3 Nov 2014 AMC - Oil companies lagged market as oil drops below $80
Market Summary
European
Markets Closing Prices
European markets are now
closed; stock markets across Europe performed as follows:
·
UK's FTSE: -0.9%
·
Germany's DAX: -0.8%
·
France's CAC: -0.9%
·
Spain's IBEX: -1.0%
·
Portugal's PSI: -0.2%
·
Italy's MIB Index: -2.1%
·
Irish Ovrl Index: + 1.1%
·
Greece ASE General Index: + 2.6%
Before Market Opens
S&P futures vs fair value: -0.60. Nasdaq futures vs fair
value: +2.00.
The S&P futures trade two points below fair value.
Markets finished mixed across Asia.
The S&P futures trade two points below fair value.
Markets finished mixed across Asia.
·
In economic data:
o China's Manufacturing PMI (50.8 actual v. 51.1 expected, 51.1
previous) missed estimates while Non-Manufacturing PMI (53.8 actual v. 54.0
previous) dipped and HSBC Final Manufacturing PMI (50.4 actual) was in-line.
o Australian building permits tumbled -11.0% MoM (-0.9% MoM
expected).
o India's HSBF Manufacturing PMI ticked up to 51.6 (51.0
previous).
o Indonesia's core inflation rate held at 4.0% YoY.
-----
·
Japan's Nikkei was closed in observance of Culture Day.
·
Hong Kong's Hang Seng (-0.3%) gave up its early gains and finished on
the lows. Energy names led to the downside with PetroChina shedding 1.5% and
China Shenhua Energy giving up 2.5%.
·
China's Shanghai Composite (+0.4%) gained for a fifth straight session to
finish at its best level since February 2013. Brokerage firms rallied across
the board with Industrial Securities Co tacking on 5.1% to pace the sector's
advance.
Major European bourses trade lower across the board.
·
Data out overnight
included:
o Britain's Manufacturing PMI (53.2 actual v. 51.5
expected, 51.5 previous) outpaced expectations.
o Spanish Manufacturing PMI (52.6 actual v. 52.4 expected, 52.6
previous) topped estimates.
o Italian Manufacturing PMI (49.0 actual v. 50.6 expected, 50.7
previous) slipped back into contraction following a positive reading
in October.
-----
·
Great Britain's FTSE is lower by 0.7%. Financials lead to the downside with Royal
Bank of Scotland and HSBC Holding off 2.0% and 1.8%, respectively.
·
Germany's DAX holds a loss of 0.6%. Financials outperform as Commerzbank is
up 1.5% and Deutsche Bank is higher by 0.2%
·
France's CAC trades down 0.6%. Utilities are weak as GDF Suez and
Electricite de France are lower by 2.6% and 2.4%, respectively.
U.S. Equities
·
Futures suggest small
losses at the open
·
Both the S&P 500 and
DJIA ended Friday's session at a record high while the Nasdaq finished at its
best level since March 2000
·
The S&P 500 is now
+10.9% off the October 15 low
·
The VIX (14.03) sits at its
lowest level since late-September
·
Mid-term elections will be
held tomorrow
o S&P Futures -1 @ 2010
o Dow Futures -19 @
17292
o Nasdaq Futures -1 @ 4149
Asia
·
Markets finished mixed
across Asia.
·
China's Manufacturing PMI
(50.8 actual v. 51.1 expected, 51.1 previous) missed estimates while
Non-Manufacturing PMI (53.8 actual v. 54.0 previous) dipped and HSBC Final
Manufacturing PMI (50.4 actual) was in-line
·
Australian building permits
tumbled -11.0% MoM (-0.9% MoM expected)
·
India's HSBF Manufacturing
PMI ticked up to 51.6 (51.0 previous)
·
Japan's Nikkei was closed
in observance of Culture Day
·
Hong Kong's Hang Seng
(-0.3%) gave up its early gains and finished on the lows
·
China's Shanghai Composite
(+0.4%) gained for a fifth straight session to finish at its best level since
February 2013
·
India's Sensex (UNCH) held
at record highs
·
Australia's ASX (-0.4%)
slipped off six-week highs. Heavyweight miners were a drag as Rio Tinto gave up
1.0%
Market Internals
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Market Mixed as Oil Slides below $79.00/bbl
The stock market had its issues on Monday, mostly because of what was happening outside the stock market. To that end, the dollar hit a seven-year high against the yen, crude futures slumped below $80/bbl, and economic reports from around the globe were mixed at best. On top of that, market participants were staring straight ahead at political issues wrapped up in election day for the U.S. on Tuesday.
Those items were reason enough not to expect the stock market to do all that well on Monday, never mind that it also had to contend with the thought that it was overbought following a 10.8% gain off the October 15 low and due for a period of consolidation.
That's pretty much what happened, too. The major indices went into a consolidation mode, holding to narrow trading ranges for most of the session and not distancing themselves all that far from the unchanged mark.
The technology (+0.4%) and financial (+0.3%) sectors exhibited relative strength throughout the session and provided an influential measure of support that helped the market avoid steep losses. However, it was the weakness in the energy sector (-1.7%) that collared the market and kept it from running away to the upside.
That weakness was limited for most of the session, yet it grew more pronounced in the afternoon session when oil prices failed to respond enthusiastically to the seemingly bullish news that Saudi Arabia will be raising December crude prices for Asia and Europe. In conjunction with that report, it was also noted that crude prices will be decreased for U.S. customers.
Crude futures pushed above $80.50/bbl following the aforementioned report, but just as quickly rolled over. When they did, weak-handed bulls bailed out and created an air pocket that sucked prices below $80.00/bbl and then $79.00/bbl in a fast retreat. Crude settled the session down $2.20 at $78.34/bbl.
That weakness pulled down the energy sector, which declined 1.7% for the session after being up as much as 0.8% when the Saudi Arabia headline first hit.
The energy sector was the only sector to make a move greater than 1.0% for the session. That was a big reason, along with the relative strength of the financial and technology sectors, why the broader market didn't trade down in a more noticeable manner. The utilities sector (+0.7%) was actually the biggest percentage gainer on Monday, yet its small weight didn't make as much difference as the heavy weight of the financial and technology sectors did.
To that end, a 1.3% gain in Apple (AAPL 109.40, +1.40) was a big driver of the broader market's resilience along with gains in Dow components American Express (AXP 90.85, +0.90), Goldman Sachs (GS 190.83, +0.84), and JPMorgan Chase (JPM 60.88, +0.40) that helped offset weakness in Caterpillar (CAT 100.22, -1.19) and Home Depot (HD 96.09, -1.43).
Home Depot was downgraded by Raymond James to Market perform from Outperform.
The S&P 500 set a new all-time high earlier in the day at 2024.54, but slipped back from that record-setting level in afternoon trading.
Consistent with the overall mixed tone of Monday's trading, key economic releases were mixed. The ISM Index for October hit a three-year high at 59.0 while final October PMI readings for China, Germany, and the eurozone were revised slightly lower.
The Construction Spending report for September revealed a disappointing 0.4% decline and pointed to the prospect of a downward revision to the third quarter GDP report as the results for July were revised sharply lower from the original report (to +0.3% from +1.2%).
Tuesday's economic calendar will feature the Trade Balance report for September (Briefing.com consensus -$40.2 bln) and the Factory Orders report for September (Briefing.com consensus -0.5%).
The stock market had its issues on Monday, mostly because of what was happening outside the stock market. To that end, the dollar hit a seven-year high against the yen, crude futures slumped below $80/bbl, and economic reports from around the globe were mixed at best. On top of that, market participants were staring straight ahead at political issues wrapped up in election day for the U.S. on Tuesday.
Those items were reason enough not to expect the stock market to do all that well on Monday, never mind that it also had to contend with the thought that it was overbought following a 10.8% gain off the October 15 low and due for a period of consolidation.
That's pretty much what happened, too. The major indices went into a consolidation mode, holding to narrow trading ranges for most of the session and not distancing themselves all that far from the unchanged mark.
The technology (+0.4%) and financial (+0.3%) sectors exhibited relative strength throughout the session and provided an influential measure of support that helped the market avoid steep losses. However, it was the weakness in the energy sector (-1.7%) that collared the market and kept it from running away to the upside.
That weakness was limited for most of the session, yet it grew more pronounced in the afternoon session when oil prices failed to respond enthusiastically to the seemingly bullish news that Saudi Arabia will be raising December crude prices for Asia and Europe. In conjunction with that report, it was also noted that crude prices will be decreased for U.S. customers.
Crude futures pushed above $80.50/bbl following the aforementioned report, but just as quickly rolled over. When they did, weak-handed bulls bailed out and created an air pocket that sucked prices below $80.00/bbl and then $79.00/bbl in a fast retreat. Crude settled the session down $2.20 at $78.34/bbl.
That weakness pulled down the energy sector, which declined 1.7% for the session after being up as much as 0.8% when the Saudi Arabia headline first hit.
The energy sector was the only sector to make a move greater than 1.0% for the session. That was a big reason, along with the relative strength of the financial and technology sectors, why the broader market didn't trade down in a more noticeable manner. The utilities sector (+0.7%) was actually the biggest percentage gainer on Monday, yet its small weight didn't make as much difference as the heavy weight of the financial and technology sectors did.
To that end, a 1.3% gain in Apple (AAPL 109.40, +1.40) was a big driver of the broader market's resilience along with gains in Dow components American Express (AXP 90.85, +0.90), Goldman Sachs (GS 190.83, +0.84), and JPMorgan Chase (JPM 60.88, +0.40) that helped offset weakness in Caterpillar (CAT 100.22, -1.19) and Home Depot (HD 96.09, -1.43).
Home Depot was downgraded by Raymond James to Market perform from Outperform.
The S&P 500 set a new all-time high earlier in the day at 2024.54, but slipped back from that record-setting level in afternoon trading.
Consistent with the overall mixed tone of Monday's trading, key economic releases were mixed. The ISM Index for October hit a three-year high at 59.0 while final October PMI readings for China, Germany, and the eurozone were revised slightly lower.
The Construction Spending report for September revealed a disappointing 0.4% decline and pointed to the prospect of a downward revision to the third quarter GDP report as the results for July were revised sharply lower from the original report (to +0.3% from +1.2%).
Tuesday's economic calendar will feature the Trade Balance report for September (Briefing.com consensus -$40.2 bln) and the Factory Orders report for September (Briefing.com consensus -0.5%).
·
Dow Jones Industrial
Average +4.8% YTD
·
Nasdaq Composite +11.1% YTD
·
S&P 500 +9.2% YTD
·
Russell 2000 +0.4% YTD
After Hours Summary: ELNK +12.3%, ININ +9%, NLS +7.8%, BRDR -22.5%, SALE -20.9%, HLF -12.7% following earnings/guidance
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings: ELNK +12.3%, ININ +9%, NLS +7.8%, ARCI +7.1%, SKH +6.6%, EOX +5.2%, AFSI +4.9%, PLOW +4.7%, NCMI +4.4%, SNHY +4.4%, NTRI +3.7%, THC +3.3%, LB +3.2%, RKT +2.9%, SYKE +2.8%, DXPE +2.3%, TSLX +2%, QLYS +1.9%, EPAM +1.7%,TXRH +1.6%, VNR +1.6%, GALE +1.6%, RKUS +1.4%, MRO +0.8%, AIG +0.6%, NYRT +0.5%, CHSP +0.3%, VNO +0.2%, APL +0.1%
Companies trading higher in after hours in reaction to news: NLS +7.8% (announced that its Board of Directors has authorized the repurchase of up to $15 mln of the co's outstanding common stock), TBPH +4.9% (announced positive results from Phase 1 proof-of-concept study of TD-6450, an NS5A Inhibitor to treat Hepatitis C; 240 mg achieved a median maximal viral load decline of 4.9 Log10 IU/mL following three daily doses in Genotype 1a Patients), TSLX +2.0% (announced $50 mln stock repurchase plan), SGOC +2.0% (appointed Mr. Shi-Bin Xie as President and CEO), BABA +1.9% (mentioned positively by Jim Cramer), TRN +1.3% (co's subsidiary, Trinity Rail Group, LLC, has entered into a supply agreement with GATX Corporation (GMT) to deliver 8,950 railcars over a four-year period, beginning March 2016)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: BRDR -22.5%, SALE -20.9%, HLF -12.7%, CHGG -9.4%, LF -8.3%, S -7.6%, PQ -4.5%, CKP -3.9%, LCI -3.5%, EGAN -1.9%, TDW -1.9%, CRK -1.7%, CYH -1.3%, RTEC -1.1%, NOR -0.8%, ANV -0.7%, JMI -0.7%, FTR -0.5%, MR -0.4%, RLD -0.1%
Companies trading lower in after hours in reaction to news: UMPQ -3.4% (announced the commencement of a secondary public offering of 31 mln shares of the co's common stock), HTA -3.2% (announced a public offering of 8 mln shares of common stock), DCT -2.2% (announced public offering of 13.5 mln common shares),NWE -1.1% (filed for $348 mln common stock offering), JPM -0.6% (updated in its 10-Q filing the range of possible losses for legal proceedings to $0 to $5.9 bln from $0 to $4.6 bln)
Commodities
Closing Commodities: WTI Crude Oil Prices Drop Sharply To
Near $78/Barrel
·
Crude oil and natural gas
were big movers today
·
Natural gas rose almost 5%
by early morning trade on a colder than usual weather forecast in the U.S.
·
By the time floor trading
closed, nat gas finished 4.4% higher at $4.04/MMBtu
·
Crude was fairly
range-bound throughout today's session until the last several minutes, where it
has tanked lower, falling as low at $78.14/barrel at around 2:55pm EST.
·
The Dec contract ended the
floor trading session down 2.2% at $78.75/barrel
·
Dec gold fell 0.2% to
$1168.80/oz, while Dec silver gained 0.9% to $16.21/oz
Metals
closing prices
Gold fell
$1.80 (-0.15%) to $1168.80/oz
·
Gold traded in an ~$8 range
since GLOBEX trading opened on Sunday, closing today's session with a very
modest move lower.
Silver rose
9.9 cents (+0.6%) to $16.205/oz
·
Silver has trended higher
since the GLOBEX open on Sunday afternoon, closing today's session near its HoD
of 16.21. Front-month futures for the precious metal remain at 4.5 year
lows.
Copper rose 1.65 cents (+0.5%)
$3.0635/lb
Agricultural
price action
·
Corn fell 3 cents (-0.8%) to $3.7375/bushel
·
Wheat rose 5.5 cents (+1%) to $5.38/bushel
·
Soybeans fell 20 cents (-1.9%) to $10.2925/bushel
·
Ethanol rose 1.8 cents (+1%) to $1.855/gallon
·
Sugar #11 fell 0.7% to 15.93 cents/lb
Energy price
action
Crude oil fell
$1.79 (-2.2%) to $78.75/barrel
·
Crude oil was fairly
rangebound throughout today's session until the last several minutes, where it
has been tumbling. Futures are still in free-fall, trading at the LoD of 78.37,
and creating fresh lows every few seconds.
Natural gas rose
16.9 cents (+4.4%) to $4.042/MMBtu
·
Natural gas gapped higher
upon GLOBEX open on Sunday and have been rangebound since; futures are now
trading at the top of that range.
Heating oil fell
2.23 cents to $2.4886/gallon
RBOB fell 2.68 cents to
$2.121/gallonTreasuries
Yields Edge Up: 10Y: -05/32..2.351%..USD/JPY:
113.73..EUR/USD: 1.2492 -Technical-
·
Treasuries booked small
losses as a late-morning bid
persisted throughout the afternoon. Click here to see an intraday
yields chart.
·
Treasuries rallied in
overnight trade, but erased those gains into the cash open.
·
The complex pressed to its
worst levels of the day as a wave of selling developed in response to the mixed
ISM Index (59.0 actual v. 56.2 expected, previous 56.6) and construction
spending (-0.4% actual v. 0.7% expected) data.
·
However, a steady bid
developed in late-morning trade and continued into the cash close, causing
yields to pare their early advance.
·
Up front, the 2Y ticked up
+0.8bps to 0.513%. Action probed 0.520% resistance, climbing as high as 0.541%,
before sliding into the close.
·
Selling had the biggest
impact on the belly as the 5Y added +2.1bps to 1.634%. The yield climbed to an
almost one-month high of 1.665% but resistance helped by the 50, 100, and 200
dma was once again able to hold.
·
The 10Y edged up +1.3bps to
2.348%. The benchmark yield continues to test resistance in the 2.350%
region.
·
Light selling at the long
end caused the 30Y to add +0.6bps to 3.066%. Action probed the 3.100% level
early, but eased into the close.
·
A slightly steeper curve
developed as the 2-10-yr spread widened to 183.5bps.
·
Precious metals remained
weak as gold fell -$6 to $1165 and silver slid -$0.07 to $16.03.
·
Data: Trade balance (8:30) and factory orders (10).
On other news....
Currencies
Dollar Crosses 87.00 on Way to Fourth Straight Gain: 10Y:
-05/32..2.357%..USD/JPY: 113.79...EUR/USD: 1.2482
·
The Dollar Index holds near
session highs as trade presses the 87.40 level. Click here to see a daily Dollar
Index chart.
·
Today's bid has the
greenback higher for a fourth straight session and on track to close at its
best levels since June 2010.
·
EURUSD is -40 pips @ 1.2480 as trade slides to a fresh 27-month low. The
single currency is lower in the face of mixed Manufacturing PMI data from the
region as sellers continue to flex their muscles ahead of Thursday's
ECB meeting. Eurozone data scheduled for tomorrow is limited to Spanish
unemployment change.
·
GBPUSD is -10 pips @ 1.5980 as some light selling amid U.S. trade has
dropped action back into negative territory. Sterling caught an early bid after
Manufacturing PMI outpaced estimates, but trade succumbed to the broad-based
rally in the greenback. Britain's Construction PMI will cross the wires
tomorrow. The Bank of England opines on Thursday.
·
USDCHF is +35 pips @ .9660 as action flirts with its best close
since July 2013. Action saw little response to the SVME PMI beat as
trade remains closely correlated to the euro.
·
USDJPY is +145 pips @ 113.75 as trade surges to its best levels
since December 2007. The 115.00 area provides some resistance as Japanese
banks reopen following the extended holiday weekend.
·
AUDUSD is -105 pips @ .8690 as selling has persisted throughout the day.
The hard currency has been pressured since the overnight plunge in building
permits, and is moving towards a test of the lower bound of the .8650/.8850
range that has held up for the past month. The .8650 support level will be in
focus into the Reserve Bank of Australia rate decision.
·
USDCAD is +95 pips @ 1.1360 as trade readies for its best close
since July 2009. Tomorrow, Canada's trade balance will be released
before Bank of Canada Governor Stephen Poloz testifies in front of the
House of Commons Standing Committee on Finance.
Next Week In View
Economic Commentaries
Economic Summary: ISM beats expectations; Construction
spending shows unexpected drop
Economic Data Summary:
Economic Data Summary:
·
October ISM Index 59.0 vs
Briefing.com consensus of 56.2; September was 56.6%
o Surprisingly, the spike in manufacturing activities coincided with
weaker reports from nearly all of the regional Federal Reserve manufacturing
surveys. That was a stark contrast to September, when most of those same
reports showed improving manufacturing conditions but a decline in the national
ISM index.
·
September Construction
Spending -0.4% vs Briefing.com consensus of 0.7%; August was revised to from
-0.8%
Upcoming Economic Data:
·
September Trade Balance due
out Tuesday at 8:30 (Briefing.com consensus of -$40.2 bln; August was -$40.1
bln)
·
September Factory Orders
due out Tuesday at 10:00 (Briefing.com consensus of -0.5%; August was -10.1%)
Upcoming Fed/Treasury Events:
·
Dallas Fed President
Richard Fisher (2014 voter, hawkish) to speak today at 12:40
Jason's Commentaries
Looking at the broader market, it was actually quite flat. Howoever, the market was being dragged down by the Oil companies, as oil drops below $80, now at $76 currently. Volumes were healthy and there were not much divergence around. As we are in the week of employment report once again, there's gonna be more volatility coming. On top of that, we're just out of the QE cycle and i'm gonna be expecting some turblence coming soon. Utilities managed to be the biggest gainer of the session while the energy sector was clearly the laggard of the session. Seems that the market is likely to be sidelined until the employment report on Friday.
Market Call: FLAT to downside
Date: 4 Nov 2014
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