Global stocks rallying after Italian coalition government makes concessions to EU and US Fed Chairman Powell calls outlook for domestic US economy “remarkably positive”

by QuantalyticsResearch

US Stocks

  • Global stocks are rallying this morning following news that the Italian coalition government is seeking a lower budget deficit after CY2019 & positive comments made by US Fed Chairman Jerome Powell about the outlook for the US Economy
  • US stocks index futures are pointing to a positive open in NY with the Dow Jones minis +0.21% S&P500 minis +0.26% and Nasdaq 100 minis +0.27%
  • Investor sentiment is being buoyed by comments made by US Fed Chairman Jerome Powell to the National Association for Business Economics where he said the outlook for the domestic US economy is “remarkably positive”
  • The VIX is little changed this morning and is currently at 11.78 after closing at 12.05 yesterday
  • EEM November 16 OTM Calls, Petrobras (BOVESPA:PETR4, ADR: PBR) January 2019 OTM Calls, FXI November 16 OTM Puts & Calls, and SPY October 3 OTM Puts are the most heavily traded options contracts in the US pre-market
  • US 10-Year Treasury Bonds are lower with yields up 1.13 basis points to 3.07%
  • The US Treasury 2s-10s Spread has widened 0.71 basis points to 0.26%
  • WTI Crude is currently little changed -0.09% to USD$75.23/bbl with the Brent-WTI spread up USD$0.41 to USD$9.77/bbl
  • Gold is currently little changed -0.01% to USD$1203.18/oz
  • Global oil prices are holding steady near the 4-year highs made in yesterday’s trading with the loss of supply from Iran and Venezuela offsetting concerns about inventory builds in the United States

Stocks Trending in the News

  • The lawsuit alleging Apple (AAPL) throttled back batteries in older iPhones will proceed as a worldwide class action lawsuit, a court in California has ruled.  The suit involves 122 claims that older batteries had their performance limited by Apple leading to problems for consumers.  Apple is indicated slightly higher in pre-market trading.  Apple is rated ‘Top Buy’ in our US Large-Cap Global Top Picks and ‘Attractive’ in our US Information Technology Global Top Picks
  • Aston Martin (AML LN) debuted in trading at its IPO price of 19 pounds and has traded lower since, presently 5.3% lower at 1800 pence.  Aston Martin dropped its IPO price range just prior to raising 4.2bn pounds in its IPO.  Aton martin is not rated in our Global Top Picks.
  • Baidu (BIDU) education spin-off Zuoyebang may see a USD$500mm investment from Sofbank’s (9984 HK) Vision Fund, according to reports in the Asian press.  No further details were available but Zuoyebang has already raised USD$500mn from foreign investors.  Baidu is indicated 0.5% higher in pre-market, Softbank closed 1.2% lower at 11,055 yen.  Baidu is rated ‘Neutral’ in our China All-Cap Global Top Picks and Softbank is rated ‘Attractive’ in our Japan Large-Cap Global Top Picks
  • BMW (BW GR) commented on sales when reporting 1.3% growth in September, saying that Tesla (TSLA)is pressuring its 5-Series sales as it ramps up production.  BMW’s sales were fueled by strong X-3 UV sales but it was Tesla’s production of 83,500 vehicles in the last quarter that caused BMW to comment.  BMW is 0.72 higher at 78.70 euros, Tesla closed 3.1% lower yesterday at $301.02.  BMW is rated ‘Unattractive’ in our European Large-Cap Global Top Picks and Tesla is rated ‘Unattractive’ in both our US Large-Cap and US Consumer Discretionary Global Top Picks
  • A research report by Bluefin Research said Intel (INTC) may have 10 nanometer production up and running by April, 4-6 weeks earlier than present consensus.   Intel is making “significant strides” and had spoken to suppliers about an earlier ramp-up, the report highlights.  Intel’s ramp-up has been plagued with problems and if confirmed would be a huge positive for Intel.  Intel is rated ‘Neutral’ in our US Large-Cap Global Top Picks and ‘Top Buy’ in our US Information Technology Global Top Picks
  • Lennar (LEN) is up 2.4% in pre-market trading after reporting 3Q results in line and giving a bullish outlook.  Lennar’s CEO said they may be “well positioned to continue our strong performance as we head towards the end of 2018 and into 2019.”  Lennar is rated ‘Neutral’ in our US Large-Cap Global Top Picks and ‘Unattractive’ in our US Consumer Discretionary Global Top Picks
  • Norsk Hydro (NHY NO) said it is stopping all operations at its Alunorte facility in Brazil.  Norsk Hydro is taking this action due its inability to treat anymore waste residue at the facility. Norsk Hydro is in an ongoing legal dispute around its treatment of waste residue and the facility has been running at only 50% since a waste spill in February.  Norsk Hydro is trading 13% lower at 42.88 kronor.  Norsk Hydro is rated ‘Neutral’ in our European Large-cap Global Top Picks
  • Royal Mail (RMG LN) has broken its 27% fall since its profit warning Monday, rising 2.1% today to 366.60 pence.  Royal Main is higher despite Jefferies downgrading to underperform and cutting its price target to 290 pence, a 28% cut.  Royal Mail trades at a 35% to the European postal sector according to the report versus 10% before the warning.  Royal Mail is rated ‘Unattractive’ in our United Kingdom All-Cap Global Top Picks
  • Tencent (700 HK) officially filed for the IPO of its Tencent Music Entertainment Group, listing USD$1bn in the filing with the SEC.  Tencent’s music unit focuses on streaming music, online karaoke and streaming live music events.  Tencent is trading 0.32% lower at HKD$316.  Tencent is rated ‘Attractive’ in our China All-Cap Global Top Picks
  • Tesco (TSCO LN) reported an uptick in same-store sales to 2.5% in the second quarter of its fiscal year.  Tesco saw problems in Poland and Thailand this quarter and operating profit came at 933mm pounds, below 992mm consensus.  The miss has caused the stock to drop 8.5% to 215.30 pence today.  Tesco is rated ‘Neutral’ in our United Kingdom All-Cap Global Top Picks

European Stocks

  • European stocks are advancing this morning, retracing yesterday’s losses following news that the Italian coalition government will make some concessions to the EU to avoid growing concerns about its public finances
  •  The Italian newspaper Corriere della Serra is reporting that the Italian budget deficit is expected to fall to 2.20% in CY2020 and 2.0% in CY2021 – the market was previously spooked by a targeted budget deficit of 2.4% in CY2019
  • The Euro Stoxx 600 is currently up +0.38%, the FTSE 100 is higher by +0.36%, the DAX has fallen -0.42%, and the CAC 40 has risen +0.46%
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.8x
  • Telecommunications (+1.04%), Utilities (+0.77%), and Banks (+0.76%) stocks are the top performers in the Euro Stoxx 600 today
  • Retail (-0.52%), Travel & Leisure (-0.47%), and Basic Resources (+0.02%) stocks are the worst performers in the Euro Stoxx 600 today
  • 34 stocks in the Euro Stoxx 600 are at 4-week highs while 105 stocks are at 4-week lows
  • 22 stocks in the Euro Stoxx 600 are overbought while 35 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 14.23 after closing at 15.48 yesterday
  • German 10-Year Bunds are lower with yields up 2 basis points to 0.442%
  • UK 10-Year GILTs are lower with yields up 0.7 basis points to 1.535%

Asian Stocks

  • Asian stocks were mixed overnight, with the rally in Japanese stocks stalling after reaching the highest levels since 1991 during the first two trading days of the quarter
  • Hong Kong stocks finished negative for the second day in a row following Tuesday’s sell-off which was the worst in a month
  • Chinese markets are closed this week for Golden Week
  • The Nikkei 225 finished down –0.66%, the Hang Seng ended down -0.13%, the Hang Seng China Enterprise up +0.29%, and the CSI 300 was +1.04%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.21x
  • 83 stocks in the Nikkei 225 hit 4-week highs while 0 stocks reached 4-week lows
  • 69 stocks in the Nikkei 225 closed overbought while 0 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 1.38x
  • 7 stocks in the Hang Seng hit 4-week highs while 5 stocks reached 4-week lows
  • 1 stock in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
  • Japan 10-Year Government Bonds are lower with yields up 1.1 basis points to 0.141%
  • JGBs 2s-10s Spread has widened 1.2 basis points to 0.25%
  • JPY¥ is currently up +0.167% against the USD$ to 113.84

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