Barchart Morning Call
- Global stocks are higher with the European Euro Stoxx 50 index up +0.84% and June S&Ps up +8.70 points. Treasuries and the dollar weakened with the dollar index plummeting to a 2-2/3 year low. Commodities gained with gold at a record and crude at a 1-week high. Global equity markets extended this week's gains after Apple said its Q2 profit almost doubled to $6.40 a share from $3.33 a year earlier. Other companies also reported stellar earnings results that helped lift the market as well with Nokia Oyj up 2.2% after it reported Q1 profit that beat estimates and Akzo Nobel soared 4.5% after the world's biggest maker of paints reported increased Q1 profit. The British pound rose to a 16-monthhigh against the dollar after Mar UK retail sales unexpectedly rose +0.2% m/m, stronger than expectations for a -0.4% month decline. Apr German IFO business confidence slipped -0.7 to 110.4, slightly weaker than expectations of -0.6 to 110.5. The euro rose to a 16-month high against the dollar despite the surge in yields on Greek, Portugal and Irish government debt to euro-era records as the European sovereign-debt crisis intensifies.
- The Asian stock markets today closed higher with Japan up +0.82%, Hong Kong +1.01%, China +0.66%, Taiwan +1.64%, Australia +1.13%, Singapore +0.91%, South Korea +1.38%, India +0.67%. Asian stocks rose with gains in technology stocks leading the way, after Apple reported increased profits, which signals the global economic recovery is accelerating. Raw-materials and energy producers also gained with silver rising to a 31-year high and copper and crude oil at 1-week highs. Japanese stocks gained despite the rise in the yen to a 3-week high against the dollar. The Australian dollar surged to $1.0772, its strongest since it was freely floated in 1983, after Q1 Australia producer prices rose +1.2% q/q, stronger than expectations of +1.0% q/q, which fuels speculation the RBA will continue to tighten monetary policy.
- June S&Ps this morning are trading up +8.70 points. The US stock market yesterday settled sharply higher as a strong earnings forecast from Intel along with better-than-expected Mar US existing home sales boosted prices: Dow Jones +1.52%, S&P 500 +1.35%, Nasdaq Composite +2.10%. The Dow soared to a 2-3/4 year high, the Nasdaq climbed to a 1-1/4 month high and the S&P 500 posted a 1-1/2 week high. Bullish factors included (1) the rally in Intel, which lifted the overall market, after the world's biggest chipmaker forecast Q2 revenue that topped analysts' projections and bolstered optimism in the economic outlook, (2) strength in commodity producers after a slump in the dollar index to a 16-1/2 month low spurred a broad-based rally in commodities, (3) the larger-than-expected increase in Mar US existing home sales (+3.7% to 5.10 million versus expectations of +2.5% to 5.00 million), and (4) an upbeat start to earnings season as 76% of the 59 companies in the S&P 500 that have reported results since Apr 11 have beaten analysts' earnings estimates.
- Bearish factors for stocks included (1) concern the European sovereign-debt crisis will worsen after credit-default swaps to insure Greek and Portuguese government debt climbed to records, and (2) weakness in bank stocks after FBR Capital markets issued a "neutral-to-negative" outlook on the sector, citing a lack of loan growth and increased costs from new regulations.
- Apple (NASDAQ:AAPL) jumped 4.1% in pre-market trading after the compnay late yesterday reported that Q2 net income rose ro $6.40 a share on sales of $24.7 billion, well ahead of analysts' estimates of $5.39 a share on sales of $23.4 billion.
- Qualcom (NASDAQ:QCOM) surged 5.2% in European trading after the company reported Q2 earnings of 86 cents a share on sales of $3.88 billion, stronger than analysts' estimates of profit of 80 cents and revenue of $3.62 billion.
- June 10-year T-notes this morning are down -3 ticks. T-note prices yesterday closed lower as the stock market rallied and after US exiting home sales rose more than expected: TYM11 -11, FVM11 -8.2, EDU11 unchanged. Bearish factors included (1) the larger-than-expected increase in Mar US existing home sales (+3.7% to 5.10 million versus expectations of +2.5% to 5.00 million), (2) reduced safe-haven demand for Treasuries after the stock market rallied sharply, and (3) inflation concerns after gold prices surged to an all-time high. Bullish factors included (1) a possible increase in the safe-haven demand for Treasuries on concern the European sovereign-debt crisis may worsen after credit-default swaps to insure Greek and Portuguese government debt climbed to all-time highs, and (2) the action by the Fed to buy $1.5 billion of TIPS as part of its QE2 asset-purchase program.
- The dollar index this morning is weaker and at a 2-2/3 year low with the dollar/yen -0.53 yen and the euro/dollar +0.82 cents. The dollar index yesterday plummeted to a 16-1/2 month low as commodity currencies rallied and as surging equity markets reduced the dollar's safe-haven demand: Dollar Index -0.661, USDJPY -0.030, EURUSD +0.01886. Bearish factors included (1) a rally in commodity currencies as the Australian dollar rose to a record $1.0599 against the US dollar, the strongest since it was freely floated in 1983, and the Canadian dollar climbed to a 3-1/4 year high against the dollar after commodities rallied on expectations for further global economic growth, (2) strength in the euro which climbed to a 15-month high against the dollar as European debt concerns eased when demand for a Spanish auction of government debt strengthened, and (3) reduced safe-haven demand for the dollar after the equity market rallied sharply. Bullish factors included (1) the larger-than-expected increase in Mar US existing home sales, which signals economic strength and is supportive for the dollar, and (2) a possible increase in the safe-haven demand for the dollar after ECB Council member Nowotny warned that a restructuring of Greek government debt could lead to a debt spiral as "the fear could spread on financial markets that this may become a precedent."
- June crude oil prices this morning are trading up +78 cents a barrel and June gasoline is +2.02 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply on a slump in the dollar and the unexpected decline in weekly crude inventories: CLM11 +$3.17, RBM11 +4.91. June crude posted a 1-week high. Bullish factors included (1) the slide in the dollar index to a 16-1/2 month low, which encourages investment demand in commodities, (2) the unexpected decline in weekly crude oil inventories (-2.32 million bbl versus expectations of +1.35 million bbl), (3) the -1.58 million bbl decline in weekly gasoline inventories which fell for the ninth consecutive week to a 5-month low of 308.1 million bbl, and (4) the rally in the S&P 500 to a 1-week high, which bolsters confidence in the economic outlook and energy demand. Bearish factors included (1) weakened demand for gasoline after US gasoline demand in the week ended Apr 15 fell -1.2% w/w to 9.06 million barrels a day, and (2) the larger-than expected increase in the weekly refinery utilization rate, which bodes well for increased output of gasoline and distillate products in the weeks ahead (+1.1 to 82.5% versus expectations of +0.9 to 82.3%).
Earnings reports (confirmed releases, sorted by mkt cap) GE-General Electric (BEST earnings consensus $0.28), PM-Philip Morris International (1.05), SLB-Schlumberger (0.76), VZ-Verizon Communications (0.50), MCD-McDonalds (1.14), DD-Du Pont (1.37), UNH-UnitedHealth Group (0.88), HON-Honeywell International (0.82), MS-Morgan Stanley (0.40), BLK-BlackRock (2.75), DNH-Danaher (0.57), PNC-PNC Financial Services Group (1.37), BAX-Baxter International (0.93), NEM-Newmont Mining (1.01), COV-Covidien PLC (0.89).
Global Financial Calendar
|0830 ET||Weekly initial unemployment claims expected ?22,000 to 390,000, previous +27,000 to 412,000. Weekly continuing claims expected -5,000 to 3.675 million, previous 58,000 to 3.680 million.|
|1000 ET||Feb FHFA house price purchase index expected ?0.3% m/m, Jan ?0.3% m/m.|
|1000 ET||Mar leading indicators expected +0.3%, Feb +0.8%.|
|1000 ET||Apr Philadelphia Fed manufacturing index expected ?7.0 to 36.4, Mar +7.5 to 43.4.|
|1100 ET||Treasury announces amounts of 2-year T-notes (previously $35 billion), 5-year T-notes (previously $35 billion) and 7-year T-notes (previously $29 billion) to be auctioned Apr 26-28.|
|1130 ET||Treasury auctions $14 billion 5-year TIPS|
|1630 ET||Weekly money supply report and Fed balance sheet.|
|0100 ET||Revised Feb Japan coincident index CI, previous 106.3. Revised Feb leading index CI, previous 104.2.|
|0400 ET||Apr German IFO business climate expected ?0.6 to 110.5, Mar ?0.2 to 111.1. Apr IFO current assessment expected ?0.3 to 115.5, Mar +1.0 to 115.8. Apr IFO expectations expected ?1.0 to 105.5, Mar ?1.4 to 106.5.|
|0430 ET||Mar UK retail sales ex auto fuel expected ?0.4% m/m and +0.8% y/y, Feb ?1.0% m/m and +1.2% y/y.|
|0430 ET||Mar UK retail sales with auto fuel expected ?0.5% m/m and +0.9% y/y, Feb ?0.8% m/ma and +1.3% y/y.|
|0830 ET||Feb Canada retail sales expected +0.5% m/m and +0.5% less autos, Jan ?0.3% and unchanged less autos.|
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