Mon 2 May 2016

In Portfolioticker today

Today at the stock market NBR

bull/bearU.S. shares rose the most in 2 weeks and the USD weakened to the lowest in almost a year as traders lowered expectations for higher interest rates as manufacturing slowed last month. Emerging-market assets retreated with crude.

The S&P 500 advanced 0.8% at 4 p.m. in New York, for its best gain since 13 Apr 2016. Amazon.com Inc. rose to a 4-month high after earnings last week led to its biggest one-day gain in 9 months. Wells Fargo & Co. and JPMorgan Chase & Co. climbed at least 1.1%. Halliburton Co. rallied 3.3% and Baker Hughes Inc. fell 1.6% after ditching their $28 billion merger. Apple Inc. extended its longest losing streak since 1998.

A rebound that lifted S&P 500 as much as 15% from its Feb 2016 low faltered last week amid lackluster earnings and few signs of a pickup in economic growth. The gauge reached a 4-month high on 20 Apr 2016, within 1.3% of the record set a year ago in May 2015.

Corporate results so far haven’t convinced investors that profits will rebound from what’s shaping up to be a fourth straight quarterly decline. Apple, Microsoft Corp. and Alphabet Inc. all forecast sales in coming periods below analyst estimates, sinking large-cap technology shares even as Facebook Inc. and Amazon.com Inc. have surpassed forecasts. Not all has been bad, as banks used cost cuts to top predictions. Financial shares advanced 0.9% Monday.

U.S. manufacturing expanded at a slower pace than forecast in Apr 2016 as factories continued to grapple with lax global demand and fallout from a weakened energy industry. China released an official manufacturing gauge over the weekend that added to evidence its economy is stabilizing, while manufacturing in the euro zone expanded at a faster pace than initially estimated in Apr 2016.

Markets shut for holidays included those of China, Hong Kong and the U.K.Bloomberg

The shape of market indices today
^ Market indices today (Chart: Yahoo Finance)

Market indices

Index Ticker Today Change 31 Dec 15 YTD
S&P 500 SPX (INX) 2,081.43 +0.78% 2,043.94 +1.83%
DJIA INDU 17,891.16 +0.66% 17,425.03 +2.67%
NASDAQ IXIC 4,817.59 +0.88% 5,007.41 -3.80%

The portfolio today

Index values

:-( Underperformed Currency Today Change 31 Dec 15 YTD
USD-denominated Index USD 1.778 +0.58% 1.939 -8.34%
Valuation Rate USD/AUD 0.77115 +0.68% 0.73374 +5.09%
AUD-denominated Index AUD 2.306 -0.10% 2.643 -12.78%

Stock price movements

The shape of the portfolio today
^ The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stock prices

:-) Facebook achieved a new record high of $118.57 (up 0.84%) today – the third sequential day of record closes. FB is now 5.7 times the $20.75 price at which we bought in on 13 Sep 2012. In AUD terms, at AUD 154.76 Facebook is now 7.74 times our AUD 19.99 buy-in price.

Stock Ticker Today Change 31 Dec 15 YTD
Alphabet A GOOGL $714.41 +0.92% $778.01 -8.18%
Alphabet C GOOG $698.21 +0.75% $758.88 -8.00%
Apple AAPL $93.64 -0.11% $105.26 -11.04%
Amazon AMZN $683.85 +3.68% $675.89 +1.17%
Ebay EBAY $24.26 -0.70% $27.48 -11.72%
Facebook FB $118.57 +0.84% $104.66 +13.29%
Linkedin LNKD $128.85 +2.82% $225.08 -42.76%
PayPal PYPL $39.02 -0.41% $36.20 +7.79%
Twitter TWTR $14.40 -1.50% $23.14 -37.78%
Visa V $78.46 +1.58% $77.55 +1.17%
VMware VMW $57.33 +0.74% $56.57 +1.34%

52-week performance

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)

^ USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)

FX: USD/AUD

The Bloomberg Dollar Spot Index, which tracks the USD against 10 major peers, headed for its lowest close in almost a year. It slumped 2% last week as the BOJ’s inaction coincided with Fed Chair Janet Yellen reiterating she’s in no rush to cool the U.S. economy by raising borrowing costs. The JPY has strengthened 13% this year, the best performance among Group-of-10 currencies. The EUR advanced 0.6% to USD 1.1517, the highest since 25 Aug 2015.Bloomberg

AUD movements against the USD
^ AUD movements against the USD today (Chart: xe.com)

AUD movements against the USD
^ AUD movements against the USD over the past year (Chart: xe.com)

Oil and Gas Futures

Futures prices

Brent oil retreated 1.7%, following a 22% surge in Apr 2016, as near-record Iraqi output added barrels to a worldwide supply glut. Gold climbed for a sixth day, the longest streak since Mar 2015. Brent crude fell to $46.53 a barrel.Bloomberg

Prices are as at 15:28 EDT

  • NYMEX West Texas Intermediate (WTI): $44.86/barrel -2.31% Chart
  • ICE (London) Brent North Sea Crude: $45.89/barrel -3.12% Chart
  • NYMEX Natural gas futures: $2.04/MMBTU -6.29% Chart

flag_australia Australia: Commodity Price Index

Press Release Extract
RBA Index of Commodity Prices (SDR 2014/15 average = 100)

RBA Index of Commodity Prices (SDR 2014/15 average = 100)

Preliminary estimates for April indicate that the index rose by 2.0 per cent (on a monthly average basis) in SDR terms, after increasing by 6.3 per cent in March (revised). Increases in the prices of iron ore and coking coal were partly offset by lower LNG prices. The base metals subindex was little changed, while the rural subindex rose in the month. In Australian dollar terms, the index rose by 0.6 per cent in April.

Over the past year, the index has fallen by 9.4 per cent in SDR terms, led by declines in the prices of base metals. The index has fallen by 7.0 per cent in Australian dollar terms over the past year.

Consistent with previous releases, preliminary estimates for iron ore, coking coal, thermal coal and LNG export prices are being used for the most recent months, based on market information. Using spot prices for the bulk commodities, the index rose by 1.7 per cent in April in SDR terms, to be 5.1 per cent lower over the past year.

Reserve Bank of Australia, “Index of Commodity Prices – April 2016“, 2 May 2016 More

flag_australia Australia: Manufacturing Index. Apr 2015

Press Release Extract

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) eased 4.7 points to 53.4 points in April indicating expansion at a slower rate than in March (results above 50 points indicate expansion).

au_pmi_20160502

This April result comes off a very strong Australian PMI® in March (the highest since April 2004) and continues the current run of expansions to ten months, the longest unbroken period of growth for the Australian PMI® since September 2006.

The depreciation of the Australian dollar in recent years is still a central source of strength, assisting growth in exports and import-competing sales. Although the Australian dollar has appreciated again, key manufacturing sectors continue to expand, albeit at a slower pace.

Of the seven activity sub-indexes in the Australian PMI® all expanded in April except employment. Production (56.8 points), sales (56.8 points) and stocks (56.7 points) expanded strongly. New orders grew at a slower pace, but remained in mild expansion.

Five of the eight manufacturing sub-sectors in the Australian PMI® expanded in April (three month moving averages), the same number as March. The large food & beverages sub-sector, continued to outperform the other sectors, moving up to a record 74.1 points. Wood & paper also expanded strongly in April (65.8 points) as did non-metallic mineral products (57.5 points). The March recovery in the machinery & equipment sub-sector was short-lived with this key sub-sector moving back into contraction in April (47.8 points).

Comments from manufacturers in April reveal mixed conditions, with demand subdued in some sectors. Tight margins and increasing competition are recurring themes. The recent rebound in the Australian dollar as well as the extended Easter holiday period appear to have taken some steam out of 2016’s recovery to date. Pessimism about the economy, the upcoming Federal election and a lack of large infrastructure projects is also hindering local demand. More positively the partial recovery in some commodity prices (such as iron ore) is reviving interest in some sectors.

Australian Industry Group, “Performance of Manufacturing Index. Apr 2015“, 2 May 2016 More

flag_usa Eurozone: Markit Manufacturing PMI. Apr 2016

Press Release Extract

Key points:

  • Final Eurozone Manufacturing PMI at 51.7 in April (Flash: 51.5, March Final: 51.6)
  • France and Germany remain in lower reaches of PMI rankings
  • Deflationary pressures ease further

eu_pmi_20160502

Conditions in the eurozone manufacturing sector remained lacklustre at the start of the second quarter, as rates of expansion eased for both production and incoming new orders. Brighter news was provided on the employment and price fronts, as jobs growth gained momentum and deflationary pressures moderated.

The final Markit Eurozone Manufacturing PMI® ticked higher for a second successive month, posting three-month high of 51.7. This was above March’s 51.6, the earlier flash estimate of 51.5 and the long-run survey average of 51.4. The reading was nonetheless among the weakest registered over the past year.

Of the six nations for which April data were available (Ireland is published on 3rd May and Greece on 4th May), five registered expansions according to their respective headline PMI readings.

Italy and Spain saw the fastest growth, with rates of increase accelerating slightly in both cases. The Netherlands and Austria posted modest expansions, albeit weaker than in the prior month.

The German PMI meanwhile rose to a three-month high, but remained in the lower half of the PMI growth rankings.

France remained in contraction territory during April as the PMI slipped to a 12-month low. France saw new orders and output fall at the steepest rates since February 2015 and April 2015 respectively. Weak domestic demand combined with the worst decline in new export orders for over three years.

Although growth of both eurozone manufacturing production and new orders were slower than in March, the trend in new export business* improved slightly. Germany, Italy and Spain all saw stronger gains in new export business. A solid increase was also registered in the Netherlands.

Current inflows of new work were still sufficient to test manufacturers’ capacity, leading to a modest accumulation of backlogs. This encouraged companies to increase employment for the twentieth successive month.

Jobs growth accelerated to its highest rate since January, underpinned by increased employment in almost all of the nations covered by the survey. The sole exception was France, which saw staffing levels decrease for the second month in a row.

April saw further reductions in both output prices and input costs at eurozone manufacturers. However, in a further sign of deflationary pressures easing, rates of decline in both eased over the month.

Input costs fell at the slowest pace in four months, with rates of decrease moderating in all of the nations covered. Lower factory gate prices were meanwhile registered across the board, although by far the steepest reduction was posted in France.

Markit Economics, “Markit Eurozone Manufacturing PMI® – final data – Growth remains lacklustre as French downturn deepens. Apr 2016“, 2 May 2016 More

flag_usa USA: Markit US Manufacturing PMI. Apr 2016

Press Release Extract

Key points:

  • Manufacturing PMI points to weakest performance since September 2009
  • Production volumes and payroll numbers rise only fractionally
  • New business levels expand at slowest pace so far in 2016

us_pmi_20160502

April data indicated that U.S. manufacturers started the second quarter of 2016 with a renewed slowdown in production and new business growth. At the same time, employment levels were close to stagnation and input buying dropped at the fastest pace for two-and- a-half years, amid reports of slower than expected demand during the latest survey period.

Adjusted for seasonal influences, the final Markit U.S. Manufacturing Purchasing Managers’ Index (PMI) registered 50.8 in April, down from 51.5 in March and only slightly above the 50.0 no-change threshold. The latest reading was weaker than the average seen in Q1 2016 (51.7) and signalled the slowest improvement in overall business conditions for just over six-and-a-half years.

Output volumes were close to stagnation in April, with the latest survey pointing to the weakest rise since the current period of expansion began in October 2009. Anecdotal evidence suggested that subdued client demand, uncertainty about the economic outlook and lower energy sector capital spending had all acted as a drag on manufacturing production in April.

Manufacturers recorded another modest increase in overall new work at the start of the second quarter, but the rate of expansion was the weakest since December 2015. Reduced export demand had a negative influence on manufacturing order books in April, with new work from abroad decreasing at the fastest pace for nearly one-and-a-half years.

A lack of pressure on operating capacity persisted across the manufacturing sector during April, as highlighted by a decline in backlogs of work for the third month running. Moreover, the latest fall in unfinished business was the sharpest since September 2009. This contributed to a near-stalling of payroll numbers in April, with the rate of job creation the weakest for just under three years.

Softer new business growth resulted in lower input buying and cautious inventory policies among manufacturing firms in April. Stocks of purchases decreased for the fifth consecutive month and at the strongest pace since the start of 2014. Post- production inventories also dropped again in April, although the rate of decline was only marginal.

April data pointed to renewed input cost pressures at manufacturing companies, which ended a seven- month period of sustained decline. A marginal rise in input prices was linked to higher raw material costs. Nonetheless, factory gate charges decreased further, reflecting squeezed pricing power and efforts to boost client spending.

Commenting on the final PMI data, Chris Williamson, chief economist at Markit said:

The April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity. The survey indicates that factory output is dropping at an annualized rate of approximately 3%, and factory headcounts are being culled at a rate of around 10,000 per month. Destocking is also very much in evidence as companies often reported weaker than expected demand and exports are slumping at the fastest rate for one and a half years. Rather than reviving after a disappointingly weak first quarter, the data flow therefore appears to be worsening in the second quarter, raising question marks over whether GDP growth will improve on the near-stalling seen in the first three months of the year.

Markit Economics, “US Manufacturing PMI. Apr 2016“, 2 May 2016 (09:45) More

flag_usa USA: ISM Manufacturing PMI. Apr 2016

Press Release Extract

“The April PMI® registered 50.8 percent, a decrease of 1 percentage point from the March reading of 51.8 percent.
The New Orders Index registered 55.8 percent, a decrease of 2.5 percentage points from the March reading of 58.3 percent.
The Production Index registered 54.2 percent, 1.1 percentage points lower than the March reading of 55.3 percent.
The Employment Index registered 49.2 percent, 1.1 percentage points above the March reading of 48.1 percent.
Inventories of raw materials registered 45.5 percent, a decrease of 1.5 percentage points from the March reading of 47 percent.
The Prices Index registered 59 percent, an increase of 7.5 percentage points from the March reading of 51.5 percent, indicating higher raw materials prices for the second consecutive month.
Manufacturing registered growth in April for the second consecutive month, as 15 of our 18 industries reported an increase in new orders in April (up from 13 in March), and 15 of our 18 industries reported an increase in production in April (up from 12 in March).

Institute for Supply Management, “April 2016 Manufacturing ISM® Report On Business®“, 2 May 2016 More

flag_japan Japan update

Nikkei Japan Manufacturing PMI. Apr 2016

Press Release Extract

Key points:

  • Production and new orders both decline at sharp paces
  • New export orders contract at fastest rate in 39 months
  • Input prices fall at quickest pace in over three- and-a-half years

jp_pmi_20160502

Latest survey data pointed to a sharp deterioration in manufacturing conditions. Production decreased at the quickest rate since April 2014, led by the fastest decline in new orders in over three years. As a result, firms cut back on their input buying at the most marked rate in two years. Employment, on the other hand, remained in growth territory for the seventh consecutive month.

Meanwhile, input prices declined at the quickest rate since August 2012, enabling companies to lower their charges further.

The headline Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of sector operating conditions.

The headline PMI posted 48.2 in April, down from 49.1 in March, thereby highlighting a sharper deterioration in operating conditions at Japanese manufacturers. Moreover, the latest reading was the lowest since January 2013.

Contributing to the overall decline in operating conditions was a fall in output. In fact, the rate of decrease was the fastest in two years. The recent earthquakes in one of Japan’s key manufacturing regions was cited by panellists as having a detrimental effect on production.

A contraction in output was matched by a marked decrease in new orders. Moreover, the rate of decline was the quickest since December 2012. Panellists attributed the fall in total new work intakes to a weaker Asian economy leading to a slump in foreign demand.

Subsequently, new export orders decreased at the sharpest rate since January 2013. Firms mentioned a reduction in trade volumes with Taiwan and China in particular. At the sector level, all three market groups registered marked falls in foreign demand, with investment goods producers noting the fastest decline.

As a result, manufacturers cut back on buying activity and made deliberate efforts to clear inventories of pre-production items. Meanwhile, employment increased for the seventh month running, with the rate of expansion the best recorded since January.

Reports of reduced raw material costs, particularly oil- and metal-related items led to further fall in input costs. In fact, the rate of decline was the sharpest in over three-and-a-half years. Consequently, manufacturers were able to reduce their charges for the fifth successive month.

Markit Economics, “Nikkei Japan Manufacturing PMI. Apr 2016“, 2 May 2016 More

Currency: USD/JPY

JPY movements
^ JPY movements against the USD over the past month (mouseover for inverse) (Charts: xe.com)

Stockmarket: Nikkei 225

n225 movements
^ Nikkei N225 movements over the past week (Chart: Yahoo Finance)

n225_20160502_perspective

flag_china China update

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) (Charts: xe.com)

Stockmarket: CSI300

China’s stock market was closed today for the Labour Day holiday.