Closing Market Summary: Indices Lower as Global Growth Concerns WeighThe major averages ended the Tuesday affair under pressure as the Nasdaq Composite (-1.1%) and the S&P 500 (-0.9%) erased yesterday's modest gains. Today's trade centered on a downtick in oil, concerns over global growth, continued swings in the currency market, and weakness in the financial (-1.3%) sector.
The major averages began the day on a wobbly note as renewed selling pressure from the oil pit and below-consensus economic data from overseas forced macroeconomic concerns back into focus. On that note, disappointing manufacturing PMI readings from China (49.4 in April from 49.7 in March) and the U.K. (49.2 in April from 50.7 in March) both showed larger than expected contractions in April.
The European Commission underscored the unsettling developments when it cut its 2016 euro area GDP (to 1.6% from 1.7%) and inflation forecasts (to 0.2%; from 0.5%). As a result, investors assumed a risk-off posture during the European session and bid safe haven Treasuries, gold, and the yen higher. On the home front, risk-off trade would bring the benchmark index to a session low by the late morning.
The stock market ticked off its low after midday, as all ten sectors trimmed their losses. The benchmark index would end off its low despite all ten sectors ending in the red. Rounding out the board, commodity-sensitive energy (-2.2%) and materials (-1.7%) trailed financials (-1.3%), telecom services (-1.0%) and consumer discretionary (-0.9%).
The energy space (-2.2%) trimmed its year-to-date gain to 9.6% as it surrendered to pressure in oil. WTI crude ended its day lower by 2.5% ($43.64/bbl) as investors ruminated over supply increases from OPEC states and looked forward to the API's latest inventory report. The API will release its latest stockpile data at 16:35 ET. In the broader sector, Halliburton (HAL 40.44, -1.61) declined by 3.8% after beating bottom-line estimates for the quarter. To be fair though, the company recorded asset impairments and severance costs of approximately $2.1 billion.
In the financial sector (-1.3%), money center banks displayed relative weakness as they traded lower in sympathy with a downturn in European banks. Furthermore, banks likely underperformed due to their exposure to oil and gas loans. On that note, JPMorgan Chase (JPM 62.56, -1.23) and Citigroup (C 45.57, -1.11) declined 1.9% and 2.4%, respectively. Elsewhere, MetLife (MET 44.79, -1.05) fell 2.3% after receiving a $25 million fine from the Financial Industry Regulatory Authority for omissions and negligent misrepresentations regarding its variable annuity replacements.
The industrial sector (-0.8%) displayed broad-based weakness. United Technologies (UTX 102.13, -2.24) fell 2.2% after receiving a downgrade to "Sector Perform" from "Outperform" at RBC Capital Markets. Meanwhile, the Dow Jones Transportation Average (-1.2%) displayed relative weakness as Expeditors International (EXPD 47.39, -2.87) slid 5.7% after missing top- and bottom-line estimates for the quarter.
In the heavyweight technology sector (-0.8%), Apple (AAPL 95.18, +1.54) outperformed as it rebounded from an eight-day losing streak. Elsewhere, Fidelity National (FIS 71.29, +4.11) gained 6.1% after reporting a bottom-line beat on light revenue for the first quarter. Conversely, the high-beta chipmakers underperformed, evidenced by the 1.2% decline in the PHLX Semiconductor Index.
The U.S. Dollar Index (92.95, +0.32) ended on its high as the greenback gained against the Canadian dollar and trimmed losses against the yen and euro. The dollar/yen pair ended flat at 106.45 after falling as low as 105.55 overnight. Meanwhile, the euro lost 0.2% against the dollar (1.1508) while the dollar/Canadian dollar pair finished higher by 1.5% (1.2717).
The Treasury complex settled near its session high as the yield on the 10-yr note fell seven basis points to 1.80%.
Today's participation was above the recent average as more than 975 million shares changed hands at the NYSE floor.
Today's economic data was limited to April Auto and Truck Sales.
Tomorrow's economic data will include the weekly MBA Mortgage Index and the April ADP Employment Change (consensus 196k), which will be released at 7:00 ET and 8:15 ET, respectively. Meanwhile, preliminary Q1 Productivity (consensus -1.4%), Unit Labor Cost (consensus 2.6%), and the March Trade Balance (consensus -$41.4 Billion) will all be released at 8:30 ET. Finally, the day's data will be capped off with March Factory Orders (consensus 0.5%) and April ISM Services (consensus 54.5) both crossing the wires at 10:00 ET.
- Dow Jones +1.9% YTD
- S&P 500 +1.0 YTD
- Russell 2000 -1.2% YTD
- Nasdaq Composite -4.9% YTD
MDVN - Seeing call activity 1000 Jun 65 calls trade at $1.34
K+S Chief Defends Management in Potash Bid, Rejects Environmental Crime Allegations
Norbert Steiner, head of German potash producer K+S, said that last year’s failed takeover attempt by Canadian competitor PotashCorp was not thwarted by K+S management.
“We carefully assessed the proposal and rejected it. But we have always said that we won’t block a takeover,” Mr. Steiner told Handelsblatt about Potash’s bid. In the end, it was the Canadian firm that backed out because of worsening market conditions, he argued.
Ahead of next week’s annual general meeting, Mr. Steiner called media reports accusing his company of criminal offenses in a case of alleged illegal potash brine dumping in Germany “simply obscene.” He maintained that K+S was legally authorized to pump potash lye underground.
Mr. Steiner also criticized financial analysts, who have taken a pessimistic view of the company. After the failed takeover, K+S’s share price dropped to a low of €18 and has since been stuck at around €21.
Mr. Steiner argued that analysts are not taking into account a new potash mine worth €3 billion ($3.47 billion) in Canada that K+S will open this year. K+S will be “spot-on in terms of schedule and budget” on the project, added the chief executive
Rémunération de Carlos Ghosn : Macron menace de légiférer
mmanuel Macron a demandé aujourd'hui au PDG de Renault, Carlos Ghosn, de prendre ses responsabilités sur sa rémunération à compter de cette année, après le passage en force du conseil d'administration du constructeur automobile concernant l'exercice 2015.
Le ministre de l'Economie a menacé de légiférer sur ce sujet s'il n'était pas entendu.
Alors que l'assemblée générale de Renault avait voté à 54% contre la rémunération de 7,2 millions d'euros de Carlos Ghosn pour 2015, le conseil d'administration l'a confirmée.
"Suite à ce vote de l'assemblée générale de Renault, il y a un dysfonctionnement en matière de gouvernance", a dit Emmanuel Macron lors de la séance des questions au gouvernement à l'Assemblée nationale.
"Et donc ce que nous demandons très clairement, c'est d'une part que M. Ghosn prenne ses responsabilités dès à présent pour que sur sa rémunération de 2016 les conséquences soient tirées de ce vote, c'est que le conseil d'administration de Renault se réunisse à nouveau pour tirer les conséquences de ce vote", a-t-il ajouté.
"Lors du dernier conseil, seuls les représentants des salariés et de l'Etat se sont prononcés contre. Nous devons en tirer les conséquences dans les prochaines semaines sans quoi nous serions conduits à légiférer", a poursuivi le ministre de l'Economie.
Le président du Medef, Pierre Gattaz, s'est dit lundi "très surpris" de la décision du conseil d'administration de Renault.
"Je suis un peu choqué que l'on ait entériné aussi vite des conditions de rémunération", a-t-il dit sur BFM en rappelant le code Afep-Medef en la matière.
Germany climate action plan aims to significantly cease coal-based power production before 2050 - press
- says current renwable energy expansion goal should be achieved faster
- govt will consider whether levy on fossil fuel and heating would increase demand for green tech
Intesa Sanpaolo considers sale of its stakes in Cai and Risanamento by 2017
Intesa Sanpaolo, the listed Italian bank, is considering the sale of its stake in Cai (Alitalia), the Italian airline, and Risanamento, the Italian real estate group, according to an unsourced report in La Repubblica Affari e Finanza. The item said that the Italian bank holds a 31.8% stake in Cai and a 48.9% stake in Risanamento and it aims to close the sale of these two non-core assets by the end of 2017.
Risanamento has a market cap of EUR 174m.
La Repubblica (Affari e Finanza)
Tech view:
EUR/USD
(1.1590 Last) – negative below 1.1714, target a move back to 1.07/1.08 ?
The CCY pair is drifting higher and is now testing the 24/8/15 high at 1.1714. While below this level it is still possible that the CCY is in a wave 4 triangle consolidation pattern. In the majority of cases a triangle consolidation pattern is a pause in the trend and therefore while 1.1714 caps the upside one should expect a move lower towards the lower boundary at 1.07/1.08 and eventually a downside break which would complete the double zigzag pattern which began in July 2008 at 1.6038.
Strategy: Short 1 unit at market price, target 1.08 with a stop at 1.1725
Weekly chart
Research Disclaimer
Freightcar America down 14% after missing Q1 estimates
--> RAIL -14% leading rail car manufacturers lower after missing Q1 estimates: TRN -4%, GBX -3%, ARII -3%