US Stocks
- Global stocks are dropping this morning following disappointing results from Amazon.com (AMZN) and Alphabet (GOOG.L) and negative earnings guidance from European large-cap stocks
- US stocks index futures are declining and are pointing to a sharp decline to the start of trading in US stocks with the Dow Jones minis –0.81%, S&P500 minis –1.03% and Nasdaq 100 minis –2.01%
- Global stocks have lost close to USD$6.7tn in market value since September as escalating trade tensions and higher interest rates have dampened investor sentiment
- 3Q US GDP estimates will be released at 8:30am and will afftect outlook for future interest rate increases
- The VIX is moving up this morning and is currently at 27.18 after closing at 24.22 yesterday
- HYG November 16 & January 2019 OTM Puits, VXX November 16 OTM Puts, SPY October 26 & November 16 OTM Puts, and GDX November 16 OTM Calls are the most heavily traded options contracts in US pre-market trading
- US 10-Year Treasury Bonds are higher with yields down -3.56 basis points to 3.0811%
- The US Treasury 2s-10s Spread has widened 0.08 basis points to 0.27%
- WTI Crude is currently up 0.84% to USD$67.33/bbl with the Brent-WTI spread down USD$-1.54 to USD$8.28/bbl
- Gold is currently up 0.36% to USD$1236.59/oz
- European stocks are dropping this morning following disappointing earnings results from US large-cap tech stocks and negative FY guidance from large-cap European stocks
- European oil stocks are trading at their lowest level since April 2018 as global oil prices head for its third straight weekly decline
Stocks Trending in the News
- Amazon (AMZN) reports C3Q EPS of USD$5.75 vs Street estimates of USD$3.11. While earnings blew out estimates, revenues came in weaker than expected at USD$56.5bn vs. a forecast of USD$57.1bn. Amazon is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
- Autoliv (ALV) reports interim C3Q sales slightly below market expectations. Autoliv sees FY CY2018 operating margin at 10.5% vs. previous guidance of 11.0%. Autoliv is not rated in our Global Top Stock Ideas.
- Cabot Oil (COG) reports C3Q earnings which came in light vs. Consensus on weaker than expected revenues for the quarter. Cabot Oil boosts its quarterly dividend 17%. Cabot Oil is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
- China Life (SEHK:2628) was downgraded at CICC after reportings worse than expected C3Q results. CICC cut profit forecasts by 40% for CY2018 and CY2019 earnings and cut their price target for China Life to HKD$23. China Life is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
- Electrolux (OM: ELUX B) is tumbling this morning after reports C3Q results which miss Consensus expectations as higher raw materials costs continue to pinch operating profitability. North American sales were further hit on market-share losses to private label brands following bankruptcy of Sears (SHLD). Elextrolux is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
- Fujitsu Ltd (TSE:6702) reports F2Q earnings which miss market estimates. Earnings for the quarter were negatively impaired by costs associated with restructuring following the sales of its PC business to Lenovo (SEHK:992). Fujitsu management sees operating margin reach 10% by FY2022. Fujitsu is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.
- Google (GOOG.L) reports C3Q EPS of USD$13.06 vs. Consensus of USD$10.40. While earnings blew out estimates, Google’s revenues, ex TAC, came in slightly below expectations at USD$27.2bn. Google average cost-per-click for C3Q dropped 28%. Google is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Info Tech Global Top Stock Ideas.
- Intel Corp (INTC) reports C3Q EPS that beat Street estimates as a surprise jump in PC demand boosted revenues for Intel chips. Revenues from Intel’s PC-focused business grew 16% Y/Y. Intel is the second large semiconductor maker in the world and its positive earnings should provide a boost to semiconductor stocks and the SOXX ETF. Intel is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Info Tech Global Top Stock Ideas.
- Microsoft (MSFT) reports F1Q results which top estimates, though capex came in 4.8% below expectations. Microsoft’s beat was driven by its cloud computing unit as revenue from Azure cloud computing services jumped 76% Y/Y. Microsoft is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Info Tech Global Top Stock Ideas.
- SEB SA (ENXTPA:SK) cut its FY CY2018 profit growth outlook on continued impact from FX volatility and weak retail sales (on account of disruption from eCommerce boom). SEB sees FY CY2018 sales growth of ~8%. SEB is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
- Sunny Optical (SEHK:2382) was downgraded to “Hold” at Jefferies with a price target of HKD$65. Sunny Optical is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
- Valeo (ENXTPA:FR) is plunging in early morning trading following C3Q results which miss market expectations. A slowdown in the China market and new rules on emissions testing hit Valeo results harder than management expected. Valeo cuts its target FY CY2018 guidance to 6.2%-6.5%. Valeo is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
- Western Digital (WDC) reports FY1Q2018 EPS of $3.04, matching consensus EPS of $3.04. While top-line revenue was on par with consensus estimates, Western Digital’s top-line revenue fell short of expectations as management reported FY1Q2018 revenue of $5bn compared to consensus of $5.14bn. Highlighting the earnings release was Western Digital’s surveillance hard drive sales and embedded flash solution revenue, both of which grew more than 30% y/y. Western Digital is rated “Attractive” in our US Information Technology Global Top Stock Ideas and “Neutral” in our US Large-Cap Global Top Stock Ideas.
European Stocks
- European stocks are dropping this morning following the disappointing earnings results from US large-cap tech stocks and negative FY guidance from large-cap European stocks
- European oil stocks are trading at their lowest level since April 2018 as global oil prices head for its third straight weekly decline
- The Euro Stoxx 600 is currently down -1.53%, the FTSE 100 has declined -1.64%, the DAX has fallen -2.05%, and the CAC 40 is lower by -2.34%
- Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.11x
- Travel & Leisure (-0.36%), Food & Beverage (-0.48%), and Utilities (-0.84%) stocks are the top performers in the Euro Stoxx 600 today
- Oil & Gas (-2.85%), Automobiles & Parts (-2.45%), and Technology (-2.33%) stocks are the worst performers in the Euro Stoxx 600 today
- 9 stocks in the Euro Stoxx 600 are at 4-week highs while 272 stocks are at 4-week lows
- 4 stocks in the Euro Stoxx 600 are overbought while 146 stocks are oversold according to the 16-day RSI Measure
- VSTOXX, the European stocks equivalent of the VIX, is moving up this morning and is currently at 24.85 after closing at 20.76 yesterday
Asian Stocks
- Asian stocks dropped in overnight trading following disappointing results from US Tech behemoths Amazon.com (AMZN) and Alphabet (GOOG.L)
- YTD, Chinese stocks have lost closed to USD$3tn in market value and are on pace for the worst annual performance since CY2008 as the Chinese government’s focus on deleveraging combined with rising global trade tensions to spook investor sentiment
- The Nikkei 225 finished down –0.4%, the Hang Seng ended down -1.11%, the Hang Seng China Enterprise declined -1.16%, and the CSI 300 was -0.65%
- Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.79x
- 0 stocks in the Nikkei 225 hit 4-week highs while 187 stocks reached 4-week lows
- 0 stocks in the Nikkei 225 closed overbought while 70 stocks closed oversold according to the 16-day RSI Measure
- Investor sentiment for Hong Kong stocks finished negative with the advance/decline ratio for the Hang Seng closing at 0.47x
- 0 stocks in the Hang Seng hit 4-week highs while 24 stocks reached 4-week lows
- 0 stocks in the Hang Seng closed overbought while 6 stocks closed oversold according to the 16-day RSI Measure
- Japan 10-Year Government Bonds are higher with yields down -0.4 basis points to 0.113%
- JGBs 2s-10s Spread has narrowed 0.8 basis points to 0.23%
- JPY¥ is currently down -0.463% against the USD$ to 111.9
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