Monday, December 17, 2018
Stock futures point to a slightly lower open, as investors prepare for a busy week of central bank action while a partial government shutdown in the U.S. looms. Before the Christmas break falls up on stock markets next week, there are a handful of potential market moving events this week including: markets expect the Federal Reserve to raise interest rates for the fourth time this year on Wednesday while also watch rate decisions in England and Japan. Meanwhile, the U.S. is on course for a partial government shutdown as President Donald Trump has said he would be “proud” to close the government if he doesn’t get funding for a border wall. The White House on Sunday pushed the federal government closer to the brink of a partial shutdown later this week, digging in on its demand for $5 billion to build a border wall as congressional Democrats stood firm against it. “We will do whatever is necessary to build the border wall to stop this ongoing crisis of immigration,” said White House senior adviser Stephen Miller. Also this week, the EC mulls sanctions against Italy for breaching budget rules and volume may increase Friday amid quadruple witching option expiration. In Asian markets, The Nikkei Index gained 132 points to settle at 21,506, the Shanghai Index rose 4 points to 2,597 and the Hang Seng Index dipped 6 points to 26,087. In Europe, the German DAX is down -15 points at 10,850, while the FTSE 100 is down over -10 points at 6,830 led by weakness in retailers after a profit-warning in the sector.
Stocks ended the week on a down note Friday, falling sharply on worries about global growth after weaker-than-expected Chinese data. The Dow Jones Industrial Average fell around 500-points, or 2%, to finish near 24,100, moving the index back into correction territory, defined as a pullback of at least 10% from a recent peak. The S&P 500 dropped 1.9% to end near 2,600. The S&P and Dow both saw a weekly decline of 2%, while the Nasdaq fell 2.3%.
Market Closing Prices Yesterday
· The S&P 500 Index dropped -50.59 points, or 1.91%, to 2,599.95
· The Dow Jones Industrial Average sunk -496.87 points, or 2.02%, to 24,100.51
· The Nasdaq Composite plunged -159.67 points, or 2.26%, to 6,910.66
· The Russell 2000 Index declined -21.89 points, or 1.53% to 1,410.81
· 8:30 AM EST Empire Manufacturing for December…est. 20.0
· 10:00 AM EST NAHB Housing Market Index for December…est. 61
· 4:00 PM EST Net Long-term TIC Flows for October…prior $30.8B
Sector News Breakdown
· Renault SA has urged Nissan Motor Co. (NSANY) to call a meeting of its shareholders after the Japanese company and its former chairman, Carlos Ghosn, were indicted on allegations of financial misconduct.
· U.K. fashion retailer ASOS PLC (ASC.LN) warned of difficult November trading and cut its full-year outlook as shares tumbled; Asos signaled that the consumer uncertainty that has weighed on high street shop chains is hitting the online sector
· Fashion retailer Hennes & Mauritz AB (HM-B.SK) reported Q4 sales growth in line with expectations saying sales excluding value-added tax, rose 12% from a year earlier to 56.43 billion Swedish kronor ($4.94 billion) vs. est. SEK56.43 billion.
· Qatar Petroleum is looking to invest at least $20 billion in the U.S. over the coming few years, its chief executive told Reuters, after the Gulf Arab state unexpectedly quit OPEC this month.
· SSE PLC (SSE.LN) said that it has terminated plans to merge its household and energy services business with Innogy SE’s (IGY.XE)U.K. retail division, Npower, as terms for a revised deal couldn’t be reached.
· Malaysian authorities filed criminal charges against Goldman Sachs Group Inc. (GS) and a former partner of the bank in connection with the 1MDB financial scandal, the country’s attorney general said in a statement
· PayPal Holdings (PYPL) should benefit from the growth in e-commerce around the globe according to Barron’s, helping it have another lever for growth instead of just relying on the broader economy, according to Nuveen’s Saira Malik
· Bankia has agreed the sale of €3.07B in ‘toxic’ real estate assets to the private equity firm Lone Star, the Spanish lender announced in a regulatory filing – Financial Times
· Supernus Pharmaceuticals (SUPN) said the U.S. FDA approved the expanded use of Oxtellar XR as a monotherapy treatment option for partial-onset seizures
· DaVita Inc. (DVA) and UnitedHealth’s Optum Inc. amended the terms of their to deal to expedite clearing the last hurdle to get the transaction approved by the FTC, as well as due to underlying business performance; agree to cut deal price to $4.34B from $4.9B
· WellCare (WCG) backs FY18 adj. EPS view of $10.90-$11.00 vs. est. $10.88 and backs FY18 revenue guidance of $20B-$20.3B vs. est. $20.17B
Industrials & Materials
· ABB Ltd. (ABB) agreed to sell an 80.1% stake in its power grids division to Hitachi Ltd. (6501.TO), generating net cash proceeds of between $7.6 billion and $7.8 billion; deal includes an option for ABB to exit the remaining 19.9% stake, exercisable three years after closing with a floor price at 90% of the agreed enterprise value for the whole unit https://on.mktw.net/2rEbUE1
· BHP Group Ltd. (BHP) said it purchased 5% of its stock in a $5.2 billion buyback funded by the sale of its U.S. shale unit.
· Commodity laggards this year like gold and copper could turn out to be next year’s leaders, Barron’s said. Direxion’s Ed Egilinsky says copper is one of the “most promising” commodities for 2019 if trade disputes are resolved. Teucrium Trading’s Sal Gilbertie said corn prices could benefit from rising use and a projected decline in inventories
· OSI Systems Inc. (OSIS) was awarded a U.S. Defense Logistics Agency contract valued at up to $450M; the contract will run through Dec., 2023, according to the Defense Department.
Technology, Media & Telecom
· Netflix Inc.’s (NFLX) plans to become the most prolific movie studio in Hollywood are quickly coming together. On Sunday, the New York Times profiled Scott Stuber, Netflix’s original-movie chief, and described a coming “cinematic onslaught” by the streaming giant, which is reportedly set to release about 90 films a year.
· T-Mobile US Inc (TMUS) and Sprint Corp (S) believe their foreign owners’ offer to stop using Huawei Technologies equipment will help with the United States clearing their $26 billion merger deal, sources said – Reuters
· Google (GOOGL) has said it will more than double its staff in New York over the next decade as the Silicon Valley search group announced plans for a major expansion in the city
· Barron’s said even if investors have reason to be wary after a rocky few months in the market, U.S. stocks still look appealing as 2019 approaches: Barron’s top 10 stock picks for 2019 are Alphabet (GOOGL), Apple (AAPL), Bank of America (BAC), BlackRock (BLK), Caterpillar (CAT), Chevron (CVX), Daimler (DDAIF), Delta Air (DAL), Energy Transfer (ET) & Toll Brothers (TOL)
· Barron’s said while Amazon.com (AMZN) and Microsoft (MSFT) are obvious winners in the race for cloud services, Intel (INTC) should benefit as it provides server chips to the cloud. The new chip at Advanced Micro Devices (AMD) should give it an advantage over Intel