Market Overlook (01.12.2017)
by Aaron.J | Hans.S | Yilin.Z
Macro News
Hang Seng Index (-0.46% at 22,829) corrects lower, dollar retreat provides protection. Hong Kong stocks gained support from a weaker dollar and a decline in US bond yields. Although the positive influences failed to prevent a Hang Seng correction weaker, they did cushion losses.
FTSE 100 Index (+0.21% at 7,290) drew further support from Sterling weakness on Wednesday with gains in European bourses also supportive. The index retreat later in the day, as the US indices retreat pulled the FTSE index sharply away during Trump’s press. This is the tenth successive all-time record closing high.
Shanghai Composite Index (-0.56% at 3119) The Indices rallied to an early high before sliding most of the rest of the day. Chinese markets were defying a bullish trend in Asia today, as most other indexes closed higher.
S&P 500 (+0.28% at 2,275) Dow Jones (+0.5% at 19,954) Nasdaq (+0.21% at 5,563) US stocks turned higher after a shaky session on Wednesday, pressured by a volatile health sector after President-elect Donald Trump criticized pharmaceutical companies in his first news conference since the election. Health stocks listed on the S&P 500 fell 1%, with biotechnology and pharmaceutical companies leading the declines. Energy stocks rose 1.2% on Tuesday as oil prices staged a large recovery. US crude futures advanced 3%, partially offsetting two days of losses.
Nikkei 225 (-1.19% at 19,135) The US currency reversed gains and fell sharply after US President-elect Trump’s press conference. A weaker dollar was crucial in undermining the Nikkei index, although market sentiment held firm.
Americas
Applications for U.S. Jobless Benefits Rise Less Than Forecast (247,000 vs 255,000); the number of individuals filing for initial jobless benefits in the week ending January 7 increased by 10,000 to a seasonally adjusted 247,000 from the previous week’s total of 237,000 which was revised from an initial reading of 235,000.
U.S. import price index, 0.4% vs. 0.7% forecast, rise at fastest pace since 2012. The cost of imported goods rose at the end of 2016 at the fastest pace in four years, largely because of higher oil prices whose recent rise has added to some upward pressure on inflation.
Applications for U.S. mortgages to buy a home rose to a six-month high last week as mortgage rates retreated further from more than two-year highs, Mortgage Bankers Association data released on Wednesday showed. The Washington-based industry group said its seasonally adjusted measure on applications for mortgages for home purchase, a proxy on future home sales, rose 6.1 percent to 241.9 in the week ended Jan. 6.
Europe
Euro zone industrial output in the 19-country currency bloc surged 1.5 percent vs 0.5 forecast on the month and 3.2 percent year-on-year as firms stepped up production before Christmas. Both figures were far better than expected. Euro zone economy registering surprisingly strong growth spurt.
Germany's economy stepped up its pace of growth in 2016, thanks to higher household and government spending. Estimated figures from its Federal Statistical Office said gross domestic product was 1.9% higher last year than in 2015. The annual figure is based on an early estimated that growth was around 0.5% in the fourth quarter.
Italian Industrial Production 0.7% vs. 0.3% forecast. Italian industrial output increased more than estimated in November, signaling a possible acceleration in economic activity.
French CPI 0.3% vs. 0.3% forecast. French National Institute for Statistics and Economic Studies said that French CPI rose to a seasonally adjusted 0.3%, from 0.3% in the preceding month.
Asia and Pacific
China's total social financing (TSF), a broad measure of credit and liquidity in the economy, fell slightly to 1.63 trillion yuan ($236.37 billion) in December from 1.74 trillion yuan in November, data from the central bank showed on Thursday.
Japan’s Bank Lending 2.6% vs. 2.4% forecast. Japan’s Bank Lending rose to a seasonally adjusted annual rate of 2.6%, from 2.4% in the preceding quarter, rose unexpectedly in the last quarter.
Japan’s Current Account 1.80T vs. 1.48T forecast. Japan’s Current Account rose to a seasonally adjusted 1.80T, from 1.93T in the preceding month, rose more-than-expected last month.
The West Texas Intermediate (WTI) benchmark for US crude futures rose to $53.06 a barrel at 8:53 am ET. The March contract for Brent crude climbed to $56.01 a barrel. The US Energy Information Administration (EIA) reported crude inventories rose by 4.097 mn barrels after a drop of 7.051 mn barrels the previous week.. The EIA reported on Tuesday that US crude output would rise by 110,000 barrels per day to 9 million barrels per day.
Gold prices had dropped below the $1,180 level in yesterday’s trading, but reversed course as the dollar plunged following the press conference by President-elect Donald Trump. The dollar, which had risen to 102.95 for a high, is currently near 101.
Natural gas contract for February settlement on the New York Mercantile Exchange currently at $3.281, up 0.34%. Yesterday, according to natgasweather.com, by the last week of January, cooling could arrive into the east-central US, which will be important to end bearish weather sentiment as the next 12-13 days will simply be awful for mid-winter demand. US Energy Information Administration said that U.S. Gasoline Inventories rose to a seasonally adjusted annual rate of 5.023M, from 8.307M in the preceding quarter.
Rebar futures at the Shanghai Exchange were up 7%. Dalian Commodity Exchange with an 8% jump to a three-week high. The curbing of steel output and suspension of activity at steel mills in Northern China due to heavy smog have cause steel and iron ore prices to skyrocket at Chinese exchanges on Tuesday.
(Source: Bloomberg Time:9:45am ET 1.12.2017)
US Dollar: Retreatsafter Trump Press Conference, No Mention of Fiscal Stimulus. He reiterated hisdetermination to create a substantial number of jobs in the US economy. Therewere, however, no specific references of a fiscal stimulus in the openingremarks and no mention of tax reform measures. (DXY: -0.62%at 101.12)
China RMB: China’syuan took the market by surprise at the beginning of 2017 with its biggestweekly gain ever amid tighter offshore liquidity and capital control measures.(CNY: -0.67% at 6.89;CNH: -0.50% at 6.854)
European EUR:ECB Minutes Reveal Increased Divisions, Inflation Expectations Increase.A few members of the ECB Council preferred extending the lower rate ofbond-purchase program for six months rather than nine months. (EUR/USD: 0.56% at 1.641)
Bitcoin: After China announced it had begun investigatingbitcoin exchanges in Beijing and Shanghai on suspicion of marketmanipulation, money laundering, unauthorized financing, and other issues.Selling in response to that announcement pushed bitcoin down more than 13%.(BTC/USD: 0.06% at 779.89)
(Source: Bloomberg Time:9:45am ET 1.12.2017)
Americas
Obama Against China Aluminum: The Obama administration is expected today to launch a formal complaint with the World Trade Organization against China over subsidies Beijing provides to the country's aluminum industry. The complaint will likely accuse China of granting cheap loans from state-run banks to its aluminum producers, helping companies to enhance their production.
Secretary of State nominee Rex Tillerson expressed views on Wednesday at odds with President-elect Donald Trump's positions on key foreign policy issues like nuclear proliferation, trade deals, climate change and relations with Mexico.
U.S. President-elect Doald Trump said on Wednesday he would maintain ownership of his global business empire but hand off control to his two oldest sons while president, an arrangement that watchdogs said would not prevent conflicts of interest in the White House.
President-elect Donald Trump escalated a fight with U.S. spy agencies on Wednesday, just nine days before he takes over their command as president, and accused them of practices reminiscent of Nazi Germany.
President-elect Donald Trump said during a news briefing at Trump Tower in New York City that he was planning a new process that would increase competitive bidding for federal government prescription drug purchases.
Europe
On Tuesday the European Union’s Commission proposed a newly drafted legislation in order to protect consumers’ online privacy. The EU expects to pass the legislation and bring all voice-calling and text-messaging apps under the existing regulatory umbrella for communications privacy.
Asia and Pacific
China has put out a White Paper on its policy on security cooperation in the Asia-Pacific for the first time, in what is seen as a reflection of its growing interest in reshaping the regional security order.
Middle East and Africa
Some Middle Eastern countries are showing a great deal of interest in Africa these days, and although Africa seems to welcome the attention, it can do without the drama. Egypt and Saudi Arabia, in particular, have extended their drive for influence in the Mideast by competing in some African countries.
Business News
Exxon Mobil (NYSE:XOM): Massachusetts Judge Heidi Brieger has refused to excuse Exxon Mobil from a request by the state's attorney general to hand over decades worth of documents on its views of climate change. "This order affirms our longstanding authority to investigate fraud," she said on Twitter following the decision, adding that Exxon "must come clean." A total of 17 states and territories are cooperating in the investigation.
Kinder Morgan (NYSE:KMI): British Columbia has given the green light to Kinder Morgan's plan to nearly triple its Trans Mountain oil pipeline, which runs from Canada's oil sands through the province to a marine terminal on the Pacific Coast. The federal government approved the $6.8B expansion in November after the National Energy Board recommended moving ahead with the project based on the fulfillment of 157 conditions.
IndustrialsAntitrust Against Airline: The U.S. Justice Department is not expected to bring antitrust action against U.S. airlines after finding little proof the four major carriers – Delta (NYSE: DAL), Southwest (NYSE: LUV), American Airline (NASDAQ: AAL) and United Airline (NYSE: UAL) - coordinated to raise fares by curbing the supply of seats. Investigators failed to uncover sufficient evidence of collusion among airlines to restrain seats, since the DOJ's probe began in the summer of 2015.
Boeing (NYSE:BA): Indian budget airline SpiceJet is set to seal an order for at least 90 new 737 jets from Boeing, Reuters reports. At current list prices, the order could be valued at about $10B. The announcement is expected as early as tomorrow when SpiceJet's chairman holds a press event in New Delhi.
United Continental (NYSE:UAL) expects to cut some management employees as a part of its larger restructuring program to reduce bureaucracy and boost profit margins. Frontline employees, which include pilots, flight attendants, customer-service and gate agents, will not be affected by United's impending changes.
Consumer DiscretionaryToyota (NYSE:TM) President Akio Toyoda met with Vice President-elect Mike Pence in Washington this week, following criticism from Donald Trump about the company's Mexican production facilities. While a Toyota spokeswoman declined to say what was discussed, Toyoda is believed to have explained the degree of the automaker's contribution to the U.S. economy.
Volkswagen (OTCPK:VLKAY): Further individuals could be charged in an ongoing investigation by U.S. authorities into Volkswagen's diesel emissions cheating, according to the U.S. Attorney General Loretta Lynch. The announcement comes after VW agreed with the U.S. government to pay $4.3B in fines and penalties, while six high-ranking employees were indicted in connection with a conspiracy to cheat emissions tests.
Tesla (NASDAQ:TSLA) announced last week that battery production had started at its Nevada Gigafactory, but it didn't mention one exciting detail. According to an investor handout, the Gigafactory will be powered by a 70-megawatt solar array, which is "~7x larger than the largest rooftop solar system installed today." Any generated excess power will be stored by Tesla Powerpack batteries for use at other time.
Consumer StaplesJohnson & Johnson (NYSE: JNJ) has tentatively agreed with Actelion (OTCPK:ALIOY) on a price to acquire the Swiss biotechnology company, and talks are now focused on valuing what would be a new unit that would house research and development assets. Before the current round of negotiations started in late December, J&J had made an offer for Actelion valued at about $260 per share, or more than $28B.
HealthcareShire (NASDAQ: SHPG) has agreed to pay a $350M settlement over U.S. claims that it used "kickbacks and other unlawful methods" to induce doctors to prescribe Dermagraft, a bioengineered human skin substitute. Deputy U.S. attorney-general Benjamin Mizer, head of the DOJ's civil division, said the settlement was "the largest False Claims Act recovery" in a kickback case involving a medical product. (SHPG -1.7% premarket)
Data Center
Equity
S&P500
Dow Jones 30
Bond
World Bond Yield Curve
Sovereign Debt Movement
Sovereign 5Y Debt CDS
U.S. Municiple Bond
U.S. Investment Grade Bond
U.S. High Yield Bond
U.S. Corporate Bond CDS
ETF Flow
Asset Class
Asset Class: Equity
Geography Regions
Geography Regions: Asia Pacific
Market Track
In Asia, Japan -1.2%. Hong Kong -0.5%. China -0.6%. India +0.4%.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.4%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude +1.2% to $52.85. Gold +0.6% to $1204.
Ten-year Treasury Yield -4 bps to 2.32%
8:30 Initial Jobless Claims
8:30 Import/Export Prices
8:30 Fed's Harker: Economic Outlook
8:30 Fed's Evans: Monetary Policy
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $12B, 30-Year Note Auction
1:15 PM Fed's Bullard: U.S. Monetary and Economic Policy
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Janet Yellen speech
·END·
Source Link:
https://www.bloomberg.com/ http://www.cnn.com/ http://www.economiccalendar.com/
https://www.investing.com/ http://www.marketwatch.com/ https://www.nytimes.com
http://www.reuters.com/ http://seekingalpha.com/ http://www.wsj.com/