Traders Market Weekly: Memorial Weekend a Time for Reflection

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    Treasuries generally tracked lower yesterday as stock prices tracked higher, in a curve-steepening trade.

    The 2-yr note yield settled up three basis points at 2.61% while the 10-yr note yield ended up seven basis points at 2.86%. A strong move by the euro against the dollar (EUR/USD +1.2% to 1.0686), after ECB President Lagarde teased the possibility of exiting negative rates by the end of Q3, was another factor weighing on Treasuries.


    Eurozone’s May flash Manufacturing PMI 54.4 (expected 54.9; last 55.5) and flash Services PMI 56.3 (expected 57.5; last 57.7)
    Germany’s May flash Manufacturing PMI 54.7 (expected 54.0; last 54.6) and flash Services PMI 56.3 (expected 57.2; last 57.6)
    U.K.’s May flash Manufacturing PMI 54.6 (expected 54.9; last 55.8) and flash Services PMI 51.8 (expected 56.9; last 58.9). May CBI Distributive Trades Survey -1 (expected -30; last -35). April Public Sector Net Borrowing GBP17.80 bln (expected GBP17.85 bln; last GBP13.91 bln)
    France’s May flash Manufacturing PMI 54.5 (expected 55.0; last 55.7) and flash Services PMI 58.4 (expected 58.6; last 58.9). May Business Survey 106 (expected 107; last 108)
    European Central Bank President Lagarde repeated that she expects rates to be positive by the end of Q3. However, some policymakers would reportedly prefer a quicker path to positive rates.
    British Chancellor of the Exchequer Sunak is planning a windfall tax on over GBP10 bln in profits by electricity companies.
    Spain’s Prime Minister Sanchez indicated that a cap on the price of gas will be implemented.


    Snap (SNAP 15.71, -6.76, -30.0%): says it expects Q2 revenues and adjusted EBITDA to be below low end of prior guidance range as macro conditions deteriorated faster and further than anticipated
    Best Buy (BBY 73.80, +1.21, +1.7%): tops fiscal Q1 estimates, but lowers FY23 EPS guidance range and indicates revenues expected to be below consensus
    Abercrombie & Fitch (ANF 21.13, -5.60, -21.0%): drops sharply following large fiscal Q1 earnings miss and disappointing revenue guidance
    Roblox (RBLX 28.49, -1.57, -5.2%): drops after Atlantic Equities cuts rating to Neutral from Overweight


    The S&P 500 futures are 1.1% below fair value; the Nasdaq 100 futures 1.8% below fair value; and the Dow Jones Industrial Average futures are 0.6% below fair value.

    Key factors driving the futures market:

    A Q2 warnings from Snap (SNAP) that was blamed on macro conditions deteriorating faster and further than anticipated
    Weakness in the mega-cap tech stocks
    Preliminary May PMI readings out of the eurozone that were mostly weaker than expected and conveyed a deceleration in the pace of expansion versus April
    UBS and JPMorgan cut their 2022 China GDP growth forecasts
    Snap (SNAP) plunges 32% following its Q2 warning and other social media stocks that derive revenue from online advertising, including Alphabet (GOOG), follow
    Abercrombie & Fitch (ANF) is the latest apparel retailer to disappoint with earnings and outlook; ANF drops 25%
    Best Buy (BBY) dips 0.8% after topping fiscal Q1 estimate but lowering its FY23 EPS guidance range


    Brokerage research calls of note:

    Upgrades: MQ, NWN, SNOW, OTIS
    Downgrades: ETN, RBLX, WKME


    WTI crude futures +0.3% to $110.71/bbl; wheat futures +1.1% to $12.02/bu; nat gas futures -1.0% to $8.74/mmbtu
    10-yr note yield -5 bps to 2.81%; 2-yr note yield +1 bp to 2.62%


    The JPY is the strongest and the GBP is the weakest as North American traders enter for the day. The USD is tilted to the upside but also lower vs. the EUR, JPY and CHF.


    Dow 31,930.33 50.09 0.16%
    S&P 500 3,941.74 -32.01 -0.81%
    Nasdaq 11,264.45 -270.83 -2.35%
    GlobalDow 3,791.07 62.20 1.67%
    Gold 1,865.10 17.30 0.94%
    Oil 110.11 -0.18 -0.16%

    HOLY MONKEE-POX – lol ;)


    S&P Futures vs Fair Value: +5.0
    10 yr Note: 2.741%
    USD/JPY: 126.99 +0.16
    EUR/USD: 1.0673 -0.0063
    Europe: FTSE: +0.3% DAX: -0.1% CAC: -0.1%
    Asia: Hang Seng: +0.3% Shanghai: +1.2% Nikkei: -0.3%
    Gold (1856.50 -8.90) Silver (21.89 -0.17) Crude (110.84 +1.07)


    The global equity markets are treading water. S&P Futures are up a few points to trade around the 3944 area. The market saw an early bid but could only get as high as 3969.00. Modest pressure kicked in upon the European opening which swooped the spoos to a low of 3929.25 before settling into the current level.

    In Asia, China rallied over 1% while Japan slipped 0.3%. The Shanghai Composite strengthened after comments from central bank regulators seemed to encourage lenders to increase loans to boost the economy. In Japan, the Nikkei saw a lackluster day with little economic data to digest.

    In Europe, the major bourses are little changed. Economic data throughout the region was light. As such, German first quarter GDP and GfK Consumer Climate for June were both in-line with expectations. Semiconductors are off to a rough start with names like Infineon and STMicroelectronics down by 1-2%. Luxury retail names are also struggling with the likes of Burberry, LVMH Moet Hennessy Louis Vuitton and Hermes falling 1-2%.


    The S&P 500 futures are 0.5% below fair value. The Nasdaq 100 futures are 0.6% below fair value. The Dow Jones Industrial Average futures are 0.3% below fair value.

    Key factors driving the futures market:

    Festering concerns about a slowdown in economic and earnings growth
    Some hesitancy in front of 2:00 p.m. ET release of FOMC Minutes for the May 3-4 meeting
    Continued weakness in mega-cap stocks
    Dick’s Sporting Goods (DKS) issuing FY23 EPS guidance well below consensus to account for the expected impact of “evolving macroeconomic conditions”; DKS shares indicated 14% lower
    Beijing continues to wrestle with Covid issues and nervousness builds about potential for increased lockdown restrictions
    Russia stepping up its military effort in eastern Ukraine in bid to win control of Donbas region
    Reserve Bank of New Zealand raises key policy rate by 50 basis points to 2.00%, as expected
    ECB Member Knot suggests a 50 basis point rate hike in July is still a possibility
    Nordstrom (JWN) jumps 3.9% following better-than-expected FY23 outlook
    Wendy’s (WEN) up 8% after filing by Trian Fund suggests it intends to explore and evaluate potential transactions with company to enhance shareholder value


    Brokerage research calls of note:

    Upgrades: APD, CME, FANG, EQH, MMP
    Downgrades: DVN, TWOU, WIT


    Equity indices in the Asia-Pacific region ended Wednesday on a mostly higher note.

    Japan’s Cabinet office maintained its overall economic assessment but raised its view of employment and housing. Shanghai Security News reported that small and medium banks have been instructed to limit their asset management units this year. North Korea conducted more missile tests. The Reserve Bank of New Zealand raised its official cash rate by 50 bps to 2.00%, as expected.

    —Equity Markets—

    Japan’s Nikkei: -0.3%
    Hong Kong’s Hang Seng: +0.3%
    China’s Shanghai Composite: +1.2%
    India’s Sensex: -0.6%
    South Korea’s Kospi: +0.4%
    Australia’s ASX All Ordinaries: +0.3%


    Japan’s March Leading Index 0.7% m/m (last 0.9%) and Coincident Indicator 0.7% m/m (last 0.2%)
    South Korea’s June Manufacturing BSI Index 85 (last 85)
    Singapore’s Q1 GDP 1.4% qtr/qtr (expected 0.8%; last 1.4%); 3.7% yr/yr, as expected (last 3.4%)
    Australia’s Q1 Construction Work Done -0.9% qtr/qtr (expected 1.0%; last -0.4%)


    Major European indices trade in the green.

    British employers have reportedly increased pay by about 4% over the past three months, representing the biggest increase in 30 years, though raises were still below the pace of inflation. European Central Bank policymaker Panetta said that the current outlook justifies a gradual exit from negative rates but does not mean that stimulus should be removed outright.

    —Equity Markets—

    STOXX Europe 600: +0.3%
    Germany’s DAX: +0.1%
    U.K.’s FTSE 100: +0.4%
    France’s CAC 40: +0.1%
    Italy’s FTSE MIB: +0.4%
    Spain’s IBEX 35: +0.8%

Viewing 15 posts - 31 through 45 (of 72 total)
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