Closing Market Summary: Averages End Near Highs Ahead of Jobs ReportThe stock market ended the Thursday affair on a flat note as a reversal in oil facilitated a rebound in the broader market. The S&P 500 gained 0.4% and closed above the psychological 2100 price level. Focal points for today's trade included a modest uptick in the dollar, a rally in Treasuries, and the outperformance of the heavyweight health care (+1.3%) and consumer discretionary (+0.5%) spaces. The Nasdaq Composite (+0.4%) ended ahead of the Dow Jones Industrial Average (+0.3%) and the S&P 500 (+0.3%).
Today was a busy day on the macroeconomic front with both the European Central Bank and the Organization of the Petroleum Exporting Countries holding their meetings.
The biannual OPEC meeting failed to result in an agreement to establish an output ceiling. Furthermore, the group agreed on no other apparent means of curbing excess production. However, crude oil staged a rebound as investors shifted their attention to the Department of Energy's weekly stockpile report. The Energy Information Administration reported that crude oil inventories shrank by 1.36 million barrels, compared to the estimated 2.49 million barrel draw. Meanwhile, gasoline inventories declined by 1.49 million barrels, compared to the estimated 0.15 million barrel draw. As a result, oil ended its day with a marginal gain ($49.14/bbl; +$0.08; +0.2%).
In central bank news, the ECB maintained its monetary policy stance, leaving its interest rate corridor unchanged. However, ECB President Mario Draghi did state that risks are tilting to the downside and that interest rates will remain at their present levels, or lower, for an extended period of time. The policy statement and press conference went largely as expected.
Equity indices gapped down at the beginning of the session as the downturn in crude oil weighed on the broader market. The S&P 500 (+0.3%) index ticked down to the 2088/2089 price level before finding its bearings. The benchmark index climbed through the session, ending at its best level of the day (2105.26). Seven sectors ended in the green with health care (+1.3%), telecom services (+0.5%), and consumer discretionary (+0.5%) leading. On the flipside, energy (-0.3%), technology (-0.1%), utilities (-0.1%) rounded out the board.
Biotechnology demonstrated relative strength in the health care space (+1.3%), as the iShares Nasdaq Biotechnology ETF (IBB 286.28, +5.10) extended its weekly gain to 3.3%. AbbVie (ABBV 65.09, +2.26) rallied 3.6% after announcing an accelerated share repurchase agreement. Elsewhere, Medtronic (MDT 82.99, +2.47) notched a new all-time high ($83.29). The broader sector has gained 1.8% this week, compared to a gain of 0.3% in the benchmark index and a gain of 0.8% in the tech-heavy Nasdaq.
In the consumer discretionary group (+0.5%), retail names demonstrated relative strength, responding to better-than-feared comparable store sales readings for May. L Brands (LB 71.33, +2.92) jumped 4.3% after reporting flat sales over that period. Gap (GPS 18.33, +0.46) and Macy's (M 34.35, +1.32) gained 2.6% and 4.0%, respectively. The broader SPDR S&P Retail ETF (XRT 42.95, +0.49) gained 1.2%, trimming its yearly loss to 0.7%.
The influential technology sector (-0.1%) underperformed as large cap Oracle (ORCL 38.66, -1.60) declined by 4.0%. The stock saw pressure from a lawsuit brought on by a former company accountant, who alleged that sales figures were altered. Elsewhere, Alphabet (GOOGL 744.27, -4.19), Microsoft (MSFT 52.48, -0.37), and Apple (AAPL 97.72, -0.74) ended with losses between 0.6% and 0.8%.
The U.S. Dollar Index (95.56, +0.10) ended modestly higher as the greenback gained against commodity currencies and the euro. The euro/dollar pair ended lower by 0.4% (1.1149) while the dollar gained 0.2% against the Canadian dollar (1.3104).
Treasuries finished higher with the yield on the 10-yr note sliding four basis points to 1.80%.
Today's participation was above the recent average with more than 952 million shares changing hands at the NYSE floor.
Today's economic data included Challenger Job Cuts for May, the ADP Employment Change Report for May, and weekly initial claims:
- The Challenger Job Cuts report for May revealed 30,200 job cut announcements since April, marking a decline of 26.5% on a year-over-year basis.
- The ADP Employment Change report was close to the market's mark. Private sector jobs were estimated to have increased by 173,000 (consensus 180,000)
- This followed an upwardly revised 166,000 increase (from 156,000) for April.
- The May job growth was driven exclusively by the service-providing sector, which added 175,000 positions.
- The goods-producing sector saw a decline of 1,000.
- Small businesses added the most jobs (76,000) followed by medium-sized businesses (63,000), and then large businesses (34,000).
- This ADP report won't alter the market's expectations for the nonfarm payrolls report on Friday (consensus 155,000).
- Some might be bothered by job growth being below 200,000 again, yet it is still at levels that will be seen as healthy by the Federal Reserve.
- Initial claims for the week ending May 28 dipped by 1,000 to 267,000 (consensus 268,000).
- There were no special factors influencing initial claims, which were below 300,000 for the 65th straight week.
- The four-week moving average for initial claims fell from 278,500 to 276,750.
- The latest initial claims report seems to fit the Fed's script, which points to labor market strength.
- Continuing claims for the week ending May 21 increased by 12,000 to 2.172 million.
- The four-week moving average for this series jumped from 2.151 million to 2.163 million.
Tomorrow's economic data will include the Employment Situation Report for May (consensus 155k) and the April Trade Balance (consensus -$41.6 billion), which will both cross the wires at 8:30 ET. Meanwhile, Factory Orders for April (consensus +1.6%) and ISM Services for May (consensus 55.4) will be released at 10:00 ET.
- S&P 500 +3.0% YTD
- Russell 2000 +3.0% YTD
- Dow Jones +2.4% YTD
- Nasdaq -0.7% YTD
MONSANTO / BAYER: DISCUSSION WITH FORMER BAYER SENIOR EXECUTIVE
OUR GUEST SPEAKER: Former Senior Executive at Bayer CropScience
June 9th 2016 at 3:00 PM London time.
Our guest speaker is a former senior executive at Bayer CropScience with over 30 years’ experience in the industry. He will be able to opine on the competitive positioning of the remaining industry players following the Syngenta/ChemChina, Bayer/Monsanto and Dow/DuPont deals as well as the global dynamics in the crop protection industry and the market trends.
A Q&A session will follow the presentation
PLEASE CONFIRM YOUR PARTICIPATION TO YOUR SALES REPRESENTATIVE.
Research Disclaimer
This publication has been prepared by Makor Capital Limited (“Makor Capital”) and is intended for professional or qualified investors only. Makor Securities London Ltd (“Makor Securities”)is distributing this material to its clients who are Eligible Counterparties or Professional Clients under FCA Rules. It may also be disseminated to persons who are Investment Professionals within the meaning of the Financial Services and Markets Act 2000 (Financial Promotion Order 2005). In the United States Makor Capital only distributes this material to major US institutional investors (as that term is defined in Rule 15 a-6 of the Securities and Exchange Act of 1934) and to SEC registered broker-dealers or banks acting in a broker –dealer capacity” If you do not fall into any of these categories you should disregard it. This research material is a marketing communication. It is not investment research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research. It is not subject to any prohibition on dealing ahead of the dissemination of investment research. It has not been produced by Makor Securities. This material does not take into account the particular investment objectives, financial situation or needs of individual clients or other recipients. Before acting on this material, clients and other recipients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. This material should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This material is produced by research providers which Makor Securities believes to be reliable, but Makor Securities does not warrant or represent (expressly or impliedly) that it is accurate, complete, not misleading or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed will be the current opinions of those producing the research as of the date appearing on this material only. We expect those producing the material in this report to update it on a timely basis but can give no undertaking that they will do so and regulatory compliance or other reasons may prevent them from doing so (or us from disseminating updated material). Members and employees of Makor Securities London Ltd, employees of Makor Capital, Makor Capital Markets may from time to time have long or short positions in securities, warrants, futures, options, derivatives or other financial instruments referred to in this material. For Makor Securities, this information is set out in our Conflicts of Interest Policy which is available on request. Policies for the production of research from other research providers are available on request.Unless otherwise stated, share prices provided within this material are as at the close of business on the day prior to the date of the material. Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without prior consent. This material is issued for general information and discussion purposes only. None of Makor Securities, Makor Capital, Makor Capital Markets accepts liability whatsoever for any direct, indirect or consequential loss or damage of any kind arising out of the use of all or any of this material. The services, securities and investments discussed in this material may not be available to, nor are suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves risk, including the risk of capital loss. Past performance is no guide to future performance. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable.
EntitiesMakor Securities London Ltd is authorised and regulated by the Financial Conduct Authority (FCA registration number 625054) of Dover House, 34 Dover Street, London W1S 4NG.Makor Capital, company number 514456466, is incorporated in Israel and is a 100% held subsidiary of Makor Holdings Pte Ltd incorporated in Singapore. Makor Capital Markets SA, company number CH-660.2.999.011-0 is incorporated in Switzerland and is also a 100% held subsidiary of Makor Holdings Pte Ltd.
BUZZ-Zodiac Aerospace: M&A chatter spurs share spike - Reuters News
02-Jun-2016 15:53:13
** Zodiac Aerospace ZODC.PA shares spike higher in volume in late European trading with 2 traders attributing move to possible bid rumours
** Last reported talk (April 2016) was that Safran SAF.PA may be weighing a bid Story link: http://bloom.bg/1SwBwJx
** A source close to Safran had told Reuters in April that an offer for Zodiac was not on the agenda. Safran declined to comment.
--> +5.93% 1.6mil shares traded.
Last Rumor was Safran
24/04/2016
Safran SA is considering an offer for Zodiac Aerospace SA that would unite two French companies that rank among Europe’s biggest aerospace suppliers, people familiar with the matter said.
Deliberations are still at an early stage, and Safran could decide against a bid, said the people, who asked not to be named because the plans are private.
Shares of Zodiac surged 11 percent Friday, the most in 13 years, spurring the aircraft interiors specialist’s market value to 6.1 billion euros ($6.9 billion). Safran, best known for its CFM International engines pact with General Electric Co., is worth about 25 billion euros.
A spokeswoman for Safran declined to comment, while a representative of Zodiac referred to Chief Executive Officer Olivier Guy Zarrouati’s comments in a radio interview this week where he said the group isn’t for sale.
A bid would come more than five years after Safran dropped an offer for its compatriot. Zodiac, a world leader in the manufacture of aircraft seats, has cut earnings forecasts eight times in the past six months as it struggles to meet delivery schedules after taking on more work than it was capable of handling.
Detection Disposal
CEO Zarrouati, when asked on a conference call in March about a possible bid, said the company would be receptive to a “reasonable” offer.
Shares of Plaisir-based Zodiac closed 2.12 euros higher at 21.2 euros in Paris for their biggest daily gain since April 3, 2003. The stock had already begun to recover from the earnings scares, gaining 32 percent before today since a February profit warning caused it to fall the most in 17 years.
The company said Wednesday that it’s targeting improved earnings in the second half, adding that it had already made provision for fixes to required on some U.S. airline seats found to pose a safety risk.
Safran, whose engines power the 737 and A320 series narrow-body jets from Boeing Co. and Airbus Group SE, closed down 3 percent at 60.79 euros in the French capital, where the company is based.
Safran agreed Thursday to sell its explosives-detection arm to Smiths Group Plc in a deal valued at $710 million. CEO Philippe Petitcolin said in a statement that the disposal stems from the company’s plans to focus more on its core aerospace and defense markets.
Hearing renewed takeover chatter circulating - Glaxosmithkline rumored as potential suitor.