Quantamize Afternoon Market Update April 10
Apr 10, 2018
US Markets Midday Review
US equities are broadly higher, holding gains from the morning. Optimistic sentiment stemming from mitigating Sino-American trade pressure is driving the market. The VIX receded modestly to 21.18, down from 21.77, as market uncertainty abates. An S&P 500 advance/decline ratio (439 advances and 65 declines) affirms a positive investor outlook.
The S&P 500 has advanced 1.43% and is up 1.76% this week. The Nasdaq Composite has moved 1.46% higher, as positive momentum in technology rolls over from yesterday. Russell 2000 stocks are up 1.51%, relatively in-line with the S&P 500 and Nasdaq Composite.
Energy is the biggest outperforming sector in US markets. Large-cap energy is 3.64% higher, while small-cap energy has risen by 4.56%. Significant returns in large-cap oil and gas (+3.25%) and small-cap crude producers (+4.72%) forced their respective sectors higher. S&P 500 technology is up 2.25%, compounding on yesterday’s positive returns. Strong returns in semiconductors (+2.38%) lifted large-cap technology. Russell 2000 technology is 2.25% higher, in-line with the S&P 500 tech sector.
Large-cap financials (+1.63%) offered stronger returns than financial stocks in the Russell 2000 which moved 0.98% higher. Materials followed suit, rising by 2.00% in the S&P 500, while small-cap materials advanced by 1.78%. Healthcare in the S&P 500 (+1.59%) was in-line with the Russell 2000 healthcare sector (+1.61%).
Consumer discretionary and consumer staples in the S&P 500 moved broadly higher, up 0.91% and 0.31%, respectively. Likewise, consumer discretionary gained 1.10%, while consumer staples advanced by 0.70% in the Russell 2000.
Utilities are today’s broad underperformer. Utilities offered disappointing returns in the Russell 2000 (+0.12%) and are the only sector in negative territory in the S&P 500 (-0.61%).
Stocks Trending in the News
Bank of America analyst, Wamsi Mohan, sees upside for IT Hardware stocks APPLE (AAPL), IBM CORP (IBM), and NETAPP (NTAP). Mohan maintained his buy rating for all three stocks. Apple shares are up 1.41%, IBM shares are up 1.74%, and NetApp shares are up 3.08%.
The US Justice Department is close to granting BAYER (BAYN.GR) antitrust approval for MONSANTO (MON). Bayer shares closed up 4.73%, and Monsanto shares are up 0.10%.
BOEING (BA) and EMBRAER (ERJ) are nearing an alliance deal according to Brazil’s defense minister Joaquim Silva e Luna. Boeing shares are up 2.97% and Embraer shares are up 5.20%.
CALIFORNIA RESOURCES CORP (CRC) is will have complete ownership of California’s largest natural gas field by purchasing CHEVRON (CVX)’s stake. California Resources paid Chevron $460M in cash and 2.85 million shares. CRC shares are up 10.85%, and Chevron shares are up 2.85%.
FACEBOOK (FB) CEO, Mark Zuckerberg, is supposed to stand before congress at 2:15 PM today. Facebook shares are up 1.17%.
M&T BANK (MTB) was downgraded to sell from neutral by UBS, with a price target of $173. M&T shares are down 1.16%.
S&P 500 Gainers
S&P 500 Laggards
- STX +7.69%
- NFX +6.34%
- RRC +5.60%
- DVN +5.56%
Russell 2000 Gainers
- AAL -3.75%
- HSY -2.96%
- NKTR -1.87%
- CHTR -1.70%
Russell 2000 Laggards
- PAY +51.90%
- SPPI +29.53%
- MTSI +11.60%
- WATT +9.73%
Rates & Commodities
- SELB -9.51%
- RDVT -7.47%
- EMKR -7.14%
- ARMO -5.86%
US bonds are mixed at midday as investors maintain their risk on sentiment. The 10-Year yield is unchanged from today’s open of 2.792% and the US 30-Year Yield is at lower from yesterday’s close of 3.016%. Notably, the 2-Year Yield is at 2.303%, higher from today’s open of 2.287%. The USD$ remains below a 90.0 level, currently at 89.68, lower by 17bps, yet slightly stronger from today’s open of 89.59. The USD$ remains sharply higher against the RUB? +3.88%. The USD has appreciated by over 9% against the Ruble this week. The USD$ has continued to advance against the JPY¥, currently at 107.20, up 42bp. The USD$ is notably weaker against the CAD$ by 73bps at 1.26. The loonie’s move against the USD$ comes as the Canadian business survey mitigates Canada’s economic growth concerns. Metals have found direction at midday as all are positive except for platinum. Gold is up 19bps at USD$ 1338.90/ounce, silver up 62bps at USD$ 16.60/ounce palladium up 269bps at USD$956.35 and platinum is down 48bps at USD$928.01. Aluminum is extending a strong rally, at USD$2,139/contract as trade war tensions have eased. WTI Crude oil is trading sharply higher, up 282bps at USD$ 65.21. WTI has crossed USD$ 65/barrel.
Major cryptocurrencies have rallied from lows this morning. Four of the big five are higher today with Litecoin the lone decliner. The big five are trading at; Bitcoin USD$6,827.79 +1.03%, Ethereum USD$407.75 +2.84%, Ripple USD$0.4911 +1.06%, Bitcoin Cash USD$648.78 +1.66% and Litecoin USD$114.21 -0.67% are all trading lower. Of the top twenty-five by market capitalization, 21 cryptocurrencies are posting positive returns as of midday. Today, Ethereum’s application, Golem, has reportedly gone live. The application lets users auction off their computer’s excess CPU power. European Commission Vice President, Andrus Ansip spoke today and highlighted how blockchain technology is going mainstream, and that the EU should make the most of this opportunity to innovate. The Indian government’s think tank, National Institution for Transforming India (NITI), says that it will have a blockchain proof-of-concept solution to combat the country’s roaring counterfeit drugs trade by year end. Lastly, a cryptocurrency investment management startup, CoinTracker, has raised USD$1.5mm. The company’s mission is to make crypto more accessible, easier to use and a simpler for a mainstream audience.
Latin American Equities
Latin American equities are trading higher at midday, in tandem with US equities. Brazil’s Ibovespa is reversing losses from yesterday, up 104bps, Argentina’s Merval is up 95bps and Mexico’s Mexbol is up 73bps. Of the 112 stocks comprised of these three indices, 93 are trading higher today. Brazil’s inflation data released this morning was disappointing as the readings came below estimates; Y/Y inflation for March came in at 2.68% vs. 2.72% expected and the M/M reading came in at 0.08% vs 0.12% expected. Inflation has been lackluster for Brazil as of late and following the central bank’s recent statements towards further monetary easing, the case seems warranted. US president trump has cancelled his plans to travel to the Summit of the Americas in Peru later this week as the ongoing conflict in the Middle East involving Syria and Russia requires his presence domestically. Secretary of Defense General Mattis cancelled his plans to travel to California following President Trump’s announcement, and Vice President Pence will travel to Peru instead.