Browsed by
Month: May 2017

FOREX–Fed minutes weigh on dollar, euro resumes climb

FOREX–Fed minutes weigh on dollar, euro resumes climb

* Minutes from latest Fed meeting not as hawkish as expected

* Euro edges back towards 6-1/2-mth high

* BOC’s upbeat economic view, buoyant oil boosts Canadian dollar

By Ritvik Carvalho

The dollar was on the defensive on Thursday, with investors low on incentives to buy the greenback after the Federal Reserve dialled down some expectations that it would hike interest rates soon, while the euro began to climb back towards a 6-1/2-month high.

Fed policymakers agreed they should hold off on raising interest rates until they see evidence that a recent economic slowdown was transitory, the minutes from their last policy meeting showed on Wednesday.

The minutes were seen to indicate heightened Fed caution towards interest rate hikes and took the wind out of an earlier bounce by the dollar, which had been plagued recently by U.S. political concerns centred on President Donald Trump.

The dollar index against a basket of major currencies .DXY . was down 0.3 percent at 96.972.

“The minutes, while leaving the door open for another rate hike weren’t as hawkish as some investors had been expecting – there had been speculation ahead of time that hawkish tones could be quite supportive for the dollar,” said Alexandra Russell-Oliver, currency analyst at Caxton FX in London.

“I think some of those expectations were a bit disappointed following the minutes and we’ve seen the dollar ease off since. That’s also because it’s been quite vulnerable recently.”

The dollar rose 0.3 percent to 111.830 yenJPY= , pushed away from Tuesday’s one-week high of 112.130 yen.

The euro, which went as low as $1.1168 overnight, was 0.2 percent higher at $1.1240EUR=EBS , making its way back towards the 6-1/2-month peak of $1.1268 touched on Tuesday.

The common currency has enjoyed a bull run this month on factors including an ebb in French political concerns and upbeat euro zone data.

“The euro is resuming its advance with the dollar sagging on the Fed’s minutes. It has the momentum to surpass the $1.1300 mark and we could see the rise continue towards $1.1500,” said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.

Stronger crude oil prices, which have bounced sharply from multi-month lows seen earlier in the month amid hopes that an OPEC-led production cut would be extended, have also supported the loonie this week.

Other oil-linked currencies also gained.

The Norwegian crown stood at 9.3326 per euro EURNOK= for a gain of about 0.2 percent on the week. The currency has managed to put some distance between a nine-month low of 9.577 plumbed three weeks ago when oil prices fell to their lowest levels since November.

The Australian dollar was 0.2 percent higher at $0.7485AUD=D4 after Wednesday’s fall to $0.7443 following rating agency Moody’s downgrade of China.

The Australian dollar is often used as a liquid proxy for China-related trades.

Dow closes up more than 200 points as French vote triggers relief rally

Dow closes up more than 200 points as French vote triggers relief rally

U.S. stocks rallied to finish higher Monday, with major indexes advancing more than 1% and the tech-heavy Nasdaq scoring a record high close following a strong showing by centrist Emmanuel Macron in the French presidential election, which averted fears of a euroskeptic-only runoff.

The Dow Jones Industrial Average DJIA, +0.36% jumped 216.13 points, or 1.1%, to close at 20,763.89, led by a 3.5% surge in shares of J.P. Morgan Chase & Co. JPM, -0.06% and a 2.9% jump in Goldman Sachs Group Inc. GS, +1.91%

The S&P 500 SPX, +0.25% surged 25.46 points, or 1.1%, to 2,374.15, with nine of the index’s 11 sectors trading higher, led by a 2.2% gain in financials, its biggest one-day pop since March 1, and a 1.3% rise in both industrial and tech stocks. The biggest laggard on the session was real estate, which lost 0.9%.

The Nasdaq Composite Index COMP, +0.40% finished up 73.30 points, or 1.2%, to a record close at 5,983.82, after reaching an all-time high of 5,989.92 earlier in the session.

Macron advancing to the runoff gave investors an opportunity to cross another market overhang off their list of fears, said Karyn Cavanaugh, senior market strategist at Voya Financial. Cavanaugh, however, believes that many of those fears are “much ado about nothing.”

“Investors have been using fear to make decisions,” Cavanaugh said in an interview. “Until something happens to materially affect earnings, you can’t let geopolitics cloud your outlook.”

Conservative François Fillon and Socialist Benoît Hamon — the mainstream candidates defeated in the first round — both threw their support behind Macron. Their support is seen as fending off nationalist Le Pen, who has called for scrapping the euro and exiting the European Union, a prospect seen as hugely destabilizing for the region.

“Her radical views on immigration, the European Union and the euro should see a solid resistance from the majority of the population,” said Ipek Ozkardeskaya, senior market analyst at LCG, in a note to clients.

European stocks surged, with the French CAC 40 PX1, -0.17% ending at a two-year high. The Stoxx Europe 600 index SXXP, -0.18% leapt 2.1%, and Germany’s DAX 30 index DAX, -0.51% climbed 3.4%. The euro gained 1.4% against the dollar EURUSD, +0.2317% hovering at five-month highs. The iShares MSCI France ETF EWQ, +0.17% surged 5.8% in its biggest one-day advance since August 2012.

S&P 500 posts record close as Wall Street cheers Fed’s gradual plan to trim balance sheet

S&P 500 posts record close as Wall Street cheers Fed’s gradual plan to trim balance sheet

  • The S&P 500 gained 0.25 percent, as real estate led advancers, to post a record close.
  • The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting.
  • The S&P and the Dow closed above their May 16 closing levels, wiping out losses from the biggest sell-off of the year.

The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.

“The Fed provided more clarity here,” said Matt Toms, chief investment officer of fixed income at Voya Investment Management. “They’re implying the ability to modulate their balance-sheet reduction plan. It shows the Fed is not on auto-pilot and that they can adopt as needed.”

The S&P 500 gained 0.25 percent, as real estate led advancers, to post a record close. The Dow Jones industrial average rose about 75 points, with Goldman Sachs contributing the most gains. The Nasdaq composite advanced 0.4 percent.

“Although they indicate that they want to trim the balance sheet, they’re not locking themselves into a particular path,” said Daniel Deming, managing director at KKM Financial. “That’s why the market reacted positively to the minutes.

Historically, stocks have mostly posted gains on days when the Fed releases minutes since Janet Yellen became chair, according to Kensho. On average, the S&P 500 has gained 0.28 percent on those days, with health care, consumer discretionary and materials outperforming, Kensho data showed.

The Fed held off on raising rates earlier this month but most investors are expecting the central bank to hike again at its June 14 meeting. Market expectations for a June rate hike are 83.1 percent, according to the CME Group’s FedWatch tool.

“The central-bank narrative has changed dramatically over the past few months. It’s no longer easy money on the table, but rather a tightening path,” said Adam Sarhan, CEO of 50 Park Investments.

Treasury yields fell after the minutes’ release, with the benchmark 10-year note yield declined to 2.257 percent while the two-year yield slipped to 1.281 percent.

In other economic news, total mortgage application volume increased 4.4 percent last week on a seasonally adjusted basis from the previous week thanks largely to refinancings. Existing home sales slipped 2.3 percent in April, more than expected.

U.S. equities came into Wednesday’s session riding a four-day winning streak, bouncing back from their biggest sell-off of the year. The S&P and the Dow closed above their May 16 closing levels, wiping out last Wednesday’s losses.

“There are two pillars in the market right now. First, earnings were good. You can knock it any way you want but the earning season was good,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “The second is this ying-yang data. As long as we continue to get mixed data, we will likely stay in this trading range.”

The Dow Jones industrial average rose 74.51 points, or 0.36 percent, to close at 21,012.42, with Goldman Sachs leading advancers and General Electric lagging.

The S&P 500 gained 5.97 points, or 0.25 percent, to end at 2,404.39, with materials leading eight sectors higher and telecommunications underperforming.

The Nasdaq advanced 24.31 points, or 0.4 percent, to close at 6,163.02.

 

NASDAQ stocks edge higher

NASDAQ stocks edge higher

US stocks recovered some ground on Thursday, after suffering their biggest fall in months amid growing concerns about the Trump presidency.

They were buoyed by news from firms such as retail giant Walmart, which jumped 3% after bucking gloomy retail trends with higher than expected sales.

The S&P 500 rose 0.37% to 2,365.72, while the Dow Jones gained 56.09 points, climbing 0.27% to 20,663.02

The Nasdaq closed at 6,055.13, up 0.73%

The row over the firing of FBI director James Comey, who was leading an investigation into the Trump campaign, has led to growing scepticism about Mr Trump’s ability to deliver tax and regulatory reform.

On Wednesday, the S&P 500 and the Dow Jones both recorded their biggest one-day falls since September.

But analysts said stocks were likely over-sold on Wednesday and would rebound.

Optimism was in evidence over at least one of the Trump administration’s agenda items: loosening regulations for internet providers.

Those firms currently fall in the same category as public utilities, akin to electricity providers, but the chair of the Federal Communications Commission said he believes that oversight is unnecessarily stringent.

On Thursday, the commission voted to advance a proposal to reverse the Obama administration’s 2015 “net neutrality” order.

Verizon shares climbed more than 1%, while Comcast gained 1.5%

Facebook, which slumped 2% on Wednesday, had recovered much of that ground by Thursday morning and bounced further after it announced a deal to livestream 20 baseball games, starting Friday.

The social media giant had previously said it was looking at deals to broadcast sports as it works to beef up its video tab, with the goal of creating a “revenue share” model.

The firm closed the day up 1.94%.

Other firms weighed on the markets.

Shares in Cisco fell more than 7% after it forecast weaker-than-expected quarterly revenues and said it would cut an additional 1,100 jobs.

S&P 500 Futures: Down Hard Early In The Week, And Up Big Late In The Wee

S&P 500 Futures: Down Hard Early In The Week, And Up Big Late In The Wee

The political circus was in full swing last week, and the S&P 500 futures (ESM17:CME) bore the brunt of it. After a quiet start to the week, the President Tump / former FBI director Comey headlines kicked the ES into high gear. On Wednesday, the S&P took a 1.8% nose dive, the Dow futures (YMM17:CME) were down 1.5%, and the Nasdaq 100 futures fell 2.75%. One of the things I asked my Twitter followers and the PitBull was, ‘did algorithmic trading push the markets further then they should have?’ For the most part, the answer was a unanimous ‘YES’!

After a big rally on Thursday the index futures markets continued higher on Friday. The S&P 500 futures (ESM17:CME) rose 17.9 points, or 0.75%, to 2381.50. The Nasdaq 100 futures (NQM17:CME) climbed 22.75 points, or 0.45%, to 5653.25, and the Dow Jones futures (YMM17:CME) gained 143 points, or 0.55%, to 20787.00. Even with the strong late week rebound, major indexes in the U.S., Europe and Japan ended the week lower on worries about President Donald Trump’s ability to push through proposals, including tax cuts and infrastructure spending.

In the end, despite the drop and all the ‘bad news’ out of Washington, the S&P 500 futures, at its high of 2388, was only 16 points off its all time contract high. Yes, the bears got their way, but the overall patterns remain the same; drop and pop. After the dust settled, the S&P 500 fell 0.4% for the week, its worst weekly drop in more than a month. The Dow industrials also fell 0.4% during the week, and the Nasdaq Composite dropped 0.6%.

There is clearly a new sheriff in town, and it’s not Donald Trump… It’s all the different types of algorithmic and high frequency trading programs, and how they whip all the various asset classes around. From currencies, to metals, to commodities and index futures, it’s all part of how the markets move. While many trades brush off this idea, last week was another great example of how the news moves the markets down sharply, and then moves it sharply the other way.

The late week rebound regained much of the weeks losses and showed not only how political strife can rattle the markets, but also how investors focus eventually goes back to corporate earnings and economic growth. I understand that the markets are over extended, and have been for a long time, but I also understand how historically low interest rates have made it impossible to be a seller. It all goes back to that old saying, ‘don’t fight the Fed’. The bounce back showed that as long as the data is improving, the stock market still has more room on the upside.

Dow closes about 90 points higher after Trump delivers on overseas deals

Dow closes about 90 points higher after Trump delivers on overseas deals

U.S. stocks rose on Monday as President Donald Trump continued his first trip abroad since taking office.

The Dow Jones industrial average advanced about 90 points, with Boeing and 3M contributing the most gains.

The S&P 500 rose 0.5 percent, with information technology leading advancers. Tech has been the best-performing sector in the S&P this year, rising 18 percent.

The Nasdaq composite outperformed, gaining 0.82 percent.

“President Trump’s first trip overseas has put some of his domestic troubles on the back burner which should temporarily eliminate some of the headline risk that has frustrated the bulls,” said Jeremy Klein, chief market strategist at FBN Securities, in a note.

Trump arrived in Tel Aviv Monday and described his visits as a “rare opportunity to bring security and stability and peace to this region and to its people.”

His two-day visit to Israel will include separate meetings with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas. Trump also plans to visit the Holocaust memorial Yad Vashem and the Western Wall, an important key Jewish holy site.

Trump’s visit to Israel comes after Trump visited Saudi Arabia, a trip that ended with a multi-billion-dollar arms deal. Defense-related stocks popped on the back of the deal, with the iShares U.S. Aerospace & Defense ETF (ITA) rising about 0.9 percent.

Private equity firm Blackstone also announced the creation of a $40 billion infrastructure investment fund with Saudi Arabia’s Public Investment Fund, the country’s main sovereign wealth fund. Blackstone shares spiked more than 6 percent.

Trump’s trip came after one of the worst weeks of his presidency as news broke that Trump allegedly tried to influence an FBI investigation. Stocks suffered their worst day of the year Wednesday, as the three major indexes dropped more than 1 percent.

“It’s basically a case of no news is good news. There hasn’t been anything incremental since then,” said Aaron Clark, portfolio manager at GW&K Investment Management.

U.S. stock futures traded higher before the open, with Dow futures rising 47 points, while S&P and Nasdaq futures gained 3.25 points and 11 points, respectively.

“The news of the deal is positive, but there are two factors that are being overlooked,” said Peter Cardillo, chief market economist at First Standard Financial, referring to a North Korea missile test and testimony from former FBI Director James Comey. “These clouds of uncertainty are not evaporating,” First Standard’s Cardillo said.

North Korea said Monday it successfully tested an intermediate-range ballistic missile, further defying calls to curb its nuclear program. Meanwhile, Comey agreed last week to testify in an open Senate session sometime after Memorial Day; his testimony could raise questions about the future of Trump’s presidency.

“I think we’re at a point where investors don’t care about negative catalysts, or these catalysts are not that big of a deal,” said Mike Bailey, director of research at FBB Capital Partners.

 

In economic news, there were no major data released Monday, but Wall Street looked ahead to the release of the minutes from the Federal Reserve’s meeting on May 3. The minutes were slated for release Wednesday.

U.S. Treasurys slipped, with the benchmark 10-year note yield rising to 2.25 percent and the two-year yield climbing to 1.275 percent. The dollar fell slightly against a basket of currencies, with the euro hitting its highest level since Nov. 9.

 

S&P 500, Industrial Giants Dip As Trump Controversies Continue

S&P 500, Industrial Giants Dip As Trump Controversies Continue

The three largest U.S. stock market indexes all fell on Wednesday as Washington D.C. turmoil regarding President Donald Trump and his administration ramped up yet again.

The S&P 500, Nasdaq, and the Dow all dipped on the back of two new major D.C. and Trump-based controversies. For months, the president has stirred the 24-hour news cycle with a seemingly endless amount of tweets and unprecedented moves. In spite of this, the markets kept on chugging along.

This all changed on Wednesday, when the S&P 500 slipped 1.82% and the Dow dropped 1.78%. The Nasdaq has experienced the biggest fall, down 2.57%. On top of that, however, gold is up almost 2%, with Barrick Gold (NYSE:A) up 0.88%.

In another interesting ripple, the Chicago Board Options Exchange’s Volatility Index VIX—often referred to as the “investor fear gauge”—skyrocketed 44.88%. The move was its biggest since September.

These market indicators could signal that investors are now indeed worried that Trump and his administration’s pro-growth initiatives might begin to fall apart. The president’s economic agenda of corporate tax cuts, infrastructure spending, and banking regulation reforms sent the market on a historic run since Trump took office last November.

But the news that began to circulate yesterday, first reported by the New York Times, claiming that former FBI Director James Comey compiled a memo stating that Trump asked Comey and the FBI to discontinue their investigation into former national security adviser Michael Flynn.

Trump also shared potentially compromising Israeli-gathered intelligence with Russian officials in the Oval Office last week—actions he defended on Tuesday via Twitter (NYSE:TWTR) .

Before Wednesday’s wave of new White House scandals, both the S&P 500 and Nasdaq were at record highs this week. But despite today’s drop off, the S&P 500 and the Dow remain up roughly 5% this year. The Nasdaq is still up roughly 11% year-to-date.

Dow, DuPont Merger Gets Conditional Approval In Brazil

Dow, DuPont Merger Gets Conditional Approval In Brazil

Dow and DuPontsaid  that Brazil’s Administrative Council for Economic Defense (“CADE”) has conditionally approved their proposed $130 billion mega-merger. This represents another important milestone for the planned merger transaction.

The approval is subject to the implementation of certain remedies that include the sale of a select portion of Dow AgroSciences’ corn seed business in Brazil. These include certain seed processing plants and seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank and a license for the use of the Dow Seeds brand for a specific period of time.

This is in addition to the earlier announced sale of certain parts of DuPont’s crop protection business and R&D pipeline and organization and Dow’s global ethylene acrylic acid copolymers and ionomers business, which is in sync with commitments already made to the European Commission (“EC”) and regulatory agencies in other jurisdictions.

The EC conditionally approved the merger in Mar 2017 after both companies committed to sell major portions of different businesses. Moreover, the companies, earlier this month, secured conditional regulatory approval in China for the planned merger.

Dow and DuPont continue to work constructively with regulators in the remaining relevant jurisdictions to obtain approval for the merger. The companies continue to expect the closing of the deal to take place between Aug 1, 2017 and Sep 1, 2017.

Dow and DuPont also recently declared the members of the board of directors for the proposed merger. The board of the combined entity will consist of 16 directors – eight incumbent Dow directors and eight current DuPont directors. The appointments will be effective on completion of the merger.

Moreover, Dow recently provided an update on the transition of its CEO Andrew Liveris. The company noted that Liveris will serve as the executive chairman of the combined entity from closing of the merger through Apr 1, 2018, when he will become the chairman of the integrated company. Liveris will then retire from the company and the board on Jul 1, 2018.

Nasdaq Reaches New Record High Despite Choppy Trading

Nasdaq Reaches New Record High Despite Choppy Trading

Stocks showed a lack of direction during trading on Tuesday, resuming the lackluster trend seen in recent sessions. Despite the choppy trading on the day, the tech-heavy Nasdaq reached another new record closing high.

The major averages eventually ended the session mixed. While the Nasdaq climbed 20.20 points or 0.3 percent to 6,169.87, the Dow edged down 2.19 points or less than a tenth of a percent to 20,979.75 and the S&P 500 dipped 1.65 points or 0.1 percent to 2,400.67.

The lackluster performance on the day came following the release of a mixed batch of U.S. economic data along with continued turmoil in Washington.

The Commerce Department released a report this morning showing that housing starts unexpectedly saw further downside in the month of April.

The report said housing starts fell by 2.6 percent to an annual rate of 1.172 million in April after tumbling by 6.6 percent to a revised 1.203 million in March.

Economists had expected housing starts to climb to a rate of 1.260 million from the 1.215 million originally reported for the previous month.

Additionally, the Commerce Department said building permits slid by 2.5 percent to a rate of 1.229 million in April from 1.260 million in March.

Building permits, an indicator of future housing demand, had been expected to inch up to a rate of 1.270 million.

Meanwhile, a separate report from the Federal Reserve showed a much bigger than expected increase in industrial production in April.

The Fed said industrial production jumped by 1.0 percent in April after climbing by a downwardly revised 0.4 percent in March. Production rose for the third consecutive month and saw its largest monthly gain since February of 2014.

Economists had expected production to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

Traders also kept an eye on developments in Washington after a report from the Washington Post claimed President Donald Trump revealed highly classified information to Russian officials in a White House meeting last week.

Trump described the details of an Islamic State terrorist threat related to the use of laptop computers on aircraft, current and former U.S. officials told the Post.

Responding to the news in a post on Twitter, Trump said he has “the absolute right” to share details pertaining to terrorism and airline flight safety with Russia.

The news creates another headache for the White House, potentially threatening Trump’s ability to make progress on issues such as tax reform and deregulation.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index advanced by 0.9 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index edged down by 0.2 percent.

In the bond, treasuries finished the session slightly higher after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by nearly a basis point to 2.329 percent.

Looking Ahead

Earnings news may attract attention on Wednesday amid a quiet day on the U.S. economic front, with retail giant Target (TGT) among the companies reporting their quarterly results before the start of trading.

Dow’s late-session gain driven by J&J, Caterpillar, Goldman stock

Dow’s late-session gain driven by J&J, Caterpillar, Goldman stock

The Dow Jones Industrial Average’s late-day climb on Monday was being supported by a rise in shares of Johnson & Johnson, Caterpillar Inc., Goldman Sachs Group, and International Business Machines. The quartet of companies was underpinning more than three-quarters of the Dow’s DJIA, +0.41% gain. Shares of J&J [: JNJ] were adding 23 points to the blue-chip gauge, while a rise in Caterpillar Inc. CAT, +1.70% Goldman GS, +1.03% and IBM IBM, +0.76% contributed the rest. The broader stock market was enjoying an early bounce from a rally in crude-oil futures CLM7, +0.43% on talk of extending a six-month production limit led by the Organization of the Petroleum Exporting Countries into 2018. Although stock benchmarks were off their best levels of the day, the firm advance was enough to help lift the Nasdaq Composite Index COMP, +0.46% to an intraday record of 6,153.04, while the S&P 500 index SPX, +0.48% touched a record intraday high of 2,404