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Quantamize Midday Market Update April 5

Apr 05, 2018

US Markets Midday Review

US equities are broadly higher, and extended gains from this morning. If today’s advances are held by market close, it would mark the third consecutive day of positive trading for US equities following Monday’s declines. Reduced Sino-American tensions have lifted markets, and a falling VIX (-3.24%) is an indication of easing investors trade concerns.

The S&P 500 is 0.79% higher at midday. All sectors in the S&P 500 are in positive territory, real estate (-0.12%) excluded. Energy (+1.98%) is the best performing sector today, in contrast to being yesterday’s biggest underperformer. Consumer stocks are broadly higher with consumer staples and consumer discretionary increasing by 0.39% and 1.24%, respectively. Technology has advanced, building on yesterday’s positive returns. Information technology is up 0.62%, while telecommunications have moved 0.40% higher. Despite technology’s strong performance, semiconductors (-0.72%) continue to offer disappointing returns. Materials and financials have increased by more than 1%, and industrials (+0.95%) advanced as well.

The Nasdaq Composite is up 0.61%, and technology continues to recover from poor returns in recent trading. The Dow Jones Industrial has advanced by 0.63%, as soybean futures rebound after China’s proposed retaliatory tariffs yesterday.

Russell 2000 stocks are up 0.67%. Energy (+3.12%) is the biggest outperformer, as both small and large cap energy has moved firmly higher. Russell 2000 consumer stocks are mixed as consumer discretionary rose by 0.90%, but consumer staples edged 0.10% lower. Technology compounded on yesterday’s strong performance and are up 0.68% midday. Materials gained 1.77%, while healthcare (-0.26%) is a laggard in the Russell 2000.

Stocks Trending in the News

Citi noted that APPLE (AAPL) has an attractive valuation and sees growth opportunities in its services and Emerging Markets businesses. Apple shares are up 1.01%.

Moody’s lowered BARCLAYS PLC (BARC.LN)’s bond rating to Baa3. Moody’s noted that the bank will face profitability challenges. Barclays closed are up 2.31% today.

HNA Group, a Chinese conglomerate, is looking to sell some of its HILTON WORLDWIDE HOLDINGS (HLT) stake. HNA owns roughly 26% of Hilton’s stock. Hilton shares are up 0.56%.

INTERCONTINENTAL EXCHANGE (ICE), the parent company of the NYSE, announced the acquisition of the Chicago Stock Exchange for an undisclosed amount. Shares of ICE are down 0.59%.

MGM GROWTH PROPERTIES (MGP) is purchasing the Hard Rock Rocksino Northfield Park for $1.06B. This Hard Rock Casino is located outside Cleveland. MGP shares are up 3.34%.

MITSUBISHI UFJ FINANCIAL GROUP (8306.JP) is planning to sell $435 million of its BANCO BRADESCO (BBDC4.BZ) stake. MUFG owns $870 million of Bradesco, or 2.5% of the total company. MUFG shares closed up 1.91%, while Bradesco shares are down 0.65%.

MONSANTO (MON) reported adjusted EPS of $3.272, below estimates of $3.285. Reported revenue of $5.019B, below estimates of $5.339B. Monsanto said its earnings were affected by lower planted acres in the US and lower commodity prices in Brazil. Monsanto shares are up 1.08%.

United First Partners believes that BAYER (BAYN.GR) has a better chance at its MONSANTO (MON) takeover going through than initially expected. Bayer shares closed up 3.03%.

S&P 500 Gainers

  • MRO +6.64%
  • NAVI +5.26%
  • RRC +4.86%
  • ALB +4.69%
S&P 500 Laggards
  • MU -5.99%
  • HRL -3.09%
  • REGN -2.97%
  • UAA -2.52%
Russell 2000 Gainers
  • VERI +16.95%
  • PLSE +15.66%
  • CRZO +10.95%
  • GMS +10.76%
Russell 2000 Laggards
  • CONN -11.51%
  • ANAB -8.72%
  • ALNA -6.87%
  • SNDX -6.29%

Major cryptocurrencies are mixed as of midday, but overall, lower over the last week. Bitcoin is trading at USD$ 6,794.74 down 1.79%, Ethereum is following at USD$ 380.55, up 0.58% and Ripple is at USD$ 0.4914 down 2.19%, to round out the top three. Cryptocurrencies that are positive from the top 25 by market capitalization include, Litecoin, EOS, Tron, OmiseGO and Binance coin. Coinlist, a startup firm, has just raised USD$ 9.2mm to build out a platform where accredited investors can invest in ICO’s, or custom cryptocurrencies issued by startups and open-source projects. India’s central bank said that banks and financial institutions that it regulates will no longer be allowed to work with cryptocurrency exchanges and other related services. Privacy-focused cryptocurrency Verge reportedly has had its blockchain hacked with USD$ 1mm worth of tokens stolen and as a result Verge is down 13% over the past 24-hours. Chainanalysis, a blockchain startup has raised $USD 16mm to fund its goal of becoming a real-time cryptocurrency compliance tool for exchanges, law enforcement agencies and other clients involved in the crypto world. Lastly, IBM has submitted a patent application this week for a blockchain test configuration that could provide simple and secure infrastructure for testing blockchain applications.

Latin American Equities

Latin American equities are higher today, trading in tandem with US equities and following the news regarding President Lula’s appeal on his conviction being rejected by the supreme court. Brazil’s Ibovespa is up 169bps, Argentina’s Merval is up 103bps and Mexico’s Mexbol is up 144bps. Economic data was released from Chile today and showed economic growth of 4% in February vs. estimate of 4.5% and growth from January of 3.9% was revised downward to 3.5%. Additionally, wage growth in February also missed estimates of 4.1% and came in at 3.7%, the lowest acceleration in almost 8 years. In Argentina, Buenos Aires is tapping the country’s debt market and is looking to raise at least ARS$ 9.5bn and up to as much as $ARS 22bn of seven-year floating rate bonds. The debt may pay a coupon of 26%, according to LatAm analysts.

Rates & Commodities

US Bonds continue to sell off as of midday with more of the selling coming on longer dated maturities. The US 10-Year yield is at 2.826% from today’s open of 2.819%. The US 30-Year Yield is at 3.068% from 3.058% this morning. The selling in US bonds follows the risk-on attitude that has been felt since markets shrugged off trade war concerns. The USD$ is at its highest level in weeks at 90.47, up 39bps. The USD$ may be poised to strengthen even further tomorrow as non-farm payrolls will be released. The USD$ is stronger against the JPY¥ by 58bps at 107.40, the highest level since February 28, and the USD$ stronger against the EUR€ by 33bps (1.223). Metals are slightly lower following the risk-on sentiment across asset classes. All precious metals are lower as of midday, with Aluminum being the only metal positive today. Gold and silver are down 55bps at USD$ 1325.90/ounce, and down 35bps at USD$ 16.37 respectively. Platinum (USD$ 910.72) -0.73% and palladium (USD$ 909.17) -2.22%. round out the precious metals. Lastly, WTI Crude oil is rebounding despite a stronger USD$. Currently WTI is trading at USD$ 63.72/barrel, as trade war fears have eased the pressure on WTI.