Barchart Morning Call 1/18

Barchart Morning Call

BC - 2 hrs 29 mins ago

Overnight Developments

• March E-mini S&Ps this morning are little changed. Last night's positive Chinese GDP report of +7.9% was offset by negative news from several high-profile companies. Intel is down about 5% in European trading this morning after reporting another quarter of declining sales. AT&T is down 1.5% after reporting a $10 billion pension charge and saying that smartphone subsidies hurt earnings. Capital One fell 7% in overnight trading on an earnings miss. European stocks this morning are down -0.12%. Asian stocks today closed higher on support from the Chinese GDP report. Japan closed +2.86%, Hong Kong closed +1.12%, and China closed +1.67%. Commodity prices this morning are slightly higher by +0.10%. Feb crude oil is down -0.16%, Feb gasoline is down -0.39%, Feb gold is up +0.08%, March copper is up +0.38%, grains are up +0.5%, and livestock and softs are mixed. The dollar index is up +0.26%, EUR/USD is down -0.23%, and USD/JPY is little changed. March 10-year T-note prices are up 3 ticks.
• The Chinese Q4 GDP report last night of +7.9% y/y was slightly stronger than market expectations of +7.8% and was up from the 3-1/2 year low of +7.4% posted in Q3. The slightly stronger-than-expected Chinese Q4 GDP report was a relief to the global stock markets, which have been heavily relying on the narrative of a recovering Chinese economy.
• In other Chinese data released last night, China's Dec industrial production rose +10.3% y/y, slightly above expectations of +10.2 and Nov's +10.1%. Dec retail sales rose +15.2% y/y, slightly above expectations of +15.1% and up from Nov's +14.9%.
• China's Dec property price report showed that year-on-year prices for new residential apartments rose in 40 of the 70 major cities surveyed, up sharply from 25 cities in Nov and 21 cities in Oct and Sep. Prices for existing residential apartments rose in 25 of the 70 cities surveyed, up from 18 cities in Nov and 15 cities in Oct. The report means the government will maintain its various measures designed to try to curb property prices.
• The U.K. Dec retail sales ex-auto fuel report of -0.3% m/m and +1.1% y/y was weaker than market expectations of +0.1% m/m and +2.0% y/y. The report indicated disappointing UK retail sales spending and suggested that weak UK economic growth will continue.
• UK Prime Minister David Cameron postponed his speech in Amsterdam today regarding the UK's need to revise its relationship with the EU. The postponement was due to the hostage crisis at the natural gas facility in Algeria, which involved some British citizens.
  Market Comments
  • March E-mini S&Ps this morning are little changed after negative reports from several key companies offset optimism about the stronger-than-expected Chinese Q4 GDP report of +7.9%. The S&P 500 index on Thursday rallied to a 5-year high and closed higher after better-than-expected economic data on jobs and housing bolstered optimism in the economic outlook. U.S. weekly initial unemployment claims fell by a more than expected -37,000 to a 5-year low of 335,000 and Dec housing starts rose by a more-than-expected +12.1% to a 4-1/2 year high of 954,000. A bearish factor was the unexpected -10.4 point decline in the Jan Philadelphia Fed manufacturing index to -5.8. Closes: S&P 500 +0.56%, Dow Jones +0.63%, Nasdaq +0.45%.
  • March 10-year T-notes this morning are up 3 ticks. March 10-year T-note prices on Thursday slumped and finished lower on reduced safe-haven demand when the S&P 500 posted a 5-year high on signs the economic recovery is strengthening. U.S. weekly initial unemployment claims fell to a 5-year low and U.S. Dec housing starts surged to a 4-1/2 year high. Closes: TYH3 -13.5, FVH3 -7.75.
  • The dollar index this morning is up +0.21 (+0.26%), EUR/USD is down -0.0031 (-0.23%) and USD/JPY is little changed. The dollar index on Thursday fell back and closed lower after a rally in the S&P 500 to a 5-year high reduced the safe-haven demand for the dollar. USD/JPY strengthened to a 2-1/2 year high after the Nikkei newspaper reported that the BOJ will ease monetary policy at its next meeting. Closes: Dollar index -0.155 (-0.19%), EUR/US +0.00865 (+0.65%), USD/JPY +1.483 (+1.68%).
  • Feb WTI crude oil this morning is down -0.15 (-0.16%) and Feb gasoline is down -0.0109 (-0.39%). Feb crude oil and gasoline prices on Thursday rallied sharply and closed higher as Feb crude climbed to a 3-3/4 month high on economic optimism after U.S. weekly initial unemployment claims fell more than expected to a 5-year low and U.S. Dec housing starts rose more than expected to a 4-1/2 year high. Closes: CLG3 +1.25 (+1.33%), RBG3 +0.0470 (+1.73%). Other bullish factors for energy prices included a weaker dollar, the rally in the S&P 500 to a 5-year high, and an increase in geopolitical risks in North Africa after an al-Qaeda-linked terrorist group took hostages at a natural gas complex in Algeria.
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    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): GE-General Electric (consensus +0.43), SLB-Schlumberger (1.07), MS-Morgan Stanley (0.27), STT-State St (1.01), JCI-Johnson Controls (0.51), ED-Consolidated Edison (0.73), STI-Suntrust Bnaks (0.62), PGR-Progressive Corp (0.34), PH-Parker Hannifin (1.12), COL-Rockwell Collins (0.89), MMR-McMoran Exploration (-0.13), FHN-First Horizon (0.18).
    Global Financial Calendar

    Friday 1/18/13
    United States
    0955 ET	Early-Jan U.S. consumer confidence (University of Michigan) expected +2.1 to 75.0, Dec -9.8 to 72.9.
    United Kingdom
    0430 ET	UK Dec retail sales ex-auto fuel expected +0.1% m/m and +2.0% y/y, Nov +0.1% m/m and +2.0% y/y. Dec retail sales with auto fuel expected +0.2% m/m and +1.0% y/y, Nov unch m/m and +0.9% y/y.

    
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