Briefing.com consensus of 34.5; October was 34.5
  • The U6 unemployment rate, which accounts for the total unemployed plus persons marginally attached to the labor force and the underemployed, was 9.9% versus 9.8% in October
    Persons unemployed for 27 weeks or more accounted for 25.7% of the unemployed versus 26.8% in October
• October Trade Balance -$43.9 bln vs Briefing.com consensus of -$43.0 bln; September was revised to -$42.5 bln from -$40.8 bln
  • The export of goods decreased by $3.1 billion with industrial supplies and materials decreasing $1.6 billion, half of which was the result of a decrease in exports of fuel oil and other petroleum products. Capital goods exports decreased $0.9 billion, paced by a $0.5 billion drop in exports of industrial engines. Consumer goods exports dropped by $0.5 billion, with the entirety of that decline stemming from exports of artwork, antiques, stamps, and jewelry.

Upcoming Economic Data:

• October Consumer Credit due out Monday at 15:00 (September was $28.9 bln)

Upcoming Fed/Treasury Events:

• Philadelphia Fed President Harker (not a voting FOMC member) to speak today at 10:15 AM ET 
• Saint Louis Fed President James Bullard (not a voting FOMC member) to speak today at 15:45 PM ET and Monday at 11:30 AM ET.

Other International Events of Interest

• Germany's October Factory Orders +1.8% month-over-month (expected 1.2%; previous -0.7%)

Read more: http://www.briefing.com/Platinum/InDepth/InPlayFull.htm#ixzz3tYcgDyk6

Market Call:UP

Date: 7 Dec 2015