19 Dec 2014 AMC - Market staged massive rally after oil catalysed drop
Market Summary
European Markets Closing Prices
European
markets are now closed; stock markets across Europe performed as follows:
·
UK's
FTSE: + 1.2%
·
Germany's
DAX: -0.3%
·
France's
CAC: -0.2%
·
Spain's
IBEX: -0.3%
·
Portugal's
PSI: -0.7%
·
Italy's
MIB Index: -0.4%
·
Irish
Ovrl Index: 0.0%
·
Greece
ASE General Index: -1.4%
Before Market Opens
S&P futures vs fair value: +6.00.
Nasdaq futures vs fair value: +6.20.
The S&P 500 futures trade six points above fair value.
Markets rallied across Asia as the Fed-induced enthusiasm on Wall Street traveled across the Pacific. The Bank of Japan kept policy on hold and said inflation could dip to 1.0% into March due to low oil prices.
The S&P 500 futures trade six points above fair value.
Markets rallied across Asia as the Fed-induced enthusiasm on Wall Street traveled across the Pacific. The Bank of Japan kept policy on hold and said inflation could dip to 1.0% into March due to low oil prices.
·
Economic
data was limited:
o Japan's All Industries Activity Index ticked
down 0.1% month-over-month (expected 0.2%; previous 1.4%)
o Hong Kong's current account deficit of HKD8.08
billion swung to a surplus of HKD43.30 billion
o New Zealand's ANZ Business Confidence slipped to
30.4% from 31.5%
------
·
Japan's Nikkei jumped 2.4% to post its biggest gain
since Halloween. Heavyweights Softbank and Fast Retailing provided support,
rising 2.4% and 2.3%, respectively.
·
Hong
Kong's Hang Seng
added 1.3% as part of its second consecutive day of buying after hitting
seven-month lows on Wednesday. Financials led AIA Group gained 3.4% and Bank of
Communications added 2.6%.
·
China's Shanghai Composite climbed 1.7% to its best
levels since November 2010. Aluminum maker Chalco surged the limit, 10%, after
announcing intentions to sell non-core assets.
·
India's Sensex climbed 0.9%, gaining for the second day
in a row, but struggled to reclaim the 50-day average. Commodity plays were
strong as Hindalco Industries jumped 3.2% and Reliance Industries added
2.3%.
Major European indices trade mostly
lower with Italy's MIB (-1.3%) showing the largest decline. According to Reuters,
the ECB is looking into ways of making weaker eurozone countries bear a larger
portion of the risk associated with a sovereign QE program. The same countries
would stand to benefit most from asset purchases.
·
In
economic data:
o Eurozone Current Account surplus narrowed to
EUR20.50 billion from EUR32.00 billion (expected surplus of EUR27.40
billion)
o Germany's PPI was unchanged month-over-month
(expected -0.2%; previous -0.2%) while the year-over-year reading fell 0.9%
(expected -1.2%; previous -1.0%). Separately, GfK Consumer Climate improved to
9.0 from 8.7 (expected 8.8)
o UK's Public Sector Net Borrowing increased to
GBP13.41 billion from GBP6.43 billion (expected GBP15.37 billion). Separately,
CBI Distributive Trades Survey jumped to 61 from 27 (expected 31)
o French Business Survey held at 99, as
expected
o Italy's Industrial New Orders rose 0.1%
month-over-month (previous -1.5%) while Wage Inflation ticked up 0.1%
month-over-month (prior 0.1%)
------
·
UK's FTSE is higher by 0.4% with miners in the lead.
Antofagasta and Randgold Resources hold gains close to 3.0% apiece. Consumer
names lag with Diageo, Next, and Coca-Cola HBC down between 0.7% and
1.6%.
·
In France, the CAC is lower by 0.7% with Alstom leading
the decline. The stock has surrendered 3.5%. Financials trade in mixed fashion
with AXA and Unibail-Rodamco sporting respective gains of 0.4% and 1.0% while
Societe Generale trades lower by 2.1%.
·
Germany's DAX has given up 0.9%. Influential index
components lag with BMW, Deutsche Bank, and Bayer down between 1.1% and 1.7%.
Henkel AG outperforms, trading higher by 1.6%.
·
Italy's MIB leads to the downside with a 1.3% decline.
Financials lag with BMPS, Intesa Sanpaolo, Unicredit, and Mediobanca holding
losses between 2.6% and 4.0%.
U.S. Equities
·
Futures
point to a modest gains at the open
·
Early
gains will have the S&P 500 threatening all-time highs
·
The VIX
(16.81) slumped to a one-week low as a result of yesterday's surge in equities
·
Today is
quadruple witching options expiration
o S&P Futures +2 @ 2062
o Dow Futures +23 @ 17749
o Nasdaq Futures +12 @ 4275
Asia
·
Markets
rallied across Asia as the Fed induced enthusiasm on Wall Street traveled
across the Pacific
·
The Bank
of Japan kept policy on hold and suggested inflation could dip to 1% into March
due to the weakness in oil prices
·
Hong
Kong's current account deficit swung to a surplus (HKD43.3 bln actual v.
-HKD8.08 bln previous)
·
Japan's
Nikkei (+2.4%) posted its biggest gain since Halloween
·
Hong
Kong's Hang Seng (+1.3%) saw a second day of buying after hitting seven-month
lows on Wednesday
·
China's
Shanghai Composite (+1.7%) climbed to its best levels since November 2010
·
India's
Sensex (+0.9%) gained for a second day, but struggled to reclaim the 50 dma
·
Australia's
ASX (+2.5%) surged to its best close in nine sessions as three days of gains
have erased six days of selling
Market Internals
Market Internals -Technical-
The S&P 500 closed up 9 (+0.46%) at 2071, the Nasdaq closed up 17 (+0.36%) at 4765, and the Dow closed up 28 (+0.16%) at 17806. Action came on above average volume (NYSE 2421 mln vs. avg. of 877; NASDAQ 2735 mln vs. avg. of 1822), with advancers outpacing decliners (NYSE 2052/1131, NASDAQ 1437/1335) and new highs outpacing new lows(NYSE 222/22, NASDAQ 132/51).
Relative Strength:
Russia-RSX +8.51%, Eastern Europe-ESR +8.18%, Oil-USO +5.88%, Oil and Gas Exploration-XOP +5.4%, Energy-IYE +4.95%, Columbia Index-GXG +4.52%, Oil Services-OIH +4.23%, Gasoline-UGA +3.48%, BRICs-EEB +2.21%, Egypt-EGPT +1.78%.
Relative Weakness:
Natural Gas-UNG -5.55%, Middle East and Africa-GAF -3.07%, Emerging Markets Small Cap-EWX -2.59%, Junior Gold Miners-GDXJ -2.58%, Vietnam-VNM -2.09%, Poland-EPOL -1.8%, Grains-JJG -1.18%, Thailand-THD -1.14%, Insurance-KIE -1.03%, Regional Banks-KRE -0.95%.
Leaders and Laggards
Technical Updates
Commentaries
Closing Market Summary: Stocks End
Strong Week on Upbeat Note
The stock market capped a strong week with an advance that sent the S&P 500 higher by 0.5% to extend its weekly gain to 3.4%. The Dow Jones Industrial Average (+0.2%) underperformed today, but the price-weighted index still managed to add 3.0% for the week.
After adding more than 88 points in the previous two sessions, the S&P 500 spent the first half of the day near its flat line, but climbed ahead of the close. Despite the sharp midweek surge, buying interest remained in place today with nine of ten sectors ending the day in the green.
The energy sector (+3.1%) finished in the lead and extended its weekly gain to 9.7%, which put the growth-sensitive group well ahead of the remaining sectors. Crude oil contributed to today's rally as the energy component settled higher by 5.4% at $57.10/bbl and continued its advance into the $58.00/bbl area in electronic trade.
Meanwhile, the other commodity-related sector—materials—ended in the second place with a solid gain of 1.2%. Steelmakers contributed to the advance with the Market Vectors Steel ETF (SLX 36.61, +1.05) climbing 3.0%.
Outside of energy and materials, only one other sectors was able to end ahead of the broader market. Industrials (+0.5%) rallied behind their top-weighted component—General Electric (GE 25.62, +0.48)—while transport stocks ended just behind the broader market. The Dow Jones Transportation Average climbed 0.4% with freight carriers pacing the advance.
Elsewhere, the health care sector (+0.4%) slipped behind the market into the close, but biotechnology outperformed. Juno Therapeutics (JUNO 35.00, +11.00) surged 45.8% in its debut, which represented the largest biotech IPO of the year. For its part, the iShares Nasdaq Biotechnology ETF (IBB 317.20, +3.23) rallied 1.0% and helped the Nasdaq Composite end just behind the broader market even as chipmakers lagged.
The PHLX Semiconductor Index shed 0.3% with Xilinx (XLNX 43.00, -0.70) falling 1.6% after Bank of America/Merrill Lynch downgraded the stock to ‘Underperform' from ‘Neutral.' As for the broader technology sector (+0.1%), the top-weighted group was kept behind the broader market by relative weakness in influential components like Apple (AAPL 111.78, -0.87),Intel (INTC 36.37, -0.65), and Visa (V 261.67, -2.49).
Shares of Visa were also partially responsible for the underperformance of the Dow Jones Industrial Average. However it wasn't just the top-priced listing that kept the index behind the S&P 500. Nike (NKE 94.84, -2.24) fell 2.3% after the company's below-consensus futures orders growth overshadowed better than expected earnings and revenue. Retail names in general displayed weakness with the SPDR S&P Retail ETF (XRT 94.13, -0.68) shedding 0.7%.
Treasuries climbed throughout the day and ended just below their highs. The benchmark 10-yr yield slipped four basis points to 2.17%.
Today's participation was well ahead of average, which was caused by quadruple witching. As a result more than 2.1 billion shares changed hands at the NYSE floor.
Investors did not receive any economic news today and Monday's data will be limited to the Existing Home Sales report (Briefing.com consensus 5.20 million), which will be released at 10:00 ET.
The stock market capped a strong week with an advance that sent the S&P 500 higher by 0.5% to extend its weekly gain to 3.4%. The Dow Jones Industrial Average (+0.2%) underperformed today, but the price-weighted index still managed to add 3.0% for the week.
After adding more than 88 points in the previous two sessions, the S&P 500 spent the first half of the day near its flat line, but climbed ahead of the close. Despite the sharp midweek surge, buying interest remained in place today with nine of ten sectors ending the day in the green.
The energy sector (+3.1%) finished in the lead and extended its weekly gain to 9.7%, which put the growth-sensitive group well ahead of the remaining sectors. Crude oil contributed to today's rally as the energy component settled higher by 5.4% at $57.10/bbl and continued its advance into the $58.00/bbl area in electronic trade.
Meanwhile, the other commodity-related sector—materials—ended in the second place with a solid gain of 1.2%. Steelmakers contributed to the advance with the Market Vectors Steel ETF (SLX 36.61, +1.05) climbing 3.0%.
Outside of energy and materials, only one other sectors was able to end ahead of the broader market. Industrials (+0.5%) rallied behind their top-weighted component—General Electric (GE 25.62, +0.48)—while transport stocks ended just behind the broader market. The Dow Jones Transportation Average climbed 0.4% with freight carriers pacing the advance.
Elsewhere, the health care sector (+0.4%) slipped behind the market into the close, but biotechnology outperformed. Juno Therapeutics (JUNO 35.00, +11.00) surged 45.8% in its debut, which represented the largest biotech IPO of the year. For its part, the iShares Nasdaq Biotechnology ETF (IBB 317.20, +3.23) rallied 1.0% and helped the Nasdaq Composite end just behind the broader market even as chipmakers lagged.
The PHLX Semiconductor Index shed 0.3% with Xilinx (XLNX 43.00, -0.70) falling 1.6% after Bank of America/Merrill Lynch downgraded the stock to ‘Underperform' from ‘Neutral.' As for the broader technology sector (+0.1%), the top-weighted group was kept behind the broader market by relative weakness in influential components like Apple (AAPL 111.78, -0.87),Intel (INTC 36.37, -0.65), and Visa (V 261.67, -2.49).
Shares of Visa were also partially responsible for the underperformance of the Dow Jones Industrial Average. However it wasn't just the top-priced listing that kept the index behind the S&P 500. Nike (NKE 94.84, -2.24) fell 2.3% after the company's below-consensus futures orders growth overshadowed better than expected earnings and revenue. Retail names in general displayed weakness with the SPDR S&P Retail ETF (XRT 94.13, -0.68) shedding 0.7%.
Treasuries climbed throughout the day and ended just below their highs. The benchmark 10-yr yield slipped four basis points to 2.17%.
Today's participation was well ahead of average, which was caused by quadruple witching. As a result more than 2.1 billion shares changed hands at the NYSE floor.
Investors did not receive any economic news today and Monday's data will be limited to the Existing Home Sales report (Briefing.com consensus 5.20 million), which will be released at 10:00 ET.
·
Nasdaq
Composite +14.1% YTD
·
S&P
500 +12.0% YTD
·
Dow Jones
Industrial Average +7.4% YTD
·
Russell
2000 +2.7% YTD
Commodities
Closing Commodities: WTI Crude Oil Soaring
Over $58/Barrel In Electronic Trade
·
WTI crude
oil prices continued to soar higher in electronic trade, rising as high as
$58.34/barrel
·
Jan crude
oil finished today's session $2.91 higher at $57.10/barrel.
·
Natural
gas futures sold off on a warm weather forecast, falling sharply
·
Jan nat
gas ended $0.16 to $3.47/MMBtu
·
Precious
metals showed very modest gains today
·
Feb gold
gained $1.10 to $1196.00/oz, while Mar silver rose $0.10 to $16.03/oz
Metals price action
·
Feb gold
ended today's session $1.10 higher at $1196/oz
·
Mar
silver also ended $0.10 higher at $16.03/oz
·
Mar
copper rose 3 cents to $2.88/lb
Agricultural price action
·
Mar Corn
closed unchanged at $4.11/bushel
·
Jan wheat
fell 20 cents to $6.33/bushel
·
Jan
soybeans fell 6 cents at $10.30/bushel
·
Ethanol
fell 3 cents to $1.62/gallon
·
Sugar #11
fell 0.01 cents to 14.98 cents/gallon
Energy price action
·
Jan crude
oil rose $2.91/barrel, closing today's pit session at $57.10/barrel
·
Natural
gas fell 16 cents to $3.47/MMBtu
·
RBOB
Gasoline rose 2 cents to $1.56/gallon
·
Heating
oil rose 4 cents to $1.93/gallon
Treasuries
Yields Climb as Fed Signals Patience on
Rates: 10Y: +12/32..2.175%..USD/JPY: 119.57..EUR/USD: 1.2224
The Week in Review
The Week in Review
·
Treasuries
lost ground this week as the Federal Reserve signaled it would remain
'patient' as to the course of future rate hikes. Click here to see an intraweek
yields chart.
·
The Bank
of Japan kept policy unchanged and hinted inflation could slow to 1% into March
as a result of the drop in oil prices.
·
Reports
out Friday indicated Europe's periphery could bear the biggest burden
of any QE risk should the ECB take that route.
·
Russia's
ruble saw a volatile five days as the currency plunged to a record low near 79.50 before ending
the week little changed near 58.18.
·
U.S.
economic data was largely disappointing as Empire Manufacturing (-3.6 actual v. 14.0 expected),
housing starts (1028K actual v. 1035K expected), building permits (1035K actual
v. 1060K expected), CPI (-0.3% actual v. -0.1% expected), and Philly Fed (24.5
actual v. 26.0 expected) all missed the mark.
·
Only
industrial production (1.3% actual v. 0.7% expected), capacity utilization
(80.1% actual v. 79.3% expected), and leading indicators (0.6% actual v. 0.5%
expected) topped estimates.
·
Up front,
the 2Y tacked on +9bps to 0.638%. The yield ended just shy of its highest close
since April 2011.
·
The 5Y jumped
+12bps to 1.654%. The yield finished on the 100 and 200 dma, and is attempting
a run at 1.700% resistance.
·
The 10Y
climbed +9bps to 2.176%. The benchmark yield flirted with the key 2.220%, but
was unable to finish the week above the level.
·
Outperformance
at the long end saw the 2Y tick up just +2bps to 2.774%. The ability to hold
2.700% will be critical for the bear case.
·
Little
change along the curve saw the 2-10-yr spread hold near 154bps.
The Week Ahead
·
Monday's
data is limited to existing home sales (10). Treasury
will auction $27B 2Y notes.
·
Tuesday's
data is heavy as durable orders, GDP - Third Estimate (8:30), FHFA Housing
Price Index (9), Michigan Sentiment - Final (9:55), personal
income and spending, PCE Prices - Core, and new home
sales (10) cross the wires. Treasury will hold a $35B 5Y note
auction.
·
Data
concludes for the week on Wednesday with the weekly MBA Mortgage Index (7) and
initial and continuing claims (8:30). U.S. equity markets will close at
1pm ET and the U.S. Treasury market will finish at 2pm ET for Christmas Eve. Treasury
will auction $29B 7Y notes.
·
Markets
are closed Thursday in observance of Christmas Day.
·
There is
no data on Friday.
On other news....
Currencies
Dollar Hits Best Levels Since April
2006: 10Y: +09/32..2.180%..USD/JPY: 119.55..EUR/USD: 1.2226
·
The
Dollar Index presses session highs near 89.60 and remains on track for its best
close since April 2006. Click here to see a daily Dollar
Index chart.
·
The 200
mma provides a headwind near 89.90.
·
EURUSD is -60 pips @ 1.2225 as trade flushes to
levels last seen in August 2012. The single currency has come under
pressure during today's session after a report surfaced suggesting the weaker
countries from the region could shoulder the largest burden if a QE-type
program is implemented. Key support in the 1.2000/1.2200 area is guarded by the
200 mma.
·
GBPUSD is -45 pips @ 1.5625 as trade continues to test
15-month lows. Sterling was unable to gain traction in overnight trade despite the
strongest CBI Realized Sales print in over 25 years, but did manage to
reclaim the flat line in early U.S. action. However, the late-morning rally in
the greenback pushed the pound back into negative territory. The 1.5600 area is
key.
·
USDCHF is +40 pips @ .9835 as trade readies for its
best close in more than two years. Action has recoupled with the euro after
briefly decoupling in response to yesterday's decision by the Swiss National
Bank to initiate a negative rate policy. EURCHF was little
changed near 1.2030.
·
USDJPY is +70 pips @ 119.55. Today's bid has the pair
testing resistance in the area, and comes after the Bank of Japan held
policy unchanged but warned inflation could slide to 1% into March as a result
of the drop in oil prices.
·
AUDUSD is -30 pips @ .8130 as trade presses
back onto 54-month lows. Support in the .8100 remains under
scrutiny.
·
USDCAD is +40 pips @ 1.1615 as trade ticks back up
towards its best levels since July 2009. The pair drifted little changed into
this morning's mixed core CPI (-0.2% MoM actual v. +0.1% expected) and core
retail sales (0.2% actual v. 0.2% expected) data before grinding higher over
the remainder of the session.
Weekly Analysis
Technical Updates
Briefing's Commentaries
Week in Review: Oil Remains in Focus
The major averages began the new week amid some old concerns. The S&P 500 settled lower by 0.6% while the Nasdaq Composite (-1.0%) underperformed, but most of the attention was directed to crude oil trading pits once again. After plunging nearly 4.0% on Friday and inviting questions about macroeconomic implications of the continued weakness, crude oil enjoyed an overnight rebound before resuming its downtrend. The energy component ended the pit session lower by 3.2% at $55.96/bbl and continued its retreat into the $55.50/bbl area in electronic trade. Similar to oil, European equities and U.S. equity futures rebounded in overnight action, but accelerated their retreat from highs once the U.S. cash market opened. All ten sectors finished the day in negative territory with heavily-weighted financials (-0.9%), health care (-0.9%), and consumer discretionary (-0.6%) keeping the market under pressure.
The stock market endured a volatile session on Tuesday with investors keeping one eye on the oil market and one on the dollar/ruble exchange rate. The Russell 2000 (-0.1%) registered the slimmest decline while the S&P 500 settled lower by 0.9% after failing to hold its 100-day (1988) and 50-day moving averages (2001). On Monday evening, the Central Bank of Russia hiked its key interest rate by 650-basis points to 17.0% with the move aimed at halting the recent freefall in the ruble. The news gave a brief boost to the Russian currency, but the ruble was down more than 18.0% against the dollar in the morning, which invited concerns about potential economic and financial risks stemming from the continued plunge. This sent participants scrambling in search of safe havens, which boosted Treasuries and the yen. Meanwhile in the commodity market, crude oil was down in excess of 2.5% this morning, but the energy component spiked off its low shortly after the start of the pit session. Oil was able to return to its flat line, but could not make a sustained move into the green, ending with a nine-cent loss at $55.87/bbl.
Stocks ended the Wednesday session with solid gains that were paced by the Russell 2000. The small-cap index jumped 3.1% while the S&P 500 settled higher by 2.0% with all ten sectors registering gains. Equities climbed through the first half of action and saw an extension of their rally in the afternoon once the FOMC released its latest policy directive. As expected by some, the Fed removed the "considerable time" language from its policy statement, but that reference was replaced with a call for "patience," which essentially conveyed the same message. Above all, Chair Yellen reiterated that the central bank will remain data-dependent and reserves the right to accelerate, or defer, a rate hike in accordance with what the data are communicating about the progress being made toward the Fed's dual mandate. The policy statement was followed by volatile action in the bond market, but Treasuries slid to lows into the close. The benchmark 10-yr yield spiked eight basis points to 2.14%. As for equities, the energy sector (+4.2%) paced the advance and ended near its high even as crude oil slumped into the close, narrowing its gain to 1.0% at $56.44/bbl.
Equity indices ended the Thursday affair on their highs with the S&P 500 (+2.4%) extending its two-day advance to 88 points. The key averages started the Thursday session on a sharply higher note after equity futures received an early morning boost, which took place after the Swiss National Bank imposed negative deposit rates (-0.25%). The central bank said the move is aimed at lowering the three-month LIBOR below zero and European investors viewed the announcement as a prelude to a sovereign QE program from the European Central Bank. European equities, U.S. futures, and commodities rallied following the news, but crude oil fell victim to renewed selling interest after climbing above the $58.50/bbl level in the early morning. The energy component ended near its worst level of the day, down 4.0% at $54.19/bbl. For its part, the energy sector (+2.1%) displayed relative strength at the start, but was pressured from its high by the intraday weakness in crude. Marathon Oil (MRO) finished ahead of the sector, adding 3.3%, after lowering its 2015 capital, investment, and exploration budget by about 20.0% from this year's levels due to the recent plunge in the price of crude.
Next Week In View
Economic Commentaries
Economic summary: No US data today;
Evans and Lacker to speak later today; Existing home sales Monday at 10:00
Upcoming Economic Data:
Upcoming Economic Data:
·
November
Existing Home Sales due out Monday at 10:00 (October was 5.26 M )
Upcoming Fed/Treasury Events:
·
Chicago
Fed President Charlie Evans (not a voting FOMC member in 2014, dovish) to speak
tomorrow at 10:00
·
Richmond
Fed President Jeff Lacker (not a voting FOMC member in 2014, hawkish) to speak
tomorrow at 12:30
Other International Events of interest
·
The Bank
of Japan kept policy on hold and suggested inflation could dip to 1% into March
due to the weakness in oil prices
·
Reports
out this morning indicate the most troubled countries may be forced to shoulder
the heaviest burden of QE risk
·
Germany's
PPI was unchanged month-over-month (expected -0.2%; previous -0.2%) while the
year-over-year reading fell 0.9% (expected -1.2%; previous -1.0%). Separately,
GfK Consumer Climate improved to 9.0 from 8.7 (expected 8.8)
Jason's Commentaries
Towards the last few weeks in the market, the market has
been very volatile, spiked mainly by the sudden drop in oil prices which caused
macroeconomics concerns over the sustainability of profits in oil producing
nations. The OPEC did not want to do anything in response to the drop in oil
prices which could possibly cause some negative GDP in some nations. Russia was
one of the affected ones which it has to hike its interest rate to salvage the
Ruble. However, the market is not taking that seriously. Now Russia might have
to seek China’s help stabilize its currency. The drop in Ruble also caused the
Swiss bank to impose negative interest rates as the Russians are flooding swiss
banks with cash. To maintain the value of the Swiss Franc, I believe it’s
actually quite a fast move to prevent a fast surge in Swiss Franc value.
With all these issues happening, the market decided to rally
for the past few sessions which push the market back to its high once again as
crude oil prices stabilized at $55 region. Volumes remained very healthy and no
doubt the Energy companies are the leading ones so far. However, there remains
a good possibility that it could be a dead cat bounce. Nonetheless, we’re still
have the Santa Claus rally!
Market Call: DOWN
Date: 22 Dec 2014