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Quantamize End of Day Update Mar 23

Mar 23, 2018

US Market Recap

Following the historical trade friction over the past week, US equities were down sharply today, and sentiment was broadly negative. The decline in US equities this week was the most significant weekly slid in more than 2 years, with the S&P 500 falling 5.9%. The release of US economic data was largely overshadowed by escalating trade conflict between China and the US. Cui Tiankai, the Chinese ambassador to the US, threatened that halting the purchase of US treasures in retaliation to US tariffs is an option for China.

The VIX closed the week at 24.87 after beginning the week at 16.87. This is a weekly gain of 52.05% and is an indicator of rising investor uncertainty. Market breadth for today’s trading was negative with an advance/decline ratio of 0.08 (41 advances and 462 declines). Despite threats to veto the $1.3 billion federal spending bill passed by Congress, President Trump has signed off on it. The bill provides funding for the federal government through September.

The S&P 500 is down 2.5% today. Information technology (-7.9%) declined today as poor returns in semiconductors weighed on the sector. Financials (-3.7%) declined sharply today and were the second worst performing sector on the week (-7.2%). These were no sectors with positive returns on the week, but energy (-0.9%) was the best performer in the S&P 500.

Russell 2000 stocks were down 2.2% today, bringing total weekly losses for the index to 4.8%. Utilities were the best performing sector today and posted weekly-best returns among all sector in the Russell 2000 of -2.9%. Materials (-3.2%) were the worst performing sector today and finished the week with the poorest returns (-5.7%) in the Russell 2000.

Stocks Trending the News

ABBVIE (ABBV) was upgraded to buy from hold at DZ Bank. However, the price target was lowered to $115 from $125. AbbVie shares are 0.66% lower today.

BANK OF AMERICA (BAC) will be paying the state of New York $42 million to settle a masking probe. Bank of America shares fell 4.49%.

DOWDUPONT (DWDP) is expecting to spinoff its materials science unit in April 2019. The spinoff was initially planned to be completed by the end of 1Q 2019. DowDuPont shares are 3.87% lower. 

S&P 500 Gainers

  • FL +4.44%
  • NEM +3.06%
  • CTAS +2.91%
  • LMT +2.80%
RTY 2000 Gainers
  • HOME +19.24%
  • ODT +13.47%
  • SGN +11.01%
  • LFIN +10.23%
S&P 500 Laggards
  • WDC -8.42%
  • MU -7.99%
  • AMAT -6.07%
  • LRCX -5.67%
RTY 2000 Laggards
  • GKOS -1.8%
  • TORC -10.62%
  • URS -10.54%
  • OMER -10.54%

Rates & Commodities

Investors finally poured into US bonds as bond yields are lower across the curve, with more money piling in on the front end of the curve. Currently the 10-Year is flat at 2.812% in comparison to 2.824% from yesterday’s close and the 30-Year is slightly lower at 3.059% from 3.063% from yesterday’s close. In the FX markets, the USD$ is lower by 34bps at 89.51 measured by the U.S. Dollar Currency Index (DXY). The USD$/JPY¥ (104.72) is moderately weaker on the day and has found support below 105. For reference, the USD$/JPY¥ hit a high of 106.60 on Monday; giving it a 1.76% decrease on the week. Investors seem to be losing confidence in the USD$ as President Trump has followed through in announcing trade tariffs on China. Additional concern for the USD$ may be that the US Government passed a $1.2 trillion spending bill through the end of September, the 2nd largest spending bill in US history. The bill passed which prevented a government shutdown however the bill will seemingly increase the United States’ twin deficits.

Following USD$ weakness, WTI Crude Oil continued to expand gains. Currently WTI is trading at $65.90/barrel, up 250bps from yesterdays close. Data was light on the day except for the Baker Hughes weekly rig count showing US oil rigs increased by four to 804 total rigs. The market seemingly continues to price in Iran hardliner John Bolton replacing General McMaster, WTI. Precious metals finally broke their positive correlation with equities, and gold is trading at 1,347 USD$/ounce, up 139bps, silver is at 16.56 USD$/ounce, up 104bps and platinum at 948 USD$/ounce, up 2bps.

Cryptocurrencies

Cryptocurrencies are mixed at the end of the equity trading week. Bitcoin rallied in the afternoon and is currently at $8,682 up 32bps with Bitcoin Cash following up 23bps, Litecoin is up 88bps and EOS is up 41bps. News following the afternoon was mostly positive.  South Korean investors reportedly pooled $400mm and placed an offer for the cryptocurrency exchange Bitstamp. Bitstamp is a Luxemberg exchanged, founded in 2011, and is currently ranked 11th in 24-hour volume according to CoinMarketCap. The governor of Tenessee signed a bill today that legally recognizes blockchain data and smart contracts under law. This law recognizes legal use blockchain technology and smart contracts in conducting electronic transactions; protects ownership rights of certain information secured by blockchain technology.

EU Market Recap

EU equities, like other global markets, traded lower. Sino-American trade frictions negatively affected markets in the region. Export dependent industries, such as automobiles (-1.90%), were some of the worst performers today. Ardo Hansson, who is the governor of Estonia’s central bank and is also a member of the ECB’s rate setting committee, had hawkish comments regarding interest rates. Hansson intimated that rate hikes in 2019 are ‘plausible’, and that the ECB is getting closer to curtailing QE.

The Euro Stoxx 600 slid 0.9% today. Financials struggled significantly today as declines in insurance (-1.49%), financial services (-1.49%), and banking (-1.17%) drove the sector lower. Materials were lower as chemicals (-1.34%) continued to fall. Telecommunications (+0.17%), and utilities (+0.06%) were the only sectors to post positive returns. Retail finished flat.

Regional markets closed down sharply with the FTSE 100 (-0.44%), DAX (-1.77%), and the CAC40 (-1.39%) all declining.

EU Gainers

  • LN +7.7%
  • B.SS +4.4%
  • B.SS +4.1%
  • LN +3.3%
EU Laggards
  • LN -6.2%
  • LN -5.1%
  • LN -4.4%
  • GR -4.2%