Global stocks declining as global growth jitters push markets down

by QuantalyticsResearch

US Stocks

  • Yesterday’s release by China’s National Bureau of Statistics that shows China 4Q GDP slowing to 6.4% in CY2018 vs 6.8% in CY2017 has rekindled worries about a deceleration in global growth
  • US stocks index future are dropping to start the week after yesterday’s MLK holiday with front-month Dow Jones minis –0.56%, S&P 500 minis -0.65%, and Nasdaq 100 minis -0.84%
  • Global growth will be in focus this week as the 2019 Annual World Economic Forum in Davos begins today
  • The S&P 500 is on pace to enter an “earnings recession” with expectations for earnings growth for 1Q falling to 5.9% and forecasted 2Q earnings growth falling to 3.6%
  • 55 members of the S&P 500 has reported 4Q earnings so far with 76.4% beating estimates
  • Analysis by Bloomberg, Dealogic and Goldman Sachs suggests IPOs as a percentage of the S&P 500 market capitalization is set to double the rolling 5-year average with several maturing unicorns expected to come to market over the next few years.  The expected increase would be the largest increase since 19945 when IPOs spike to more than 3 times the annual average change.
  • The rally in oil prices YTD in CY2019 is driving the S&P 500 energy sector to be the top performing sector in the S&P 500.  Too fast, too soon?  We will have to wait and see.
  • The VIX is little changed this morning and is currently at 18.71 after closing at 17.8 yesterday
  • SPY February 15 OTM Calls & Puts, QQQ February 15 OTM Calls and EEM February 15 OTM Calls & Puts are some of the most actively traded US options contracts in the US pre-market today
  • UBS believes the VIX has now dropped below fair value, introducing real risks to US stocks.  UBS believes the drop in VIX last week offered the largest discount to other market indicators since 1990 and is real risk to “quality” stocks
  • US 10-Year Treasury Bonds are higher with yields down -3.61 basis points to 2.7481%
  • The US Treasury 2s-10s Spread has narrowed 1.12 basis points to 0.16%
  • WTI Crude is currently up 3.32% to USD$53.8/bbl with the Brent-WTI spread down USD$-5.6 to USD$7.15/bbl
  • Gold is currently little changed 0.24% to USD$1283.6/oz

Stocks Trending in the News

Click name for Q-Factor breakdown, latest price details, more financial info and sentiment data.

  • Fifth Third Bancorp (FITB) reported fourth quarter adjusted EPS of 69 cents while consensus was for 66 cents.   Fifth Third Bancorp fourth quarter loan loss provisions came at USD$95 million, up from USD$84 million a year earlier.  Fifth Third Bancorp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Halliburton (HAL) reported fourth quarter EPS from continuiing operations of 41 cents while consensus was for 37 cents.  Halliburton fourth quarter revenue came at USD$5.9 billion while USD$5.87 billion was consensus.  Halliburton is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) reported adjusted fourth quarter EPS of USD$1.97 while consensus was for USD$1.95.  Johnson & Johnson fourth quarter revenue came at USD$20.4 billion while USD$20.2 was consensus.  Johnson & Johnson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Stanley Black & Decker (SWK) reported fourth quarter EPS of USD$2.11 while consensus was for USD$2.10.  Stanley Black & Decker fourth quarter revenue came at USD$3.63 billion versus USD$3.62 billion expected.  Stanley Black & Decker sees 2019 EPS coming at USD$8.45-8.65.  Stanley Black & Decker is rated “Attractive” in our US Large-Cap Global Top Stock Ideas. a
  • Steel Dynamics (STLD) reported fourth quarter EPS of USD$1.31 while consensus was for USD$1.21.  Steel Dynamics fourth quarter revenue came at USD$2.9 billion while USD$2.93 billion was consensus.  Steel Dynamics is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Tesla (TSLA) plans acquire batteries for its new China factory from Panasonic (TSE: 6752), according to Nikkan Kogyo.  The new arrangement will be an expansion of their existing relationship.  Presently, Panasonic is the main supplier of batteries to Telsa.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Panasonic Tesla is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas
  • Travelers (TRV) reported fourth quarter EPS of USD$2.13 while consensus was for USD$2.08.  Travelers fourth quarter revenue came at USD$7.8 billion while USD$7.7 billion consensus.  Travelers return on equity in the fourth quarter was 10.9%.  Travelers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • UBS (SWX: UBS) reported USD$13 billion withdrawals by its customers.  UBS said it saw USD$8 billion withdrawn from its wealth management unit while USD$5 billion was withdrawn from its asset management unit.  UBS comments that it does not believe the weakness of the fourth quarter has completely passed.  UBS Travelers is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

European Stocks

  • European stocks are declining for a second straight trading session as the twin concerns of decelerating growth in China and ongoing BREXIT saga weighs on investor sentiment
  • The Euro Stoxx 600 is currently down -0.4%, the FTSE 100 has declined -0.68%, the DAX has fallen -0.58%, and the CAC 40 is lower by -0.64%
  • According to Bank of America fund manager surveys, underweight/short British stocks is one of the most popular trades.  HSBC believes this pessimism is overdone and that investors are missing the fact that the FTSE 100 offer a dividend yield of 4.9%, one of the most attractive yields in developed markets.  Just as a point of reference the FTSE 100 dividend yield is more than double that of the S&P 500!
  • Investor sentiment for European stocks is negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.59x
  • Oil & Gas (-1.21%), Telecommunications (-0.47%), and Basic Resources (-1.23%) stocks are the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-0.99%), Food & Beverage (+0.29%), and Utilities (+0.1%) stocks are the worst performers in the Euro Stoxx 600 today
  • 248 stocks in the Euro Stoxx 600 are at 4-week highs while 3 stocks are at 4-week lows
  • 40 stocks in the Euro Stoxx 600 are overbought while 2 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 15.94 after closing at 15.39 yesterday
  • EUR€ is currently little changed against the USD$ at 1.1361
  • GBP£ is currently little changed against the USD$ at 1.2904
  • CHF is currently little changed against the USD$ at 1.0036
  • German 10-Year Bunds are higher with yields down -0.7 basis points to 0.248%
  • UK 10-Year GILTs are flat with yields little changed 0 basis points to 1.323%

Asian Stocks

  • Asia stocks close negative in overnight trading as investors digest yesterday’s disappointing CY2018 China GDP data release
  • The Nikkei 225 finished down –0.47%, the Hang Seng ended down -0.7%, the Hang Seng China Enterprise declined -0.93%, and the CSI 300 was -1.33%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.36x
  • 151 stocks in the Nikkei 225 hit 4-week highs while 0 stocks reached 4-week lows
  • 1 stock 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 negative with the advance/decline ratio for the Hang Seng closing at 0.25x
  • 28 stocks in the Hang Seng hit 4-week highs while 1 stock reached 4-week lows
  • 3 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
  • Japan 2-Year Government Bonds are flat with yields little changed 0 basis points to -0.167%
  • Japan 10-Year Government Bonds are higher with yields down -0.5 basis points to 0.003%
  • JGBs 2s-10s Spread has narrowed 0.5 basis points to 0.17%
  • JPY¥ is currently down -0.255% against the USD$ to 109.39
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