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Quantamize Midday Market Update April 4

Apr 04, 2018

US Markets Midday Review

US equities are higher at midday and have broadly advanced from session lows as US markets seem to shrug off today’s Sino-American trade actions. US Secretary of Commerce Wilbur Ross stressed that the $50 billion in tariffs proposed by China represent only 0.3% of the US’s total exports. Investor sentiment has improved significantly throughout trading, in contrast to the decidedly negative tone earlier. The VIX has risen to 21.62 (+2.46%), though has declined from earlier highs. The Nasdaq Composite has moved 0.39% higher, and technology is an outperformer today after being much maligned during recent trading.

The S&P 500 is relatively flat (+0.08%), after retreating more than 1.5% pre-market this morning.  Consumer stocks are broadly higher with consumer staples rising 0.79%, while consumer discretionary advanced by 0.21%. Strong returns in consumer durables (+1.38%) and food & staples retailing (+1.27%) lifted their respective sectors higher. Large-cap technology is mixed as defensive telecommunication stocks are up 0.21%, but information technology fell by 0.13%. Energy is down by 1.28% and is the worst performing sector in the S&P 500. Industrials (-1.23%) are strong underperformers today as well and have been driven lower by today’s Sino-American trade actions. Materials, utilities, and healthcare also receded.   

Russell 2000 stocks are 0.55% higher. Small-cap consumer stocks are strong outperformers with consumer staples (+1.37%) and consumer discretionary (+0.74%) being the two best performing sectors in the Russell 2000 today. Healthcare (+0.49%) and financials (+0.30%) are the only two other sectors in the Russell 2000 positive territory. Energy (-0.51%) was the worst performing sector in the Russell 2000, as was the case in the S&P 500. Technology in the Russell 2000 is underperforming, led lower by disappointing returns in electronic entertainment.

Stocks Trending in the News

BLACKROCK (BLK) is looking to raise $2.5 billion for a private credit fund. BlackRock shares are up 0.55%.

Jet Airways, an Indian airline, is ordering 75 737 Airplanes from BOEING (BA). Boeing shares are down 2.45%.

CBS CORP. (CBS)’s takeover offer of VIACOM (VIA) was rejected. Viacom is reportedly preparing a counteroffer. CBS shares are up 0.47%, Viacom shares are down 4.60%.

JPMorgan analysts said that DEUTSCHE BANK (DBK.GR) should focus on its European business and reduce its US operations. Deutsche Bank shares closed up 0.13%.

The Japanese government passed laws that could benefit casinos. MGM RESORTS (MGM) shares are down 0.05%, while LAS VEGAS SANDS (LVS) shares down 2.54%.

TJX COMPANIES (TJX) will be raising its quarterly dividend to $0.39, 25% above its prior dividend of $0.31. TJX shares are up 0.79%.

SPOTIFY (SPOT) shares are down 5.64%, as a few analysts have come out with a few cautious ratings. Spotify now has 5 Buy ratings and 4 hold ratings. 

S&P 500 Gainers

  • LEN +6.45%
  • UA +5.91%
  • HRL +5.67%
  • CELG +3.34%
 S&P 500 Laggards
  • AYI -6.51%
  • DE -4.40%
  • SCG -3.37%
  • IPGP -3.38%
Russell 2000 Gainers
  • FATE +9.15%
  • RYTM +7.63%
  • MTSI +7.44%
  • ACYM +6.84%
Russell 2000 Laggards
  • CLDR -38.71%
  • TITN -16.87%
  • VRTU -10.64%
  • SEND -10.01%
Latin American Equities

LatAm equities are mixed again today with Mexico’s Mexbol being the only index in the region positive as of midday, currently up 69bps. Brazil’s Ibovespa is lower by 83bps with 11 out of 63 company’s advancing. Argentina’s Merval is down 51bps with 9 out of 30 constituents advancing. Lopez Obrador, the leader in the polls for the upcoming Mexican presidential election in July wrote an op-ed today in El Financiero newspaper. He mentioned how he will not confiscate assets and will review public work contracts one by one to avoid corruption cases and to respect bondholder rights. Lopez Obrador also vowed to respect central bank autonomy and is calling for a signing of any agreement on NAFT to be delayed until after the election. Brazil’s soybean prices rose early today because China has already opted for Brazilian supplies at the expense of US cargoes. Currently the premium paid for soybeans loading in May at Brazil’s Parangua port has jumped 63% to USD$ 1.17/bushel over the past month. It is noted that Brazil cannot supply China’s demand alone and that China will most likely have to continue purchasing soybeans from the US.

Rates & Commodities

US bonds are weaker as of midday, giving back gains from earlier this morning. The 10-Year Yield is moderately higher at 2.781% from today’s open of 2.753% and the US 30 -Year Yield is above 3.0% at 3.017% from today’s open of 3.011%. The slight sell-off in US bonds seems to stem from US equity markets shrugging off the trade war news after positive data on the economic front was released. US ADP employment change for March came in at 241K vs estimate of 210K. US PMI for March came in at 54.0 vs. estimate of 54.2, which is a slight miss, however, is still a sign of health in US manufacturing. The USD$ has moved lower from the open and is down to 90.06, down 13bps. The USD$ has reversed its losses against the JPY ¥ and is now up 19bps at 106.63. Following a weaker JPY ¥, only gold remains higher of the precious metals; up 19bps at USD$ 1335.28/ounce. Silver is down 78bps at USD$ 16.29. All other metals are lower except for Copper which is up 122bps at USD$ 6,796/contract. Lastly, WTI Crude oil is trading moderately lower following the trade war news at USD$ 63.11/barrel, down 63bps. Additionally, EIA data showed that US exports reached a record high of 2.18mm barrels/day.

Cryptocurrencies

Major cryptocurrencies are extending losses from earlier this morning. Bitcoin is trading at USD$ 6,891.00 down 7.05%, Ethereum is following at USD$ 376.28, down 7.18% and Ripple is at USD$ 0.5001. There are no longer any cryptocurrencies with positive returns on the day out of the top 25 by market capitalization. The decline in the crypto world seems to stem from fears of a Binance hack (one of the top cryptocurrency exchanges). Users currently cannot login to their account. ASRock is planning to sell four graphic cards (GPU), specifically geared towards cryptocurrency mining. Similarly, Bitmain has confirmed the release of its Antminer E3 chips, which is specifically designed for processing Ethereum transactions. US Federal Reserve Board Member, Lael Brainard, spoke today and briefly mentioned how the Fed is monitoring excess volatility in cryptocurrencies. She also said that cryptocurrencies do not pose a threat to the stability of the US economy. This morning, news was released that Alibaba is suing a Dubai-based cryptocurrency foundation called “Alibabacoin Foundation” for trademark infringements.