Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are mixed with the European Euro Stoxx 50 up +0.69% and June S&Ps up +5.20 points. Treasuries are weaker ahead of the conclusion of the 2-day Fed meeting later today and most commodities are higher with gasoline rising to a 2-3/4 year high. Better-than-expected company earnings results are lifting European and US stocks with Ericsson AB up over 9% after the biggest maker of mobile-phone networks reported Q1 net income of 4.1 billion kroner ($675 million), well ahead of analysts' estimates of 3.06 billion kroner. Volkswagen is up over 4% after Europe's largest automaker reported Q1 profit of 1.71 billion euros ($2.51 billion), beating analysts; estimates of 1.63 billion euros, while Volvo climbed 2.6% after it raised its 2011 sales forecast for Europe and North America to 230,000 to 240,000 tucks from a previous forecast of 220,000 vehicles. The dollar index recovered from a 2-1/2 year low after credit-default swaps to insure the government debts of Greece, Portugal and Ireland all rose to records.
- The Asian stock markets today closed mixed with Japan up +1.39%, Hong Kong -0.48%, China -0.66%, Taiwan +1.13%, Australia -0.83%, Singapore +0.34%, South Korea +0.24%, India -0.49%. The yen retreated from a 1-month high against the dollar after Standard & Poor's cut Japan's sovereign-rating outlook to "negative" from "stable," saying the nation's reconstruction needs following last month's earthquake will likely boost net government debt to 145% of GDP in fiscal 2013, higher than an earlier forecast of 137%. Mar Japan retail sales weakened more than expected after they tumbled -8.5% y/y, the biggest decline in 13 years. Despite the negative news, Japanese stocks finished higher after the larger-than-expected increase in US consumer confidence boosted the outlook for Asian exporters along with the statement from Japan's Trade Ministry that 60% of factories in earthquake-stricken areas have restarted production. Australia's S&P 200 Stock Index finished lower and the Australian dollar climbed to a record against the US dollar after Q1 Australia consumer prices rose +1.6% q/q, higher than expectations of +1.2% q/q and the biggest increase in 5 years, which gives the RBA more reason to continue their interest rate tightening campaign.
- June S&Ps this morning are trading up +5.20 points at a fresh contract high as company earnings results continue to surprise to the upside. The US stock market yesterday finished with solid gains on improved company earnings results along with stronger-than-expected consumer confidence: Dow Jones +0.93%, S&P 500 +0.90%, Nasdaq Composite +0.77%. The Dow and S&P 500 climbed to 2-3/4 year highs and the Nasdaq catapulted to a 10-year high. Bullish factors included (1) continued strong company earnings results as 79% of the 154 companies in the S&P 500 that reported earnings results since Apr 11 have beaten analysts' estimates, (2) the stronger-than-expected Apr US consumer confidence (+1.6 to 65.4 versus expectations of +1.4 to 64.8), which reduced concern that rising fuel costs will slow consumer spending, and (3) reduced interest rate concerns after the yield on the 10-year T-note fell to a 1-month low of 3.306%.
- Bearish factors for stocks included (1) concern the European sovereign-debt crisis may worsen after credit-default swaps to insure Greek and Portuguese government debt jumped to records, (2) the as-expected -3.3% y/y decline in the Feb S&P/CaseShiller composite-20 home price index, the biggest y/y decline in 15 months and a sign that the US housing market remains depressed, and (3) the unexpected decline in the Apr Richmond Fed manufacturing index which fell to its lowest level in 5 months (-10 to 10 versus expectations of unchanged at 20).
- June 10-year T-notes this morning are down -6 ticks ahead of the conclusion of the FOMC meeting later today. T-note prices yesterday rallied to a 1-month high and settled higher on speculation the Fed on Wed will announce steps to keep Treasury yields from rising as the June end of the QE2 asset-purchase program approaches: TYM11 +11, FVM11 +7.2, EDU11 +0.5. The 10-year T-note yield slipped to a 1-month low of 3.306%. Bullish factors included (1) the as-expected -3.3% y/y decline in the Feb S&P/CaseShiller composite-20 home price index, the biggest y/y decline in 15 months and a sign that the US housing market remains depressed, (2) increased safe-haven demand for Treasuries on concern the European debt crisis may worsen after credit-default swaps to insure Greek and Portuguese government debt jumped to records, (3) the unexpected decline in the Apr Richmond Fed manufacturing index which fell to its lowest level in 5 months (-10 to 10 versus expectations of unchanged at 20), (4) strong foreign demand for the Treasuries $35 billion 2-year T-note auction in which indirect bidders bought 37.9% of the notes, stronger than the 33.5% average of the past 10 auctions, and (5) the Fed's action to purchase $1.99 billion of Treasuries as part of its QE 2 asset-purchase program. Bearish factors included (1) the stronger-than-expected Apr US consumer confidence (+1.6 to 65.4 versus expectations of +1.4 to 64.8), and (2) supply pressures ahead of the Treasury's $35 billion 5-year T-note auction on Wednesday.
- The dollar index this morning is weaker and posted a fresh 2-1/2 year low in overnight trade with the dollar/yen +0.69 yen and the euro/dollar +0.29 cents. The dollar index yesterday closed lower on speculation that the FOMC on Wednesday will keep interest rates at a record low along with strength in the euro which rallied to a 16-1/4 month high against the dollar on hawkish comments from ECB President Trichet: Dollar Index -0.149, USDJPY -0.277, EURUSD +0.0630. Bearish factors included (1) speculation that the FOMC on Wednesday will keep interest rates at a record low, which may prompt inventors to shy away from the dollar in favor of higher yielding assets, (2) comments from ECB President Trichet who said the ECB must continue "solidly anchoring" inflation expectations, which bolstered speculation for further ECB rate hikes, and (3) reduced safe-haven demand for the dollar after stock prices rallied to 2-3/4 year highs. Bullish factors included (1) a possible increase in the safe-haven demand for the dollar after credit-default swaps to insure Greek and Portuguese government debt jumped to records, which raises concern the European sovereign-debt crisis will worsen, (2) the stronger-than-expected Apr US consumer confidence, which is dollar supportive, and (3) comments from Treasury Secretary Geithner who reaffirmed the US commitment to a "strong dollar".
- June crude oil prices this morning are trading up +39 cents a barrel and June gasoline is +1.28 cents per gallon at a contract high. Crude oil and gasoline prices yesterday finished mixed as a weak dollar, strong equities and stronger-than-expected US consumer confidence lifted gasoline while comments from Saudi Arabia's national oil company undercut crude: CLM11 -$0.07, RBM11 +2.87. Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high. Bullish factors included (1) the weak dollar which encourages investment demand in commodities, (2) the stronger-than-expected US Apr consumer confidence, which may lead to increased consumer spending and fuel demand, (3) strength in gasoline prices on the outlook for weekly DOE gasoline supplies to fall for the tenth consecutive week when they are reported on Wed, and (4) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand. Bearish factors included (1) comments from the CEO of Saudi Arabia's state oil company who said it is "not comfortable" with the current price of oil and is concerned about its effect of global economic growth, which fueled speculation of an increase in Saudi Arabian oil production, and (2) the outlook for weekly DOE crude oil stockpiles to increase for the seventh time in eight weeks when they are released on Wed. Expectations for the DOE's weekly inventory report are for crude supplies to gain 1.7 million bbl, gasoline stockpiles to fall -1.0 million bbl, distillate inventories to rise +500,000 bbl and the refinery utilization rate to increase +0.9 to 83.4%.
Global Financial Calendar
| Wednesday 4/27/11 | |
|---|---|
| United States | |
| 0700 ET | Weekly MBA mortgage applications, last market index +5.3% with purchase mortgage sub-index +10.0% and refinancing sub-index +2.7%. |
| 0830 ET | Mar durable goods orders expected +2.3% and +2.0% ex transportation, Feb –0.6% and –0.3% less transportation. |
| 1230 ET | FOMC announces interest rate decision (expected no change to the 0.00% to 0.25% Fed funds rate). |
| 1300 ET | Treasury auctions $35 billion 5-year T-notes. |
| 1415 ET | Fed Chairman Ben Bernanke speaks at a press conference after the FOMC meeting. |
| Germany | |
| 0200 ET | May German GfK consumer confidence survey expected -0.1 to 5.8, Apr -0.1 to 5.9. |
| n/a | Apr German CPI (EU harmonized) expected +0.2% m/m and +2.6% y/y, Mar +0.6% m/m and +2.3% y/y. |
| France | |
| 0245 ET | Apr French consumer confidence indicator expected unchanged at 83, Mar -2 to 83. |
| 1200 ET | Mar French jobseekers expected -10,000, Feb -2,100. Mar total jobseekers, Feb 2,701,100. |
| United Kingdom | |
| 0430 ET | Q1 UK GDP expected +0.5% q/q and +1.8% y/y, Q4 -0.5% q/q and +1.5% y/y. |
| 1901 ET | Apr UK GfK consumer confidence survey expected +1 to -27, Mar unchanged at -28. |
| Euro-Zone | |
| 0500 ET | Feb Euro-Zone industrial new orders expected +1.8% m/m and +22.6% y/y, Jan +1.1% m/m and +22.2% y/y. |
| Canada | |
| 0900 ET | Feb Canada Teranet/National Bank home price index, Jan +0.4% m/m and +3.9% y/y. |
| Japan | |
| 1915 ET | Apr Japan Markit/JMMA manufacturing PMI, Mar -6.5 to 46.4. |
| 1930 ET | Mar Japan overall household spending expected -8.0% y/y, Feb -0.2% y/y. |
| 1930 ET | Mar Japan jobless rate expected +0.2 to 4.8%, Feb -0.3 to 4.6%. Mar job-to-applicant ratio expected +0.61, Feb 0.62. |
| 1930 ET | Apr Tokyo CPI expected -0.1% y/y, Mar -0.3% y/y. Apr Tokyo CPI ex-fresh food expected +0.2% y/y, Mar 0.3% y/y. Apr Tokyo CPI ex food & energy expected -0.1% y/y, Mar -0.3% y/y. |
| 1930 ET | Mar Japan national CPI expected unchanged y/y, Feb unchanged y/y. Mar national CPI ex-fresh food expected 0.2% y/y, Feb -0.3% y/y. Mar national CPI ex food & energy expected -0.6% y/y, Feb -0.6% y/y. |
| 1950 ET | Preliminary Mar Japan industrial production expected -11.1% m/m and -8.5% y/y, Feb +1.8% m/m and +2.9% y/y. |
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