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28Th July 2016
OVERNIGHT MARKETS AND NEWS
Sep
E-mini S&Ps (ESU16 -0.10%)
this morning are trading slightly higher by +0.12% on support from a +5%
overnight rally in Facebook on better-than-expected revenue and user figures.
The Euro Stoxx 50 index this morning is down by -0.67%, undercut by the banking sector
after Lloyds Banking Group fell -4% on a disappointing earnings outlook
tied in part to Brexit. The European banking sector is also lower ahead of bank
stress-test results that will be released on Friday.
On
the more positive side, European stocks are getting some underlying support
this morning from news that the July Eurozone economic confidence index from
the European Commission rose by +0.2 points to 104.6 from 104.4 in June, which
was substantially stronger than market expectations for a-0.9 point decline to 103.5. The confidence
report suggested that Europe largely shook off concerns about the July 23
Brexit vote. The July German unemployment rate was unchanged at a record low of
6.1%. The Spanish Q2 unemployment rate fell to a 6-year low of 20%.
The
Nikkei index today closed -1.12% on yen strength with USD/JPY down -0.67 yen (-0.64%) this morning. The
Japanese markets are worried about whether the BOJ on Friday will announce a
sufficiently large expansion of new monetary stimulus measures to meet high
market expectations. Prime Minister Abe on Wednesday announced a $265 billion
fiscal stimulus plan to put pressure on the BOJ for the maximum amount of new
monetary stimulus.
The
rest of the Asian markets today closed mixed with support from Wednesday's FOMC
results that reduced concerns for a rate hike as early as the next FOMC meeting
in September: Hong Kong -0.20%,
China Shanghai +0.08%, Taiwan +0.15%, Australia +0.30%, Singapore -0.78%, South Korea-0.34%, India
+0.66%, Turkey +0.66%.
Sep
10-year T-notes (ZNU16 +0.01%)
are up +1.5 ticks this morning as the market looks ahead to today's 7-year
T-note auction. There are questions about Treasury demand at current yields
after the weak demand seen at Tuesday's 5-year T-note auction.
The
dollar index (DXY00 -0.46%)
is down -0.52 points (-0.53%) this morning as the
dollar continues to slide on the market's dovish interpretation of Wednesday's
FOMC post-meeting statement. The dollar is also lower on yen strength as
USD/JPY (^USDJPY) fell -0.67 (-0.64%) on fears that the BOJ will
disappoint on Friday. EUR/USD (^EURUSD)
this morning is up +0.30 (+0.27%).
Commodity
prices are up +0.42% this morning with support in part from today's -0.53% sell-off in the dollar index. Sep
crude oil (CLU16 +0.24%)
this morning is slightly lower by -0.05 (-0.12%) on continued overhang from
yesterday's weekly EIA that showed an unexpected +1.7 million bbl increase in
U.S. crude oil inventories and the third straight week of U.S. oil production
gains. Sep gasoline (RBU16 +0.61%)
this morning is up +0.0016 (+0.12%). Metals prices are trading sharply higher
on the weak dollar with Aug gold (GCQ16 +1.07%)
up +13.1 (+0.99%), Sep silver (SIU16 +2.13%)
up +0.415 (+2.08%), and Sep copper (HGU16 +1.01%) up +0.016 (+0.73%). Grains are
trading higher with Dec corn up +1.00 (+0.29%), Nov soybeans up +2.00 (+0.20%),
and Sep wheat up +3.50 (+0.84%). Softs are mixed with Oct sugar down -0.04 (-0.21%), Sep coffee up +0.25
(+0.18%), Sep cocoa up +23 (+0.81%), and Dec cotton down -1.29 (-1.75%).The Total Investment & Insurance Solutions
Key
U.S. news today includes: (1) weekly initial unemployment claims (expected
+8,000 to 261,000, previous -1,000
to 253,000) and continuing claims (expected +8,000 to 2.136 million, previous -25,000 to 2.128 million), (2) Jul
Kansas City Fed manufacturing activity (expected +2 to 4, Jun +7 to 2), (3)
Treasury auction of $28 billion of 7-year T-notes, and (4) USDA weekly Export
Sales.
There
are 67 of the S&P 500 companies that report earnings today with notable
reports including: Amazon.com (consensus $1.12), Alphabet (8.03), MasterCard
(0.90), Ford (0.60), Harley-Davidson (1.54), PG&E (0.92), Marathon
Petroleum (0.97), Dow Chemical (0.85), Baker Hughes (-0.62), CME Group (1.11).
U.S.
IPO's scheduled to price today: Bioventus Inc (BIOV), Talend SA (TLND).
Equity conferences this
week include: none.
Sep
E-mini S&Ps this morning are trading slightly higher by +0.12% on support
from a +5% overnight rally in Facebook on better-than-expected revenue and user
figures. Wednesday's closes: S&P 500 -0.12%,
Dow Jones -0.01%, Nasdaq +0.58%.
The S&P 500 on Wednesday closed slightly lower. Stocks were undercut by the
weaker-than-expected June durable goods orders report of -4.0% and -0.5% ex-transportation (vs market
expectations of -1.4% and +0.3%) and by the
weaker-than-expected U.S. June pending home sales report of +0.2% m/m (vs
expectations of +1.2%). There was also weakness in petroleum companies as Sep
crude oil fell by another -2.3% to a new 3-month low. However, stocks
saw underlying support from the FOMC's post-meeting statement that did not
suggest that the FOMC is on the verge of a rate hike at its next meeting in
September. U.S. stocks also got a boost from the early announcement of Japan's
new $265 billion fiscal stimulus package.The Total Investment & Insurance
Solutions
·
Facebook (FB +1.75%) rallied 5% overnight after
revenue and user figures topped estimates on a surge in mobile ads.
·
Groupon (GRPN -3.32%) rallied 24% in after-hours
trading on higher sales guidance for the remainder of the year.
·
Cirrus Logic (CRUS +2.50%) rallied 14% in after-hours
trading after strong revenue guidance and EPS and sales figures that beat the
consensus (Q1 EPS of 44 cents vs 27 cent consensus).
·
Whole Foods (WFM -1.38%) fell 4% in after-hours trading
after missing sales estimates on tougher competition.
·
Vertex
Pharmaceuticals (VRTX +1.08%) fell -2.5% in after-hours trading after reporting
disappointing sales for its Orkambi therapy.
·
Barrick Gold (ABX +4.40%) fell -2.6% in after-hours trading after releasing
its quarterly earnings report.
·
Earnings reports this
morning have been nearly all positive with results including: Fifth Third (FITB -0.05%)(0.41 vs 0.38 consensus),
Marathon Petroleum (MPC -2.02%)(1.62 vs 0.97), Dow Chemical (DOW +0.17%)(0.95 vs 0.85),
Colgate-Palmolive (CL -0.95%)(0.70 vs 0.60), Raytheon (RTN-0.04%)(2.38 vs 2.02),
Bristol-Myers (BMY +1.88%)(0.69 vs 0.66), CME Group (CME +1.20%) (1.14 vs 1.11),
MARKET
COMMENTS
Sep 10-year T-notes are
up +1.5 ticks this morning as the market looks ahead to today's 7-year T-note
auction. Wednesday's closes: TYU6 +13.5, FVU6 +8.5. Sep 10-year T-notes on
Wednesday rallied moderately on the weaker-than-expected U.S. durable goods and
pending home sales reports and on relief that the FOMC did not adopt more
hawkish language suggesting a rate hike in September. T-notes were also boosted
by the -2.3% sell-off in Sep crude oil that further
dampened inflation expectations.
The dollar index is down -0.52 points (-0.53%) this morning as the
dollar continues to slide on the market's dovish interpretation of Wednesday's
FOMC post-meeting statement. The dollar is also lower on yen strength as
USD/JPY fell -0.67 (-0.64%) on fears that the BOJ will
disappoint on Friday. EUR/USD this morning is up +0.30 (+0.27%). Wednesday's
closes: Dollar index -0.10 (-0.11%), EUR/USD +0.0072 (+0.66%),
USD/JPY +0.74 (+0.71%). The dollar index on Wednesday closed mildly lower on
the market's dovish interpretation of the FOMC's post-meeting statement.
USD/JPY rallied on Japanese Prime Minister Abe's earlier-than-expected
announcement of a $265 billion fiscal stimulus package, which will put pressure
on the BOJ for new stimulus measures at its Thu-Friday meeting.
Sep crude oil this
morning is slightly lower by -0.05 (-0.12%) on continued overhang from
yesterday's weekly EIA that showed an unexpected +1.7 million bbl increase in
U.S. crude oil inventories and the third straight week of U.S. oil production
gains. Sep gasoline this morning is up +0.0016 (+0.12%). Wednesday's closes:
CLU6 -1.00 (-2.33%), RBU6 -0.0264 (-1.96%). Sep crude oil and gasoline
on Wednesday closed lower with Sep crude oil posting a new 3-month low on the
EIA report showing a +1.67 million bbl rise in U.S. crude oil inventories (vs
expectations of -2.5 million bbls). Crude oil prices were
also undercut by the +0.2% increase in U.S. oil production to 8.515 million
bpd, the third straight weekly gain that now totals +1.0%.Total Investment & Insurance Solutions
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