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OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (
ESM13 +0.39%) this morning are up +0.42% on a +1.13% rally in the Euro Stoxx 50 index and on the BOJ's expansion of it QE program, which was more aggressive than expected. The Bank of England and the ECB both left their respective monetary policies unchanged as expected. The Nikkei index rallied sharply today by +2.20% on the BOJ's expanded QE program. The markets were closed today for a public holiday in China, Hong Kong, and Taiwan. Other Asian stock markets closed lower with Australia down
-0.89%, Singapore down
-0.42%, South Korea down
-1.27%, and India down
-1.55%. Commodity prices today are down
-0.19%. May crude oil is up +0.06%, May gasoline is down
-0.65%, June gold is down
-0.61%, May copper is down
-0.21%, and agriculture prices are trading lower across the board. The dollar index (
DXY00 +0.60%) is sharply higher by +0.68% thanks mainly to a plunge in the yen on the BOJ meeting outcome, which pushed USD/JPY (
^USDJPY) up +2.58%. EUR/USD (
^EURUSD) is down
-0.32%. June 10-year T-notes (
ZNM13 +0.08%) are down 1 tick.
The ECB at its meeting today left its refinancing rate unchanged at 0.75% as expected. The markets will be listening carefully to ECB President Draghi at his press conference later this morning to see if he takes a more dovish tone in response to the ongoing Eurozone recession.
The Bank of England at its policy meeting today left its monetary policy unchanged with the base rate at 0.50% and its asset-purchase target unchanged at 375 billion pounds. The outcome was fully in line with market expectations. BOE Governor Mervyn King has been pushing for a 25 billion pound increase in the asset-purchase target but has been overruled by a majority vote on the BOE Monetary Policy Committee due to concerns about the UK inflation rate of +2.8% y/y overall and +2.3% core.
The BOJ at the conclusion of its 2-day meeting doubled its monthly bond-buying program to 7 trillion yen ($73 billion) per month. The BOJ dropped the limit on the maturity on the bonds that it buys, thus extending the maturity beyond 3 years. The BOJ also said it will double its monetary base and plans to reach its 2% inflation target within two years. The outcome of the BOJ meeting was more aggressive than expected and boosted the Japanese stock market and undercut the yen.
North Korea today prevented South Korean workers from entering the Gaeseong joint industrial zone for a second day. However, North Korea allowed South Korean workers who were already in the zone to leave. North Korea reiterated its threat against the U.S. by noting that its government authorized a potential "smaller, lighter and diversified nuclear strike." The South Korean Kospi stock index today fell 1.2% and the won fell by 0.6% to a 7-month low.
The Spanish 10-year bond yield today fell by 7 bp to 4.84% and the Italian 10-year bond yield fell by 5 bp to 4.51%.
The German final-March services PMI was revised lower by 0.7 points to 50.9 from the preliminary report of 51.6, which was weaker than market expectations for no revision. The Eurozone final-March services PMI was revised lower by
-0.1 point to 46.4 from 46.5 and was weaker than market expectations for no revision.
The Eurozone Feb PPI rose by +0.2% m/m, which was in line with market expectations. On a year-on-year basis, the Feb PPI eased to +1.3% from a revised +1.7% in Jan.
U.S. STOCK PREVIEW
Today’s weekly initial unemployment claims report is expected to show a decline of
-4,000 to 353,000, reversing part of last week’s increase of +16,000 to 357,000. Meanwhile, today’s weekly continuing claims report is expected to be unchanged from last week’s level of 3.050 million, moving sideways after last week’s decline of
-27,000 to 3.050 million. The U.S. stock market is focused on the outcome of the central bank meetings in Japan, Europe, and UK. The only earnings report today from the Russell 1000 is RPM International (consensus 6 cents). Conferences through the rest of this week include J.P. Morgan Private Builder/Private Equity Conference on Thursday, China Business Conference 2013 in NY on Friday, and Women in the World Summit 2013 on Friday.
June E-mini S&Ps this morning are up +6.50 points (+0.42%) on the 1.13% rally in the Euro Stoxx 50 index and on . The S&P 500 index on Wednesday closed lower as a smaller-than-expected increase in the Mar ADP employment change (+158,000 vs. expectations of +200,000) fueled concern that Friday’s U.S. Mar payrolls may be weaker than expected and that the economy may be slowing. Another negative was the
-1.6 point drop in the Mar ISM non-manufacturing index to a 7-month low of 54.4, weaker than expectations of
-0.5 to 55.5. Closes: S&P 500
-1.05%, Dow Jones
-0.76%, Nasdaq 100
-0.91%.
OVERNIGHT U.S. STOCK MOVERS
- Microsoft (MSFT -0.83%) was downtgraded to Neutral from Buy due to disappointing Windows 8 adoption, a lack of unit growth in consumer devices, and a decline in expected PC sales.
- RPM (RPM -1.85%) reported Q3 adjusted EPS of 7 cents, which was 1 cent above the consensus of 6 cents.
- Domino's Pizza (DPZ -0.88%) was downgraded to Buy from Conviction Buy at Goldman sachs due to valuation concerns.
- Provident New York Bancorp (PBNY +0.34%) and Sterling Bancorp (STL) plan to merge.
- Federal Realty (FRT +0.42%) acquired a shopping center in Darien, Ct. for $47.3 million.
- Sean P. Downes reported an 8.6% stake in Universal Insurance (UVE +0.40%) .
- Intellipharmaceutics (IPCI -1.13%) reported a loss for Q1 EPS of -7 cents, better than consensus of a -12 cent loss.
- The board of directors of McCormick (MKC -1.40%) authorized a new share repurchase program in which the company is authorized to purchase up to $400 million of its outstanding shares.
- Healthcare Services (HCSG +0.55%) expects the retroactive reinstatement of the Work Opportunity Tax Credit, WOTC, to favorably impact Q1 of 2013 by approximately 2 cents to 3 cents per diluted common share.
- CVS Caremark (CVS -2.01%) has agreed to pay $11 million to settle a civil lawsuit with the Justice Department that alleged the company failed to keep proper records of drug sales in Oklahoma, according to a Wall Street Journal report.
- SAIC (SAI -0.88%) announced it was awarded a prime contract by the Pension Benefit Guaranty Corporation to provide information technology and operations support services.
- Compuware (CPWR -1.88%) lowered its guidance on Q4 non-GAAP EPS to 5 cents-6 cents, well below consensus of 15 cents, and cut its guidance on fiscal year 2013 to 26 cents-28 cents, well below consensus of 36 cents. CEO Bob Paul said "During the quarter, a large number of deals we had anticipated closing in Q4 were pushed into the new fiscal year, significantly impacting our results."
MARKET COMMENTS
June 10-year T-notes this morning are down 1 tick. June 10-year T-note prices on Wednesday closed higher as the 10-year T-note yield fell to a 3-month low of 1.796% on increased safe-haven demand after stocks fell when weaker-than-expected data on Mar ADP employment and the Mar ISM non-manufacturing index spurred concern that U.S. economic growth may be slowing. Closes: TYM3 +13.5, FVM3 +6.75.
The dollar index this morning is sharply higher by +0.57 points (+0.68%) as the yen fell sharply on the BOJ's aggressive QE program. USD/JPY is up sharply by +2.40 yen (+2.58%. EUR/USD is down
-0.0041 (
-0.32%). The dollar index on Wednesday closed lower after weaker-than-expected U.S. economic data on Mar ADP employment and Mar ISM non-manufacturing raised concern the Fed will maintain its dollar negative stimulus measures. EUR/USD strengthened after the IMF reached an agreement with Cyprus for a 1 billion euro contribution to its bailout and after Italian and Spanish government bond yields fell. Closes: Dollar index
-0.206 (
-0.25%), EUR/USD +0.0030 (+0.25%), USD/JPY
-0.39 (
-0.42%).
May WTI crude oil is slightly higher by +0.06 (+0.06%) and May gasoline is down
-0.0190 (
-0.65%). Crude oil and gasoline tumbled on Wednesday after weekly EIA crude inventories rose to their highest since 1990. May crude posted a 1-week low and May gasoline fell to a 2
-1/4 month low after weekly EIA crude inventories rose +2.707 million bbl, more than the expectations of 2.050 million, to 388.6 million bbl, the highest in more than 22 years. Other negatives included the smaller-than-expected increase in the Mar ADP employment and the larger-than-expected drop in the Mar ISM non-manufacturing index, which raised demand concerns. Closes: CLK3
-2.77 (
-2.85%), RBK3
-0.1304 (
-4.29%).
GLOBAL EVENT CALENDAR04/04/2013
| US | 0730 ET | March Challenger job cuts, Feb 7.0% y/y. |
| 0830 ET | Weekly initial unemployment claims expected -4,000 to 353,000, previous +16,000 to 357,000. Weekly continuing claims expected unch at 3.050 mln, previous -27,000 to 3.050 mln. |
| 0830 ET | USDA weekly Export Sales. |
| 0845 ET | Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart speak on current economic conditions and monetary policy discussion at the University of Dayton’s Redefining Investment Strategy Education conference. |
| 1030 ET | Fed Chairman Ben Bernanke speaks on the economy in taped video. |
| 1100 ET | Treasury announces details of April 9-11 3-year, 10-year, and 30-year auctions. |
| 1230 ET | Kansas City Fed President Esther George speaks on the U.S. economy at Redlands Community College. |
| 1700 ET | Fed Vice Chair Janet Yellen speaks to Society of American Business Editors and Writers conference at George Washington University. |
| JPN | n/a | BOJ 2-day meeting concludes. |
| GER | 0355 ET | German final-March services PMI expected unrevised from prelim March 51.6. |
| EUR | 0400 ET | Eurozone final-March services PMI expected unrevised from prelim March 46.5. Final-March composite PMI expected unrevised from prelim 46.5. |
| 0500 ET | Eurozone Feb PMI expected +0.2% m/m and +1.4% y/y, Jan +0.6% m/m and +1.9% y/y. |
| 0745 ET | ECB announces policy meeting outcome. Refinancing rate expected unchanged at 0.75%. |
| UK | 0430 ET | UK March services PMI expected -0.3 to 51.5, Feb 51.8. |
| 0700 ET | BOE announces outcome of policy meeting. Base rate expected unchanged at 0.50% and asset purchase target expected unchanged at 375 bln pounds. |
| CH | n/a | Chinese markets closed for a public holiday. |
U.S. STOCK CALENDAR04/04/2013
| Company Name | Symbol | Time | Event Description | Period | EPS Est (US$) |
|---|
| RPM International Inc | RPM US | Bef-mkt | Q3 2013 Earnings Release | Q3 2013 | 0.061 |
| Ariad Pharmaceuticals Inc | ARIA US | 8:00 | Business Update Call | | |
| RPM International Inc | RPM US | 10:00 | Q3 2013 Earnings Call | Q3 2013 | |
| Facebook Inc | FB US | 13:00 | Media Event-Product Announcement | | |
| Hanesbrands Inc | HBI US | 18:00 | Investor Meeting | Y 2013 | |
| PNC Financial Services Group Inc | PNC US | | Shareholders Meeting | Y 2013 | |
| FirstEnergy Corp | FE US | | Roadshow - Boston | Y 2013 | |
