Morning Preview: April 24th, 2017

eOptionDaily Market Report

U.S. equity futures are soaring early, tracking developments in Europe, after Centrist Emmanuel Macron and far-right leader Marine Le Pen are now set to face each other in a May 7 runoff for the French presidency after coming first and second in the first round of voting. Markets are also getting an additional boost after President Trump vowed to announce tax reforms this week. S&P 500 are up around 1% throughout the session, while defensive assets such as gold and U.S. Treasury prices fell. The first round of the election tossed out the “worst case” market scenario of Le Pen vs. Melenchon as both had talked about France leaving the EuroZone. Macron and Le Pen both took around 23 percent of the vote. The euro pared gains after jumping around 2% vs. the dollar overnight to highest levels since November.

In Asian markets, The Nikkei Index jumped 255 points (1.37%) to settle at 18,875, the Shanghai Index dropped -43 points to close at 3,129, and the Hang Seng Index rose 97 points to close at 24,139. In Europe, markets are broadly higher, with the German DAX up over 360 points (or more than 3%) to trade above 12,400, while the FTSE 100 is higher by over 130 points (nearly 2%) and the Paris Cac-40 up over 4.6% as it nears the 5,300 level (9-year highs). The Shanghai Composite Index fell 1.4% at the close, the biggest one-day loss since Dec. 12. Industrial companies and material producers led losses

Market Closing Prices Yesterday

  • The S&P 500 Index dropped -7.15 points, or 0.30%, to 2,348.69
  • The Dow Jones Industrial Average fell -30.95 points, or 0.15%, to 20,547.76
  • The Nasdaq Composite slipped -6.26 points, or 0.11%, to 5,910.52
  • The Russell 2000 Index declined -4.30 points, or 0.31% to 1,379.85

Events Calendar for Today

  • 8:30 AM ET          Chicago Fed Nat Activity Index for March…est. 0.5
  • 10:30 AM ET       Dallas Fed Manufacturing Activity for April…est. 17.0
  • 11:30 AM ET       Fed’s Kashkari speaks at UCLA in California
  • 3:15 PM ET          Fed’s Kashkari participates in Q&A

Earnings Calendar:

  • Earnings Before the Open: BOH, FFWM, HAL, HAS, HLX, IBCP, ITW, KMB, LII, NS, NSH, OPB, TCB, TNC, WASH
  • Earnings After the Close: AA, ACC, ADC, AKR, AMP, BANR, CBU, CCI, CDNS, CR, ESRX, HMN, HMST, HSII, HTLF, KNL, NEM, OI, QDEL, RE, RMBS, RRC, SANM, SLCA, SWFT, UDR, UIS, WHR, WNC, WRI, ZION

World News

  • Centrist Emmanuel Macron and far-right nationalist Marine Le Pen won the first round of the French presidential election, triggering a runoff on May 7 between two radically different visions of the country’s future. Macron looks to have come 1st with 23.61%, Le Pen 2nd with 22.20%, as the euro spikes given the worst-case market scenario of Le Pen vs Melenchon in Round 2 no longer an option (both had talked about France leaving the EuroZone)
Sector News Breakdown

Consumer

  • Hasbro (HAS) Q1 EPS 54c/$849.7M vs. est. 38c/$818.2M, the better results come after disappointing quarterly earnings from Mattel (MAT) on Friday
  • O’Reilly Automotive (ORLY) shares could have more than 70% upside in three years according to Barron’s as the auto-parts retailer’s veteran management and longstanding relationships with mechanics help it to stave off online shopping giant Amazon.com’s foray into the business
  • Harley-Davidson (HOG) mentioned cautiously in Barron’s saying shares remains unattractive as demand continued to slump in the March quarter, and while management reiterated its 2017 forecast, Harley has proven itself “poor” at forecasting sales in recent years
  • British luxury retailer Jimmy Choo is seeking offers for the company as part of a review of its strategic options to maximize shareholder value, it said on Monday.

Energy

  • Helix Energy (HLX) Q1 EPS loss (11c)/$104.5M vs. est. loss (13c)/$113.46M
  • Nustar GP Holdings (NSH) Q1 EPS 39c vs. est. 40c

Financials

  • Lodging real estate investment trust RLJ Lodging Trust (RLJ) said on Monday it agreed to buy FelCor Lodging Trust Inc. (FCH), making it one of the top lodging REITs an enterprise value of $7 billion. https://goo.gl/95EGds
  • Bank stocks look attractive again after a recent 10% pullback, according to Barron’s, saying bank capital returns in the coming year are likely to be among the best of any industry. Median earnings among large banks are expected to increase by high-single digits this year, compared with two percent growth in each of the past three years, according to Barclays Plc
  • In Barron’s, Morningstar (MORN) CEO Kunal Kapoor discusses the company’s plan to introduce nine of its own mutual funds in the fourth quarter of this year, expanding from its role as an analyzer of funds. The funds will eliminate some fees and be competitive with ETFs, Kapoor said
  • Seritage Growth Properties (SRG), a real estate investment trust spun off from Sears Holdings, could be attractive for long-term investors according to Barron’s saying the firm’s equity could be worth more than eight times its current value in 10 years as it redevelops and re-leases Sears properties to higher-paying tenants

Healthcare

  • Becton Dickinson (BDX) to acquire R. Bard (BCR) in $24B cash and stock deal, where BDX will acquire Bard for $317.00 per Bard common share in cash and stock. Bard holders to get $222.93 in cash, 0.5077 shares of BD stock https://goo.gl/hzxizs
  • Sarepta Therapeutics (SRPT) shares could double or more according to Barron’s as sales of its Exondys 51 drug are expected to ramp up this year and next. The company may also become a takeover target as its Duchenne muscular dystrophy drug draws broader support from insurers.

Industrials & Materials

  • Gold could rise above $1,300 an ounce from its current $1,284 in coming months amid signs that President Donald Trump’s agenda for cutting taxes and boosting infrastructure spending has been bogged down, Barron’s reported according to analysts at Standard Bank.
  • Bloomberg reports this morning that PPG Industries (PPG) submits revised offer to buy Akzo Nobel (AZKZOY); PPG’s increased price of Euro 96.75 per outstanding ordinary share of AkzoNobel, comprised of cash of Euro 61.50 and 0.357 shares of PPG common stock.
  • Dubai Aerospace Enterprise Ltd announced a takeover of aircraft lessor AWAS, adding more than 200 planes to its fleet. Dubai Aerospace said the combined company will have an owned, managed and committed aircraft fleet of 394 aircraft with a total value of more than $14 billion. https://goo.gl/ajIMK

Technology, Media & Telecom

  • AT&T (T) is offering home television through its DirecTV and U-verse brand as well as “discounted access to entertainment on every screen” if regulators approve its $85B Time Warner (TWX) takeover, the Wall Street Journal reports
  • Quintiles IMS Holdings (Q) is expect to announce an agreement today to provide its clinical-trial and prescription-drug data through the cloud-based technology developed by Salesforce.com (CRM), The Wall Street Journal reports https://goo.gl/8I3j6K
  • com (SOHU) Q1 EPS loss ($1.75)/$374M vs. est. loss ($1.63)/$363M; sees Q2 revs $390-$420M vs. est. $425.7M
  • Xilinx (XLNX) upgraded to Outperform from Neutral at Credit Suisse
  • Comcast’s (CMCSA) “The Fate of The Furious” earned $38.7M over the April 23 weekend

Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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