In Portfolioticker today
- Energy: Oil and Gas Futures
- EU: Government Deficit
- EU: Government Debt
- EU: Flash Eurozone Composite PMI. Oct 2017
- US: Flash US Composite PMI. Oct 2017
- Japan Update
- China Update
Today at the stock market
“The Dow rallied on Tuesday, registering its biggest daily percentage gain in more than a month, as stronger-than-expected results and forecasts from companies including 3M and Caterpillar fueled optimism about economic strength.
3M rose 5.9% and Caterpillar rose 5%, giving the Dow its biggest boost, after the companies reported quarterly results and gave upbeat outlooks.
“It has been encouraging to see some of these industrial names report solid numbers and raise their guidance,” said Lindsey Bell, investment strategist at CFRA Research in New York. “Looking at some the earnings we got yesterday and the ones today, you’re seeing strength domestically here in the U.S.”
Stocks trimmed gains late in the day after Bloomberg reported Stanford University economist John Taylor may have won in a show of hands by Senate Republicans when asked by President Donald Trump about their support of potential nominees for Federal Reserve chair.
Markets reacted to that headline, said Michael O‘Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, but he said the poll “obviously doesn’t mean anything.”
Also dampening the market’s mood late in the session, Republican Sen. Jeff Flake criticized Trump’s style of governing and announced he would not run for re-election next year, highlighting tensions between the president and fellow Republicans.
Upbeat results also came from General Motors, which rose 3%. The top U.S. automaker reported stronger-than-expected earnings, reaffirmed its full-year earnings forecast and promised to slash stocks of unsold vehicles.
McDonald’s also rose following results. The stock was last up 0.3%.
Strong earnings and optimism about Trump’s tax plans have boosted stocks in recent sessions.
Offsetting some of the day’s gains, Biogen slipped 3.9% after disappointing U.S. sales of a potential blockbuster drug, Spinraza.
Whirlpool tumbled 10.5% after the home appliances maker reported profit and sales below estimates and lowered full-year earnings guidance.” Bloomberg
^ Market indices today (mouseover for 12 month view) Chart: Google Finance
The Dow Jones Industrial Average index closed on a record high of 23,441.76.
|Index||Ticker||Today||Change||31 Dec 16||YTD|
|S&P 500||SPX (INX)||2,569.13||+0.16%||2,238.83||+14.75%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 16||YTD|
Portfolio stock prices
VMware closed on a record high of $119.63, up 0.44% on yesterday’s record of $119.11.
|Stock||Ticker||Today||Change||31 Dec 16||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index climbed 0.3 percent to the highest in almost 15 weeks.
The euro increased 0.1 percent to $1.1761.
The British pound declined 0.5 percent to $1.3125.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
“West Texas Intermediate crude advanced 1 percent to $52.44 a barrel, the highest in four weeks.” Bloomberg
Prices are as at 15:49 ET
- NYMEX West Texas Intermediate (WTI): $52.46/barrel +1.08% Chart
- ICE (London) Brent North Sea Crude: $58.32/barrel +1.66% Chart
- NYMEX Natural gas futures: $2.99/MMBTU -0.10% Chart
EU: Eurozone PMI (Flash). Oct 2017
Press Release Extract [ser_eu_pmi]
- Flash Eurozone PMI Composite Output Index at 55.9 (56.7 in September). 2-month low.
- Flash Eurozone Services PMI Activity Index at 54.9 (55.8 in September). 2-month low.
- Flash Eurozone Manufacturing PMI Output Index at 58.7 (59.2 in September). 2-month low.
- Flash Eurozone Manufacturing PMI at 58.6 (58.1 in September). 80-month high.
The recent strong growth of the euro area economy was maintained at the start of the final quarter of the year, driven by another marked improvement in new orders. Rising workloads encouraged firms to take on extra staff at the sharpest pace in over a decade.
The headline IHS Markit Eurozone PMI posted 55.9 in October, according to the preliminary ‘flash’ estimate (based on approximately 85% of final replies), down from 56.7 in September.
While output growth eased slightly, it remained sharp and broadly consistent with the trend seen over 2017 so far. Firms were buoyed by further strong new order inflows. In fact, new business increased at the same pace as seen in September.
Output growth in the manufacturing sector continued to outpace that of services, with both seeing slightly weaker rises than in the previous month. Manufacturers also recorded a faster rise in new orders than their service sector counterparts, with the rate of expansion at a four-month high.
The strong performance of manufacturing partly reflected higher new export orders, with export growth picking up from that seen in September.
A key highlight from the latest survey was a sharp and accelerated rise in employment across the private sector. Moreover, the rate of job creation was the strongest in over a decade. Service providers took on extra staff to the greatest extent in seven months, while manufacturing jobs growth was the strongest since data collection began in June 1997.
Job creation reflected further evidence of pressure on capacity, with backlogs of work increasing solidly again during October. Meanwhile, the manufacturing sector saw suppliers’ delivery times lengthen to the greatest extent in 80 months amid pressure on supply chains.
In line with the trend in output, business confidence eased in October following September’s four-month high. Reduced optimism was recorded across both the manufacturing and service sectors, although in each case companies remained strongly confident regarding the 12-month outlook for business activity.
Inflationary pressures continued to build at the start of the fourth quarter. Companies posted the fastest rise in input costs in six months, with both the manufacturing and service sectors seeing sharper rates of inflation in October.
Further improvements in demand meant that firms were often able to pass rising cost burdens on to their clients. As a result, output price inflation accelerated for the third month running and was the sharpest since June 2011. As was the case with input prices, charges increased at sharper rates across both monitored sectors.
The big-two eurozone economies of France and Germany drove growth during October, comfortably outperforming the rest of the single-currency area. France posted the sharpest rise in output since May 2011, while growth in Germany remained strong despite easing slightly.
Outside of the big-two, the rate of expansion in business activity was solid, but eased to the weakest for a year. Data showed that the slowdown was linked to weaker service sector growth as manufacturing output increased at the sharpest pace in four months.
Commenting on the flash PMI data, Andrew Harker, Associate Director at IHS Markit said:
‘The eurozone economy has had a good year so far, and the initial signs are that this has continued at the start of the final quarter of 2017. The PMI signalled a further strong increase in output across the private sector in October.
‘After signalling a 0.7% increase in GDP in Q3, the pace of expansion looks to be staying around this mark as the year draws to a close.
‘Job creation was a key feature of the latest survey as firms took on staff at the quickest pace in over a decade, responding to greater workloads and pressure on capacity. The manufacturing sector once again led the way, posting another record rise in employment.
‘Firms don’t appear to have been unduly affected by recent euro strength, with growth of new export orders accelerating in October. Healthy demand in export markets appears to be outweighing any negative currency impacts.
‘Capacity pressures acted to push up inflation, with both input costs and output prices rising at faster rates. In fact, the increase in output charges was the sharpest since June 2011.
‘Later this week, the ECB looks set to announce a scaling back of bond purchases for 2018, a move that would appear to be justified based on this latest set of PMI data.’”
IHS Markit, “Flash Eurozone PMI: Eurozone adds jobs at strongest pace in over a decade“, 9 Oct 2017 More
US: Composite PMI (Flash). Oct 2017
Press Release Extract [ser_us_pmi]
- Flash U.S. Composite Output Index at 55.7 (54.8 in September). 9-month high.
- Flash U.S. Services Business Activity Index at 55.9 (55.3 in September). 2-month high.
- Flash U.S. Manufacturing PMI at 54.5 (53.1 in September). 9-month high.
- Flash U.S. Manufacturing Output Index at 54.5 (52.4 in September). 8-month high.
October data indicated a robust and accelerated expansion of U.S. private sector business activity. The upturn was supported by the fastest rise in manufacturing production for eight months, alongside another robust increase in service sector output.
The seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index rose to 55.7 in October, from 54.8 in September. As a result, the latest reading signalled the fastest upturn in private sector output since January.
However, growth of overall new business volumes moderated further from the two-year peak seen in August. This reflected a slowdown in the service sector, as manufacturing firms reported the strongest rise in new work since March.
The latest survey revealed a solid increase in private sector employment, supported by the steepest rise in payroll numbers at manufacturing companies since June 2015.
Meanwhile, input price inflation moderated from September’s three-year peak. This contributed to a slowdown in prices charged inflation to its weakest for six months. That said, manufacturers continued to report relatively strong cost inflation, driven by rising commodity prices (particularly metals).
October data also pointed to the greatest pressure on manufacturing supply chains since early- 2014. Survey respondents widely cited disruption and stretched workloads among suppliers following hurricanes Harvey and Irma.
The composite index is based on original survey data from the IHS Markit U.S. Services PMI and the IHS Markit U.S. Manufacturing PMI.
IHS Markit U.S. Services PMI™
Service sector business activity continued to rise at a robust pace in October. At 55.9, up slightly from 55.3 in September, the seasonally adjusted IHS Markit Flash U.S. Services PMI™ Business Activity Index was well above the 50.0 no-change threshold. Moreover, the latest reading signalled the second-fastest rate of expansion since November 2015. Survey respondents attributed rising business activity to improving domestic economic conditions and increased client spending.
The rate of job creation at service providers eased slightly in October. Some companies cited softer new business growth, alongside subdued pressure on operating capacity.
Service sector firms remain upbeat about their growth prospects for the year ahead, and the degree of optimism improved from September’s seven-month low.
Input cost inflation moderated to its least marked since March. This contributed to softer prices charged inflation across the service economy, with the latest increase in average charges the slowest for six months.
IHS Markit U.S. Manufacturing PMI™
The latest survey pointed to improved operating conditions across the manufacturing sector. This was highlighted by a rise in the seasonally adjusted IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) to 54.5 in October, from 53.1 in September, to signal the strongest upturn in manufacturing growth since January.
Faster rates of manufacturing production and new order growth were recorded in October. This helped to boost employment numbers, with the rate of job creation the sharpest since June 2015. There were also positive developments in terms of export sales. Manufacturers recorded the most marked increase in new work from abroad for 14 months.
Stronger demand for inputs and continued hurricane-related disruption led to intense pressure on supply chains in October. The latest lengthening of average lead-times among vendors was the greatest since that recorded after heavy snowfall in February 2014.
October data pointed to another sharp rise in input costs, although the rate of inflation eased from September’s near five-year peak. Meanwhile, factory gate charges increased at only a modest pace.
Commenting on the flash PMI data, Tim Moore, Associate Director at IHS Markit said:
‘The US economy seems to have made a strong start to the final quarter of 2017. Resilient service sector growth and an encouraging rebound in manufacturing production combined to generate one of the sharpest rises in private sector output for two- and-a-half years during October.
‘There were also positive developments in terms of staff hiring and business optimism during October, suggesting that private sector firms are gearing up for sustained growth in coming months.
‘Service providers noted that supportive underlying economic conditions had helped to drive up business and consumer spending. Manufacturers cited an element of catch-up to production schedules and orders, following hurricane-related disruption in the third quarter. Goods producers also experienced the strongest rise in export orders since August 2016, suggesting a boost from improving external demand.
‘The main near-term concern for manufacturers is that national supply chain pressures remain the most widespread since those recorded after heavy snowfall in early-2014. In particular, survey respondents pointed to depleted inventories among suppliers, ongoing transport delays and sharply rising raw material prices during October.’”
IHS Markit, “Flash U.S. PMI™: U.S. private sector growth accelerates to nine-month high in October, partly driven by a rebound in manufacturing“, 9 Oct 2017 More
Nikkei Flash Japan Manufacturing PMI. Oct 2017
- Flash Japan Manufacturing PMI® signals solid growth, but edges lower to 52.5 in October (52.9 in September)
- Flash Manufacturing Output Index at 52.6 (53.2 in September)
- Business confidence softens to 11-month low
Commenting on the Japanese Manufacturing PMI survey data, Joe Hayes, Economist at IHS Markit, which compiles the survey, said:
“Although still improving solidly, the Japanese manufacturing sector appeared to lose some momentum in October, as growth eased from September’s four- month high. Softer expansions were seen for both output and new orders. Meanwhile, firms continued to largely absorb cost pressures, with output price inflation only marginal again in October. Signs of slowing growth coincided with faltering optimism, as the level of positive sentiment fell to an 11- month low.”
IHS Markit, “Nikkei Flash Japan Manufacturing PMI®: Japanese manufacturing sector growth remains solid. Oct 2017“. 24 Oct 2017 More
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei N225 movements over the past week Chart: Google Finance
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
^ Shanghai CSI300 movements over the past week Chart: Google Finance