Monday, April 9, 18
Stock futures are bouncing to start the week, led higher on reports that President Trump may have softened his approach in a trade dispute with China, while reports also indicate that Israeli aircraft carried out an attack on an airbase in Syria early Monday, the Russian Defense Ministry said, shifting away attention from the U.S. after President Donald Trump vowed retaliation for a reported chemical weapons attack over the weekend. White House administration officials spoke Sunday talk shows, playing down the possibility that the situation will escalate, with Treasury Secretary Mnuchin saying that he doesn’t “expect there will be a trade war.” Bloomberg did report that China is evaluating the potential impact of a gradual yuan depreciation, as the country’s leaders weigh their options in a trade. In Asian markets, The Nikkei Index gained 110 points to settle at 21,678, the Shanghai Index…the Hang Seng Index rose 384 points to end at 30,229. In Europe, the German DAX is up over 80 points at 12,330, while the FTSE 100 is little changed at 7,185.
Stocks got crushed again on Friday as volatility and concern continued over fresh tariffs announcements by the U.S. and China as well as a surprisingly weaker jobs report (adding 103K jobs in March, well below the expected figure above 170K jobs, though unemployment held steady at 4.1%). It has been a tumultuous few weeks for global stock averages starting a month ago after President Trump first announced tariffs on steel and aluminum imports, though exempted several countries (including Canada, Mexico, and the EU among them), but trade rhetoric intensified with China. China then recently announced retaliatory tariffs on over 106 U.S. food products while the Trump administration announced additional tariffs on 1,300 products made in China and exported to the U.S., to go into effect after a 60-day public commentary period. Reports over the weekend appear to show as easing of the “tough talk” between the U.S. and China, though damage has already been inflicted on markets.
Market Closing Prices Yesterday
· The S&P 500 Index dropped -58.37 points, or 2.19%, to 2,604.47
· The Dow Jones Industrial Average fell -572.46 points, or 2.34%, to 23,932.76
· The Nasdaq Composite tanked -161.44 points, or 2.28%, to 6,915.11
· The Russell 2000 Index declined -29.63 points, or 1.92% to 1,513.30
· None today in the U.S.
· U.S. President Donald Trump said there would be a “big price to pay” for a chemical attack against a besieged rebel-held town in Syria where medical aid groups reported dozens of people were killed by poison gas. The Syrian state denied government forces had launched any chemical attack and Russia, President Bashar al-Assad’s called the reports bogus – Reuters
· French Foreign Minister Jean-Yves Le Drian on Sunday said reports of a chemical attack in a rebel-held town in Syria were extremely worrying and called for the United Nations Security Council to meet quickly
· After threatening to slap China with new tariffs, the Trump administration officials softened some of the rhetoric, noting that the penalties are not imminent and there is ample time to work out a deal and step back from a possible trade war – WSJ https://on.wsj.com/2qdYTAK
· The Trump administration, facing hard deadlines and growing pressure from Capitol Hill over the president’s trade powers, is accelerating negotiations to overhaul the North American Free Trade Agreement (NAFTA) and seeking to put together a deal as soon as the coming weeks https://on.wsj.com/2qg1uu2
Sector News Breakdown
· General Motors (GM) and its joint ventures in China delivered a March record of 352,346 vehicles, according to a statement on the company website, with sales up 2% YoY
· Hilton (HLT) to buy 10M shares directly from holders
· Deutsche Bank (DB) appoints Christian Sewing, currently co-deputy CEO of Deutsche Bank, as the new CEO of Germany’s biggest lender, replacing John Cryan
· PayPal Holdings Inc. (PYPL) said it has entered a partnership with a Kenyan digital payments provider, in line with a general trend among financial-technology giants to gain exposure to new regions.
· Novartis (NVS) agreed to buy AveXis (AVXS) for $8.7 billion, saying it will pay $218 for each share in Illinois-based AveXis, an 88% premium to its closing price Friday https://on.mktw.net/2ICKtRw
· Menlo Therapeutics (MNLO) said Serlopitant for the treatment of pruritus associated with atopic dermatitis didn’t meet the primary or key secondary efficacy endpoints in a Phase 2 trial
· Pacira (PCRX) announced that the U.S. FDA has approved its supplemental new drug application to broaden the use of EXPAREL to include administration via interscalene brachial plexus block to produce postsurgical regional analgesia
Industrials & Materials
· American Airlines Group Inc. (AAL) ordered 47 Boeing Co. (BA) 787 Dreamliners for long-range flying, expanding its fleet of the advanced carbon-composite jetliners. In a related move, American canceled an order for 22 of Airbus’s twin-aisle A350 jets. The Boeing deal is worth a total of $12.3 billion before customary discounts.
· Coeur Mining (CDE) announced Q1 2018 production of 3.2M ounces of silver and 85,383 ounces of gold, or 8.3M silver equivalent ounces
· Shares of Russian aluminum giant United Company Rusal Plc plunged as much as 40% on Monday as investors bailed on the stock after it was included in a new list of U.S. sanctions targeting Russian companies and their owners – Reuters
Technology, Media & Telecom
· Viacom Inc (VIAB) has asked CBS Corp (CBS) to sweeten its merger bid by about $2.8 billion or almost a quarter more than CBS’s offer, Reuters https://reut.rs/2JvIpfb
· Alphabet (GOOGL) positive mention in Barron’s noting it has the world’s dominant search engine in Google, as well as valuable businesses like YouTube, the Android cellphone operating system, and Waymo autonomous vehicles, but investor are not giving the company enough credit partly because of worries that it, like Facebook (FB), will soon face greater government regulation
· IAC/InterActiveCorp (IAC) mentioned positively in Barron’s saying shares are trading at a discount, and its $12.4 billion valuation comes in well below its most valuable assets. Cowen analyst says IAC is “overly mispriced.”
· Smartphone chipmakers Skyworks Solutions (SWKS), Qorvo (QRVO), Qualcomm (QCOM) and Synaptics (SYNA) are going to struggle as phone sales flatline this year, says Barron’s. However, the phone screen maker Universal Display (OLED) is on sale after a 43% drop this year
· Spotify Technology (SPOT) mentioned positively in Barron’s saying after it made its market debut last week and while its stock price could remain volatile in the months ahead, shares could “reasonably” rise to five times sales
· Barron’s notes that this week Facebook’s (FB) CEO Mark Zuckerberg will come to Washington to testify before an eager group of lawmakers. Barron’s said this week’s optics will no doubt be bad, but the stock’s valuation already reflects much of the pain
· Paramount’s (VIAB) horror-thriller “A Quiet Place” opened with a better-than-expected $50M from 3,508 theaters in North America, while Warner Bros. (TWX) “Ready Player One” came in second, with $25.1M in its 2nd week for an 11-day domestic total of $96.9M
· Pivotal Software, the cloud-native platform in which Dell Technologies holds a majority stake, says it plans to offer 33.1 million shares in its IPO at $14 to $16 share
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.