No joke on this April Fools Day, global markets are rallying to open the quarter
Apr 01, 2019
Market data as of 7am EST
US Stocks Preview Ahead of the Open
- Stocks are cratering across the globe - APRIL FOOLS - global markets are rallying with US futures following, US stocks index futures are higher with front-month Dow Jones minis +0.73%, S&P 500 minis +0.70% and Nasdaq 100 minis +0.94%
- The President of the Minneapolis Fed Neel Kashkari said it is not time to raise interest rates - he is known as a consistent opponent of interest rate hikes
- The spring home-buying season is starting off in a very good spot, with falling interest rates putting 4% mortgage rates within reach for some
- Goldman Sachs and Morgan Stanley both lowered their 2019 expectation for US 10-year Treasury yield to 2.35% and 2.25%, respectively
- Morgan Stanley European Quants are out arguing that investors should buy value stocks over quality stocks. They argue the valuation for quality stocks is in the 99th percentile while stocks with high dividend yields are in the bottom decile. As a result, you may get a better “payoff” buying stocks with higher payouts.
- UBS is out arguing that global consumer discretionary stocks are set to outperforming utilities stocks. The ratio between the two sectors has dropped 15% since hitting an all-time high back in June 2018. A long-short pairing of the two is a way to play to reacceleration in global growth. Not sure we would recommend that though Consumer Discretionary has been one of our favorite sectors in US markets so far this year!
- The United States will announce February m/m retail sales growth at 8:30 AM today. Economists expect m/m growth of 0.3% in February retail sales compared to 0.2% reported for the prior period.
- The United States will also announce ISM Manufacturing data for March at 10:00 AM today. Economists expect March ISM Manufacturing to come in at 54.5 compared to 54.2 reported for the prior period.
- German Manufacturing PMI for March came at 44.1, worse than the 44.7 consensus and the worst reading in 7 years
- PMIs across Asia printed better than expected, in Japan, China and South Korea readings came better than expected, indicating generally improving economic conditions
- Brexit discussions continue in Parliament with lawmakers trying to craft an updated proposal, trying to break the impasse
- The VIX is moving up this morning and is currently at 16.48 after closing at 13.71 last week
- SPDR S&P 500 ETF Trust (SPY) April 1 & May 3 OTM Puts, Financial Select Sector SPDR Fund (XLF) April 18 Calls 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 3.36 basis points to 2.4386%
- The US Treasury 2s-10s Spread has widened 0.54 basis points to 0.15%
- WTI Crude is currently up 1.42% to USD$60.14/bbl with the Brent-WTI spread little changed USD$68.38 to USD$8.33/bbl
- Gold is currently little changed -0.14% to USD$1290.58/oz
Stocks Trending in the News
Click name for Q-Factor breakdown, latest price details, more financial info and sentiment data.
Global Consumer Stocks Trending in the News
- Coty (COTY) was dubbed a top short idea at JP Morgan today, saying the tender offer from majority share owner JAB will continue to put downward pressure on the shares. JP Morgan does not see any good news for the stock near-term as passive funds rebalance, selling the shares. Coty is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
- Galaxy Entertainment (SEHK:27) shares surged after China’s Gaming Inspection & Coordination Bureau said Macau’s casinos’ revenue fell just 0.4% in March, coming much better than the 3% drop that was expected. While better, casino revenue remains subdued as high rollers have yet to return to the casinos in strength. The soft revenue is expected to persist. Galaxy Entertainment is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
- Walt Disney (DIS) has a disappointing weekend with its debut of the live-action version of Dumbo. Disney’s Dumbo earned just $45 million in ticket sales over the weekend, a weak opening for the film. Dumbo cost $170 million to produce and this is Disney’s first flop of the year. Disney is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
Global Information Technology and Communication Services Stocks Trending in the News
- Apple (AAPL) announced the cancellation of its AirPower wireless charging mat, in a rare move for the tech giant. Apple announced the AirPower in late 2017 with its iPhone X, with the product set to go on sale in 2018. Apple has almost never simply canceled a product it already announced. Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
- EasyJet (LSE:EZJ) warned investors that the holiday season is not likely to be as strong as the company has expected. Brexit and the associated uncertainty is dampening demand for air travel, the company advised. “We had hoped for a little more clarity and certainty at this point,” said CEO Johan Lundgren. The combination of Brexit woes plus a slowing economy is taking its toll on EasyJet shares recently. EasyJet is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
- Facebook (FB) CEO Mark Zuckerberg called for additional regulation and oversight of the internet. Critics of Facebook got a chuckle from Zuckerberg’s comments given the multitude of missteps Facebook has made on this subject. Zuckerberg called for regulation of four broad areas-harmful content, election integrity, privacy and data portability. Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Softbank (TSE: 9984) announced the largest local bond sale ever in Japan. Softbank will offer 500 million yen in bonds targeting individual investors. The bonds are expected to be priced on April 12. Softbank controls the $100 billion Vision Fund. Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.
- Versum Materials (VSM) has opened the possibility for a deal with Merck KGaA (DB:MRK) of Germany after initially rejecting its $5.9 billion bid. Members of both companies met this week to discuss a potential deal. Merck’s initial offer was for $48 per share. In this meeting the CEO of Merck indicated there is room to increase its offer. Versum Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. Merck KGaA is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
Global Industrials Stocks Trending in the News
- Lyft (LYFT) saw the debut of its shares open 21% higher than the pricing today. Lyft saw very strong demand for its shares in the offering and closed 12% higher than pricing on its first full day of trading. Lift raised $2.34 billion in the IPO. The company closes the first day of a public company with a market valuation of over $25 billion. Lyft is not yet rated in our Global Top Stock Ideas.
Global Financial Stocks Trending in the News
Wells Fargo (WFC) was downgraded to market perform from outperform at KBW. Wells Fargo’s price target was cut to $50 from $58. Wells Fargo will have “tough sailing” without a CEO and finding a new one will not be easy. Senator Elizabeth Warren, however, is smiling. KBW fears it is not clear where Wells Fargo is headed. Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
Global Health Care Stocks Trending in the News
- Celgene (CELG) was downgraded at Atlantic Equities to neutral from buy. Celgene’s price target was lowered to $101 from $103. The market the average price target of Celgene is $99.50. The downgrade is based on valuation with the recent rise in the stock price. Celgene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
- Novartis (SWX:NOVN) will acquire the outstanding shares of IFM Tre, a unit of IFM Therapeutics. Novartis will pay $310 million up front and eligible for up to $1.265 billion in additional milestone payments. IFM Tre drug is able to fine-tune a person’s immune system and Novartis is keen to acquire its drug pipeline. Novartis is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.
International Stock Markets Recap
- The Euro Stoxx 600 is currently up +0.75%, the FTSE 100 is higher by +0.62%, the DAX has risen +1.04%, and the CAC 40 is up +0.54%
- Basic Resources (+3.2%), Technology (+0.96%), and Retail (+0.27%) stocks are the top performers in the Euro Stoxx 600 today
- Telecommunications (+0.14%), Utilities (-0.52%), and Real Estate (+0.15%) 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 2.85x
- 83 stocks in the Euro Stoxx 600 are at 4-week highs while 48 stocks are at 4-week lows
- 46 stocks in the Euro Stoxx 600 are overbought while 10 stocks are oversold according to the 16-day RSI Measure
- The Nikkei 225 finished up +1.43%, the Hang Seng ended up +1.76%, the Hang Seng China Enterprise up +1.56%, and the CSI 300 was +2.62%
- Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 10.84x
- 15 stocks in the Nikkei 225 hit 4-week highs while 27 stocks reached 4-week lows
- 7 stocks in the Nikkei 225 closed overbought while 4 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 49x
- 12 stocks in the Hang Seng hit 4-week highs while 7 stocks reached 4-week lows
- 6 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