Quantamize Afternoon Market Update March 19

Mar 19, 2018
US Markets Midday

US markets are broadly lower midday. News headlines driving sentiment include Robert Mueller’s continued investigation into the Trump Organization, the Facebook data breach of 50 million user accounts, and an agreement of terms between the EU and UK regarding a Brexit transition deal.

The S&P receded by 0.98%, weighed down significantly by losses in technology. Information technology stocks and telecommunication stocks declined 2.47% and 0.52%, respectively. Energy is down 1.71% and materials are 1.66% lower, compounding falling returns from last weeks trading. There are no sectors in the S&P posting positive returns, and the best performer is consumer staples which has a -0.44% return. Utilities have slid by 0.68%, despite being the top performing sector last week with a 2.0% return.

The Russell 2000 also declined and is 1.05% off from the open. Small-cap technology is in-line with the S&P technology sector, posting a return of -2.32%. Energy is the biggest underperformer and is lower by 2.92%. As with the S&P, there were no sectors that provided positive returns in the Russell 2000. Consumer staples were the best performer, providing a -0.34% return.

Stocks Trending in the News

ALIBABA (BABA) is investing $2 billion in Lazada Group SA. Lazada group is a e-commerce company based in Singapore. This move raises Alibaba’s investment in Lazada to $4 billion and furthers Alibaba’s expansion into Southeast Asia.

FACEBOOK (FB) shares are down 7.30% today after Cambridge Analytica, a political advertising data, acquired information on Facebook users without their consent. Facebook’s Deputy General Counsel has contested the statement, and stated that any information was provided with user consent.

GENERAL DYNAMICS (GD) is continuing its pursuit of CSRA INC. (CSRA), which is a provider of IT services to the U.S government. The attempted acquisition is facing pressure from another IT firm, CACI INTERNATIONAL INC. (CACI), who is trying to outbid General Dynamics. General Dynamics offer was worth $6.7b, while CACI International’s bid is worth about $7.2b.

KLA-TENCOR (KLAC) is acquiring ORBOTECH (ORBK) for about $69.02/share. KLA-Tencor CEO, Rick Wallace, believes that there are many synergies between the two companies, and that the acquisition should help sustain profitable growth.

NEWELL BRANDS (NWL) and legendary investor Carl Icahn have agreed on a strategy to accelerate Newell’s transformation plan. Part of this plan included adding 4 board members appointed by Icahn.

SOCIETE GENERALE SA (GLE.FP) deputy CEO, Didier Valet, has reportedly left the company as a necessary measure to settle a US Justice Department investigation. The Justice Department is investigating the bank’s alleged manipulation of interest-rate benchmarks. S&P Gainers

  • GPS +2.11%
  • CL +1.75%
  • M +1.70%
  • NOC +1.69%
S&P Laggards
  • FB -7.42%
  • LRCX -3.85%
  • NVDA -3.65%
  • AVGO -3.64%
RTY Gainers
  • HRTX +29.07%
  • STC +8.40%
  • KIRK +6.65%
  • LFIN +6.12%
RTY Laggards
  • FSCT -10.30%
  • IPHI -10.10%
  • SAIL -10.04%
  • CARB -9.88%
Rates and Commodities

 

US bonds are flat across the curve, with the 10-year treasury not moving off of its open of 2.86%. The 20+ Year Treasury Bond ETF (TLT) is down 0.03% on the day. Investors appear to be selling off lower quality assets as the High Yield Corporate Bond ETF (HYG) is lower by 40bps at midday. In the swaps market, yields are slightly higher - which could be related to US treasury news that has been released today. The US treasury is set to auction $65bn in four-week bills to finance the government, which was projected to run out of funding this Friday. Additionally, Bloomberg reported that a $1.2 trillion spending bill will be presented at the Republican conference meeting this upcoming Monday that will cover federal spending through the end of the fiscal year in September.

Gold & platinum are slightly higher on the day – up ~30bps. Other metals remain flat or are negative. The USD index is lower by about 30bps with notable weaknesses against the GBP£ (1.404) & the EUR€ (1.233) following the news released earlier this morning regarding the UK & Euro area reaching agreements in their negotiations. The JPY¥ (105.846) remains steady and is only 5bps stronger against the USD$. In contrast, the USD$ is stronger against most EM pairs, which is not reflected in the USD index as the basket of currencies is made up of G10 pairs. WTI Crude is down 60bps on the day despite dollar weakness. Data related to oil is mostly light on the day other than news that Genscape Cushing inventory levels increased by 22k barrels week over week. This further supports the US’ move to increase oil supply.

Cryptocurrency

Cryptocurrencies are extending their rally from earlier this morning as news in the cryptocurrency world remains positive on the day. Bitcoin’s price increased by $1,000 when Mark Carney, the Bank of England’s governor, told G20 members today that crypto assets “do not pose risks” to the world’s economy. Additional news on the day includes the US Federal Trade Commission (FTC) has created a Blockchain Working Group to examine the ways in which the technology, particularly cryptocurrencies, will affect its objectives. The FTC has stated that they want to ensure consumers are protected and that competition is promoted.

EU End of Day Review

EU markets fell during Monday’s trading. An agreement between the EU and UK on a Brexit transition deal is one of the top stories. Reuters also has reported that the focus of the ECB is shifting from interest rates to winding down its QE program, which may have contributed to the negative sentiment.

The Euro Stoxx 600 finished 1.08% lower at the close today. Real estate and travel & leisure were the only two sectors that generated positive returns. Real estate advanced 1.03%, while travel and leisure rose 0.35%. A decline in technology in the region was in-line with that of US markets, and tech provided a -2.61% return. Basic resources were lower by 2.64% as steel and chemical equities continue to be a laggard.

Regional markets were down across the board with the FTSE 100 (-1.66%), DAX (-1.43%), and CAC40 (-1.20%) all receding.

EU Gainers

  • LN +23.9%
  • LN +3.9%
  • LN +3.7%
  • GR +2.7%
EU Laggards
  • MCRO -46.2%
  • FP -4.20%
  • GR -2.40%
  • GR -2.30%