Quantamize Afternoon Market Update April 11

Apr 11, 2018
US Markets Midday Review

US equities are mixed midday. Markets struggle to find direction due to conflicting sentiment from positive Sino-American trade rhetoric, contrasted by President Trump’s aggressive stance towards Russia regarding Syria. On the trade front, the Trump Administration is reportedly developing a multi-billion-dollar relief package for domestic farmers impacted by US-China trade tension.

The VIX has fallen to 19.76, down from 21.33 earlier today as market confidence seemingly stabilizes. An S&P 500 advance/decline ratio of 1.05 (258 advances and 245 declines), however, indicates investor tentativeness. Energy continues to build on yesterday’s strong returns, and technology moved broadly higher as well.

The S&P 500 edged 0.03% lower, as large-cap stocks underperform the broader market. Technology is mixed with telecommunications 1.16% lower, while information technology rose 0.37%. Returns in energy and real estate are in-line with each other, gaining 1.11%. Consumer stocks rose broadly with consumer discretionary moving 0.52% higher, and consumer staples increasing by 0.22%. Large-cap financials and healthcare retreated by 0.54% and 0.22%, respectively. Disappointing returns in banking (-0.62%) weighed the S&P 500 financial sector down.

Nasdaq Composite stocks gained 0.29%, with large-cap semiconductors (+0.67%) offering solid returns. Micron Technology (+1.83%), Lam Research (+1.23%), and Applied Materials (+1.50%) all outperformed the broader Nasdaq Composite. Social media technology is mixed, after being broadly higher yesterday. Twitter fell 0.91%, while Snap Inc and Facebook gained 2.55% and 1.19%, respectively.

The Russell 2000 advanced 0.38%. Energy (+2.31%) is the best performer today, following yesterday’s 5.04% advance. Technology has risen by 1.19%, followed by small-cap healthcare’s’ 0.78% increase. Utilities are up 0.21%, after being yesterday’s biggest underperforming sector. Materials (-0.18%) are the worst performers in the Russell 2000 today, led lower by weak returns in aluminum production (-1.86%). Consumer stocks in the Russell 2000 are higher as consumer discretionary and consumer staples gained 0.12% and 0.64%, respectively.

Stocks Trending in the News

Airbus SE (AIR.FP)’s subsidiary, Premium Aerotec Gmbh, is attracting takeover interest from private equity companies. Premium Aerotoc produces aircraft-parts. Airbus shares closed 3.13% lower.

Mizuho believes that Biogen (BIIB) could have $11-$20 upside from today’s level. This is because Samsung is considering purchasing Biogen’s stake in the companies’ joint venture. Mizhuo has a Buy rating, and a $433 price target. Biogen shares are 1.13% higher.

Jefferies is calling Envision Healthcare (EVHC) 7.3% decline yesterday an overreaction. Jefferies believes that Envision Healthcare is still likely to be bought out in the near future despite news of contract arbitration going on between Envision Healthcare and UnitedHealth Group (UNH). Envision shares are up 3.29% today, while UnitedHealth shares are down 1.27%.

60 million shares of Hilton Worldwide (HLT) are being sold at $73 per share by HNA Tourism Group, the Chinese company. Hilton shares are up 5.83%.

MercadoLibre (MELI), the Argentine equivalent to eBay, saw its price target raised to $450 from $385 at Bank of America. MercadoLibre shares, which are listed on the Nasdaq, are down 3.37% today.

S&P 500 Gainers

  • HLT +5.63%
  • MAT +5.33%
  • FTI +4.60%
  • NEM +4.03%
S&P 500 Laggards
  • FAST -6.52%
  • GWW -4.39%
  • RSG -3.08%
  • AMG -2.62%
Russell 2000 Gainers
  • AVAV +18.33%
  • FATE +13.82%
  • OMER +13.60%
  • AAOI +11.64%
Russell 2000 Laggards
  • QNST -18.02%
  • ALOG -13.33%
  • SGRY -7.61%
  • WATT -4.97%
Rates & Commodities

US bonds are slightly lower from the open as investors are seemingly cautious as of midday. The US 10-Year yield is at 2.786% from today’s open of 2.772% and the US 30-Year Yield is at 2.999% from today’s open of 2.994%, The USD$ is at 89.46, lower by 16bps as of midday. The USD$ is now only slightly stronger against the RUB? +0.52% and slightly stronger against the TRY? by 0.37%. The Ruble appears to be consolidating after weakening by over 10% this week, and Turkey’s central bank said today that “they will do what’s needed when needed” in terms of supporting the Lira. The USD$ is weaker against the safe-haven JPY¥ by 25bps, currently at 106.86.  All metals remain higher with gold up 136bps at USD$ 1357.91/ounce, silver up 126bps at USD$ 16.79/ounce, palladium up 189bps at USD$969.96 platinum up 74bps at USD$936.67, aluminum up 290bps at USD$2,201/contract, and copper up 168bps at USD$6,945/contract. WTI Crude oil continues to extend gains, up 226bps at USD$ 66.97. WTI is at its highest level since July 2015. Oil prices have recently been driven by increasing tensions in the Middle East, notably, Secretary Mnuchin saying today that the US may impose “very strong” sanctions on Iran.

Cryptocurrencies

Major cryptocurrencies are holding onto their gains as of midday. All the big five remain higher today. The big five are trading at; Bitcoin USD$6,941.84 +1.76%, Ethereum USD$420.32 +3.70%, Ripple USD$0.4981 +1.64%, Bitcoin Cash USD$655.95 +1.41% and Litecoin USD$114.84 +0.59%. Of the top twenty-five by market capitalization, 20 cryptocurrencies are posting positive returns as of midday. Russia has introduced a bill that will regulate ICO registration and project development. The legislation aims to provide protection and liquidity for investors. Bithumb exchange, is promoting cryptocurrencies with its partnership with mobile payment operator Korea Pay’s Services. Bithumb hopes to reach over 8,000 merchants across the country by the year end. Lastly, Monero has confirmed that their cryptocurrency is now available to be stored on the hardware wallet manufacturer, Ledger.

Latin American Equities

Latin American equities are mixed at midday. Brazil’s Ibovespa is up 92bps, Argentina’s Merval is down 12bps and Mexico’s Mexbol is up 36bps. Newly elected President, Martin Vizcarra, has a 55% approval rating this far. Of the respondents in a recent poll, 54% responded that Vizcarra will be better than his predecessor, and 32% believe it will be the same. Brazil’s central bank president said the country can adequately ride out global economic turbulence, that the bank has enough reserves and the potential to intervene in the swap markets. With this potential to intervene, the central bank feels it has enough ammunition to deal with any scenario.