Quantamize Afternoon Market Update March 20

Mar 20, 2018
US Midday Review

US equities are modestly higher at midday. There is little recent news with a continuation of potential tariff & trade deals, and broad sell-offs in the technology sector driving market sentiment.

The S&P 500 is up 0.15% midday. Energy, the strongest performing sector, is 1.33% higher. Advances in the energy equipment & services (+1.32) and oil & gas consumables (+1.03) industries are providing a lift to energy. Financials (+0.39%) are benefitting from a rise in the insurance (+0.83%) industry. The increase in consumer discretionary (+0.38%) rounds out the sectors posting positive returns in the S&P 500. Technology continues to be a laggard, and telecommunications have fallen by 1.03%. Staples (-0.61%) are the next worst performing sector, weighed down by a falling tobacco (-1.42%) industry.

Russell 2000 stocks have advanced by 0.58%. Energy (+1.24%) is the outperformer among small-cap sectors. Both coal (+2.23%) and crude products (+1.50%) industries are contributing to energy’s strong performance. Technology is up 0.36% in contrast to the heavy losses experienced by the sector during yesterday’s trading. Utilities receded 0.41%, largely due to losses in the gas distribution (-1.55%) industry.

Stocks Trending in the News

Amazon (AMZN) is said to be raising transportation fees on bulky consumers products that are costly to ship. The company is also rumored to make it more difficult of customers to purchase small orders of inexpensive consumer items with small margins.

Trump released a plan to deal with the opioid epidemic sending shares of drug distribution stocks lower. AMERISOURCEBERGEN (ABC) is 4.11% lower, MCKESSON (MCK) 3.35% is lower, and CARDINAL HEALTH (CAH) is 5.13% lower.

ANHEUSER-BUSCH INBEV NV (ABI.BB) is selling bonds to refinance its debt it used in its acquisition of SABMiller. Moody’s rates Anheuser-Busch debt as A3, and S&P rates their debt as A-.            

GENERAL DYNAMICS (GD) increased its offer for CSRA INC. (CSRA) by 1.2%. The new bid by General Dynamics values CSRA at roughly $6.9 billion, which is still below CACI INTERNATIONAL’s (CACI) bid of roughly $7.2 billion. General Dynamics shares are 0.97% higher, CSRA shares are 1.00% higher, and CACI shares are 2.95% higher.

The FTC is investigating FACEBOOK (FB) to see if the company violated a 2011 consent decree over the handling of user data. Facebook has agreed to meet with lawmakers on Wednesday. Facebook shares are 4.67% lower today.

Rates & Commodities Review

US treasury yields are higher across the curve with the 10-Year at 2.878% from 2.856% this morning and the 30-Year at 3.110% from 3.086% this morning. Most notably, the Libor-OIS spread, which is the difference between the London interbank offered rate for dollars and the overnight indexed swap rate, has hit its widest mark since 2009. Recent attribution to this spread widening has been said to be because of US companies repatriating cash from overseas due to the US Tax Reform Bill. Alternatively, this can be seen as a tightening of financial conditions and could be a measure of increase in nervousness surrounding risk assets.

The USD$ is stronger across the board today at 90.33 measured by the USD$ Index; most notably 54bps stronger against the EUR€ (1.226) and 28bps stronger against the JPY¥ (106.45). Precious metals are lower on the day; notably gold is down 36bps at 1,312 USD$/ounce and platinum is down 114bps on the day at 943 USD$/ounce. Despite USD$ strength today, WTI Crude oil is trading higher on the day, up 240bps at $63.55. Economic data is light on the day. Investors are waiting for the API data release post-market at 4:30PM EST. Notable news out from the G20 includes financial leaders reporting today that they will refrain from competitive devaluations, and not target FX for competitive reasons. US Commerce Secretary Ross today said that it will be important to push for a NAFTA deal in the next month or so.

S&P 500 Gainers

  • DOV +4.11%
  • APC +3.79%
  • HES +3.71%
  • ADBE +3.52%
Russell 2000 Gainers
  • ARNA +35.97%
  • MULE +23.31%
  • SRI +20.19%
  • ASNS +8.66%
S&P 500 Laggards
  • ORCL -9.70%
  • CAH -5.57%
  • FB -5.52%
  • MAT -3.40%
Russell 2000 Laggards
  • DLTH -14.59%
  • WATT -10.87%
  • GPI -9.35%
  • KINS -8.63%
Cryptocurrency Review

 

Cryptocurrencies are holding onto their gains from this morning. The G20 meeting that took place this morning, finance ministers have drafted a document that highlights how cryptocurrencies lack the traits of sovereign currencies and that they consider cryptocurrencies to be assets rather than currencies. The US Treasury published on its website five tips today for building blockchain projects. These tips are derived from what its internal staff learned from working on a proof of concept blockchain system for tracking physical assets. This report is an effort to provide insights for whether blockchain technology is a good fit for certain projects. Following the US’ ban on Venezuela’s ICO of the Petro, a senior politician from Maduro’s government has made statements decrying the ban. Additionally, he stated that the US and President Trump have failed to take a diplomatic approach with the country’s bilateral relationship. Lastly, news out of Europe has come out signaling that Ripple may be the next cryptocurrency to have tradeable futures by investors. A U.K. based startup has been operating a futures market on Ripple for the past 18 months. This will certainly be something to pay attention to as Ripple is currently the 3rd largest cryptocurrency by market capitalization.

EU Market Recap

European markets traded broadly higher and closed near session highs. News from the region was light, with much of the focus on President Trump’s potential implementation of $60 billion in tariffs on China, as well as the US Fed’s decision on interest rates tomorrow.

The Euro Stoxx 600 was 0.51% higher at the closing bell. Financials were the biggest outperformer on the day with financial services (+1.42%) and insurance (+1.39%) being the two strongest performing industries in the Euro Stoxx 600 index.

Regional markets were at the close. The FTSE 100 (+0.26%), DAX (+0.74%), and CAC40 (+0.57%) all advanced in today’s trading.

EU Gainers

  • BB +7.1%
  • SW +6.4%
  • GR +6.1%
  • DC +5.6%
EU Laggards
  • B.SS -6.9%
  • LN -6.8%
  • FP -5.8%
  • FP -4.0%