Morning Update Note
Tuesday 23rd April 2019
- US stocks closed mostly stronger Monday, with the tech-heavy Nasdaq finishing at a six month high, as investors face a big week for corporate quarterly results and economic data following an extended holiday weekend. Investors were also monitoring a jump in crude oil prices as the US said it would end waivers for countries that import Iranian crude.
- The Dow Jones Industrial Average fell 0.2%, to 26,511.05, while the S&P 500 rose 0.1%, to 2,907.97, and the Nasdaq Composite gained 0.2%, to 8,015.27, its highest close since October 3rd.
- The Chicago Fed national activity index rose to negative 0.15 March from negative 0.31 in February. A zero value indicates the national economy is expanding at a trend rate of growth while negative values indicate below-trend growth and positive readings indicate above-trend.
- Existing homes were sold at a seasonally adjusted annual rate of 5.21 million in March, 4.9% lower than February’s pace, and missed the Econoday consensus of a 5.3 million rate.
- Oil prices rallied, with West Texas Intermediate crude futures up more than 2%, after reports that the US will stop issuing waivers for countries that import Iranian oil, with an official announcement possibly as soon as Monday.
- Some 150 S&P 500 companies are due to report quarterly earnings this week, with Kleenex parent Kimberly-Clark getting things started Monday morning by reporting first-quarter adjusted earnings and sales that fell less than expected. The stock jumped 5.4%, among the biggest S&P 500 winners.
- Boeing shed 1.3% to weigh on the Dow, after the New York Times reported over the weekend on concerns of lax safety tied to the production of the aircraft maker’s 787 Dreamliner. The report comes in the wake of the grounding of Boeing’s 737 Max jets after two deadly crashes.
- Tesla fell 3.9%. The electric-car maker is reportedly investigating a video from Shanghai that appeared to show a parked Tesla auto catching fire.
- Halliburton reversed direction to fall 0.1%, after the company reported earnings and revenue declines that were better than Wall Street had been expecting.
- Bed Bath & Beyond dropped 4%, after the retailer announced that it would shake up the composition of its board in response to shareholder pressure.
- European stocks were mixed on Thursday ahead of the Easter break, as yet more indicators pointed to malaise in the region’s economy.
- The Stoxx Europe 600 added 0.2% to 390.46.
- In the UK, the FTSE 100 lost 0.15% to 7459.88 after finishing flat the previous day, while Germany’s DAX fell by 0.3% to 12,122.03 and France dipped 0.4% to 5,542.17.
- The main focus for investors was the release of the region’s preliminary Purchasing Managers’ Index (PMI) surveys for April, which signaled that the economic stagnation cited by policymakers was not yet finished.
- France showed a decline in manufacturing output at 49.6 versus estimates of 50, though its services came in better at 50.5 versus predictions of 49.8. German manufacturing remained in contraction at 44.5 versus 45 estimated, but a significant services figure of 55.56 versus 55 estimated will likely assuage some fears about the region’s powerhouse.
- Unilever added 2%, after the consumer goods giant warned shareholders that underlying sales growth will be at “the lower half” of its self-set 3%-5% target, despite reporting better-than-expected results for the first quarter of the year.
- Kering, the French luxury fashion house, lost ground, after Jean-Marc Duplaix, the firm’s chief financial officer, reportedly said that its star performing brand Gucci is now in “a phase of normalization of this growth” following two years of “absolutely exceptional growth”.
- Asian markets were mixed on Tuesday, as oil prices surged to nearly six month highs after the US said it would soon impose sanctions on all buyers of Iranian oil.
- Japan’s Nikkei 225 reversed earlier losses to finish marginally higher by 0.2%. Hong Kong’s Hang Seng Index is also slightly higher.
- On mainland China, the Shanghai Composite slipped 0.4% and the smaller cap Shenzhen Composite dropped 1.1%. South Korea’s Kospi managed to eke out a small gain.
- There was no strong impetus for buying in Asia. Reports from a recent high level meeting in China, which was chaired by President Xi Jinping, showed willingness to fine-tune monetary policy but raised questions about future government stimulus.
- 10yr and 30yr US treasuries are currently trading at 2.58% and 2.98% respectively.
- 10yr UK gilts trade with a yield of 1.2%.
- German 10yr bund yields trade at 0.03%.
- 10yr Italian and Spanish bond yields trade at 2.63% and 1.08% respectively.
- The WTI crude oil price is $65.7.
- Brent crude is $74.58.
- The gold price is $1,272.65.
- The silver price is $14.95.
- The COMEX copper price is $2.91.
- The US dollar is trading at 111.88 against the Yen.
- The pound is trading at 1.30 against the US dollar.
- The pound is trading at 1.15 against the Euro.
The Psigma Investment Team
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