>>> Europe : Brokers Upgrade & Downgrades - 29th of April 2016

>>> Up
*BRITISH LAND RAISED TO BUY VS HOLD AT HSBC
*BT GROUP RAISED TO NEUTRAL VS SELL AT UBS
*EBRO FOODS RAISED TO ADD VS REDUCE AT ALPHAVALUE
*ELECTROLUX RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
*HAMBORNER REIT RAISED TO BUY VS HOLD AT HSBC
*LAND SECURITIES RAISED TO BUY VS HOLD AT HSBC
*SUEDZUCKER RAISED TO HOLD VS SELL AT BERENBERG
*TECHNICOLOR RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*UC RUSAL RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN
*WEIR GROUP RAISED TO HOLD VS REDUCE AT HSBC
*WEX RAISED TO NEUTRAL AT JPMORGAN
*WPP RAISED TO ADD VS REDUCE AT ALPHAVALUE

>>> Down
*AIRBUS CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*AMETEK CUT TO NEUTRAL AT ROBERT BAIRD
*COVANTA HOLDING CUT TO NEUTRAL VS OUTPERFORM AT ROBERT BAIRD
*GEA GROUP CUT TO SELL VS BUY AT BERENBERG
*LUNDIN MINING CUT TO NEUTRAL VS BUY AT CITI
*VIENNA INSURANCE CUT TO HOLD VS BUY AT HSBC

>>> PT Change


>>> Initiation
*LEONI RATED NEW BUY AT HSBC; PT EU40

>>> Call
>> Stock
*HOLOGIC REMOVED FROM CONVICTION BUY LIST AT GOLDMAN; STILL BUY
>> Allocation
*GLOBAL EQUITIES MOVED TO SLIGHTLY UNDERWEIGHT AT CITI

>>> US After Hours Summary: AMZN +13%, EXPE +12%, P +9%, GRPN -6%,

After Hours Summary: AMZN +13%, EXPE +12%, P +9%, GRPN -6%, GILD -5% following earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: GIMO +16.8%, AMZN +12.5%, GNW +12.2%, EXPE +11.2%, EHTH +10.2%, YRCW +9.7%, P +9.1%, OUTR +8.1%, SKYW +7%, LNKD +6.9%, NUS +6.8%,CENX +5.1%, BIDU +4.8%, QLIK +3.7%, SCSS +3.6%, RGC +3.6%, BGS +3.4%, JNPR +2.5%, ENVA +2.5%, VRSN +1.2%

Companies trading higher in after hours in reaction to news: NWBI +6.5% (to acquire $1.7 bln in deposits and 18 First Niagara Branches in Buffalo New York)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MOH -15.6%, SYNA -11.8%, NSR -10.4%, NPTN -8.5%, ARII -7.7%, HCLP -6.4%, GRPN -5.9%, GILD -5.4%, WDC -4.5%, FLEX -4.1%, SWKS -3.3%, EYES-3.2%, ATEN -2.5%, ELLI -2.5%

Companies trading lower in after hours in reaction to news: BIOC -19.8% (announces proposed registered public offering of its common stock/warrants), SDR -6.3% (reduces quarterly distribution to $0.101/unit from $0.183/unit), AKS -3.8% (commences 52 mln common stock offering), CNC -3.4% (in sympathy with MOH), WCG -2.1% (in sympathy with MOH)

Les Echos : Tests diesel : qui sont les mauvais élèves ?


see full report below

Le ministère de l’Environnement de Ségolène Royal a mis des noms (et des voitures) sur les résultats des tests d’émission lancés à l’automne, dans la foulée du scandale Volkswagen.
Enfin. Suivant la voie ouverte par ses homologues allemand et britannique, le ministère de l’Environnement de Ségolène Royal a mis des noms (et des voitures) sur les résultats des tests d’émission lancés à l’automne, dans la foulée du scandale Volkswagen.
Jusqu’ici, la commission technique chargée de vérifier que les constructeurs n’ont pas intégré de logiciels truqueurs, avait communiqué les 52 premiers résultats de façon anonyme. D’emblée, le ministère indique « qu’aucun dispositif d’invalidation permettant de tromper les cycles d’homologation n’a été détecté » sur les véhicules examinés, mais que les systèmes de dépollution « ne fonctionnent pas de façon optimale en permanence ». De fait, toutes les marques ou presque dépassent les plafonds fixés par la commission dans au moins un des trois tests pratiqués (deux en laboratoire, un sur piste).
Mauvais résultats pour Renault
Dans le détail, Renault affiche de mauvais résultats. Ainsi, sur le premier test, baptisé D1, mené en laboratoire, et qui ne diffère que peu du cycle officiel NEDC, plus de la moitié des véhicules au Losange testés (7 sur 13, dont l’Espace, le Captur, la Clio...) dépasse le plafond de rejets de NOx (oxydes d’azote) fixé par la commission – à savoir un dépassement de 10 % des normes. Retestée en cycle normal NEDC, la Clio IV affiche même 20,3 % d’émissions en plus par rapport à son niveau d’homologation initial...
Concernant le deuxième test, destiné à détecter un éventuel logiciel de manipulation de test, Renault affiche trois modèles déficients. C’est bien mieux que sur les tests en conditions réelles de conduite, où 11 de ses 13 véhicules dépassent d’au moins cinq fois les normes autorisées en laboratoire ! Le résultat de choix technologiques limités, que le constructeur va devoir corriger... Le groupe est d’autant moins bien placé si l’on rajoute son allié Nissan, dont les deux modèles tests – Qashqai Euro 6 et Navara Euro 5 – dépassent les seuils maximaux lors des tests (260 % de plus pour le Qashqai en laboratoire !)...
Résultats anormaux
Du côté de PSA, quatre modèles Euro5 sur huit présentent des résultats anormaux en laboratoire. Ce sont ces résultats qui ont déclenché la perquisition la semaine dernière de la Répression des fraudes dans plusieurs sites PSA . Jeudi après-midi, le constructeur a expliqué devant la Commission Royal qu’il s’agissait d’un réglage moteur volontaire, qui privilégiait la réduction des émissions de Co2 plutôt que celles de NOx lorsque le moteur est chaud. Concernant les constructeurs étrangers, ce sont Ford (Transit et Kuga), Mercedes (Classe S350), Opel (Zafira) ou encore Jeep (Cherokee) qui sont pointés du doigt. Autant de résultats qui vont nécessiter des recommandations de la commission, d’ici à l’été.

>>> Asian Update

Asian Market Update: USD/JPY falls to fresh 18-month lows; Nikkei225 closed, futures down over 8% after BOJ shock

***Economic Data***
- (AU) AUSTRALIA MAR PRIVATE SECTOR CREDIT M/M: 0.4% (4-month low) V 0.5%E; Y/Y: 6.4% V 6.6%E
- (AU) AUSTRALIA Q1 PPI Q/Q: -0.2% (4-year low) V +0.3% PRIOR; Y/Y: 1.2% V 1.9% PRIOR
- (NZ) NEW ZEALAND APR ANZ ACTIVITY OUTLOOK: 32.1 V 29.4 PRIOR; BUSINESS CONFIDENCE: 6.2 V 3.2 PRIOR
- (NZ) New Zealand Mar M3 Money Supply Y/Y: 7.8% v 7.3% prior
- (NZ) NEW ZEALAND MAR BUILDING PERMITS M/M: -9.8% V +10.3% PRIOR
- (KR) SOUTH KOREA MAR INDUSTRIAL PRODUCTION M/M: -2.2% V -0.5%E; Y/Y: -1.5% V +0.3%E
- (KR) SOUTH KOREA MAY BUSINESS MANUFACTURING SURVEY: 73 v 70 PRIOR; NON-MANUFACTURING SURVEY: 75 v 71 PRIOR
- (TW) TAIWAN Q1 PRELIMINARY GDP Y/Y: -0.8% V -0.7%E (3rd straight quarter of contraction; Taiwan remains in recession)
- (UK) MAR GFK CONSUMER CONFIDENCE: -3 V -1E

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 closed, S&P/ASX +0.3%, Kospi -0.6%, Shanghai Composite -0.3%, Hang Seng -1.4%, Jun S&P500 flat at 2,072

***Commodities/Fixed Income***
- June gold +0.9% at $1,278/oz, June crude oil -0.1% at $45.98/brl, Jul copper +1.0% at $2.25/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 1.4 tonnes to 804.1 tonnes
- (AU) Australia MoF (AOFM) sells A$1.0B in 5.75% 2021 Bonds; avg yield: 2.0575%; bid-to-cover: 3.75x
- (CN) PBOC to inject CNY30B in 7-day reverse repos; Drains net CNY290B this week v injected CNY680B prior
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.4589 V 6.4954 PRIOR; strongest Yuan fix since Apr 1st; biggest margin of increase since July 2005
- (NZ) New Zealand sells NZ$150M in Apr 2023 bonds; Bids NZ$612M

***Market Focal Points/FX***
- Sentiment around Japan remains cautious in the wake of surprise BOJ hold, with USD/JPY taking out stops on the downside en route to 18-month lows below 107.20. Nikkei225 futures now down over 8% from levels just before the BOJ announcement.
- PBoC strengthened Yuan fix by the biggest margin since 2005 to match Yen strength vs USD, in part to shield the economy from further outflows; Earlier, SAFE deputy director Fang Shangpu said China will strengthen reviews on authenticity, legitimacy and compliance of outbound investment; Also in China, S&P concluded that China securities firms can endure market volatility.
- Australia private sector growth slows and PPI hits a 4-year low on sequential basis as focus turns to RBA decision next week; Nearly half of analysts expect renewed RBA easing.
- Bank of Korea quarterly report to Parliament promises to keep monetary policy accommodative due to gradual growth and tepid outlook for exports.

***Equities***
US equities / ADRs:
- AMZN: Reports Q1 $1.07 v $0.61e, R$29.1B v $27.9Be; +12.6% afterhours
- EXPE: Reports Q1 +$0.09 v -$0.07e, R$1.90B v $1.82Be; +10.8% afterhours
- OUTR: Reports Q1 $2.44 (adj) v $1.32e (unclear if comp), R$536M v $511Me; +8.5% afterhours
- LNKD: Reports Q1 $0.74 v $0.60e, R$861M v $828Me; +8.2% afterhours
- BIDU: Reports Q1 $1.06 adj v $0.78e, R$2.45B v $2.29Be (2 est); +4.3% afterhours
- JNPR: Reports Q1 $0.37 v $0.39e, R$1.10B v $1.13Be; +2.6% afterhours
- PFG: Reports Q1 $0.97 v $0.99e, R$2.94B v $2.73Be; +0.9% afterhours
- AMGN: Reports Q1 $2.90 v $2.56e, R$5.53B v $5.36Be; +0.3% afterhours
- WDC: Reports Q3 $1.21 v $1.25e, R$2.82B v $2.86Be; -3.8% afterhours
- GILD: Reports Q1 $3.03 v $3.12e, R$7.68B v $8.13Be; -5.5% afterhours

Notable movers by sector:
- Consumer discretionary: Haier Electronics Group 1169.HK +2.7% (Q1 result); China Eastern Airlines 600115.CN -0.8% (Q1 result)
- Financials: Industrial and Commercial Bank of China Ltd (ICBC) 1398.HK -1.4% (Q1 result); Bank of Communications 3328.HK -2.0% (Q1 result); China Merchants Bank Co 600036.CN -0.7% (Q1 result); China Life Insurance 2628.HK -1.4% (Q1 result); Agricultural Bank of China (ABC) 1288.HK -0.4% (Q1 result)
- Industrials: Air China 753.HK -4.4% (Q1 result); Toyota Tsusho Corp 8015.JP -7.8% (FY15/16 result); BYD Company Limited 1211.HK +2.3% (Q1 result); Zhong Wang Group 1333.HK -2.0% (Q1 result); ANA Holdings 9202.JP -1.1% (FY15/16 result)
- Technology: ZTE Corp 763.HK -0.5% (Q1 result)
- Materials: Doray Minerals DRM.AU +4.2% (Q1 result); Aluminum Corporation of China 2600.HK -1.5% (Q1 result)
- Energy: PetroChina Co 857.HK -3.6% (Q1 result); Sinopec (China Petroleum & and Chemical Corp) 386.HK -2.3% (Q1 result); Inner Mongolia Yitai Coal Co 3948.HK -0.5% (Q1 result); Yanzhou Coal Mining Co.1171.HK +0.7% (Q1 result)
- Telecom: KT Corp 030200.KR -0.2% (Q1 result)

Les Echos : Jeroen Dijsselbloem: The plan of the Eurogroup chairman to simplify

Jeroen Dijsselbloem: The plan of the Eurogroup chairman to simplify the Stability Pact

The Dutch Minister considers that Greece has agreed on the principle of a new austerity plan "rescue" and pushing for reform of the euro area, where Brussels and each state would agree on a plan reforms.

Jeroen Dijsselbloem, the president of the Eurogroup, wants to reach an agreement on Greece by 9 May, the date of the next Eurogroup. He explains the "Echos" and the Italian newspaper "La Stampa" the problems still to be overcome and unveils reform that calls for, which would involve more Brussels in each member state's economic policy.

The postponement this week of the Eurogroup on Greece is it disturbing?
Remember that a lot of progress has been made in recent days. For example, there is an agreement between the institutions (ECB, IMF, European Commission) and the Greek government in terms of savings and reforms (including that of pensions) to enable Greece to achieve a primary budget surplus 3.5% in 2018. But there was an agreement to find a second package of measures called "emergency" that will apply only if the fiscal performance of the country is worse than expected. This proved harder to develop than we had thought. Legally, it is very complicated because the Greek system prevents legislating measures that you could not apply. If you legislate, it is to implement measures! It is primarily a question of time: we need more time to find an alternative approach.

These new requirements they reflect a vis-à-vis confidence problem in Athens?
No. We need this contingency plan because the IMF has different economic forecasts than those of the Commission and Greece. There is no problem of trust between Europeans. It is a forecasting problem, nothing more. On trust, we have come a long way. After the low point reached last summer, the atmosphere has changed and we must acknowledge the very serious and constructive work of the Greek government.

Impose a new austerity plan "rescue" while the previous is not even applied, is not it undermine the political authority of Alexis Tsipras?
One can also see things differently. If the Greeks are some of their fiscal path, they can legitimately say that they will not have to apply the new measures. For them it is not a problem so serious. Moreover, during the last Eurogroup to Amsterdam, I realized that the Greek Minister of Finance had agreed in principle on this package of additional measures. The only debate is how to apply this idea.

Is there not a risk to revive speculation about the "Grexit"?
Negotiations with Greece are still very sensitive and agitated. Once we have found a way to implement this package of measures "backup", we can begin discussions on the debt. Many people said that discuss debt was impossible, too politically sensitive, but we will! All Eurogroup ministers said they agreed to negotiate on this.

You push for reform of the Pact for Stability and Growth. For what reasons ?
A reform of the Pact is necessary because we all have problems with the existing indicators that judge the performance of a country, in particular with the structural deficit. It is a difficult indicator to predict, difficult to manage and difficult to explain. Recently, we had a budget discussion in the Netherlands and I had to explain to my Prime Minister and party leaders how this structural deficit indicator work. It took me a long time. One of my frustrations is that this indicator goes up and down without my knowing really why. I suggested that we focus our attention more in the future about spending a reference indicator ( 'expenditure benchmark "). This is to link changes in the level of expenditure of states to their economic activity. It's a simple rule to explain and apply. Many countries support this idea, and the Commission should make proposals. Furthermore, should the Commission to review the way it calculates the output gap between the level of real GDP and the potential GDP, based on a period of four years rather than two years as at present.

Are there any other sites to carry to make governance more readable eurozone?
I also grows - but it will require more discussion - the fact connects much what is done in Brussels which decided politically in capitals. Ideally, I would like once a government is newly elected, he works with the European Commission on a plan for his term (4 to 5 years depending on the country). It would be the responsibility of the new government to set fiscal targets and structural reforms. The Commission would then assess the plan and then check each year its implementation, with possible sanctions if the trajectory deviates.

You want the European Union make mandatory recommendations of his economic policy?
I do not want the European Union to say how to carry out a pension reform and labor market. But I note that today we have two different worlds, with one hand the economic policy agenda of governments and the other recommendations made each year by the European Commission. These are very few occasions by states. It is necessary that these two worlds come together and work better together. This should help correct a defect of the fiscal approach of the Commission, which is too focused on the short term and that results in quarterly admonitions to States to fulfill their goals.


Do you support the monetary policy of Mario Draghi?
I can not answer this question not to interfere with the independence of the ECB. But I can say that the Central Bank took its decisions in a very difficult period with a low interest rate environment. The low rates have not been caused by the ECB but by demographic, economic and political. Let this discussion that has no place: the ECB acts within its mandate. For some countries, this is perhaps not appropriate but the ECB takes decisions for the entire eurozone.





Les Echos : Jeroen Dijsselbloem : Le plan du président de l'Eurogroupe pour simp

Jeroen Dijsselbloem : Le plan du président de l'Eurogroupe pour simplifier le Pacte de stabilité

Le ministre néerlandais estime que la Grèce est d’accord sur le principe d’un nouveau plan d’austérité « de secours », et pousse pour une réforme de la zone euro, où Bruxelles et chaque Etat se mettraient d’accord sur un plan de réformes.

Jeroen Dijsselbloem, le président de l’Eurogroupe, veut aboutir à un accord sur la Grèce d’ici le 9 mai, date du prochain Eurogroupe. Il explique aux « Echos » et au journal italien « La Stampa » les problèmes qui restent à surmonter et dévoile la réforme qu’il appelle de ses vœux, qui impliquerait davantage Bruxelles dans la politique économique de chaque Etat membre.

L’ajournement, cette semaine, de l’Eurogroupe consacré à la Grèce est-il inquiétant ?
Il faut se rappeler que beaucoup de progrès ont été faits ces derniers jours. Par exemple, il y a un accord entre les institutions (BCE, FMI, Commission européenne) et le gouvernement grec sur le plan d’économies et de réformes (notamment celle des retraites) qui doit permettre à la Grèce de dégager un excédent budgétaire primaire de 3,5% en 2018. Mais il y a encore un accord à trouver sur un second paquet de mesures dites « de secours » qui ne s’appliqueront que si la performance budgétaire du pays est moins bonne qu’attendu. Cela s’est révélé plus difficile à élaborer que ce que l’on avait cru. Juridiquement, c’est très compliqué puisque le système grec empêche de légiférer sur des mesures que vous pourriez ne pas appliquer. Si vous légiférer, c’est pour appliquer des mesures ! C’est donc avant tout une question de temps : nous avons besoin de plus de temps pour trouver une approche alternative.

Ces nouvelles exigences traduisent-elles un problème de confiance vis-à-vis d’Athènes ?
Non. Nous avons besoin de ce plan de secours car le FMI a des prévisions économiques différentes que celles de la Commission et de la Grèce. Il n’y a donc pas de problème de confiance entre Européens. C’est un problème de prévisions, rien de plus. Sur la confiance, nous avons fait beaucoup de chemin. Après le point bas atteint l’été dernier, l’atmosphère a changé et il faut souligner le travail très sérieux et constructif du gouvernement grec.

Imposer un nouveau plan d’austérité « de secours » alors que le précédent n’est même pas encore appliqué, n’est ce pas saper l’autorité politique d’Alexis Tsipras ?
On peut aussi voir les choses autrement. Si les Grecs sont certains de leur trajectoire budgétaire, ils peuvent légitimement se dire qu’ils n’auront pas à appliquer ces nouvelles mesures. Pour eux, ce n’est pas un problème si grave. D’ailleurs, lors du dernier Eurogroupe à Amsterdam, j’ai compris que le ministre grec des Finances avait donné son accord de principe sur ce paquet de mesures additionnelles. Le seul débat est de savoir comment appliquer cette idée.

N’y a-t-il pas un risque de relancer les spéculations sur le « Grexit » ?
Les négociations avec la Grèce sont toujours très sensibles et agitées. Une fois que l’on aura trouvé un moyen de mettre en place ce paquet de mesures « de secours », on pourra débuter les discussions sur la dette. Beaucoup de gens disaient que discuter de la dette était impossible, trop sensible politiquement, mais on va le faire ! Tous les ministres de l’Eurogroupe ont dit leur accord pour négocier sur ce sujet.

Vous poussez pour une réforme du Pacte de stabilité et de croissance. Pour quelles raisons ?
Une réforme du Pacte est nécessaire car nous avons tous des problèmes avec les indicateurs actuels qui jugent la performance d’un pays, et notamment avec le déficit structurel. C’est un indicateur difficile à prédire, difficile à gérer et difficile à expliquer. Récemment, nous avions une discussion budgétaire aux Pays-Bas et je devais expliquer à mon Premier ministre et à des chefs de partis comment cet indicateur de déficit structurel marchait. Cela m’a pris beaucoup de temps. Une de mes frustrations, c’est que cet indicateur monte et descend sans que je sache réellement pourquoi. J’ai proposé que nous nous concentrions plus à l’avenir sur un indicateur de dépenses de référence (« expenditure benchmark »). Il s’agit de lier l’évolution du niveau de dépense des Etats à leur activité économique. C’est une règle simple à expliquer et à appliquer. Beaucoup de pays soutiennent cette idée, et la Commission doit faire des propositions. Par ailleurs, il faudrait que la Commission revoie la façon dont elle calcule l’écart de production entre le niveau du PIB réel et celui du PIB potentiel, en se basant sur une période de quatre ans et non de deux ans comme actuellement.

Y-a-t-il d’autres chantiers à mener pour rendre la gouvernance de la zone euro plus lisible ?
Je pousse également – mais cela va demander plus de discussions - sur le fait de connecter beaucoup plus ce qui se fait à Bruxelles de ce qui se décide politiquement dans les capitales. Idéalement, j’aimerais que dès qu’un gouvernement est nouvellement élu, il travaille avec la Commission européenne sur un plan pour sa mandature (4 ou 5 ans selon les pays). Ce serait de la responsabilité du nouveau gouvernement de définir ses objectifs budgétaires et de réformes structurelles. La Commission évaluerait alors ce plan et vérifierait ensuite chaque année son application, avec éventuellement des sanctions si la trajectoire dévie.

Vous voulez que l’Union européenne rende obligatoires ses préconisations de politique économique ?
Je ne veux pas que l’Union européenne dise comment il faut mener une réforme des retraites ou du marché du travail. Mais je constate qu’aujourd’hui nous avons deux mondes différents, avec d’un côté le programme de politique économique des gouvernements et de l’autre les recommandations faites chaque année par la Commission européenne. Celles-ci sont très peu reprises par les Etats. Il faut que ces deux mondes se rejoignent et travaillent mieux ensemble. Cela doit permettre de corriger un défaut de l’approche budgétaire de la Commission, qui est trop centrée sur le court terme et qui se traduit par des admonestations tous les trimestres aux Etats pour qu’ils tiennent leurs objectifs.

Soutenez-vous la politique monétaire de Mario Draghi ?
Je ne peux pas répondre à cette question pour ne pas interférer avec l’indépendance de la BCE. Mais je peux dire que la Banque centrale a pris ses décisions dans une période très difficile, avec un environnement de taux bas. Les taux bas n’ont pas été provoqués par la BCE mais par des facteurs démographiques, économiques et politiques. Arrêtons cette discussion qui n’a pas lieu d’être : la BCE agit dans le cadre de son mandat. Pour certains pays, ce n’est peut-être pas adapté mais la BCE prend des décisions pour l’ensemble de l’eurozone.

>>> US Close Dow-1.17% S&P-0.92% Nasdaq-1.19% Russell-1.19%

Closing Market Summary: Heavyweights Weigh in Final Hour Slide

The stock market ended the Thursday affair under selling pressure as the influential technology sector (-1.4%) reversed early gains to end on the bottom of the leaderboard. Other contributing factors in today's trade included investor disappointment regarding the Bank of Japan's latest policy statement, an increase in M&A activity, an in-line reading of the advance estimate of Q1 GDP (+0.5%; Briefing.com consensus +0.9%), and the underperformance of the heavily-weighted technology (-1.4%), financial (-1.1%), and consumer discretionary (-1.1%) spaces. The Dow Jones Industrial Average (-1.2%) ended behind the tech-heavy Nasdaq (-1.2%) and the S&P 500 (-0.9%).

Today's session began under pressure as investors ruminated over the latest policy statement from the Bank of Japan and the advance reading of Q1 GDP. Overnight, the Bank of Japan surprised investors when it voted to leave its monetary policy unchanged. Participants had been expecting further easing measures from the central bank, given the recent rally in the yen and diminishing inflation expectations.

On the home front, the advance estimate of Q1 GDP (+0.5%; consensus +0.9%) missed the Briefing.com consensus, but fell roughly in-line with the Atlanta Fed's GDPNow model (+0.6%). While this number was in-line with market expectations it was still a a far cry from the Atlanta Fed's original estimate for the first quarter (+1.2%).

The major averages lifted from their opening levels as they found support from a rally in dollar-denominated commodities and early strength in the technology (-1.4%) and consumer discretionary (-1.1%) sectors. However, a final hour sell off would push the indices to new lows as the technology (-1.4%), energy (-1.4%), and financial (-1.1%) sectors rounded out the leaderboard. Conversely, countercyclical consumer staples (UNCH), utilities (-0.1%), and health care (-0.6%) finished in front of the pack.

In the energy space (-1.4%), independent oil and gas names demonstrated relative weakness as the broader sector succumbed to profit-taking pressure. The energy space is up 8.8% in the month of April, compared to a gain of 0.8% in the benchmark index over that period. Meanwhile, the energy component ended its pit session at $46.04 (+1.8%), but dropped to the $45.58/bbl level in electronic trade. Separately, Dow components Exxon Mobil (XOM 88.03, -0.43) and Chevron (CVX 102.40, -1.45) ended the day lower by a respective 0.5% and 1.4% ahead of tomorrow morning's quarterly reports.

The technology sector (-1.4%) helped lead the reversal in the broader market as heavily-weighted Apple (AAPL 94.80, -3.01) extended its post-earnings decline to 9.2%. Today's decline in the tech giant followed activist investor Carl Icahn revealed that he closed his position in the stock. Separately, fellow large caps Alphabet (GOOG 691.02, -14.82) and Microsoft (MSFT 49.93, -1.01) also fell to new lows in the final hour. Elsewhere, Facebook (FB 116.73, +7.84) trimmed early gains, but still ended the day higher by 7.2% after beating estimates for the quarter.

In the financial sector (-1.1%), asset management names demonstrated relative weakness as the sub-group traded lower in sympathy with Invesco (IVZ 31.49, -1.24). The company sank 3.8% after missing top- and bottom-line estimates for the first quarter. Separately, CME Group (CME 92.33, -2.13) fell 2.3% after reporting in-line results for the first quarter. The company also reported that the total average volume reached a record of 16.9 million contracts per day in the first-quarter of 2016.

The U.S. Dollar Index (93.75, -0.63) ended near its lows as the euro and the yen gained against the greenback. The euro/dollar pair finished higher by 0.3% (1.1355) while the dollar lost 3.0% against the yen (108.10).

The Treasury complex ended on its highs as the yield on the 10-yr note finished its day at 1.83% (-2 bps).

Today's participation was above the recent average as more than one billion shares changed hands on the NYSE floor.

Today's economic data included the advance reading of Q1 GDP and weekly initial claims: 

  • First quarter real GDP increased at a seasonally adjusted annual rate of just 0.5% (consensus 0.9%). That was below expectations and the weakest quarter of growth since the first quarter of 2015, which was up just 0.6%.
  • The GDP Deflator was up 0.7% (consensus +0.6%).
    • This was not an uplifting GDP report, yet the market knew that was likely to be the case with the Atlanta Fed's GDPNow model tracking at 0.6%. Accordingly, the reaction to the headline print has been muted.
    • Personal consumption expenditures growth was a weak 1.9% in the first quarter; meanwhile, gross private domestic investment declined 3.5%, exports were down 2.6%, imports were up 0.2%, and government spending was up 1.2%.
    • There was a 1.27 percentage point contribution to Q1 GDP from personal consumption expenditures, which flowed almost entirely from a 1.24 percentage point contribution from spending on services.
    • Gross private domestic investment subtracted 0.6 percentage points as a 0.76 percentage point drag from nonresidential investment weighed heavily. Net exports subtracted 0.34 percentage points, and government spending added 0.2 percentage points.
    • The change in private inventories, which factors into the overall change in gross private domestic investment, subtracted 0.33 percentage points.
    • Real final sales of domestic product, which excludes the change in inventories, were up a scant 0.9% versus the prior 10-quarter average of 2.4%.
  • Initial claims for the week ending April 23 increased by 9,000 to 257,000 (consensus 259,000).
    • That was roughly in-line with expectations and marked the 60th straight week that claims have been below 300,000, which is the longest since 1973. In other words, no change really in the underlying trend.
    • The four-week moving average for initial claims decreased by 4,750 to 256,000, which is the lowest average since December 8, 1973.
  • Continuing claims for the week ending April 16 decreased by 5,000 to 2.130 million.
    • That dropped the four-week moving average to 2.158 million, which is the lowest average since November 11, 2000.

Tomorrow's economic data will include Core PCE Prices for March (consensus +0.1%), Personal Income for March (consensus 0.3%), Personal Spending for March (consensus 0.2%), and the Q1 Employment Cost Index (consensus 0.6%), which will each cross the wires at 8:30 ET. Meanwhile, Chicago PMI for April (consensus 53.3) and the final reading of the University of Michigan Consumer Sentiment Index for April (90.0) will cross the wires at 9:45 ET and 10:00 ET, respectively. 

  • Dow Jones +2.3% YTD
  • S&P 500 +1.6% YTD
  • Russell 2000 +0.4% YTD
  • Nasdaq Composite -4.0% YTD