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Quantamize End of Day Update March 22nd

Mar 22, 2018

US Markets End of Day Review

US equities closed sharply lower and finished close to session-worst levels with the S&P 500 falling 2.5% after today’s imposition of the much-anticipated tariffs on China. The sell-off in the S&P 500 was the worst fall since February 8th as markets digested the news. The VIX closed trading at 23.34, ~14% higher than midday levels and 30.7% elevated from the open. A rising VIX, combined with an S&P 500 advance/decline ratio of 0.09 (44 advances and 461 declines) as well as a put/call ratio of 1.89, is an indicator of this concern. Industrials were hit particularly hard by news of the tariffs today. Boeing Co (-5.19%), Generac Holdings (-3.14%), and Allison Transmission (-3.34%) are among the many industrial stocks that underperformed the broader market.

Despite uncertainty in the equity markets, an increase in interest rates, and the tariff announcement, bond markets have traded in a relatively narrow range with the 10-year opening the week at 2.85%, trading up to a 2.88% handle today, then falling 6 bps to 2.82%. The yield curve has remained essentially the same with a small flattening following the FOMC’s rate decision.

Financials (-3.70%) compounded losses from midday and were the worst performing sector in the S&P 500. Poor returns in banking (-4.09%) and insurance (-2.53%) drove the sector lower. Healthcare (-2.89%) underperformed the S&P 500, with declines in pharmaceuticals and biotech (-3.29%) weighing the sector down. Utilities (+0.44%) are the only sector to post positive returns, which is in-line with midday performance.

The Russell 2000 slid 2.24%. Materials (-3.17%) underperformed the index. Falling returns in aluminum (-8.34%) and steel (-7.79%) drove the materials sector lower. Energy (-3.10%) was lower, largely due to losses in coal (-5.04%). None of the sectors in the Russell 2000 finished today’s trading with positive returns, but consumer staples (-0.88%) were one the biggest outperforming sectors. Strong returns in beverages and soda (+1.37%) lifted the sector.

Stocks Trending the News

ABBVIE (ABBV) shares sunk 12.76% lower today on news that it will not pursue accelerated approval for lung cancer drug Rova-T.

MICRON TECHNOLOGY (MU) reported adjusted earnings of $2.79, beating estimates of $2.74. Reported revenue of $7.35 billion, beating estimates of $7.28 billion. Shares are down 3.09% post-market.

NIKE (NKE) reported adjusted earnings of $0.66, beating estimates of $0.53. Reported revenue of $8.98 billion, beating estimates of $8.85 billion. Shares are up 5.87% post-market.

SONY’s (6758.JP) credit rating was raised to Baa2 from Baa3 at Moody’s. Moody’s believes Sony’s outlook is stable, and that their earnings quality has improved during the recent quarters. Sony’s ADR, SNE closed down 1.15%.

S&P 500 Gainers

  • P +7.8%
  • FIVE +4.2%
  • PCG +2.72%
  • VTR +1.77%
S&P 500 Laggards
  • ABBV -12.76%
  • ATY -8.42%
  • DRI -7.9%
  • ACN -7.3%
RTY 2000 Gainers
  • OMER +35.31%
  • GEZ +28.3%
  • LE +26.11%
  • LFIN +12.23%
RTY 2000 Laggards
  • CENX -17.84%
  • MLHR -13.73%
  • CMC -12.25%
  • GIII -12.00%

Canadian Market Recap

Canadian equities closed trading lower today and had the worst single-day losses since 2016. The Toronto Stock Exchange was off by 1.76%. Most sectors declined with healthcare (-2.86%), consumer discretionary (-2.41%), and information technology (-2.37%) being the worst performers. Utilities (+0.63%) were the only sector in the TSX to post positive returns today.

TSX Gainers

  • NFI +4.49%
  • UN +2.30%
  • WPM +1.80%
  • PEY +1.47%
TSX Laggards
  • CVE -5.56%
  • MG -5.69%
  • HCG -5.28%
  • GOOS -5.06%

EU Market Recap

European equities traded broadly lower today, and collectively closed at a 3-week low. Negativity among investors stemmed from the $60 billion trade tariffs imposed on China by the US which pushed markets in the region lower. Auto makers, chemicals, and industrials were among the worst performers during and after the President Trump’s announcement. Technology (-2.14%) also posted poor returns as repercussions from the Facebook data breach continue to negatively impact the tech sector.

Data released by financial services firm IHS Markit revealed that eurozone business activity progressed at its slowest pace of expansion in over a year. This development, combined with strong declines in US equities, caused investor sentiment to sour further.

The Euro Stoxx 600 slid by 1.55%. Basic resources (-2.93%) was the hardest hit sector, led lower by heavy losses in chemicals (-2.04%). Financials were an underperformer with subpar returns in banking (-2.50%), insurance (-1.69%), and financial services (-1.58%) weighing the sector down. There were no sectors in the Euro Stoxx 600 that finished with positive returns. The best performing sector was personal & household goods (-0.21%).

Regional markets declined across the board with the FTSE 100 (-1.23%), DAX (-1.70%) and CAC40 (-1.38%) all falling during today’s trading.

EU Gainers

  • LN +8.6%
  • LN +5.4%
  • LN +4.9%
  • GR +3.9%
EU Laggards
  • GR -9.9%
  • GR -9.7%
  • FP -9.7%
  • BB -7.6%