Dow -62.13 at 16370.96, Nasdaq -16.58 at 4805.76, S&P -8.02 at 1958.02
Market was down throughout the session on Monday. As bearish as we can see, the 3 indices were mostly volatile and moving in a sideway fashion. I think market is definitely in a cautious mode with a very tight range.
Mixed performance around the world market as Shanghai Composite was beaten down as a result of weaker than expected economic data released. Meanwhile markets in the Europe were mostly flattish to downside.
Market Summary
Industry Watch
Strong: Financials, Utilities
Weak: Consumer Staples, Energy, Materials, Industrials
Other Market Moving Factor:
- Disappointing Industrial Production reports from China (+6.1% year-over-year; expected +6.4%) and Japan (-0.8% month-over-month; expected -0.6%)
[BRIEFING.COM] The stock market began the week on a lower note with the S&P 500 surrendering 0.4% while the Nasdaq Composite (-0.3%) outperformed slightly.
Overall, the Monday affair was very quiet with many investors sticking to the sidelines ahead of Thursday's FOMC policy announcement, which could feature a fed funds rate hike. To that point, fewer than 800 million shares changed hands at the NYSE floor versus a 20-day average of 984 million.
A cautious tone was set during overnight action after China and Japan both released disappointing industrial production reports. Equity bulls attempted to turn the tide during European action, but their efforts were not successful with the selling spilling into the U.S. session.
The key indices hit their lows shortly after 13:00 ET and remained near those levels until the close. Nine sectors registered losses while the utilities space (+0.3%) eked out a slim gain, which was aided by strength in Treasuries that sent the 10-yr yield lower by two basis points to 2.17%.
On the downside, energy (-0.8%) and materials (-1.3%) spent the day behind the remaining sectors, responding to general weakness in the commodity market. To that point, crude oil gave up 1.5%, sliding to $44.07/bbl while copper (-1.6% to $2.41/lb) and silver (-1.0% to $14.36/ozt) also posted losses. Gold was an outlier, climbing 0.4% to $1107.70/ozt. Mining stocks saw some intraday strength in response, but the Market Vectors Gold Miners ETF (GDX 13.12, -0.09) lost 0.7%.
Elsewhere among influential sectors, financials (-0.3%), health care (-0.4%), and technology (-0.3%) settled near the broader market.
The top-weighted tech sector spent the day just ahead of the benchmark index thanks to a 1.0% spike in the shares of Apple (AAPL 115.30, +1.09) after the company's spokesman said iPhone pre-orders are on pace to top last year's weekend sales record. However, it is worth noting that the forecast presented by Apple includes sales from China while last year's iPhone release was not available in China during the first weekend.
Unlike Apple, most of the remaining large cap tech components registered losses while high-beta chipmakers outperformed. The PHLX Semiconductor Index added 0.3% with roughly 2/3 of its components ending in the green.
On a separate note, Solera (SLH 53.66, +4.21) spiked 8.5% after agreeing to be acquired by Vista Equity Partners for $55.85/share in cash, which translates to roughly $6.50 billion. Investors did not receive any economic data today.
Tomorrow, August Retail Sales (Briefing.com consensus 0.3%) and the September Empire Manufacturing Index (consensus 0.3) will be reported at 8:30 ET while August Industrial Production (consensus -0.2%) and Capacity Utilization (expected 77.8%) will cross the wires at 9:15 ET. The day's data will be topped off with the 10:00 ET release of the Business Inventories report for July (expected 0.1%).
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -1.6%; Hong Kong’s Hang Seng +0.3%; and China’s Shanghai Composite -2.7%
There was mixed trading action in Asian-Pacific markets to begin the week. The two most closely-watched markets, however — the Nikkei (-1.6%) and the Shanghai Composite (-2.7%) — had the worst showings following some weaker than expected industrial production reports from Japan and China.
Economic data
- China
- August Industrial Production +6.1% year-over-year (expected +6.4%; prior +6.0%)
- August Fixed Asset Investment +10.9% year-over-year (expected +11.1%; prior +11.2%)
- August Retail Sales +10.8% year-over-year (expected +10.5%; prior +10.5%)
- Japan
- July Industrial Production -0.8% month-over-month (expected -0.6%; prior -0.6%)
- July Capacity Utilization -0.2% (prior +0.7%)
- Tertiary Industry Activity Index +0.2% month-over-month (expected +0.2%; prior +0.3%)
- India
- August WPI Inflation -4.95% year-over-year (expected -4.40%; prior -4.05%)
- August WPI Food -1.13% year-over-year (prior -1.20%)
- August WPI Fuel -16.5% year-over-year (prior -12.8%)
Equity Markets
- Japan’s Nikkei declined 1.6% and ended near its lows for the day following some weaker than expected industrial production data at home and out of China. Additionally, some of the weakness was attributed to reports that the BOJ isn’t going to introduce new stimulus soon. Pacing the losses were the industrials (-2.1%), health care (-1.4%), consumer discretionary (-1.3%), and financials (-1.3%) sectors. NTT DOCOMO (-9.8%), KDDI Corp (-8.6%), and Nippon Telegraph & Telephone (-6.5%) were the weakest issues. Pioneer Corp (+3.9%), NTT Data (+3.6%), and Nippon Electric Glass Co (+3.1%) topped the list of winners. Out of the 225 index members, 44 ended higher, 174 finished lower, and 7 were unchanged.
- Hong Kong’s Hang Seng increased 0.3%, deviating from a weak mainland market. Tingyi Cayman Islands Holding Corp (+2.7%), China Life Insurance (+1.9%), and AIA Group (+1.4%) were upside leaders while Belle International Holdings (-7.0%), Sands China (-3.0%), and Galaxy Entertainment Group (-2.6%) brought up the rear. Out of the 50 index members, 33 ended higher, 13 finished lower, and 4 were unchanged.
- China’s Shanghai Composite declined 2.7%, falling prone to selling pressure in the wake of reports showing August industrial production and fixed asset investment were both weaker than expected. That news overshadowed a stronger than expected retail sales report and news of reform measures surrounding state-owned enterprises.
- India’s Sensex increased 0.9% and finished near its high for the day in the wake of an inflation report that showed a larger than expected decline in wholesale prices. That was the tenth straight month that wholesale prices declined. The materials (+3.8%) and financials (+1.2%) sectors led the way higher. NTPC (+5.1%), Vedanta (+4.4%), and Hindalco Industries (+3.8%) were the best-performing issues. Bajaj Auto (-0.4%) and Maruti Suzuki India (-0.2%) led a small group of losers. Out of the 30 index members, 25 ended higher and 5 finished lower.
- Australia’s S&P/ASX 200 increased 0.5%, aided by strength in the gold (+2.6%), utilities (+1.1%), and heath care (+0.9%) sectors. Out of the 200 index members, 125 ended higher, 64 finished lower, and 11 were unchanged.
- Regional advancers: Taiwan +0.02%, Malaysia +2.3%, Indonesia +0.7%, Philippines +2.3%
- Regional decliners: South Korea -0.5%, Singapore -0.6%, Thailand -0.3%, Vietnam -0.8%
FX
- USD/CNY -0.1% at 6.3679
- USD/INR -0.3% at 66.3175
- USD/JPY -0.3% at 120.26
EUROPE
Major European indices trade near their flat lines after slipping from their highs. Over the weekend, German Finance Minister Wolfgang Schaeuble said that a European deposit guarantee mechanism cannot be implemented until other financial stability measures are in place.
- Eurozone July Industrial Production +0.6% month-over-month (expected 0.3%; prior -0.3%); +1.9% year-over-year (consensus 0.6%; last 1.5%)
- Italy’s August CPI +0.2% month-over-month, as expected; +0.2% year-over-year, as expected
- Swiss August PPI -0.7% month-over-month (expected -0.4%; prior -0.3%); -6.8% year-over-year (last -6.4%). Separately, Retail Sales -0.1% year-over-year (expected 1.5%; prior -0.9%)
Closing Prices
- UK’s FTSE: -0.5%
- Germany’s DAX: + 0.1%
- France’s CAC: -0.7%
- Spain’s IBEX: -0.1%
- Portugal’s PSI: -0.6%
- Italy’s MIB Index: -1.0%
- Irish Ovrl Index: -0.2%
- Greece ASE General Index: -0.1%
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Lower Volumes than the day before – 783.1M vs 832.9M
Decliners outpaced Advancers (adv/dec): 980 / 2049
New Lows outpaced New Highs (highs/lows): 14 / 108
NASDAQ:
Lower Volumes than the day before – 1458.0M vs 1677.2M
Decliners outpaced Advancers (adv/dec): 1091 / 1732
New Lows outpaced New Highs (highs/lows): 40 / 70
VOLATILITY S&P500 (VIX)
24.25 +1.05 (+4.53%)
Technical Updates
Volume: 92,662,418 (below average of 109,636,881)
Range: 16,330.87 - 16,450.86
Range: 16,330.87 - 16,450.86
4,805.76 -16.58 (-0.34%)
Volume: 358.1M (below average of 461,967,966)
Volume: 358.1M (below average of 461,967,966)
Range: 4,791.08 - 4,832.00
1,953.03 -8.02 (-0.41%)
Volume: 546,552,000 (below average of 609,479,354)
Range: 1,948.27 - 1,963.06
DOW remained in its triangle pattern as it could not formed a breakout. I think 16,500 remains a crucial resistance level for DOW. NASDAQ could not break above its resistance at around 4,820 and next resistance level is likely to be 4,860. S&P also could not formed a breakout and stay in its symmetrical triangle pattern. 1,970 is looking to be an important level for S&P. We are seeing a consolidation state here and market is looking to break out anytime soon.
As the direction of market is pretty uncertain, I suppose we should see some sideway at least until Thursday.
Commodities
- Commodities are trading lower today overall. According to the Bloomberg Commodity Index, commodities are about 0.4% lower today.
- The dollar index is modestly higher today, which is therefore only providing slightly pressure overall on commodities.
- Oil prices slid lower today, which follows two widely-followed montly oil market report.. this morning’s OPEC oil report and Friday’s oil market report from the IEA.
- By the end of today’s pit session, Oct oil fell -1.5% to close at $44.07/barrel.
- In other energy, Oct natural gas ended +2.6% at $2.76/MMBtu.
- Gold climbed higher, but not much. However, it closed near today’s high, finishing +0.4% at $1107.70/oz.
- Silver, on the other hand, lost steam today and ultimately closed -1% at $14.36/oz.
- Meanwhile, in industrial metals, copper declined -1.6% to $2.41/lb. All metals noted are Dec contracts.
Metals
- December gold ended today’s session $4.70 higher (+0.4%) at $1107.70/oz
- December silver closed today’s session $0.14 lower (-1%) at $14.36/oz
- December copper closed $0.04 lower (-1.6%) at $2.41/lb
Agriculture
Energy
- October crude oil futures fell $0.69 (-1.5%) to $44.07/barrel
- October natural gas closed $0.07 higher (+2.6%) at $2.76/MMBtu
- RBOB Gasoline closed $0.06 lower at $1.31/gallon
- Heating oil futures closed $0.04 lower at $1.51/gallon
Currencies
Yen and Aussie Rally
- The U.S. Dollar Index added 0.05% to 95.24 today during a session very light on news flow. FX markets, just like the equity and capital markets, are waiting for the FOMC rate decision on Thursday. Retail sales, industrial production, and consumer price index data are due out Tuesday and Wednesday
- EUR/USD: -0.19% to $1.1313
- Industrial production in the eurozone grew 0.6% m/m in July, reversing the 0.3% decline in June. The growth rate was well ahead of consensus estimates
- Italy's CPI rose 0.2% in August, in line with expectations and the prior reading
- The Harmonized Index of Consumer Prices (HICP) in Italy climbed 0.4% in the year to August, missing expectations and the 0.5% y/y growth in July
- New Democracy and Syriza are in a statistical dead heat going into the September 20th general election
- GBP/USD: +0.04% to $1.5433
- Bank of England policymaker Andy Haldane answered questions on Twitter today. He did not reference issues of monetary policy
- USD/JPY: -0.44% to 120.06
- Industrial production in Japan dropped 0.8% m/m in July, worse than both expectations and the prior reading of -0.6%
- Japan's Tertiary Industry Activity Index rose 0.2% m/m, in line with expectations but slower than the 0.3% growth in June
- USD/CHF: -0.07% to 0.9685
- The Swiss economy saw a 0.1% decline in retail sales for the year to August versus a 0.9% fall in July. The market had been looking for growth in sales for August
- Switzerland's producer price index fell 0.7% m/m in August, more than expected and more than the 0.3% drop in July
- USD/CAD: -0.02% to 1.3261
- AUD/USD: +0.64% to $0.7138
- NZD/USD: +0.19% to $0.6330
Bonds
Yield Curve Flattens
- Treasuries mostly rallied today while the 2-year note moved lower as traders and investors made further adjustments to their positioning for Thursday's FOMC rate decision. The U.S. Dollar Index edged higher by 0.08% to 95.27 and the S&P 500 index of large-cap U.S. equities declined in a rather dramatic rejection of a Sunday night rally in the equity futures market
- Yield Check:
- 2-yr: +2 bps to 0.73%
- 5-yr: -1 bp to 1.50%
- 10-yr: -1 bp to 2.18%
- 30-yr: -1 bp to 2.95%
- News:
- There were no U.S. economic data releases, Fed speakers, or Treasury auctions today
- Overnight, China reported that industrial production grew at a slower-than-expected 6.1% y/y in August. That was slightly faster than the 6.0% growth in July
- The fixed-asset investment growth rate fell to 10.9% y/y in August, lower than forecast and the 11.2% growth in the year to July
- Goldman's chief economist, Jan Hatzius, said that the Fed should be thinking about easing monetary policy in light of China's slowdown
- Tonight, Greece's former prime minister Alexis Tsipras of Syriza will debate the head of the right-wing New Democracy party, Vangelis Meimarakis. Syriza and New Democracy are in a statistical dead heat, according to polls
- Commodities:
- WTI crude: -1.21% to $44.09/bbl.
- Gold: +0.44% to $1,108.20/troy oz.
- Copper: -1.79% to $2.41/lb.
- Currencies:
- EUR/USD: -0.20% to $1.1312
- USD/JPY: -0.38% to 120.14
- Data Out Tuesday:
- August Retail Sales and Retail Sales ex-auto (08:30 ET)
- September Empire Manufacturing (08:30 ET)
- August Industrial Production and Capacity Utilization (09:15 ET)
- July Business Inventories (10:00 ET)
Treasury Yields:
- 2 Year Note 0.73% +0.02
- 5 Year Note 1.51% -0.01
- 10 Year Note 2.18% -0.02
- 30 Year Bond 2.95% UNCH
2/30 Spread: 222 bps ( -2 ) … 2/10 Spread: 145 bps ( -4 )
Preview for Tuesday 15 Sept, 2015
Economic Data
Tuesday (15 Sept) :
- Retail Sales : 0.3% (Prior 0.6%)
- Retail Sales ex-auto : 0.2% (Prior 0.4%)
- Empire Manufacturing : 0.3 (Prior -14.9)
- Industrial Production : -0.2% (Prior 0.6%)
- Capacity Utilization : 77.8% (Prior 78.0%)
- Business Inventories : 0.1% (Prior 0.8%)
Earnings Highlights
Tuesday (15 Sept) :
BMO - NTWK
AMC - AVNW UNFI
BMO - NTWK
AMC - AVNW UNFI
Summary
It has been a quiet start for the week. Not much of a surprise as I think some traders are staying off and monitor the market prior to the FOMC meeting this Thursday. I reckon we are likely to see similar session like today for the next few sessions. Expect more volatility in the market this week.
It has been a quiet start for the week. Not much of a surprise as I think some traders are staying off and monitor the market prior to the FOMC meeting this Thursday. I reckon we are likely to see similar session like today for the next few sessions. Expect more volatility in the market this week.
Direction for Tuesday 15 Sept, 2015: Down
2015 Daily Directional Accuracy: 91/143 (63.64%)
2015 Weekly Directional Accuracy: 21/34 (61.76%)
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