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Quantamize Afternoon Market Update March 27

Mar 27, 2018

US Markets Midday Review

After opening broadly higher this morning, US equities are struggling to hold gains. News is light today, with no catalyst driving investor sentiment. Despite weakening returns, market breadth is positive with the VIX retreating to 20.36 (-3.19%), and an S&P 500 advance decline ratio of 0.74 (371 advances and 130 declines).

The S&P 500 is up 0.29%. Technology continues to rise with advances in telecommunications (+0.97%) and information technology (+0.21%) lift the sector higher. Consumer stocks are broadly higher at midday with consumer staples rising 0.81%, and consumer discretionary up 0.50%. All sectors in the S&P 500 are in positive territory, which healthcare being the biggest underperformer (+0.26%). Weak returns in pharmaceuticals and biotechnology (+0.05%) continue to affect the healthcare sector. Energy was the next worst performing sector, though still returned 0.42%.

The Nasdaq Composite is down 0.35%, despite broad gains in technology. Semiconductors are relinquishing gains from yesterday with stocks such as Micron Technology (-1.66%), applied Materials (-1.56%), and Lam Research (-1.50%) all falling.

Russell 2000 stocks are lower with the index receding 0.28%. Healthcare (-0.80%) is the worst performing sector in the Russell 2000, in-line with the S&P 500. Energy (-0.67%) has declined as disappointing returns in both coal (-1.09%) and crude production (-1.02%) weigh the sector down. Small-cap consumer stocks are broadly higher as consumer staples rose 0.69%, and consumer discretionary increased 0.20%.

Stocks Trending in the News

MASCO (MAS) was upgraded to investment grade by Moody’s. Masco shares are up 0.20%.

MCCORMICK & CO. (MKC) employees will receive a one-time $1,000 bonus, and the company also plans to accelerate wage growth for hourly employees. McCormick is using its US tax savings to pay the bonuses. McCormick shares are up 1.80%.

NEWELL BRANDS (NWL) was downgraded to hold from buy at SunTrust Banks. The price target was lowered to $30 from $35. Newell Brands shares are down 1.73%.

RED HAT (RHT) is forecasting 1Q revenue above estimates and is expecting billings growth of 25%. Red Hat shares are up 3.70% and reached an all-time high earlier today.

TOYOTA MOTOR (7203.JP) was upgraded to neutral from sell at UBS. Toyota ADR (TM) shares are up 1.94%.

WALMART (WMT) is dropping ALIBABA’s (BABA) Alipay and will use TENCENT’s (700.HK) WeChat Payment System in Walmart’s Chinese stores. Walmart shares are down 0.32%, Alibaba shares are down 0.15%, and Tencent shares are closed up 1.31%. 

S&P 500 Gainers

  • RHT +4.62%
  • GE +3.41%
  • WYNN +2.70%
  • JWN +2.63%
Russell 2000 Gainers
  • ATNX +10.28%
  • RYAM +9.50%
  • ESPR +8.39%
  • VRS +7.77%
S&P 500 Laggards
  • MAC -4.89%
  • RRC -4.10%
  • GGP -4.01%
  • SPG -2.56%
Russell 2000 Laggards
  • LFIN -30.41%
  • ARA -13.23%
  • MGNX -11.35%
  • ATRA -10.21%

Latin American Equities

LatAm equities are mixed at midday with Argentina’s Merval up 14bps, Brazil’s Ibovespa down 35bps, Chile’s equity index up 51bps and Mexico’s Mexbol up 6bps. Minutes from Brazil’s central bank meeting from last week showed that interrupting the easing cycle may be adequate after next policy meeting however, a further cut of an already low Selic rate may be possible. The minutes showed the central bank’s next steps will be dependent on GDP, CPI and risks. This is a surprise as the monetary authority had suggested its aggressive easing cycle could have been over in February, yet the central bank seems to be interested in raising inflation and supporting Brazil’s recovery with further easing.

Rates & Commodities ReviewThe US 10-Year bond has rallied from today’s open, and the 10-Year yield is now at 2.812% from 2.845% on the open. The US 30-Year bond is following pursuit and the 30-Year Yield is at 3.051%, lower from 3.082 on the open. Risk assets seem to have shrugged off the White House announcement today that the US is weighing use of an emergency law to curb Chinese takeovers on US companies to protect the US technology sector. However, investors may be fleeing to US bonds showing signs caution. A risk off sentiment is not shown elsewhere as the USD$/JPY¥ (105.73) is higher by 18bps on the day. Gold is following and is down 81bps at USD$ 1342.57/ounce while silver is also down 117bps at USD$ 16.51 and platinum (USD$ 942.07) & palladium (USD$ 975.80/ounce) are down 113bps & 13bps respectively. The USD$ (89.32) is slightly lower from the open this morning (89.42), however, the USD$ is still up 27bps on the day.  Following USD$ strength on the day, WTI Crude oil is down 38bs at $65.30/barrel. News relating to oil today came from Saudi Crown Prince, Mohammad bin Salman, saying today that a long-term oil cooperation with Russia and OPEC to last 10-20 years has been sought.

Cryptocurrency Review

Major cryptocurrencies seem to be bouncing back from weakness earlier this week. Notably, Bitcoin USD$ is back above USD$ 8,000 and is trading at USD$ 8139.56, up 17bps on the day. Other major cryptos that are following Bitcoin include EOS +5.35% at USD$ 6.29, NEO +2.25% at USD$ 59.68, and Tron +11.14% at USD$ .0458. Coinbase has announced its intention to support ERC20 tokens on its exchange, reversing previous statements from January. ERC20 supports smart contracts on the Ethereum Blockchain and is the protocol for thousands of altcoin assets. This support may pave the way for ERC20 assets across Coinbase products in the future. In Germany, the university RWTH Aachen plans to research industrial use cases for IOTA. RWTH will cooperate closely with the Fraunhofer-Gesellschaft, for applied research in Europe. The RWTH Aachen is now looking for students to get involved in a master’s thesis or Ph.D. thesis on IOTA and its blockless distributed ledger Tangle. Additionally, an ex-global commodities director from JP Morgan, Blythe Masters, has revealed an update in her involvement in a new project aimed at streamlining the way systemically important financial infrastructures access its technology. The project is a blockchain startup called Digital Asset has a software development kit for FinTech firms to be used by the Depository Trust and Clearing Corporation (DTCC) among other customers. Lastly, Spring Labs, a blockchain startup that aims to decentralize data-sharing in the credit industry, has raised ~$USD 15mm. This startup will exchange identity and credit information using smart contracts to increase data efficiency and regulatory transparency.