Monday, June 18, 18
U.S. stock futures are pointing to a lower open, with the Dow Industrials on track for its 5th straight losing session as trade fears between the U.S. and its partners continue to weigh on market sentiment. Trade tensions remain key to stock markets after China announced plans for retaliatory tariffs on U.S. goods worth $34 billion late last week in response to U.S. President Trump last week approving a first round of levies on about $50 billion in Chinese products. The Dow Industrial Average slumped Friday, ending the week with a weekly drop of 0.9%, while the S&P 500 and Nasdaq Composite COMP, also finished in the red Friday, but ended in the green for the week. Today is a quiet day with no major economic data released or earnings results in the U.S. with attention on the upcoming OPEC meeting later this week which will likely impact the energy market.
In Asian markets, The Nikkei Index declined -171 points to settle at 22,680, the Shanghai Index dipped -22 points to end at 3,021 and the Hang Seng Index fell -130 points to close at 30,309. In Europe, the German DAX is down over -150 points at 12,850, while the FTSE 100 is down around -20 points holding above 7,600. European stock markets headed mostly lower on Monday, as Angela Merkel’s tenure as German Chancellor came under threat and the trade conflict between the U.S. and China escalated. Angela Merkel’s coalition is coming under increasing strain over the migrant issue according to reports.
Market Closing Prices Yesterday
· The S&P 500 Index slipped -2.83 points, or 0.10%, to 2,779.66
· The Dow Jones Industrial Average fell -84.83 points, or 0.34%, to 25,090.48
· The Nasdaq Composite dropped -14.66 points, or 0.19%, to 7,746.38
· The Russell 2000 Index declined -0.82 points, or 0.05% to 1,683.91
· 1:00 PM EST NAHB Housing Market Index for June
· Japan logged its first trade deficit in three months in May on a surge in imports of aircraft and aircraft engines from the United States posting a trade deficit of Y578.3 billion in May, overshooting an estimate for a deficit of Y21 billion in a Nikkei survey
· Iran says Venezuela and Iraq will join it in blocking a proposal to increase oil production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week. “Three OPEC founders are going to stop it,” Iran’s representative to the bloc Hossein Kazempour Ardebili said in comments to Bloomberg. “If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement.”
Sector News Breakdown
· American Axle & Manufacturing Holdings (AXL) trades at a cheap valuation, presenting an opportunity for value investors, according to Barron’s which noted the company is working to reduce its debt load, and acquired Metaldyne Performance Group to reduce its reliance on orders from General Motors
· Magna International (MGA) mentioned cautiously in Barron’s saying the Canadian tire maker could be hurt by auto tariffs and the prospect of a trade war
· Perry Ellis International Inc. (PERY) agreed to be taken private by its founder, George Feldenkreis, in a $437 million deal after Feldenkreis spent months pushing for the company to be sold; investors will get $27.50 a share in cash
· Unilever (UN) is cutting ties with digital media “influencers” that buy followers, saying it wants to help make advertising more transparent
· Volkswagen AG’s (VLKAY) luxury brand Audi CEO Stadler was arrested Monday in connection with an investigation of his role in the German car maker’s diesel emissions-cheating scandal.
· Baker Hughes (BHGE) said the company was awarded an integrated well services contract to support a large proportion of Equinor’s drilling and well construction activities in the Norwegian sector of the North Sea for an initial period of four years with options to extend by up to 10 years
· Penn Virginia (PVAC) will replace Analogic (ALOG) in the S&P SmallCap 600 effective prior to the open of trading on Friday, June 22
· Goldman downgraded online real estate stocks Zillow (ZG) and Redfin (RDFN) amid expectations for continued tightness in housing and mortgage availability; also cites likely seasonal underperformance, signs of increasing competition in online real estate, ZG’s significant outperformance YTD, RDN’s rising cost of operation; ZG cut to neutral and RDFN cut to sell
· Green Dot (GDOT) downgraded to Neutral on valuation at BTIG
· Barron’s said Berkshire (BRK/A) should buy back stock and consider paying a dividend and said that Warren Buffett should give investors more information by holding an investor day to showcase other executives, provide more information on the investment portfolio and disclose more financial information about Berkshire’s subsidiaries.
· FleetCor Technologies (FLT) will replace Time Warner (TWX) in the S&P 500 effective prior to the open of trading on Wednesday, June 20.
· Galmed (GLMD) files to sell $75M in common stock
· PTC Therapeutics (PTCT) reported encouraging interim results from a study of risdiplam (RG7916) in babies with Type 1 Spinal Muscular Atrophy (SMA), at the Annual SMA Researcher Meeting – also watch shares in BIIB
· Merck KGaA reports retrospective data from Mavanclad (Cladribine tablets) from Phase III CLARITY study showed benefits in patients with relapsing remitting MS aged less than 50 and greater than 50 years
· Cytokinetics (CYTK) reports dose-dependent results from SMA Therapy; said Phase II data of Cytokinetics’ reldesemtiv in patients with spinal muscular atrophy showed mixed results in terms of the six-minute walk distance test
· Evotec AG (EVT.XE) signed a transaction agreement with Sanofi SA (SNY) to combat infectious diseases; as part of the transaction, France’s Sanofi will pay Evotec 60 million euros ($69.6 million) up front and provide the German company with significant long-term funding
· Barron’s said a sell-off in gene-editing stocks like Crispr Therapeutics (CRSP) and Editas Medicine (EDIT) is overdone. The companies tumbled after scientific studies raised questions about whether the technique could promote cancer-causing mutations in cells. “The media reports have been exaggerating things,” one of the study authors told Barron’s.
Technology, Media & Telecom
· Alphabet Inc.’s Google (GOOGL) unit is investing $550 million in Chinese e-commerce retailer JD.com Inc. (JD), the partnership will help both companies expand their retailing presence in Southeast Asia, the U.S. and Europe https://on.mktw.net/2JV9KHz
· Disney (DIS) and Pixar’s (PIXR) “Incredibles 2” earned $180M in 4,410 locations in its opening weekend, making the sequel the best ever debut for an animated film, ComScore reported
· NVIDIA (NVDA) will replace Time Warner (TWX) in the S&P 100
· Mellanox Technologies Inc (MLNX) is close to reaching a deal with activist investor Starboard Value LP over the composition of its board of directors, according to reports
· Sprint Corp (S) and T-Mobile US Inc (TMUS) have informed the Federal Communications Commission that they will formally file an application asking for approval to merge on Monday, Reuters reported
· Verizon Communications (VZ) may be a good investment pick according to Barron’s, as the company focuses on improving its network infrastructure while rivals like AT&T (T) invest in content. Verizon trades at 10.5x estimated earnings for the next 12 months, the cheapest since the financial crisis, and below its 10-year average