Wednesday, April 11, 18
Stock futures are lower amid a cautious tone to global markets as investors weigh the possibility of a U.S. military strike in Syria while also watching developments in Special Counsel Robert Mueller’s investigation related to Russian involvement in the 2016 presidential election. Headline risk dragging markets lower overnight as Christine Lagarde, the head of the International Monetary Fund, has warned that the return of protectionism risks tearing up the current rulebook for global trade. Also, tensions between the U.S. and Russia heating up after Russia has warned that any U.S. missiles fired at Syria over a suspected chemical weapons attack on a rebel enclave would be shot down and the launch sites targeted. Also, on the agenda today, Facebook Inc Chief Executive Mark Zuckerberg returns to Capitol Hill for more questioning by lawmakers regarding privacy issues. Lastly, markets await an important round of economic data, with the consumer price index for March expected around 8:30 AM EST to get a gauge on inflation. Lots of moving parts all ahead of this Friday’s kickoff to earnings with large cap banks JPM, WFC, C and PNC all reporting. In Asian markets, The Nikkei Index dropped -107 points to settle at 21,687, the Shanghai Index gained 17 points to end at 3,208 and the Hang Seng Index gained 168 points to finish at 30,897. In Europe, the German DAX is down over -50 points at 12,330, while the FTSE 100 is down a few points around 7,250.
U.S. stocks jumped on Tuesday, extending gains from the prior day after China President Xi Jinping’s comments helped to ease fears that a trade war would break out between the world’s two largest economies. The Dow Jones Industrial Average jumped over 400 points, or 1.8%, while the Nasdaq Composite added 144 points, or over 2%, to end just shy of 7,100. As part of a broad-based rally, ten of the 11 S&P 500 sectors posted gains. Treasury yields inched higher Tuesday as the 10-year Treasury note yield added 1 bps to 2.799%, while the two-year note yield gained nearly 3 bps to 2.315%, its highest since March 20.
Market Closing Prices Yesterday
· The S&P 500 Index jumped 43.71 points, or 1.67%, to 2,656.87
· The Dow Jones Industrial Average rose 428.90 points, or 1.79%, to 24,408.00
· The Nasdaq Composite spiked 143.96 points, or 2.07%, to 7,094.30
· The Russell 2000 Index advanced 28.97 points, or 1.91% to 1,543.43
· 7:00 AM EST MBA Mortgage Applications Data
· 8:30 AM EST Consumer Price Index (CPI) MoM for March…est. 0.0%
· 8:30 AM EST CPI Ex: Food & Energy MoM for March…est. 0.2%
· 10:30 AM EST Weekly DOE Inventory Data
· 2:00 PM EST Monthly Budget Statement for March…est. (-$186.0B)
· 2:00 PM EST FOMC Meeting Minutes from 3/21
· Investor Intelligence Poll shows newsletter writers classified as bulls below 50 level for 6 of last 8 weeks; drop to 42.2% from 47.6% last week. Bears climb a 6th week to 18.6% vs 18.1% last week, remain at highest since September 20 and those expecting a correction rises to highest since May 25, 2016 at 39.2% versus 34.3% last week
· Manufacturing output in the U.K. fell on the month in February, falling -0.2% on the month in February after a flat January, the first monthly fall in almost a year.
· China’s central bank governor pledged to expand foreign access to the country’s banking, securities and insurance sectors this year and open a trading link between the Shanghai and London stock exchanges
Sector News Breakdown
· Tesco PLC (TSCDY) made a pretax profit of 1.30 billion pounds ($1.85 billion) in the financial year ended Feb. 24, beating expectations of GBP1.03 billion; reported a pretax profit of GBP145 million the year earlier and the grocer generated revenue of GBP57.50 billion
· Procter & Gamble (PG) boosting its quarterly dividend to 71.72c from 68.96c
· Spirit Air (SAVE) now sees FY2018 CASM ex-fuel down 3%-4% YoY; Total revenue per available seat mile (TRASM) for 1Q is estimated to be approximately 8.37c, down about 2.4% compared to same quarter last year
Energy & Industrials
· The American Petroleum Institute (API) reported that U.S. crude supplies rose by roughly 1.8 million barrels for the week ended April 6, showed a rise of 2 million barrels in gasoline stockpiles, while inventories of distillates shed 3.8 million barrels
· Total SA FP (TOT) said Wednesday that it has acquired several assets in the Gulf of Mexico for around $300 million via an auction of bankrupt oil-exploration company Cobalt International Energy Inc.’s (CIEIQ) assets.
· Saudi Aramco and a consortium of Indian state refiners agreed to build a mega refinery and petrochemical project on India’s west coast for an estimated $44 billion, oil officials at the signing of an initial agreement said – Reuters
· Diamondback Energy (FANG) announced that production for Q1 was 102.6 Mboe/d, an increase of over 10% from Q4 2017 average daily production of 92.9 Mboe/d. Q1 average realized prices were $61.66 per barrel of oil, $2.20 per Mcf of natural gas and $24.64 per barrel of natural gas liquids, resulting in a total equivalent unhedged price of $50.55/boe, up 12% from $45.31/boe in Q4 2017
· Fastenal (FAST) Q1 EPS 61c/$1.19B vs. est. 61c/$1.19B; Q1 daily sales up 13.2%
· Layne Christensen (LAYN) Q4 EPS 13c on revenue $110.4M, and adjusted Ebitda $5.45M; reports total backlog $178.6M at January 31
· Mitcham Industries (MIND) Q4 adjusted EPS loss (37c)/$10.4M vs. est. loss (30c)/$10.95M
· Invesco Ltd. (IVZ) preliminary month-end assets under management (AUM) of $934.2 billion, a decrease of 1.2% month over month. The decrease was driven by unfavorable market returns, lower money market AUM, net long-term outflows (excluding reinvested distributions), and non-management fee earning AUM outflows
· AllianceBernstein L.P. (AB) preliminary assets under management decreased to $549 billion during March 2018 from $555 billion at the end of February. The 1.1% decline was due to firm wide net outflows and market depreciation.
· Artisan Partners Asset Management Inc. (APAM) reported that its assets under management (AUM) as of March 31, 2018 totaled $114.8 billion. Separate accounts accounted for $56.9 billion of total firm AUM, while Artisan Funds and Artisan Global Funds accounted for $57.9 billion
· PayPal Holdings Inc. (PYPL) said it would change the way it classifies total payment volume and active accounts, mainly to reflect the role co-branded cards now play for the company. Total payment volume will include volume from the company’s merchant debit card program, which will now be included in “transaction revenues” rather than “other value-added services” revenue
· Analogic Corporation (ALOG) to be acquired by an affiliate of Altaris Capital Partners for $84.00 per share in cash, or approximately $1.1B on a fully diluted basis, a 13% discount to yesterday close (stocks closed at $96.05 per share) https://on.mktw.net/2HcSvn6
Technology, Media & Telecom
· VirnetX Holding Corp. (VHC) shares surged over 30% after Bloomberg reported a federal jury in Texas said Apple Inc. (AAPL) must pay the security software company $502.6 million over infringed patents. The jury ruled that Apple’s FaceTime, VPN on Demand and iMessage features infringed four of VirnetX’s patents
· Alphabet Inc’s Google (GOOGL) is in talks to buy Nokia Oyj’s (NOK) airplane broadband business, Bloomberg reported on Tuesday, citing people familiar with the matter https://reut.rs/2qp2iff
· Exala (XELA) announces 7M offering of common stock for holders
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.