Dow +13.69 at 16790.12, Nasdaq -32.90 at 4748.36, S&P -7.13 at 1979.91
Tuesday was mostly profit-taking after Monday was overbought. It doesn't come at a surprise after we saw a nice rally in the market. Other than that, it was rather a quiet session. Overall I think that the market is still bullish as TRIN was below 1 throughout the session.
Mixed performance across the global markets. Europe markets showing a slight upside and Asia markets were mostly flat-ish.
Market Summary
Industry Watch
Strong: Energy, Industrials, Materials
Weak: Consumer Staples, Financials, Health Care, Utilities
Other Market Moving Factor:
[BRIEFING.COM] The stock market endured a shaky session on Tuesday with the Dow Jones Industrial Average (+0.1%) eking out a slim gain while the S&P 500 (-0.4%) and Nasdaq Composite (-0.7%) underperformed throughout the day.
- SABMiller (SBMRY) expected to reject takeover proposal from Anheuser-Busch Inbev, according to Bloomberg
- Biotechnology weighs
[BRIEFING.COM] The stock market endured a shaky session on Tuesday with the Dow Jones Industrial Average (+0.1%) eking out a slim gain while the S&P 500 (-0.4%) and Nasdaq Composite (-0.7%) underperformed throughout the day.
For the second day in a row, the U.S. trading day began after the release of some disappointing economic data overseas. Today, it was Germany's Factory Orders report for August, which showed a 1.8% decline while the market had expected an increase of 0.5%. That being said, European equities were able to register gains after erasing their early losses, but the strength did not carry over the U.S. session as continued weakness in the biotech space kept the broader market under pressure.
Specifically, the iShares Nasdaq Biotechnology ETF (IBB 301.91, -11.29) lost 3.6% after surrendering 0.7% on Monday. On a related note, the health care sector tumbled 2.3% while most other influential sectors also struggled.
Similar to health care, heavily-weighted financials (-0.5%) and consumer discretionary (-0.7%) underperformed throughout the day while another influential group—technology (+0.2%)—climbed ahead of the broader market during afternoon action.
The largest sector by weight received support from the likes of Apple (AAPL 111.31, +0.53), Microsoft (MSFT 46.75, +0.12), and Intel (INTC 31.74, +0.53), but several other large components finished the day in negative territory. High-beta chipmakers struggled in the early going, but the PHLX Semiconductor Index added 0.3% after erasing a 1.5% decline.
Elsewhere among cyclical sectors, energy (+2.2%) and materials (+1.3%) continued their recent show of relative strength, extending their respective week-to-date gains to 5.1% and 4.0%. Commodity prices were behind today's charge as crude oil surged 4.9% to $48.53/bbl with reports suggesting oil traders have taken note of rising tensions in Syria.
Unlike stocks, Treasuries ended the day near their highs after a brief morning appearance in the red. The 10-yr note added a quarter of a point, pressuring its yield two basis points to 2.04%.
Today's participation was ahead of average as more than 950 million shares changed hands at the NYSE floor.
Economic data was limited to the August trade balance, which showed a deficit of $48.30 billion while the Briefing.com consensus expected the deficit to come in at $44.50 billion. The prior month's deficit was revised to $41.80 billion from $41.90 billion.
Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET while the Consumer Credit report for August will cross the wires at 15:00 ET (Briefing.com consensus $19.50 billion).
Global Market
ASIA
Most markets in the Asia-Pacific region finished higher on Tuesday, although profit-taking efforts set in for a number of markets as the trading session progressed, cutting into stronger gains seen shortly after the start of trading. Many of the smaller regional markets continued their rebound as the thought of the Federal Reserve remaining on hold continued to bolster sentiment in emerging markets. Indonesia (+2.4%) led the way followed by Vietnam (+2.0%).
Economic data
- Australia
- RBA leaves key policy rate unchanged at 2.00%, as expected
- August Trade Balance AUD -3.095 bln (expected AUD -2.550 bln; prior AUD -2.792 bln)
- Exports 0.0% (prior +2.0%)
- Imports +1.0% (prior 0.0%)
- Hong Kong
- September Manufacturing PMI 45.7 (prior 44.4)
- India
- September Nikkei Services PMI 51.3 (prior 51.8)
- New Zealand
- Q3 NZIER Business Confidence -14.0% (prior +5.0%)
- Q3 NZIER QSBO Capacity Utilization 91.4% (prior 93.4%)
Equity Markets
- Japan’s Nikkei increased 1.0%, but spent most of the day drifting lower after gaining 2.0% at the start of trading. Standout sectors included the communications (+2.0%), industrials (+1.5%), and consumer discretionary (+1.2%) sectors. Nippon Steel & Sumitomo Metal Corp (+4.0%), Fukuoka Financial Group (+4.0%), and Hitachi Construction Machinery (+3.8%) topped the list of individual winners while Kawasaki Kisen Kaisha (-2.5%), UNY Group Holdings (-2.5%), and Sumco Corp (-2.4%) led the losers. Out of the 225 index members, 172 ended higher, 49 finished lower, and 4 were unchanged.
- Hong Kong’s Hang Seng declined 0.1%, coughing up the entirety of an opening 1.4% gain. Lenovo Group (-3.4%), China Overseas Land & Investment (-3.2%), and China Resources Enterprise (-3.1%) led the way lower. Sands China (+8.6%) and Galaxy Entertainment (+3.9%) continued their rebound and topped the list of winners along with PetroChina (+3.0%). Out of the 50 index members, 21 ended higher, 27 finished lower, and 2 were unchanged.
- China’s Shanghai Composite: closed for holiday (National Day)
- India’s Sensex increased 0.6%, finishing the day on an upswing. The move was led by strength in the consumer staples (+2.8%), utilities (+2.0%), and energy (+1.6%) sectors. Tata Motors (+5.7%), ITC Ltd (+4.1%), and Cipla Ltd (+3.8%) were the best-performing issues while Bharat Heavy Electricals (-3.2%), Infosys (-2.1%), and NTPC Ltd (-1.6%) brought up the rear. Out of the 30 index members, 17 ended higher and 13 finished lower.
- Australia’s S&P/ASX 200 increased 0.3% following some weaker-than-expected trade data and an expected decision by the RBA to leave its policy rate unchanged at 2.00%. The S&P/ASX 200 had been up as much as 1.4% shortly after the start of Tuesday’s trading. The modest gain was underpinned by the metals & mining (+1.5%), resources (+1.3%), and materials (+0.8%) sectors. Out of the 200 index members, 95 ended higher, 92 finished lower, and 13 were unchanged.
- Regional advancers: South Korea +0.6%, Taiwan +0.5%, Malaysia +0.9%, Indonesia +2.4%, Singapore +1.6%, Thailand +0.7%, Vietnam +2.0%, Philippines +1.3%
- Regional decliners: None
FX
- USD/CNY -0.02% at 6.3561
- USD/INR +0.2% at 65.3975
- USD/JPY -0.1% at 120.36
EUROPE
Major European indices hold modest gains after climbing off their early lows. Markets in Spain (+0.5%), Germany (+0.3%), and France (+0.4%) have shown relative strength while UK’s FTSE (+0.2%) underperforms.
- Germany’s August Factory Orders -1.4% month-over-month (expected 0.5%; prior -2.2%)
- UK’s September Halifax House Price Index -0.9% month-over-month (expected 0.1%; last 2.7%); 8.6% year-over-year (expected 9.0%; prior 9.0%)
- Swiss September CPI +0.1% month-over-month; -1.4% year-over-year, as expected
Closing Prices
- UK’s FTSE: + 0.4%
- Germany’s DAX: + 0.9%
- France’s CAC: + 1.0%
- Spain’s IBEX: + 1.5%
- Portugal’s PSI: + 1.2%
- Italy’s MIB Index: + 0.9%
- Irish Ovrl Index: + 0.4%
- Greece ASE General Index: + 0.5%
Macroeconomic Data
Economic Data
from Briefing.com
- Trade Balance : -$48.3B vs -$44.5B (Prior -$41.8B)
TRADE BALANCE
Highlights
- The U.S. trade deficit widened to $48.3 bln in August from a slightly downwardly revised $41.8 bln (from $41.9 bln) in July. The Briefing.com Consensus expected the trade deficit to increase to $44.5 bln.
- While the big increase in the trade deficit looks like a clear miss when compared to the consensus forecast, it was actually very much in-line with the $48.0 bln estimate provided in the advance trade of goods report.
Key Factors
- As usual, a big increase in the trade deficit can be directly tied to a release of the latest version of the Apple iPhone or Samsung Galaxy cellphone. That held true in August as cell phone imports skyrocketed by $2.1 bln.
- Overall, the goods deficit increased to $67.9 bln in August from $61.3 bln in July. The services surplus increased slightly to $19.6 bln from $19.5 bln.
- Total exports declined by $3.7 bln to $185.1 bln in August from $188.8 bln in July. Most of the decline came from a $2.2 bln fall in industrial supplies and materials exports of which $0.8 bln was a result of a decline in fuel and crude oil. Other large declines were reported in food and feedstuffs (-$0.3 bln), automotive (-$0.5 bln) and consumer goods (-$0.6 bln). Capital goods exports managed to post a small increase in exports ($0.1 bln), but that was because of a surge in civilian aircraft exports ($1.4 bln).
- Total imports increased to $233.4 bln in August from $230.6 bln in July, a gain of $2.8 bln. Big declines in crude and fuel oil imports (-$1.5 bln) led to a $2.2 bln decline in industrial supplies and materials imports. However, that loss was easily offset by a $4.0 bln increase in consumer goods, which was mostly due to the aforementioned cell phone gains. Capital goods imports increased by $1.1 bln in August.
- The petroleum-based trade deficit declined to $6.9 bln in August from $8.1 bln in July.
Big Picture
- A stronger dollar and the release of the latest cell phone caused the U.S. trade deficit to widen to its largest level since the West Coast port strike in March.
Market Internals
NYSE:
Lower Volumes than the day before – 1007.2M vs 1091.7M
Advancers outpaced Decliners (adv/dec): 1694 / 1361
New Highs outpaced New Lows (highs/lows): 20 / 12
NASDAQ:
Higher Volumes than the day before – 2065.8M vs 1989.8M
Decliners outpaced Advancers (adv/dec): 1272 / 1569
New Lows outpaced New Highs (highs/lows): 37 / 41
VOLATILITY S&P500 (VIX)
19.40 -0.14 (-0.72%)
Technical Updates
Volume: 120,007,237 (above average of 111,179,480)
Range: 16,746.03 - 16,865.09
Range: 16,746.03 - 16,865.09
4,748.36 -32.90 (-0.69%)
Volume: 472.1M (above average of 467,626,688)
Volume: 472.1M (above average of 467,626,688)
Range: 4,711.79 - 4,783.37
1,979.92 -7.13 (-0.36%)
Volume: 679.9M (above average of 622,243,065)
Range: 1,971.99 - 1,991.62
DOW barely manage to close above its 50MA but its candlestick pattern indicates a lack of bullish strength. As DOW went higher with the volume dropping, I think the upside is limited to some extent. I suppose the key resistance remains at around 19,940-19,950. NASDAQ was not able to break above yesterday high and continue to hold on its 20MA as support. 4,800 is likely to be another resistance level for the index. S&P was rejected by the resistance at 1,990 and on a closer look, it looks like it is forming a head-and-shoulder pattern. Somehow the indices are showing a sign of reversal in the market and does this refer to the end of 'bear rally'?
Commodities
- The dollar index slid lower today, which helped give commodities a boost.
- The October World Economic Outlook from the IMF also came out, which played as a catalyst to the commodities space as well.
- Oil prices rallied today, settling 4.9% higher at $48.53/barrel and aside from a weak dollar, oil prices got a boost from OPEC comments and output data from the EIA’s short-term energy outlook.
- EIA estimates that total U.S. crude oil production declined by 120,000 barrels per day (b/d) in September compared with August.
- Crude oil production is forecast to decrease through mid-2016 before growth resumes late in 2016.
- Projected U.S. crude oil production averages 9.2 million b/d in 2015 and 8.9 million b/d in 2016.
- In other enery, Nov nat gas rose 0.4% to $2.47/MMBtu
- Precious metals rose, while copper was flat.
- Dec gold gained +0.7% at $1146.30/oz, while Dec silver +1.4% at $15.94/oz
Energy Closing Prices
- November crude oil futures rose $2.25 (+4.9%) to $48.53/barrel
- November natural gas closed $0.01 higher (+0.4%) at $2.47/MMBtu
- RBOB Gasoline closed $0.04 higher at $1.43/gallon
- Heating oil futures closed $0.06 higher at $1.61/gallon
Agriculture Closing Prices
- December corn closed $0.04 higher at $3.98/bushel
- December wheat closed $0.11 higher at $5.26/bushel
- November soybeans closed $0.05 higher at $8.88/bushel
- Sugar #11 closed $0.01 cents lower at 13.63 cents/lb
Metals Closing Prices
- December gold ended today’s session $8.40 higher (+0.7%) at $1146.30/oz
- December silver closed today’s session $0.22 higher (+1.4%) at $15.94/oz
- December copper closed flat at $2.36/lb
Currencies
Dollar Declines Against All Majors
- The U.S. Dollar Index fell 0.64% to 95.49 today. The U.S. trade deficit for August was reported at $48.3 bln versus the Briefing.com consensus of $44.5 bln. That was a wider deficit than the $41.8 bln from July
- EUR/USD: +0.67% to $1.1267
- German factory orders unexpectedly fell 1.8% m/m in August after a downwardly-revised 2.2% decline in July
- Demand from the rest of the single-currency bloc rose, while domestic orders fell 2.6%
- The German Economy Ministry said that school holidays exacerbated the decline
- German factory orders unexpectedly fell 1.8% m/m in August after a downwardly-revised 2.2% decline in July
- GBP/USD: +0.53% to $1.5231
- In the U.K., the Halifax House Price Index unexpectedly declined 0.9% from August to September
- USD/CHF: -0.90% to 0.9671
- Switzerland's consumer price index rose 0.1% m/m in September, in line with expectations. Consumer prices fell 0.2% in August
- USD/JPY: -0.11% to 120.29
- USD/CAD: -0.37% to 1.3036
- Canada's trade deficit was revised up more than expected in August to CAD 2.53 bln from CAD 0.59 bln
- The Ivey PMI fell to a lower-than-expected 53.7 in September from 58.0 in August
- AUD/USD: +0.95% to $0.7153
- The Reserve Bank of Australia held its key policy rate at 2.00%, as expected
- The RBA is trying to cushion the Australian economy from falling commodity prices but remains mindful of a strong housing market
- Australia's trade deficit was revised to a larger-than-expected AUD -3.095 bln in August from AUD -2.46 bln in September
- The Reserve Bank of Australia held its key policy rate at 2.00%, as expected
- NZD/USD: +0.72% to $0.6536
- The New Zealand Institute of Economic Research reported that business confidence in that country fell to its lowest level since March 2011
- The NZIER's Business Confidence Index showed that a seasonally adjusted net 9% of firms expect business conditions to worsen over the next six months, according to its third quarter survey
- During the second quarter, a net 5% firms expected trading conditions to improve
- Despite the gloomy expectations, firms reported strong trading activity. A seasonally adjusted net 12% of firms reported an improvement in their own business over the past quarter
- The New Zealand Institute of Economic Research reported that business confidence in that country fell to its lowest level since March 2011
Bonds
Treasuries Rally, Yield Curve Flattens
- The U.S. Treasury complex advanced today despite a strong rally in energy prices and the release of August trade figures which showed the United States' deficit widening more than expected. The 3-year note auction was met with good demand, despite drawing a lower-than-average bid-to-cover ratio. The major equity indices consolidated Monday's gains but have so far shown no signs of a reversal
- Yield Check:
- 2-yr: unch at 0.61%
- 5-yr: -1 bp to 1.34%
- 10-yr: -2 bps to 2.04%
- 30-yr: -2 bps to 2.87%
- News:
- The U.S. trade deficit widened in August to $48.3 bln from $41.8 bln in July. The Briefing.com consensus was for a deficit of $44.5 bln
- A strong dollar (which hurts demand for U.S. exports) and the slowdown in emerging markets were credited with the deteriorating trade position
- While the big increase in the trade deficit looks like a clear miss when compared to the consensus forecast, it was actually very much in-line with the $48.0 bln estimate provided in the advance trade of goods report
- As usual, a big increase in the trade deficit can be directly tied to a release of the latest version of the Apple iPhone or Samsung Galaxy cellphone. That held true in August as cell phone imports skyrocketed by $2.1 bln
- The $24 bln 3-year note auction was met with robust demand, stopping through by 0.3 basis points:
- High yield: 0.895%
- Bid-to-cover: 3.14
- Indirect bid: 47.7%
- Direct bid: 11.1%
- The U.S. trade deficit widened in August to $48.3 bln from $41.8 bln in July. The Briefing.com consensus was for a deficit of $44.5 bln
- Commodities:
- WTI crude: +4.89% to $48.52/bbl.
- Gold: +0.77% to $1,146.40/troy oz.
- Copper: +0.02% to $2.356/lb.
- Currencies:
- EUR/USD: +0.70% to $1.1270
- USD/JPY: -0.15% to 120.25
- Data Out Wednesday:
- MBA Mortgage Index for the week ending 10/03 (07:00 ET)
- Crude Inventories for the week ending 10/03 (10:30 ET)
- August Consumer Credit (15:00 ET)
- Treasury Auction:
- $21 bln 10-year auction – reopening (results at 13:00 ET)
Treasury Yields:
- 2 Year Note 0.61% UNCH
- 5 Year Note 1.34% -0.01
- 10 Year Note 2.05% -0.02
- 30 Year Bond 2.88% -0.02
2/30 Spread: 227 bps ( -2 ) … 2/10 Spread: 144 bps ( -2 )
Preview for Wednesday 7 Oct, 2015
Economic Data
Wednesday (7 Oct) :
- MBA Mortgage Index : (Prior -6.7%)
- Crude Inventories : (Prior 3.995M)
- Consumer Credit : $19.5B (Prior $19.1B)
Earnings Highlights
Wednesday (7 Oct) :
BMO - AYI WMS STZ GBT GPN MON RPM
AMC - DRWI MG RECN
AMC - DRWI MG RECN
Summary
Market is back to a neutral area after the strong retracement. And that means it can go literally anywhere from here. From what I am seeing in the market, the bullish steam is surely running out as it is approaching some key resistance. It comes down to whether we are going to see a catalyst for the market to break higher from here. Maybe a QE4 could do that trick here?
Market is back to a neutral area after the strong retracement. And that means it can go literally anywhere from here. From what I am seeing in the market, the bullish steam is surely running out as it is approaching some key resistance. It comes down to whether we are going to see a catalyst for the market to break higher from here. Maybe a QE4 could do that trick here?
Direction for Wednesday 7 Oct, 2015: Down
2015 Daily Directional Accuracy: 101/157 (64.33%)
2015 Weekly Directional Accuracy: 23/37 (62.16%)
No comments:
Post a Comment