Quantamize End of Day Update April 13

Apr 13, 2018

US Market Recap

US equities closed broadly lower, falling from midday levels. Early positive sentiment from higher than expected earnings data ebbed away throughout trading with investor sentiment finishing negative. Few updates were provided regarding the US’s potential military action against Syria, but the looming spectre of escalating conflict continues to weigh on markets. Sino-American trade conflict remains a focus as well, with the potential for future trade actions dampening the market outlook. Technology and financials were two of the biggest outperformers yesterday but reversed sharply today. It is interesting to note the while US equities receded, the VIX did as well settling down at 17.41.

The S&P 500 slid 0.47%, but advanced 2.0% for the week despite today’s declines. Financials finished 1.55% lower, advancing losses from midday. Large-cap banking (-2.60%) weighed on the financial sector, posting positive earnings which were none-the-less below market expectations. Technology was down broadly, with information technology and telecommunications posting losses of 0.33% and 0.15%, respectively. Consumer stocks were mixed, as consumer discretionary fell 0.37%, but consumer staples were up 0.50%. A rotation into defensive stocks continued with consumer staples and utilities (+0.69%) among the biggest outperformers. Large-cap energy closed 1.09%, bringing the sectors total return to 6.0% for the week. Healthcare was relatively flat, edging down 0.08%.

The Nasdaq Composite declined 0.47%, with technology slightly outperforming the broader market. Nasdaq 100 stocks moved 0.42%, relatively in line with the broader Nasdaq Composite index, as weakness in technology appears to be evenly distributed.  Large-cap semiconductors provided disappointing returns, falling 0.70% today.

Russell 2000 stocks were 0.50%, underperforming the broader market. Small-cap healthcare fell 0.97% and was the worst performing sector. Technology slid 0.53% , while materials were relatively flat (-0.03%). Consumer stocks declined broadly as consumer discretionary fell 0.70%, and consumer staples retreated by 0.23%. Energy (+1.09%) continued its strong performance, and along with utilities (+0.31%) were the only sectors in the Russell 2000 to finish in positive territory.

Stocks Trending the News

Allegiant Travel (ALGT) and Hawaiian Holdings (HA) have been fined by the US Department of Transportation for violating airline consumer protections rules. The companies were fined $250,000 and $125,000 respectively. Allegiant shares fell 8.59%, while Hawaiian Holdings finished flat.

Despite positive earnings results in the banking sector, market expectations exceeded these results, and banking stocks fell throughout the day. Jamie Dimon, JPMorgan CEO, commented that “the environment is intensely competitive and lending was flat for the quarter.” Wells Fargo stated that it may have to restate its 1Q results due to an upcoming regulatory settlement.  JPMorgan Chase (JPM) -2.71%, Citigroup (C) -1.72%, Wells Fargo (WFC) -3.10%, PNC Financial Services (PNC) -4.41%, all fell.

Mylan NV (MYL) is reportedly in talks to acquire Merck (MRK)’s consumer business.  Mylan shares fell 1.44%, while Merck shares rallied 0.76%.

Oracle (ORCL) is campaigning to prevent Amazon (AMZN) from receiving a Defense Department computing contract. Oracle shares gained 0.44%, while Amazon shares fell 1.22%.

Matt Maddox, CEO of Wynn Resorts (WYNN), said that the company is committed to completing its Boston area casino, but a sale is still possible. The casino is expected to cost $2.5 billion. Wynn Resorts shares fell 1.52%. 

S&P 500 Gainers

  • ALK +6.11%
  • FFIV +4.12%
  • CXO +3.21%
  • APA +3.15%
S&P 500 Laggards
  • PNC -4.61%
  • UA -4.35%
  • AAP -3.58%
  • WFC -3.43%
RTY 2000 Gainers
  • PLSE +10.56%
  • CLXT +8.56%
  • RYTM +8.26%
  • KIDS +6.70%
RTY 2000 Laggards
  • MBI -13.73%
  • SPRO -13.22%
  • GKOS -9.94%
  • QNST -8.95%
Cryptocurrencies

Major cryptocurrencies are holding onto their gains going into the weekend. Bitcoin remains above USD$8,000, currently at USD$8,052.48 +4.54%. News was light after midday. Investment tycoon Tim Draper, said Bitcoin will reach USD$250,000 by 2022. This follows a prediction that Fundstrat advisors cofounder made that Bitcoin would reach USD$25,000 by year end. At the beginning of tax season, only 802 people so far have reported crypto gains and losses in their tax filings.

Latin American Equities

Latin American equities were moderately lower today. Brazil’s Ibovespa was down 130bps, Argentina’s Merval was down 135bps and Mexico’s Mexbol is down 7bps. News was light today in the LatAm region. In terms of NAFTA, the US has stuck to five or six of its most controversial demands and is not showing any flexibility at this point. Commerce Secretary Wilbur Ross spoke at the Summit of the Americas today and said that he is optimistic a NAFTA deal will be reached by mid-May.

Rates & Commodities

US bonds finished mixed today with the general trend of yields being higher to end the week. The US 10-Year Yield closed at 2.83% today and the US 30-Year Yield finished at 3.026% Notably, the US 10-Year Yield has been rangebound between 2.74% and 2.85% over the last four weeks despite uncertainties related to trade and geopolitical risks. 10-Year yields peaked this year at 2.95% on February 21st and are still materially below the highs. The USD$ finished the day slightly higher at 89.80 +3bps. The USD$ is weaker against the MXN$ by 83bps at 18.03. The USD$ was mixed against safe-haven currencies today, up 14bps against the JPY¥ (107.32) but down by 7bps against the CHF (.9616). Precious metals were higher today, as investors seem to be cautious going into the weekend. Gold finished up 79bps at USD$ 1345.55/ounce, silver was up 64bps at USD$16.66/ounce, palladium was up 228bps at USD$988.45 and platinum was up 36bps at USD$928.60. WTI Crude held onto its gains for the week.  WTI closed at $67.29/barrel, up 33bps on the day.

EU Market Recap

European equities edged broadly higher but retreated from earlier highs. Eased Sino-American trade frictions still remain a factor in the market. Uncertainty bout military action by the UD in Syria at this time does not appear to be playing a significant role in the markets.

The Euro Stoxx 600 advanced 0.10%, finishing 1.17% higher for the week. Basic resources continued to outperform, advancing 1.19%. Real estate rose 0.75%, while utilities moved 0.69% higher. Autos & Parts increased 0.24%, compounding on yesterday’s 1.06% return. Technology retreated by 0.19%, in sharp contrast to yesterday’s 1.33% advances.

Regional markets moved relatively in-line with the broader Euro Stox 600 with the FTSE 100 gaining 0.09%, the DAX rising 0.22%, and the CAC40 increasing 0.11%.

EU Gainers

  • CON.SW +9.0%
  • VAC.FP +6.0%
  • AIR.LN +5.4%
  • LN +5.1%
EU Laggards
  • HMSO.LN -9.0%
  • SGE.LN -8.2%
  • OTELLO.NO -5.1%
  • LWB.LN -4.8%