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Quantamize Midday Market Update April 6

Apr 06, 2018

US Markets Midday Review

US equities are broadly lower, compounding earlier declines. Sino-American trade actions, which rolled over from after yesterday’s close into this morning, have turned the market outlook negative. Investor sentiment was further dampened by weaker than expected new jobs numbers for March. The VIX has risen to 20.77 (+9.66%), as an indication of rising market uncertainty.

The S&P 500 has moved 1.45% lower at midday, and all 11 major sectors in the index are negative. Industrials (-1.99%) are the worst performers, which may be due to mounting protectionist trade policies. Healthcare, financials, and materials all posted losses of more than 1.5%. Technology has fallen due to disappointing returns in both telecommunications (-0.57%) and information technology (1.01%). Consumer discretionary and consumer staples stocks have declined by 1.24% and 0.44%, respectively. Real estate is the best performing sector, but has declined by 0.17%

The Nasdaq Composite has fallen by 1.15%, and the technology sector is relatively in-line with the broader market. Semiconductors are 1.50% lower, and are weighing down the information technology sector, in contrast to positive returns in recent trading.

Russell 2000 stocks are down 1.16%. Small-cap energy (-2.53%) has been a significant underperformer, led lower by weak returns in energy equipment (-7.48%) and crude production (-3.80%). Healthcare has fallen by 1.96%, with sharp declines attributed to poorly performing pharmaceutical and biotechnology (-2.80%) stocks. Consumer durables, materials, financials, and technology have all retreated by more than 1%. Utilities are the best performer, receding only 0.10%.

Stocks Trending in the News

AMAZON (AMZN) may be adding person-to-person payments to Alexa. Amazon shares are down 1.24%, while payment processors are falling. PAYPAL (PYPL) is down 2.37% and SQUARE (SQ) is down 3.83%. 

NEMASKA LITHIUM (NMX.CA) is negotiating a lithium streaming deal with Orion Mine Finance Group according to Reuters. Nemaska shares are up 12.82%.

SOFTBANK (9984.JP) is borrowing $8 billion to gain financial flexibility. ALIBABA (BABA) is backing the loan. Softbank shares rose 0.47% today, while Alibaba shares are down 1.77%.

XILINX (XLNX) was downgraded today by JPMorgan to underweight from neutral. Price target was lowered to $68 from $73. Xilinx shares are down 3.88%.  

S&P 500 Gainers

  • NTAP +2.80%
  • ULTA +1.78%
  • ANDV +1.76%
  • WELL +1.64%
S&P 500 Laggards
  • INCY -17.92%
  • NKTR -9.05%
  • VLNX -3.93%
  • LEN -3.75%
Russell 2000 Gainers
  • DOVA +9.32%
  • NYNY +8.29%
  • PSMT +7.20%
  • VERI +6.80%
Russell 2000 Laggards
  • SNDX -18.14%
  • ALNA -15.91%
  • JNCE -11.57%
  • CRUS -9.81%

Major cryptocurrencies remain lower as of midday. Bitcoin is trading at USD$ 6,618.98 down 2.38%, Ethereum is following at USD$ 368.10, down 3.27% and Ripple is at USD$ 0.4711 down 3.99%, to round out the top three. OmiseGO and Ontology are the only positive cryptocurrencies in the top 25 by market capitalization, up 9.08% and 13.58% respectively. The SEC has filed a lawsuit against Longfin Corp, after the company allegedly sold unregistered, restricted shares to executives and then the executives sold the shares to the public. Over the last week, the total market value of cryptocurrencies declined from USD$ 251bn to USD$ 248bn with Verge, Binance coin and OmiseGo up ~50%, ~18$, and ~9% respectively.

Latin American Equities

Latin American equities are following the decline in US markets after renewed fears of trade conflict between the US and China. Brazil’s Ibovespa is down 115bps, Argentina’s Merval is down 72bps and Mexico’s Mexbol is down 44bps. Chile’s inflation data showed that consumer prices rose 1.8% vs. estimate of 1.9% Y/Y and a monthly increase of 0.2% vs. estimate 0.3% increase M/M. The Chilean government expects economic growth to accelerate to 3.5% this year from 1.5% in 2017. Chilean Finance Minister, Felipe Larrain, has said that this goal will be a challenge due to concerns over a global trade war and a decline in copper prices. Chile’s central bank decided not to cut interest rates last month even though inflation has been hovering over the lower end of Chile’s 2 to 4 percent inflation target, as a cut would be reversed in the short term according to policy makers. A strengthening Chilean Peso has retarded inflation growth which is contrary to Chile’s Central Banks policy keeping inflation closer to the higher range of its 4% target.

Rates & Commodities

US bonds are higher today as the 10-Year yield is at 2.784%, lower from today’s open of 2. 825%. The US 30-Year Yield is at 3.033% from today’s open of 3. 067% this morning. Economic data in the US was somewhat disappointing today as non-farm payrolls missed, unemployment % was unchanged (was expected to lower) and labor-force participation unchanged as well. However, underemployment (U-6) hit a recent low of 8.0%, while wage gains were in line on a M/M & Y/Y basis. The USD$ is being sold today, currently at 90.18, down 30bps. In a risk-off sentiment from continued trade conflicts between the US & China, the USD$ unchanged against the JPY¥, currently at 107.09. Precious metals are mixed with Gold (USD$ 1332.31/ounce) and Platinum (USD$ 913.88/ounce), higher by 43bps and 15bps respectively. Palladium is down 22bps (USD$ 908.19) and silver is down by 37bps at USD$ 16. Lastly, WTI Crude oil is sharply lower, down 192bps at USD$ 62.32/barrel following fears of China targeting US oil next if it were to retaliate against President Trump’s most recent proposal.