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Quantamize Midday Market Update April 18

Apr 18, 2018

Quantamize Afternoon Market Update April 18

Key Highlights

-US equities broadly higher with S&P 500 +0.32%, RTY +0.51%, NDX +0.35%

-The VIX moved to 15.87, up from a 15 open level

-Technology is the biggest underperfomer, as semiconductors decline 

-Major cryptocurrencies trading upwards despite Bitcoin being down, Bitcoin Cash, Stellar, and Monero all up ~10% 

-Spread between the US 2-Year Note’s Yield and Germany’s 2-Year Note’s Yield at 300bps, widest spread since 1989

-WTI Crude Oil trading at USD$67.65/barrel, highest level since December 2014

 

US Markets Midday Review

US equities are broadly higher, extending earlier gains, and on pace for the 3rd positive session this week. No new sentiment drivers emerged, with corporate earnings continuing to lead market outlook.  The VIX is at 15.87, up from 15 at the open. Technology is the biggest laggard today, sharply contrasting yesterday’s higher returns.

The S&P 500 is 0.28% higher at midday. Energy (+1.46%), industrials (+1.23%), and materials (+0.93%) are the biggest gainers, while consumer staples (-0.49%) and technology (-0.53%) underperformed. Market breadth was positive with 370 of 500 stocks advancing.

The Nasdaq Composite advanced 0.35%, despite weak returns in technology. Market breadth for the Nasdaq Composite was decidedly positive as 1380 advanced (836 declines). The Nasdaq Composite is trading at 191% of 30-day average volume. The Nasdaq 100 is 0.32%, relatively in-line with the broader Nasdaq Composite. Large-cap semiconductor (-0.49%) and software services stocks (-0.34%) were among the worst performing in the S&P 500.

Russell 2000 stocks rose 0.51%, with small-cap equities outperforming large-cap stocks. Market breadth was notably positive with 1315 of 2000 equities advancing. Energy is a significant outperformer, rising 3.36% today, as the rotation into small-cap energy continues. Materials gained 1.15%, with strong returns in steel (+3.31%) and precious metal stocks (+3.17%) leading the sector higher. Consumer stocks were mixed with consumer discretionary increasing 0.82%, contrasting consumer staples’ relatively flat performance (-0.04%).  

 

Stocks Trending in the News

Amazon (AMZN) has partnered with Best Buy (BBY) to sell its voice-controlled TVs at Best Buy stores. Amazon shares are up 1.70%, and Best Buy shares are up 3.90%.

Semiconductor Equipment stocks are falling today after Lam Research (LRCX) said that it is expecting its shipments to fall in the second half of the year during its earnings call yesterday. Lam Research shares are down 5.27%, Applied Materials (AMAT) shares are down 5.11%, and KLA-Tencor Corp (KLAC) shares are down 2.38%.

Testron Inc. (TXT) shares rallied on news of increased demand for private jets. Textron delivered 29 turboprop planes, 46 helicopters, and 36 business jets in 1Q18, compared to 20 turboprop planes, 27 helicopters and 35 business jets in 1Q17. Textron shares are up 6.54%.

VMware Inc. (VMW) shares are higher after Carl Ichan has reportedly taken a medium-sized stake in the company. VMware shares are 4.15% higher.

 

S&P 500 Gainers

  • ISRG +7.78%
  • TXT +7.01%
  • UAL +6.46%
  • NFX +6.04%

 

S&P 500 Laggards

  • IBM -7.29%
  • LRCX -5.15%
  • AMAT -5.12%
  • JNPR -4.53%

 

Russell 2000 Gainers

  • EPE +19.35%
  • SPWR +11.98%
  • GNMK +9.49%
  • RNET +8.93%

 

Russell 2000 Laggards

  • BMI -8.24%
  • ADTN -7.48%
  • HCSG -7.14%
  • ICHR -6.20%

 

Cryptocurrencies

Major cryptocurrencies remain mixed however cryptocurrencies are showing they can post positive gains even with Bitcoin declining. Bitcoin is down on the day at $USD8,039.08, -0.74% over the last 24-hours. Bitcoin Cash, Stellar, Monero are top performers; up 9.80%, 10.66% and 11.23% respectively. Despite the Reserve Bank of India’s ban on financial institutions transacting with companies offering cryptocurrency services, individuals can still transact cryptocurrencies on peer-to-peer exchanges like Paxful. The Bitwatt platform now provides real time pricing and a blockchain for transacting electricity and is hoping for increased price transparency with. The Japanese police have arrested five individuals for purchasing $USD1.7mm worth of Bitcoin with fraudulent fiat currency. Korean Exchange Bithumb reportedly has USD$6bn worth for collateral in twelve different cryptocurrencies.

 

Latin American Equities

Latin American equities are following yesterday’s strong gains. Brazil’s Ibovespa is +1.76%, Argentina’s Merval is +1.16% and Mexico’s Mexbol is +0.30%. Venezuela’s economic struggles continue with delayed payments on USD$3.4bn worth of debt. President Maduro is looking to restructure debt with investors but US sanctions are likely to impede this. Mexico’s Foreign Minister Luis Videgaray plans to visit Washington D.C. as Economy Minister Guajardo meets with US and Canada counterparts. So far, it has been reported that 10 out of about 30 NAFTA chapters are virtually finished and a deal could come within the next 2-3 weeks. Chile’s Central Bank policy maker Rosanna Costa has said that economic data over the past few months show an inflection point in the economic cycle that is leading to lower risks for economic activity and inflation.

 

Rates & FX

US bonds are mostly lower with a moderate sell-off in shorter dated notes. The US 2-Year Swap Yield is up to 2.719% from 2.693% this morning while the US 2-Year Note Yield is at 2.431 from 2.394% this morning. The spread between the US 2-Year Note’s Yield and the German 2-Year Note’s Yield is notably at 300bps, the largest spread between the two notes since 1989. A focus within the debt markets today is that the US debt-to-GDP ratio is projected to reach 116.9% by 2023 according to the IMF. The USD$ is higher at 89.56, up 8bps on the day. The USD$ remains stronger against the GBP£ BY 51bps, at 1.4222. Notably, the USD$ has appreciated against the CAD$ by 71bps as of midday, at 1.2652. The Bank of Canada left its benchmark interest rates unchanged at 1.25% today and comments by the Head of the BoC, Poloz, were dovish. The USD$/TRY? is lower by 193bps at 4.0140. Turkey’s President, Erdogan, announced today that elections for the government will be held earlier than previously planned.

 

Commodities

Precious metals remain higher on the day despite an appetite for risk today. Gold is up 27bps, silver is up 259bps, platinum is up 97bps, and palladium is up 279bps. Metals are rallying as traders are betting the US will announce more sanctions on Russia, on top of the steel sanctions on steel company, Rusal. Nickel is up over 10% today following this speculation. WTI continues to rally after EIA data showed the first decrease in US crude withdrawal in six weeks. Currently, WTI is up 170bps at USD$67.65/barrel, its highest level since December 2014.