Quantamize Afternoon Market Update March 16

Mar 16, 2018

US Midday Review

US markets are broadly higher midday with higher than expected consumer sentiment numbers from March (102 vs 99.2 consensus) as a contributing factor.

The S&P 500 is up 0.33% midday. Energy rose 1.22%, and is the best performing sector. On the heels of advances during yesterday’s trading, S&P financials are higher again today by 0.63%. Technology shares are mixed with telecommunications stocks advancing 0.74%, while information technology declined by 0.07%. Info tech is the only sector to post negative returns.

The Russell 2000 is trading higher as well, and it is up by 0.58%. As with large-cap S&P energy stocks, the Russell 2000 energy sector is the best outperformer with returns of 2.01%. Materials and consumer discretionary were higher by 1.16% and 1.06%, respectively. There are no sectors posting negative returns in the Russell 2000 midday, but technology is the biggest underperformer, rising 0.06%.

Trending Stocks News

JD.COM (JD), the second largest e-commerce company in China, is planning to raise $1.9B in new equity. This would value the company at $20B. JD.com is trying to expand its reach in the securities, banking and insurance businesses. JD shares are 0.09% lower today.

NIKE (NKE) President, Trevor Edwards, is stepping down from his role due to allegations of improper conduct. Edwards was viewed as the next potential CEO. Shares are 0.16% higher today.

TIFFANY (TIF) reported 4Q adjusted EPS of $1.67, beating estimates of $1.64. 4Q revenue of 1.33B, also beat estimates of 1.32B. Shares are down 4.39%, as same-store sales numbers were lower than expected. 4Q same-store sales were +1%, Wall Street was expecting same-store sales of +2.7%

TENCENT (700-HK) denied rumors that it was planning to invest in the cryptocurrency Ripple. Tencent’s US ADR (TCEHY) shares are down 1.19%. Ripple is up 3.48%.

FIBRIA CELLULOSE (FIBR3.BZ) shares are 9.71% lower today after it agreed to be purchased by SUZANO PAPEL E CELOLOSE SA (SUZB3.BZ). The deal is worth ~60B reais or $18B. Suzano shares are up 19.77%.

ADIDAS (ADS.GY) was upgraded to buy from hold at LBBW, with a €220 price target. Adidas shares are up 0.50%.

S&P Gainers

  • ULTA +7.31%
  • WDC +3.39%
  • BHF +3.16%
  • ADBE +2.72%
S&P Laggards
  • AVGO -4.01%
  • TIF -3.87%
  • AVY -2.79%
  • ATUI -2.22%
RTY Gainers
  • CTRN +15.49%
  • ZUMZ +11.25%
  • SNDX +11.14%%
  • SCUL +10.52%
RTY Laggards
  • OSTK -8.40%
  • ARNA -6.57%
  • BLUE -6.41%
  • MDGL -5.74%

Rates & Commodities Review

US Bonds have given back earlier gains on the day as United States economic data released this morning suggests inflationary pressure for bonds. The US Industrial Production expanded 1.1% M/M in February vs. an estimate of 0.4% while US Manufacturing Production expanded 1.2% M/M in February vs. an estimate of 0.5%. Additionally, University of Michigan’s one-year inflation expectations have expanded to 2.9% versus last month’s reading of 2.7%.  Investors have focused on a flattening yield curve this week with the possibility of yield curve inversion at some point in the medium-term. These concerns have dissipated today as investors are selling duration with the 30-Year at 3.076% from 3.045% earlier this morning and the 10-year at 2.846% from 2.817% this morning. The front end of the curve remains mostly flat to slightly negative.

The USD$ is stronger across all major currency pairs with the USD$ Index up 0.20%. The notable exception is USD$ weakness against the JPY¥ (+.20%), which can be attributed to Shinzo Abe’s involvement with the Moritomo Scandal. There is a concern that Prime Minister Abe’s involvement may put Japan’s current loose monetary policy strategy at risk.

Despite the strength in the USD$, WTI Crude oil is up 1.20% on the day, just under $62/barrel with no major news out on the day. Following the risk-on sentiment, all major metals are weaker on the day with the palladium the only exception.

Cryptocurrency Recap

Cryptocurrencies are stronger across the board as sentiment in the asset class reverses for the first time this week. News is light in the Crypto-world today besides a new report by the US Congress dubbing 2017 “the Year of Cryptocurrencies”. The Joint Economic Report which is issued every year by Congress to discuss the nation’s status and recommendations for the upcoming year, had a entire section devoted to Cryptocurrencies. The report highlights the potential for blockchain technology to serve as a tool to fight cybercrimes and protect the US economy and its infrastructure. Additionally, Congress recommended that policymakers, regulators, and entrepreneurs should continue to work together to ensure developers can deploy these new blockchain technologies quickly and in a manner that protects Americans from fraud, theft, and abuse, while ensuring compliance with relevant regulations.

EU End of Day Review

European markets finished higher in Friday’s trading. News from the region was light with the most significant headlines being reports from the German media that the US is seeking a cap on EU exports in exchange for tariff exemptions. Eurozone inflation numbers for February were slightly softer than expected (1.1% vs 1.2% estimated).

The Euro Stoxx 600 was up 0.25% at the end of trading today. Basic resources were the best performing sector rising 0.99%, led higher by a rise in mining stocks. Financials were also up by 0.53%, lifted by positive returns in the investment services industry.

Regional markets ended trading broadly higher as the FTSE 100 +0.3%, DAX +0.51%, and CAC40 +0.25% all advancing.