Traders Market Weekly: APR 3-9 — Yield Inversion & Inflation concerns

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    Dow 34,496.51 -144.67 -0.42%
    S&P 500 4,481.15 -43.97 -0.97%
    Nasdaq 13,888.82 -315.35 -2.22%
    GlobalDow 4,030.71 -40.69 -1.00%
    Gold 1,928.10 0.60 0.03%
    Oil 97.19 -4.77 -4.68%


    Officials in China and Japan voiced contrasting viewpoints about monetary policy, tailored towards supporting the economy.

    China’s state council, however, lacked urgency with a statement that more policy support would be provided at an appropriate time. Equity markets in both regions closed lower on Thursday.


    BOJ member Noguchi said it’s necessary for the BOJ to keep its easing policies in place.
    The IMF lowered its 2022 GDP forecast for Japan to 2.4% from 3.3%.
    Chinese Premier Li at a State Council meeting teased the prospect of more policy support to help boost economy when the time is right.
    Economists increasingly seeing such support as likely as the Shanghai lockdown (which continues), surge in energy prices, and slowing exports weigh on China’s growth prospects.
    Bloomberg reports that House Speaker Pelosi might visit Taiwan next week, and China, according to Reuters, said it will take strong measures if she does.


    In U.S. Corporate news:

    HP Inc. (HPQ 39.86, +4.95): +14.2% after Berkshire Hathaway (BRK.B) disclosed the purchase of approximately 11.1 mln HPQ shares worth nearly $400 million.
    Constellation Brands (STZ 234.00, +2.19): +0.9% after beating top and bottom-line estimates and guiding FY23 EPS in-line with expectations.
    Conagra (CAG 32.95, -1.39): -4.1% after lowering its FY22 EPS guidance below consensus, overshadowing its revenue beat.
    Levi Strauss (LEVI 19.92, +0.51): +2.6% after beating top and bottom-line estimates.
    CDK Global (CDK 54.25, +5.26): +10.7% after agreeing to be acquired by Brookfield Business Partners (BBU 27.75, +0.04, +0.1%) for $54.87/share in cash, implying a total enterprise value of $8.3 billion.
    Reviewing overnight developments:


    Treasury market is being viewed as a supportive factor for the futures market with yields trading mostly lower in a curve-steepening trade.

    The 2-yr yield is down four basis points to 2.45%, and the 10-yr yield is down one basis point to 2.60%. The U.S. Dollar Index is down 0.1% to 99.49. WTI crude futures up 2.4%, or $2.33, to $98.59/bbl after falling 5% yesterday.


    Eurozone’s February Retail Sales +0.3% m/m (expected +0.6%; prior +0.2%) and +5.0% yr/yr (expected +4.8%; prior +8.4%)
    Germany’s February Industrial Production +0.2% m/m (expected -0.2%; prior +1.4%)
    UK’s March Halifax House Price Index +1.4% m/m (prior +0.8%) and +11.0% yr/yr (prior +10.8%); Q4 Labor Productivity +0.7% (prior -4.4%)
    Switzerland’s March Unemployment Rate 2.2% (expected 2.2%; prior 2.3%)
    ECB member Nagel highlighted the potential for a rate hike soon given high inflation rates, reports suggest Russia is planning an offensive in eastern Ukraine, and Royal Dutch Shell warned that it sees a $4-5 bln charge in Q1 relating to its Russian activities.
    Germany’s industrial production report for February was better than expected, yet that period mostly pre-dates Russia’s invasion of Ukraine, so there isn’t a lot of confidence that the strength will persist in coming months.
    EUR/USD is unchanged at 1.0891.


    Equity indices in the Asia-Pacific region took a tumble Thursday, following form with Wall Street, which was undercut by concerns related to the Fed’s hawkish-minded shift in removing policy accommodation.

    Japan’s Nikkei: -1.7%
    Hong Kong’s Hang Seng: -1.2%
    China’s Shanghai Composite: -1.4%
    India’s Sensex: -1.0%
    South Korea’s Kospi: -1.4%
    Australia’s ASX All Ordinaries: -0.7%.


    Major European indices are mostly higher, rebounding some from Wednesday’s selling

    STOXX Europe 600: +0.8%
    Germany’s DAX: +0.5%
    U.K.’s FTSE 100: -0.2%
    France’s CAC 40: +0.7%
    Italy’s FTSE MIB: +1.1%
    Spain’s IBEX 35: +1.1%.


    Morning Update:
    More of the same defensive stocks like $WMT were up early Mega caps like $AAPL
    Russell continues weak after that key spit yesterday down 0.9% 1989
    10-yr yield is up 3bp to 2.65%
    200-dma 4492 for $SPX Overhead


    OIL @ $94 was key development I saw this morning as there will be a SLOW DOWN ahead
    Getting GAS/OIL prices down will help curb some of record INFLATION
    Also the “don’t fight FED” axiom applies & 2022 may not be best year for INFESTING
    Markets are down slightly — as there is tons of uncertainty ahead


    In U.S. Corporate news:

    CrowdStrike (CRWD 225.39, +8.36): +3.9% after saying it expects to achieve $5 billion in annual recurring revenue with a total addressable market of $126 billion by 2025. The company also secured a Provisional Authorization to Operate at Impact Level 4.
    Robinhood Markets (HOOD 11.63, -0.44): -3.7% after the stock was downgraded to Sell from Neutral at Goldman.
    WD-40 (WDFC 191.99, +17.48): +10.0% after beating top and bottom-line estimates.
    iShares Semiconductor ETF (SOXX 442.32, +2.62): +0.6% amid better-than-expected Q1 revenue results from Taiwan Semi (TSM 101.33, +0.81, +0.8%).


    Equity indices in the Asia-Pacific region ended modestly higher Friday, helping most cut their losses for the week.

    Japan’s Nikkei: +0.4% (-2.4% for the week)
    Hong Kong’s Hang Seng: +0.3% (-0.8% for the week)
    China’s Shanghai Composite: +0.5% (-0.9% for the week)
    India’s Sensex: +0.7% (+0.3% for the week)
    South Korea’s Kospi: +0.2% (-1.4% for the week)
    Australia’s ASX All Ordinaries: +0.5% (-0.2% for the week).


    Japan’s February Current Account Balance JPY1.648T (expected JPY1.437T; prior -JPY1.196T);
    March Household Confidence 32.8 (prior 35.2)
    South Korea’s February Current Account $6.4B (prior $1.9B)
    Wall Street’s positive turnaround on Thursday helped set the tone, although sentiment continued to be pressured by growth concerns linked to the Russia-Ukraine situation and China’s zero-COVID policy, which has Shanghai stuck in an indefinite lockdown.
    The China Securities Journal reportedly carried a front page article highlighting an expectation for the PBOC to cut the reserve requirement ratio in Q2.
    India’s RBI left its benchmark rate unchanged at 4.00%, as expected, and raised its full-year inflation outlook to 5.6% from 4.5% while calling attention to “tectonic shifts” in the global economy because of the Russia-Ukraine situation.
    China’s Cyberspace Administration will be scrutinizing major Internet companies, looking at their algorithms for potential violations in the way they drive ads and content, according to Bloomberg.


    Italy’s February Retail Sales +0.7% m/m (prior -0.6%) and +4.3% yr/yr (prior +8.3%)
    Spain’s February Industrial Production +3.0% yr/yr (expected +1.7%; prior +2.0%)
    This weekend will feature the first round of voting in France’s presidential election and polls denote a narrow gap in terms of Macron’s lead over LePen.
    Economists, according to a Bloomberg survey, see the first rate hike from the ECB in December, although some think the first hike could come as early as September.
    Still no progress in Russia-Ukraine peace talks with reports this morning highlighting Russia bombing a train station in eastern Ukraine that killed more than 30 people.
    Russia’s central bank cut its key lending rate to 17.0% from 20.0%, noting some stabilization in financial stability risks for the time being.


    Major European indices solid gains so far

    STOXX Europe 600: +1.1% (+0.4% for the week)
    Germany’s DAX: +1.4% (-1.2% for the week)
    U.K.’s FTSE 100: +1.0% (+1.2% for the week)
    France’s CAC 40: +1.4% (-1.9% for the week)
    Italy’s FTSE MIB: +1.8% (-1.7% for the week)
    Spain’s IBEX 35: +1.5% (+1.0% for the week).

Viewing 15 posts - 31 through 45 (of 48 total)
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