Barchart Morning Call - 1/25

Barchart Morning Call

BC - 2 hrs 54 mins ago

Overnight Developments

• March E-mini S&Ps this morning are mildly higher by +0.27% on support from a 0.72% rally in European stocks on news that Eurozone banks will repay more LTRO loans next week than the market had expected. Starbucks is up +2.6% in overnight trading while Microsoft is down 1.2% after their respective earnings reports. Asian stocks today closed mixed. Japan closed sharply higher by +2.88% while Hong Kong closed -0.08% and China closed -0.43%. Commodity prices are little changed this morning. March crude oil is up +0.32%, March gasoline is down -0.02%, Feb gold is down -0.25%, March copper is up +0.30%, and agriculture prices are mixed. The dollar index is mildly lower by -0.15% as EUR/USD rallied by +0.51% on news of the larger-than-expected LTRO loan payoffs by Eurozone banks. USD/JPY is up +0.72%. March 10-year T-note prices are down -13.5 ticks on reduced safe-haven demand after the LTRO payoff news.
• Treasury Secretary Timothy Geithner leaves office today. His successor, current budget chief Jack Lew, has yet to be confirmed by the Senate.
• The ECB today said that Eurozone banks will pay off 137.2 billion euros of their 3-year LTRO loans next week at the first opportunity to make early repayment. That was well above the market consensus of 80 billion euros and indicated that Eurozone banks in the aggregate are in better shape than earlier thought. During the worst of the Eurozone debt crisis, the ECB provided about 1 trillion euros of 3-year loans to banks through its "Longer-Term Refinancing Operations" program.
• The German IFO business climate index of +1.8 to 104.2 was stronger than market expectations for a 0.6 point increase to 103.0 and was the third consecutive monthly increase.
• The UK Q4 GDP report of -0.3% q/q was weaker than market expectations of -0.1% y/y and fell back into negative territory after the Q3 report of +0.9% q/q. On a year-on-year basis, Q4 GDP was unchanged after Q3's slight +0.1% increase.
• Japan's Dec CPI of -0.1% y/y was a little stronger than market expectations of -0.2% y/y but was still in deflationary territory. The Dec core CPI of -0.6% y/y showed an even larger decline.
  Market Comments
  • March E-mini S&Ps this morning are up +4.00 points (+0.27%) on support from the +0.72% rally in European stocks and the positive LTRO payoff news. The S&P 500 index on Thursday opened lower on Apple's sharp overnight sell-off due to disappointment in its earnings and sales report, but stocks recovered and settled mixed. The S&P 500 climbed to a fresh 5-year high on improved global economic prospects the 0.4 point increase in China's Jan HSBC flash manufacturing PMI to a 2-year high of 51.9 and the unexpected -5,000 drop in U.S. initial unemployment claims to a 5-year low of 330,000. Other bullish factors included the +0.5% increase in Dec leading indicators (vs expectations of +0.4%), and a rally in European stocks on the 1.4 point rise to 47.5 in the Eurozone Jan manufacturing PMI. The Nasdaq posted a 1-week low and finished lower on the plunge in Apple. Closes: S&P 500 unch, Dow Jones +0.33%, Nasdaq -1.40%.
  • March 10-year T-notes this morning are sharply lower by -13.5 ticks due to reduced safe-haven demand with the news that Eurozone banks will make larger-than-expected early payoffs on their LTRO loans, providing further good news for the Eurozone debt crisis. March 10-year T-note prices on Thursday retreated from a 3-week high posted in the overnight session on increased safe-haven demand when stocks prices fell after Apple reported weaker-than-expected earnings. However, T-note prices fell back and closed lower when the S&P 500 shed its losses and rebounded to a fresh 5-year high after weekly initial jobless claims unexpectedly fell to a 5-year low. Closes: TYH3 -2.0, FVH3 -1.0.
  • The dollar index this morning is down -0.12 (-0.15% and EUR/USD is up +0.0068 (+0.51%) on the LTRO payoff news. USD/JPY is up +0.65 (+0.72%) as the yen continues to see weakness on the stimulus plan by Prime Minister Abe . The dollar index on Thursday erased an early rally and closed little changed, undercut by reduced safe-haven demand, after the S&P 500 climbed to a fresh 5-year high. USD/JPY surged to a fresh 2-1/2 year high when Japanese Deputy Economy Minister Nishimura said the yen's slide isn't over and that the yen at 100 per dollar would be acceptable. Closes: Dollar index +0.029 (+0.04%), EUR/USD +0.0059 (+0.44%), USD/JPY +1.718 (+1.94%).
  • March WTI crude oil this morning is up +0.31 (+0.32%) and March gasoline is down -0.0006 (-0.02%). Mar crude oil and gasoline Thursday closed higher on improved global economic growth prospects after China's Jan HSBC flash manufacturing PMI rose to a 2-year high of 51.9 and U.S. weekly initial unemployment claims unexpectedly fell to a 5-year low of 330,000. Other bullish factors included increased speculation that the Seaway pipeline will soon reopen and resume full crude shipments, which will curb crude inventories at Cushing where Nymex WTI oil futures are priced, along with the unexpected -1.74 million bbl decline in weekly DOE gasoline inventories, which were expected to increase +1.25 million bbl. Negative factors for crude prices included the 2.81 million bbl increase in weekly DOE crude stockpiles, larger than expectations of +2.15 million bbl and the 508,000 bbl increase in weekly DOE distillate inventories, stronger than expectations of unchanged. CLH3 +0.72 (+0.76%), RBH3 +0.0278 (+0.98%).
  • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit http://www.barchart.com/register/crbfms_usmc.php
    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): PG-Procter & Gamble (consensus $1.11), HON-Honeywell (1.10), HAL-Halliburton (0.61), KMB-Kimberley-Clark (1.36), COV-Covidien (1.06), WY-Weyerhaeuser (0.19), SXL-Sunoco Logistics (0.94), NVR-NVR Inc (7.14), SEIC-SEI Investments (0.32), OSK-Oshkosh (0.31), PB-Prosperity Bankshares (0.84), MOG/A-Moog ((0.82), WERN-Werner (0.35).
    Global Financial Calendar

    Friday 1/25/13
    United States
    1000 ET	Dec new home sales expected +2.1% to 385,000, Nov +4.4% to 377,000.
    1500 ET	USDA Cattle on Feed.
    Germany
    0400 ET	German Jan IFO business climate expected 103.0, Dec 102.4. Jan IFO current assessment expected 107.3, Dec 107.1. Jan IFO expectations expected 98.5, Dec 97.9.
    United Kingdom
    0430 ET	UK Q4 GDP expected -0.1% m/m and +0.2% y/y, Q3 +0.9% q/q and unchanged y/y.
    0430 ET	UK Nov index of services expected -0.1% m/m and +0.5% y/y, Oct +0.1% m/m and +1.1% 3-mo/3-mo.

    
    Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.