Surely no quarter-end padding here!...Global stocks rallying as quarter comes to a close
Mar 29, 2019
Market data as of 7am EST
US Stocks Preview Ahead of the Open
- Global stocks are rallying, surely not because investors are bidding up stocks to pad the performance of their portfolios for the first quarter, but on optimism a trade deal will get done
- US stocks index futures are higher this morning pre-market as quarter-end approaches, with front-month Dow Jones minis +0.41%, S&P 500 minis +0.39% and Nasdaq 100 minis +0.44%
- Former Federal Reserve Chair Janet Yellen commented that she does not expect the US to fall into recession any time soon and sees no need for an interest rate cut
- Press reports are that the US and China are poring over a trade agreement line by line to assure there are no discrepancies between the US and Chinese language versions; there were perceived discrepancies, especially over the meaning of certain words, so negotiators are triple checking everything
- China is keen to appear on equal footing with the US in negotiations and in any final trade deal
- Read more in our blog post: How about a trade deal while I buzz you with my warships? US-China trade talks intensify
- The MSCI All World Index is poised for its best performance this quarter since early 2012
- Things are tight in Turkey, read our post: Hear that crunch? That's lira liquidity amid Turkey's F/X flights of fancy
- The UK saw GDP grow 1.4% y/y in the fourth quarter, beating consensus of 1.3%
- The United States will announce February new home sales at 10:00 AM today. Economists expect 620,000 new US home sales in February compared to 607,000 reported for the prior period.
- The United States will also announce final March 2019 data for the University of Michigan Sentiment Index. Economists expect 97.8 to be reported, matching the 97.8 reported in the prior period.
- The VIX is moving up this morning and is currently at 16.48 after closing at 14.43 yesterday
- SPDR S&P 500 ETF Trust (SPY) March 27 & 29 OTM Puts and Coty (COTY) May 17 OTM Calls & Puts are the most actively traded options contracts in US pre-market trading this morning.
- US 10-Year Treasury Bonds are lower with yields up 2.46 basis points to 2.4192%
- The US Treasury 2s-10s Spread has narrowed 0.56 basis points to 0.15%
- WTI Crude is currently little changed -0.19% to USD$59.3/bbl with the Brent-WTI spread up USD$0.8 to USD$8.27/bbl
- Gold is currently little changed 0.07% to USD$1291.29/oz
Stocks Trending in the News
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Global Consumer Stocks Trending in the News
- Alibaba (BABA) provided Qutoutiao (QTT) with a convertible loan valued at $171 million. The loan from Alibaba to the news and video aggregator Qutoutiao makes strong strategic sense, according to analysts. Citi called the deal a “win-win” as it will help Alibaba penetrate into new users in lower-tier cities,” especially given Qutoutiao’s effective user-acquisition strategy. Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. Qutoutiao is rated “Top Short” in our China All-Cap Global Top Stock Ideas.
- CarMax (KMX) reported fourth quarter results that beat consensus. Fourth quarter EPS of $1.13 beat $1.03 consensus. CarMax fourth quarter revenue of $4.32 billion trailed $4.37 billion consensus. CarMax plans to have its omni-channel roll-out to the majority of its customers by the end of fiscal 2020. CarMax will open 13 stores over the coming year. CarMax is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
- H&M ( HMB) reported first quarter pre-tax profit that handily beat consensus, 1.04 billion Swedish kroner came well above consensus of 638 million Swedish kroner. This was its weakest profit in 18 years. H&M’s CEO said the company will close “somewhat more” than 50 stores and put some limits on free deliveries. There will be more closing than openings in 2019. H&M is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
- RH (RH) reported fourth quarter EPD of USD$3.00 beating consensus of USD$2.86. RH gave 2019 guidance that trailed the market by a wide margin-EPS of USD$8.41-9.08 is well below the $10.00 consensus. Revenue is expected to come in the range of USD$2.59-2.64 billion, well below USD$2.75 billion. RH expects revenue growth of 3-5%. RH is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
Global Information Technology and Communication Services Stocks Trending in the News
- BlackBerry (TSX:BB) reported fourth quarter EPS of 11, beating consensus of 6 cents. BlackBerry reported fourth quarter revenue of $257 million, beating consensus of $252 million. Revenue grew 8% in the quarter. BlackBerry results were helped by its recent artificial intelligence acquisition. BlackBerry is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.
Global Financials Stocks Trending in the News
- Jefferies (JEF) reported fiscal first quarter EPS of 14 cents, matching consensus. Jefferies first quarter revenue of USD$828.2 million also matched consensus. Revenue included a 1% rise in trading revenue which management termed exceptional, given the challenging conditions in January. Jefferies said in the present quarter business has “resumed its more normal pace.” Jefferies is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
- Morgan Stanley's (MS) President Colm Kelleher announced he will be retiring. Kelleher was one of the key executives that helped Morgan Stanley successfully navigate the financial crisis over 10 years ago. He was viewed a the company’s next CEO but has decided, at this point, to retire after over three decades at the firm. He will remain as a senior adviser to the company after retirement. Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
- Wells Fargo (WFC) announced its CEO Tim Sloan will be exiting the company. Mr. Sloan spent 31 years at Wells Fargo and spent the last two and a half years trying to get the company back on solid footing. He has spent most of that time as a punching bag for members of Congress, in the wake of the fake-account scandal that rocked the bank. Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
Global Industrials Stocks Trending in the News
- Boeing’s (BA) suspect flight control feature was activated before the Ethiopian Airline 737 Max crash, Ethiopian investigators are saying. This is the first finding for the data on the plane’s flight recorder. The MCAS, as the suspect system is known, was somehow triggered just before the plane went into a nose dive, killing all on board. An initial report from investigators is due within days. This information was shared during a briefing at the FAA on Thursday. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
- Lyft (LYFT) priced its IPO at $72, at the top of its revised pricing range. The pricing value the company at almost $24 billion. Lyft raised $2.34 billion in the initial share sale. Lyft has always played second fiddle to Uber and has had to battle them for fundraising, so this successful IPO is especially satisfying for the company. Lyft is not yet rated in our Global Top Stock Ideas.
Global Health Care Stocks Trending in the News
- Astra Zeneca (LSE AZN) has announced a joint venture with Daiichi Sankyo (TSE:4568) to develop new cancer treatments. Astra Zeneca will pay $1.35 billion up-front to develop and commercialize its trastuzumab deruxtecan drug with Daiichi Sankyo, then up to $5.6 billion over time depending on hitting milestones. Astra Zeneca is pursuing this deal in its effort to become a global cancer powerhouse. Astra Zeneca is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. Daiichi Sankyo is rated “Unattractive” in our Japan Large-Cap Global Top Stock Ideas.
Global Commodities & Power Stocks Trending in the News
- Vale (VALE) gave the market its much anticipated iron-ore production guidance for 2019, saying it expects to produce between 307 and 322 million tons. 93 million tons of production has been shuttered in the wake of its dam disaster. Previous estimates were for Vale to produce 382 million tons of iron ore this year. Vale said it is focused on safety issues now, not on restoring production. Vale said it could take up to 3 years to reopen some of the shuttered mines, longer for those already closed. Analysts estimate there is a 29 million ton deficit in the market this year. Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas
International Stock Markets Recap
- The Euro Stoxx 600 is currently up +0.25%, the FTSE 100 is higher by +0.39%, the DAX has risen +0.29%, and the CAC 40 is up +0.46%
- Basic Resources (+1.53%), Retail (+0.91%), and Technology (+0.74%) stocks are the top performers in the Euro Stoxx 600 today
- Telecommunications (-0.74%), Travel & Leisure (-0.52%), and Health Care (-0.22%) stocks are the worst performers in the Euro Stoxx 600 today
- Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 2.41x
- 62 stocks in the Euro Stoxx 600 are at 4-week highs while 60 stocks are at 4-week lows
- 35 stocks in the Euro Stoxx 600 are overbought while 22 stocks are oversold according to the 16-day RSI Measure
- The Nikkei 225 finished up +0.82%, the Hang Seng ended up +0.96%, the Hang Seng China Enterprise up +0.75%, and the CSI 300 was +3.86%
- Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 2.31x
- 3 stocks in the Nikkei 225 hit 4-week highs while 59 stocks reached 4-week lows
- 3 stocks in the Nikkei 225 closed overbought while 6 stocks closed oversold according to the 16-day RSI Measure
- Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 2.85x
- 8 stocks in the Hang Seng hit 4-week highs while 12 stocks reached 4-week lows
- 3 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio