Earnings season dominating investor sentiment with stocks edging up

by QuantalyticsResearch

US Stocks

  • Global stocks are advancing this AM as earnings results are dominating headlines (and investor sentiment)
  • US stocks index futures are rising ahead of the open in NY with the Dow Jones minis +0.44%, S&P500 minis +0.43% and Nasdaq 100 minis +0.62%
  • Earnings growth for C3Q2018, according to Thomson Reuters, is expected to be ~21.7% for the S&P500
  • In comparison to the S&P500, Thomson Reuters forecasts +18.6% earnings growth for the Russell 2000 in C3Q2018
  • The VIX is  moving down this morning and is currently at 20.08 after closing at 21.3 yesterday
  • Bank of America (BAC) October 19 & January 2019 OTM Calls, IWM December 2018 OTM Calls, SPY October 19 & November 16 OTM Puts, and Petrobras (BOVESPA:PETR4; ADR: PBR) are the most heavily traded options contracts in the US pre-market
  • US 10-Year Treasury Bonds are lower with yields up 1.52 basis points to 3.169%
  • The US Treasury 2s-10s Spread has widened 0.47 basis points to 0.3%
  • WTI Crude is currently up 0.62% to USD$71.78/bbl with the Brent-WTI spread down USD$-1.59 to USD$8.48/bbl
  • Gold is currently little changed 0.2% to USD$1229.52/oz
  • Oil prices are dropping ahead of the release of US inventory data for last week at 10:30am today

Stocks Trending in the News

  • BlackRock (BLK) reports 3Q results above the highest expectations, reporting 3Q adjusted EPS of USD$7.52 versus USD$6.84 consensus.  BlackRock revenue came at USD$3.58bn vs USD$3.54bn expected.  BlackRock’s iShraes ETF unit saw USD$33.67bn of inflows compared with USD$17.81 last quarter.  BlackRock is trading slightly higher in pre-market trading.  BlackRock is rated ‘Top Buy’ in our US Large-Cap Global Top Stock Ideas.
  • Comerica (CMA) beat estimates for 3Q, beating expectations with EPS of USD$1.86 versus consensus of USD$1.86 while consensus was for USD$1.77.   Comerica sees 4Q loans stable with positive growth going into the end of the year.  Comerica is rated ‘Attractive’ in our US Large-Cap Global Top Stock Ideas.
  • Goldman Sachs (GS) reports earnings that beat estimates after investing banking revenues beat Street forecasts.  Fixed income sales and trading results came in below expectations.  Goldman Sachs states that gains from IPO issuances offset weak debt underwriting.  Bottom-line results were 16.7% ahead of forecasted EPS for the quarter.  Goldman Sachs is currently up 1.0% in pre-market trading.  Goldman Sachs is rated “Neutral” In our US Large-Cap Global Top Stock Ideas.
  • Kion Corp (KGX GR) is trading 9.6% higher at 49.39 euros after UBS upgraded the stock.  Kion was upgraded to buy from neutral saying its 42% fall since April is overdone.  Kion should deliver strong 3Q results allaying investors’ fears.  Kion is rated ‘Neural’ in our European Large-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) increased full year guidance, now expecting sales of USD$81-81.4bn, up from USD$80.5-81.3bn.  Johnson & Johnson now expects full year EPS of USD$8.13-8.18, up from USD$8.07-8.17.  For 3Q, Johnson & Johnson expects EPS of USD$1.97-2.07.  Johnson & Johnson is rated ‘Attractive’ in our US Large-Cap Global Top Stock Ideas.
  • Morgan Stanley (MS) reports strong 3Q earnings and is the only Wall Street bank to report an increase of revenue in stocks, fixed income and investment banking.  Morgan Stanley sees a 15% increase in its investment banking revenue compared with a fall for all other players.  Morgan Stanley reports USD$1.17 net income while consensus was for USD$1.01.  Morgan Stanley is rated ‘Unattractive’ in our US Large-Cap Global Top Stock Ideas.
  • MTR Corp (66 HK) closed 0.52% lower after 4 trains lines in Hong Kong simultaneously has signal problems.  MTR operates the rail system in Hong Kong and the snafu caused chaos, with MTR Corp having to operate the 4 lines manually, causing massive delays in the city.  MTR Corp is rated ‘Attractive’ in our China All-Cap Global Top Stock Ideas.
  • United Health Group (UNH) raised its outlook for the full year.  United Health Group expects full year adjusted EPS of USD$12.80 while preciously expecting USD$12.50-12.75.  Market consensus for United Health Group is USD$12.70.  United Health Group reported 3Q adjusted EPS of USD$3.41, above consensus of USD$3.29.  United Health Group is rated ‘Top Buy’ in our US Large-Cap Global Top Stock Ideas.
  • Volvo AB (VOLVB SS) reports problems with degradation of part of the emissions system on its trucks, causing the emissions system to exceed emissions limits.  Volvo has begun informing customers of the problems.  Volvo has said the cost to remedy the problems “could be material”.   Volvo AB is rated ‘Top Buy’ in our European Large-Cap Global Top Stock Ideas.
  • Volkswagen’s (VOW GR) Audi Group was fined 800mn euros by the Munich prosecutor related to “deviation from regulatory requirements” with some of its V6 and V8 diesels engines.  Volkswagen said the fin will “directly affect” 2018 financial guidance of the group.  Volkswagen is rated ‘Neural’ in our European Large-Cap Global Top Stock Ideas.
  • Walmart (WMT) expects fiscal year 2020 US sales growth ex-gas of 2.5-3% while present consensus is 2.5%.  Walmart expects total sales to grow more than 3% in fiscal 2020.  Walmart sees e-commerce growth of ~35% while present consensus is for ~40% growth.  Walmart is rated ‘Neutral’ in our US Large-Cap Global Top Stock Ideas and ‘Attractive’ in our US consumer Staples Global Top Stock Ideas.
  • Whitehaven Coal (WHC AU) closed 1.5% higher at AUD$5.48 after earning an upgrade from Morgans Financial.  Whitehaven Coal saw its price target raised to AUD$6 from AUD$5.38, highlighting strong fundamentals that should drive the stock.  Whitehaven Coal is rated ‘Attractive’ in our Australia Large-Cap Global Top Stock Ideas.

European Stocks

  • European stocks are edging up this morning following news that that the Italian coalition government reached an agreement on a budget plan with a target deficit of 2.4% for CY2019
  • The Euro Stoxx 600 is currently up +0.63%, the FTSE 100 has declined -0.27%, the DAX has advanced +0.38%, and the CAC 40 has risen +0.26%
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 3.92x
  • Automobiles & Parts (+1.62%), Real Estate (+1.55%), and Industrial Goods & Services (+1.41%) stocks are the top performers in the Euro Stoxx 600 today
  • Oil & Gas (-0.79%), Retail (-0.53%), and Basic Resources (-0.19%) stocks are the worst performers in the Euro Stoxx 600 today
  • 5 stocks in the Euro Stoxx 600 are at 4-week highs while 249 stocks are at 4-week lows
  • 5 stocks in the Euro Stoxx 600 are overbought while 259 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is  moving down this morning and is currently at 17.76 after closing at 19.07 yesterday
  • EUR€ is currently little changed against the USD$ at 1.158
  • GBP£ is currently up +0.57% against the USD$ to 1.3227
  • CHF is currently little changed against the USD$ at 1.0123
  • German 10-Year Bunds are lower with yields up 0.1 basis points to 0.504%
  • UK 10-Year GILTs are lower with yields up 1.4 basis points to 1.624%

Asian Stocks

  • Asian stocks flip flopped between positive and negative before generally closing positive
  • The Nikkei 225 finished up +1.25%, the Hang Seng ended up +0.07%, the Hang Seng China Enterprise up +0.53%, and the CSI 300 was -0.81%
  • Volumes in Hong Kong were light, 20% below the 20-day moving average ahead of the Cheung Yeung Festival holiday tomorrow.
  • Stocks in Shanghai reversed gains to finish in the red following economic data that points to potential cooling in domestic demand
  • Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 6.03x
  • 0 stocks in the Nikkei 225 hit 4-week highs while 78 stocks reached 4-week lows
  • 0 stocks in the Nikkei 225 closed overbought while 12 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 1.5x
  • 2 stocks in the Hang Seng hit 4-week highs while 13 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 8 stocks closed oversold according to the 16-day RSI Measure
  • Japan 10-Year Government Bonds are lower with yields up 0.4 basis points to 0.148%
  • JGBs 2s-10s Spread has widened 0.3 basis points to 0.26%
  • JPY¥ is currently up +0.242% against the USD$ to 112.04

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