Quantamize End of Day Market Update April 16

Apr 16, 2018

US Market Recap

US equities closed broadly higher, edging above midday levels. US markets opened higher this morning as events over the weekend deflated geo-political events. Strong earnings this morning and better than expected retail figures for March pushed markets higher towards midday. Markets failed to find much direction after midday and traded relatively flat from the midday session. Market breadth was decidedly positive with the VIX settling down to 16.56, and an S&P advance/decline ratio of 7.8 (446 advances and 57 declines). There was no significant driver of market sentiment. The utilities and materials sectors led markets higher today.

S&P 500 stocks finished 0.81%, and all sectors closed in positive territory. The S&P 500 has now moved back into positive territory for the year, up 0.16% YTD. Materials (+1.38%) provided strong returns due to outperforming chemical producers (+1.54%). Utilities were in-line with materials, rising 1.38%. Consumer staples, energy, and industrials all advanced by more than 1%. Technology performed strongly with telecommunications rising 1.49% and information technology increasing 0.70%. Strong returns in technology software and services (+0.81%) lifted the information technology sector. Large-cap healthcare rose 0.80%, bolstered by reports of Amazon’s decreased interest in entering the healthcare sector. Robust returns in healthcare equipment (+1.72%) supported the sector.

The Nasdaq Composite end trading 0.70% higher, underperforming both the S&P 500 and Russell 2000. Small-cap technology was a relative underperformer, while large-cap tech showed signs of strength.

The Russell 2000 increased by 0.87%, with small-cap stocks slightly outperforming large-cap equities. Utilities (+1.89%) were the biggest outperformer, followed by robust returns in materials (+1.54%). Consumer stocks provided strong robust across the board, with consumer staples increasing 1.52% and consumer discretionary rising 1.44%. Technology (+0.30%), one of the strongest performers last week, has relatively underperformed to start the week. Healthcare finished as the only sector in negative territory, falling 0.28%, weighed down by disappointing returns in small-cap biotechnology (-1.80%).  

Stocks Trending the News

Amazon (AMZN) is no longer considering selling pharmaceutical products. Drug distributors and providers rallied on the news. Cardinal Health (CAH) shares rose 3.10%, AmerisourceBergen (ABC) shares rose 2.28%, McKesson (MCK) shares rose 3.58%, CVS Health Corp. (CVS) shares rose 4.23%, and Walgreens (WBA) shares rose 3.76, while Amazon shares rose 0.75%.

Barclays (BARC.LN) is considering adding a cryptocurrency trading desk. The bank has no concrete plans, and only a preliminary assessment has been completed. Barclays shares closed up 0.21% in London.

Raymond James downgraded Big Lots (BIG), Dollar General (DG), and Dollar Tree (DLTR) to outperform from strong buy. Raymond James analyst, Daniel Wewer’s main concerns surrounding the discount retailers is that Walmart (WMT) is becoming more price competitive. Big Lots’ price target was cut to $48 from $60. Dollar General’s price target was cut to $105 from $110. Dollar Tree’s price target was kept at $110. Big Lots shares rose 1.81%, Dollar General shares rose 0.82%, Dollar Tree shares rose 0.43%, while Walmart shares rose 0.93%.

Volkswagen AG (VOW3.GR) may be interested in acquiring Navistar International Corp (NAV), the producer of medium and heavy trucks and school buses backed by Carl Icahn. Volkswagen shares closed down 2.90% in Germany, while Navistar shares rallied 9.85%.

Netflix (NFLX) reported 2Q18 earnings of $0.64 per share, in-line with estimates of $0.63. Netflix reported revenue of $3.7 billion, in-line with estimates of $3.69 billion. Total net subscribers grew by 6.2 million, beating estimates of 4.83 million. Netflix shares are up 6.52% post-market.

 

S&P 500 Gainers

  • JBHT +6.19%
  • CVS +4.21%
  • ECL +4.09%
  • NLSN +4.05%

S&P 500 Laggards

  • BMY -7.79%
  • NOV -7.18&
  • NKTR -7.00%
  • FL -4.09%

RTY 2000 Gainers

  • ERI +16.25%
  • CVNA +15.51%
  • APLS +12.23%
  • TRNC +10.79%

RTY 2000 Laggards

  • ACAI -35.97%
  • ASNA -24.59%
  • SPRO -12.72%
  • BPMC -12.64%

 

Cryptocurrencies

Major cryptocurrencies are mostly lower on the day. Bitcoin remains below USD$8,000 and is at $USD7,986.44 -3.53%. Cardano OmiseGO, and Icon are notably higher on the day; up 13.35%, 10.84% and 3.46% respectively. Coinbase has bought Earn.com, one of the most well-funded startups in the cryptocurrency world. Earn.com is being purchased for over $USD120mm, and allows users to earn and spend bitcoin for using its blockchain e-mail platform and for performing tasks. Ripple has reportedly asked the UK government to introduce regulations to “end the wild west days” within the cryptocurrency market.

Latin American Equities

Latin American equities finished moderately lower today. Economic data has continued to weigh on LatAm equities and could be attributable to recent weakness. Brazil’s Ibovespa was down 176bps, Argentina’s Merval was down 168bps and Mexico’s Mexbol was down 59bps. The Argentinian central bank hinted at raising its benchmark policy rate if May inflation does not slow, President Federico Sturzenegger said today at a quarterly monetary policy conference. IPOs may finally be coming to Brazil this year as NotreDame is scheduled to price on Thursday and Hapvida next Monday.

Rates & Commodities

US bonds finished higher on the day even though US equity markets were positive all day. The US 10-Year Yield is at 2.830%, down from today’s open of 2.858% and the US 30-Year Yield is at 3.029%, down from today’s open of 3.065%. The spread between the US 5-Year and the US 30-Year curve broke below 35bps and touched the flattest levels since August 2007. The USD$ is still weaker today, at 89.42, down 47bps. The USD$ is sharply weaker against the RUB? by 260bps. FX traders will be watching China’s GDP data to be released later tonight as well as the Royal Bank of Australia’s (RBA) minutes release. Precious metals are mostly flat with gold down 1bps (USD$1346.07), silver up 12bps (USD$16.68), platinum down 22bps (USD$929.32), and palladium up 179bps (USD$1,006.01). WTI traded lower today after advancing sharply last week. Currently, WTI is trading at USD$66.31/barrel. Data on US oil production was released today, and production increases were evident from the Bakken and Permian Basin regions.

EU Market Recap

European equities broadly declined, finishing near session lows, and reversing from Friday’s higher trading. Reduced concerns about escalating US-Russia conflict were not enough to turn markets positive. Market breadth was negative with a Euro Stoxx 600 advance/decline ratio of 0.62 (223 advances and 360 declines). There was no significant sentiment catalyst driving the moderate sell-off.

The Euro Stoxx 600 retreated 0.36%, widening losses from midday. Basic resources declined 1%, reversing a trend of positive trading. Disappointing returns in chemicals (-0.32%) weighed the basic resources sector down. Financials were led lower by declines in both banking (-0.15%) and financial services (-0.43%). Regional technology withdrew 0.56%, building on Friday’s 0.19% losses. Autos & parts moved 0.86% lower and continue to be maligned. Retail stocks (+0.13%) were among the best performing.

Regional markets were down across the board, and advanced YTD losses, with the FTSE 100 falling 0.82%, the DAX receding 0.41%, and the CAC40 edging 0.05% lower.  

 

EU Gainers

  • TPIER.GA +7.7%
  • ETE.GA +7.4%
  • WTB.LN +7.3%
  • CRI.FP +5.9%

EU Laggards

  • POLY.LN -9.4%
  • WPP.LN -6.4%
  • SOW.GR -6.1%
  • INTU.LN -5.1%