Barchart Morning Call 4/26

Barchart Morning Call

BC - 37 mins ago

Overnight Developments

• Global stock and commodity prices are mixed with June E-mini S&Ps down -1.75 points and the Euro Stoxx 50 down -0.29%. Stocks erased early gains and moved lower after Apr Euro-Zone economic confidence fell -1.7 to 92.8, weaker than expectations of -0.2 to 94.2 as it matched its lowest level in 2-1/2 years. The euro fell back from a 3-week high against the dollar and turned lower after Italian and Spanish government bond yields rose. The dollar index slipped to a 3-week low on speculation Friday's Q1 U.S. GDP will show that growth slowed, which may prompt the Fed into additional easing measures. The British pound climbed to a 7-1/2 month high against the dollar after Mar U.K. nationwide consumer confidence unexpectedly jumped +9 to 53, stronger than expectations of -1 to 43 and its best level in 10 months, which may prompt the BOE to pause in its asset purchase program. Copper prices climbed to a 2-week high after LME inventories fell -1,050 MT to a 1-month low and after China's Ministry of Industry and Information Technology said the country will remove 700,000 MT of outdated copper smelting capacity this year.
• Asian stocks today closed mostly higher with Japan up +0.01%, China +0.21%, Australia +0.34%, South Korea +0.26%, India -0.12%. Asian exporters received an early boost from the post-FOMC statement that said Fed policy makers expect growth will gradually accelerate, although Japanese stocks fell back from their best levels and closed little changed as the yen strengthened to a 1-week high against the dollar and exporters shed their gains. China's Shanghai Stock Index also closed little changed on weak company earnings results. According to data from Bloomberg, 855 companies in the Shanghai Composite index have released annual earnings and have posted profit growth of 14% on average, trailing analysts' estimates by 2.2%. South Korea's Kospi Stock Index closed higher after Q1 South Korea GDP rose +0.9% q/q, its fastest pace in a year.

Overnight U.S. Stock News

• June E-mini S&Ps this morning are trading down -1.75 points ahead of this morning's weekly jobless claims. The U.S. stock market on Wednesday opened higher on strong earnings results from Apple and Boeing and then added to its gains after the Fed said it expects economic growth to gradually accelerate and as they hiked their 2012 U.S. GDP forecast to 2.4% to 2.9% from a Jan forecast of 2.2% to 2.7% and reduced their U.S. unemployment forecast for Q4 of 2012 to 7.8% to 8.0% from a Jan forecast of 8.2% to 8.5%: Dow Jones +0.69%, S&P 500 +1.36%, Nasdaq Composite +2.30%. The S&P 500 posted a 1-week high. Better-than-expected company earnings results continue to support stocks as 80% of the S&P 500 companies that reported earnings results from Apr 10 have beaten estimates. Negative factors included the biggest decline in Mar durable goods orders in 3 years (-4.2%) and concerns over a global slowdown after Caterpillar sank when it said sales this year will be slower than anticipated due to weakness in developing nations.

Today's Market Focus

• June 10-year T-notes this morning are up +7 ticks. T-note prices Wednesday traded lower early and then recovered their losses after a well-received 5-year T-note auction, but then fell back and finished lower on an upbeat Fed statement that said the economy is "expanding moderately" and that inflation "has picked up somewhat" on energy: TYM2 -3.0, FVM2 +0.7. T-note prices were also pressured after the Fed refrained from mentioning additional stimulus measures and after they hiked their U.S. GDP forecast for this year and reduced their unemployment forecast. Limiting declines in T-notes was the larger-than-expected fall in Mar durable goods orders (-4.2% and -1.1% ex transportation) and strong demand for the Treasury's $35 billion 5-year T-note auction that had a 3.09 bid-to-cover ratio, stronger than the 12-auction average of 2.90.
• The dollar index this morning is weaker and at a 3-week low with USD/JPY -0.48 yen and EUR/USD -0.04 cents. The dollar index on Wednesday fell to a 3-week low on reduced safe-haven demand as stocks rallied on upbeat company earnings results, but the dollar recovered from its worst levels and settled modestly lower after the Fed refrained from adding additional stimulus measures and hiked its 2012 U.S. GDP forecast: Dollar Index -0.213, USD/JPY +0.029, EUR/USD +0.00203. Limiting euro gains was the comments from Francois Hollande, the leading candidate to become France's next president, who said France won't ratify the euro fiscal pact in its current form if he is elected. The British pound fell back from a 7-1/2 month high against the dollar after the British economy unexpectedly contracted last quarter (Q1 U.K. GDP -0.2% q/q) and pushed England into its first double-dip recession since the 1970s.
• Jun crude oil prices this morning are trading down -14 cents a barrel and Jun gasoline is -0.71 of a cent per gallon. Crude oil and gasoline prices on Wednesday fluctuated between gains and losses and settled mixed as the Fed statement that the economy will "pick up gradually" offset the larger-than-expected increase in U.S. crude inventories to a 10-3/4 month high: CLM12 +0.57, RBM2 -0.60. Other bearish factors included reduced Middle East concerns after an Iranian envoy in Moscow said his country is considering a Russian proposal to halt the expansion of its nuclear program along the larger-than-expected 3.98 million bbl increase in weekly DOE crude inventories to a 10-3/4 month high of 373 million bbl, and the +70,000 barrel increase in U.S. crude production in the week ended Apr 20 to 6.11 million barrels a day, a 12-year high. A slump in the dollar index to a 3-week low, along with the bigger-than-expected decline in weekly gasoline inventories to a 5-month low (-2.23 million bbl to 211.7 million bbl) and an unexpected -3.05 million bbl plunge in distillate supplies to a 3-1/3 year low of 125.9 million bbl limited declines. Also, doubts about the sincerity of the Iranian offer to halt expansion of its nuclear program kept prices from falling too far.

Today's U.S. Earnings Reports Earnings reports (sorted by mkt cap): XOM-Exxon Mobil (consensus $2.08), PEP-Pepsico (0.67), AMZN-Amazon.com (0.37), UPS-United Parcel Service (1.01), OXY-Occidental Petroleum (1.92), MO-Altria Group (0.49), BMY-Bristol-Myers Squibb (0.64), CL-Colgate-Palmolive (1.24), SBUX-Starbucks (0.39), DOW-Dow Chemical (0.59), GILD-Gilead Sciences (0.93), MET-MetLife (1.28), CELG-Celgene (1.13), LMT-Lockheed Martin (1.71), CME-CME Group (4.00).
Global Financial Calendar

Thursday 4/26/12
United States
0830 ET	Weekly initial unemployment claims expected -11,000 to 375,000, previous -2,000 to 386,000. Weekly continuing claims expected -4,000 to 3.293 million, previous +26,000 to 3.297 million.
0830 ET	Mar Chicago Fed national activity index, Feb -0.42 to -0.09.
1000 ET	Mar pending home sales expected +1.0% m/m and +7.3% y/y, Feb -0.5% m/m and +13.9% y/y.
1300 ET	Treasury auctions $29 billion 7-year T-notes.
1630 ET	Weekly money supply report and Fed balance sheet.
Japan
0030 ET	Feb Japan all industry activity index expected -0.2% m/m, Jan -1.0% m/m.
1930 ET	Mar Japan jobless rate expected unchanged at 4.5%, Feb -0.1 to 4.5%. Mar job-to-applicant ratio expected 0.76, Feb 0.75.
1930 ET	Mar Japan overall household spending expected +4.0% y/y, Feb +2.3% y/y.
1930 ET	Mar Japan national CPI expected +0.4% y/y, Feb +0.3% y/y. Mar national CPI ex-fresh food expected +0.1% y/y, Feb +0.1% y/y. Mar national CPI ex food & energy expected -0.5% y/y, Feb -0.6% y/y.
1930 ET	Apr Tokyo CPI expected -0.1% y/y, Mar -0.1% y/y. Apr Tokyo CPI ex-fresh food expected -0.3% y/y, Mar 0.3% y/y. Apr Tokyo CPI ex food & energy expected -0.9% y/y, Mar -1.0% y/y.
1950 ET	Mar Japan industrial production expected +2.3% m/m and +15.5% y/y, Feb -1.6% m/m and +1.5% y/y.
1950 ET	Mar Japan retail sales expected -0.5% m/m and +10.0% y/y, Feb +2.0% m/m and +3.4% y/y.
Euro-Zone
0500 ET	Apr Euro-Zone business climate indicator expected unchanged at -0.30, Mar -0.14 to -0.30.
0500 ET	Apr Euro-Zone economic confidence expected -0.2 to 94.2, Mar -0.1 to 94.4.
0500 ET	Revised Apr Euro-Zone consumer confidence, previous -19.8.
United Kingdom
0600 ET	Apr U.K. CBI reported sales expected -4, Mar 0.
1901 ET	Apr U.K. GfK consumer confidence survey expected +1 to -30, Mar -2 to -31.
Germany
0800 ET	Apr German CPI (EU harmonized) expected +0.1% m/m and +2.2% y/y, Mar +0.4% m/m and +2.3% y/y.
France
1200 ET	Mar French jobseekers net change expected 2,800, Feb 6,200. Mar total jobseekers expected 2.870,000, Feb 2,867,900.

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