In Portfolioticker today
- Today at the stock market
- The portfolio today
- Energy: Oil and Gas Futures
- EU: Economic Sentiment Indicator. Mar 2018
- EU: Business Climate Indicator. Mar 2018
- US: CB Consumer Confidence Index. Mar 2018
- Japan Update
- China Update
Today at the stock market
“Wall Street closed sharply lower Tuesday, with each of the major U.S. indexes suffering their fourth decline in five sessions, fuelled by a selloff in the tech sector. Of the 11 major sectors of the S&P 500 only defensive plays such as consumer staples, telecom, real estate and utilities ended the session in positive territory.
Since hitting a record two months ago, on 26 Jan 2018, equities have been battered by worries about rising inflation, the pace of interest rate hikes by the U.S. Federal Reserve and the possibility of a global trade war. The S&P 500 is down 9.1% from its high.
White House trade adviser Peter Navarro confirmed on Monday top Trump administration officials have asked China to cut tariffs on imported cars, allow foreign majority ownership of financial services firms and buy more U.S.-made semiconductors in negotiations to avoid imposing tariffs on a host of Chinese goods.
A person familiar with the discussions said these were among the asks from Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer as they pursue talks with Beijing.
Markets roared back on Monday with their best day since Aug 2015 on hopes that the world’s two largest economies were willing to renegotiate tariffs and trade imbalances. But those gains proved temporary as early advances were overcome by the tech sector weakness.
“What it really amounts to is a complete lack of knowing what to expect … It seems so open-ended, there is a lot of risk here and investors don’t like uncertainty and this is the definition of uncertainty,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.
Facebook shares dropped 4.9% at $152.22 and is down nearly 15% for the month. The Nasdaq Internet index saw its worst daily percentage drop since Jun 2016.
The drop in Facebook continues to put pressure on the tech sector, which is down 5.2% for Mar 2018 and on track for its worst month since Apr 2016. Privacy concerns for the social media giant were highlighted further on Tuesday when a whistleblower said Canadian company AggregateIQ had developed software to target Republican voters in the 2016 U.S. election. More
Alphabet shares fell 4.5% after an appeals courts resurrected a multibillion dollar copyright case brought by Oracle Corp against the company. More: Bloomberg
Nvidia was another weak spot, falling 7.8% after the chipmaker temporarily suspended self-driving tests across the globe.
Tesla shares were off 8.2% after the U.S. National Transportation Safety Board opened a field investigation of last week’s fatal Tesla crash and vehicle fire. More
Twitter fell 12% after short-seller Citron Research called the stock “most vulnerable” to privacy regulations.” Reuters
“A selloff in technology shares sent U.S. equity benchmarks lower, with losses accelerating late in the day. Trade angst weighed on leading tech companies with the Nasdaq 100 Index erasing most of Monday’s gain after a report the Trump administration is considering a crackdown on Chinese investments in technologies the U.S. considers sensitive.
The equity selling bled into the Treasury market, sending the 10-year yield below 2.8% as investors sought havens. One bright spot was General Electric Co., which rose the most in 2 months on speculation that Warren Buffett will buy a stake in the troubled conglomerate.
Investors have been whipsawed over the past few trading sessions as equities tumbled last week, only to rebound sharply Monday and then resume their selloff Tuesday. Traders are trying to suss out whether the U.S. will reach negotiated truces to ward off an all-out trade war after fears grew that there could be a surge in protectionism in the midst of rising borrowing costs and concerns that inflation could be poised to accelerate.
“The bottom line is the trade issue and uncertainty related to that is not going to fade in one day because all of a sudden we started thinking that we would reach some sort of a settlement with China,” Krishna Memani, chief investment officer at OppenheimerFunds Inc., said by phone. “This is going to be somewhat of a long process for things to settle down.”
Elsewhere, European stocks posted their biggest gain in 6 weeks. The USD (DXY) rose as the GBP and EUR fell. China’s CNY (RMB) touched the highest level in almost 3 years. And copper broke out of a 3-day trading slump, edging higher.
In Asia, shares were green across the board, with Japan’s Topix Index jumping the most since Nov 2016. South Korea’s KRW was the best performer among major currencies as Kim Jong Un was said to be making an unannounced visit to Beijing, his first known trip outside North Korea since taking power in 2011.” Bloomberg
^ S&P500 Index today (mouseover for 12 month view) [Chart: Google Finance]
|Index||Ticker||Today||Change||31 Dec 17||YTD|
|S&P 500||SPX (INX)||2,612.62||-1.73%||2,673.61||-2.29%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 17||YTD|
Portfolio stock prices
|Stock||Ticker||Today||Change||31 Dec 17||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index (DXY) rose 0.3%.
The EUR fell 0.4% to USD 1.2399.
Britain’s GBP fell 0.5% to USD 1.4153.
South Korea’s KRW rose 1% to 1,070.43 per USD, the strongest in a week on the largest climb in 3 weeks.
The yield on 10-year Treasuries fell 8 basis points to 2.77%.
Britain’s 10-year yield fell 2 basis points to 1.42%.
Germany’s 10-year yield fell 2 basis points to 0.5%.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
“Oil hit $71/barrel before retreating on Tuesday, supported by concern about possible disruption to Middle East supply but capped by fast rising global output and a dollar recovery.
The USD recovered from earlier lows, erasing some gains in oil, which had neared its highest since late Jan 2018.
The oil price has risen more than 7% so far in Mar 2018 and by 5.3% in the first 3 months of 2018, putting it on track for a third consecutive quarterly gain, a move last seen in late 2010.
Supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies have helped push Brent above $70 this year for the second time since late 2014, but analysts said this strength may not persist long.
“For oil, we expect the supply deficit of the past couple of quarters to give way to a surplus, driven largely by strong growth in U.S. tight oil supply,” Barclays Research analysts said in a note, a reference to U.S. shale production. “Supply risks in Venezuela and Iran may perk up the patient, but we do not expect them to change the market balance significantly,” they wrote.
OPEC, Russia and others began their supply curbs in January 2017. The deal is due to expire at the end of 2018.
Saudi Crown Prince Mohammed bin Salman told Reuters that OPEC and Russia were working on a long-term deal to cooperate on oil supply curbs that could extend controls over supplies by major exporters for years to come. More
Geopolitical factors have also offered support. The United States has threatened to withdraw from a nuclear deal that Iran signed with Washington and other world powers in 2015, setting a deadline of May and raising the possibility of sanctions on Tehran that could hinder oil exports.
But supplies from non-OPEC nations, especially the United States, are growing, which could prevent the market tipping into deficit, analysts said.
“The recent rally in oil prices might have taken some by surprise as the underlying fundamental picture does not justify Brent being close to $70 a barrel. This view is based on the simple fact that non-OPEC oil supply growth will trump the increase in global oil demand this year,” PVM Oil Associates analyst Tamas Varga said.
U.S. output has grown by nearly 25% in under 2 years to above 10 million barrels per day.” Reuters
Prices are as at 15:47 EDT
- NYMEX West Texas Intermediate (WTI): $64.69/barrel -1.31% Chart
- ICE (London) Brent North Sea Crude: $69.55/barrel -0.81% Chart
- NYMEX Natural gas futures: $2.69/MMBTU +2.79% (14:29) Chart
EU: Economic Sentiment Indicator. Mar 2018
Press Release Extract [eu_esi]
March 2018: Economic Sentiment decreases in both the euro area and the EU
In March, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 1.6 points to 112.6) and the EU (by 1.9 points to 112.5). While this is the third consecutive drop, the indicators remain at elevated levels.
Euro area developments
The deterioration of euro-area sentiment resulted from drops in industry, services and retail trade. Confidence among consumers remained unchanged, while it increased among construction managers. The ESI weakened in all the five largest euro-area economies; significantly so in Germany (-2.4), Italy (-1.8) and Spain (-1.2) and, less so, in the Netherlands (-0.5) and France (-0.4).
The marked decrease in industry confidence (-1.6) resulted from managers’ more pessimistic views on all three components, i.e. production expectations, the current level of overall order books, and the stocks of finished products. Managers’ assessments of the past production and export order books – which are not included in the confidence indicator – deteriorated, too. Also the marked decline in services confidence (-1.3) was driven by managers’ more pessimistic views on all three components: the past business situation, demand expectations and, in particular, past demand. Unchanged consumer confidence (±0.0) reflected broadly stable views on households’ future financial situation, while their improved unemployment expectations were offset by more negative assessments of the future general economic situation and consumers’ savings expectations. The strong fall in retail trade confidence (-2.9) resulted from more negative views on both the past and expected business situation and, to a lesser extent, on the adequacy of the volume of stocks. Increasing construction confidence (+0.9) was driven by upward revisions of both managers’ employment expectations and their assessment of the level of order books. Finally, the fall (-5.4) in financial services confidence (not included in the ESI) resulted from a sharp deterioration in managers’ assessments of the past business situation and past demand, while their views on future demand improved.
Employment plans saw an upward revision in services and construction, while they worsened markedly in retail trade and, to a lesser extent, in industry. Selling price expectations increased slightly in retail trade and more importantly in construction, while they decreased in industry and services. Also consumer price expectations dropped in March.
The marginally stronger decrease of the headline indicator for the EU (-1.9) was mainly due to the marked deterioration of sentiment in the largest non-euro area EU economies, the UK (-4.2), and Poland (-2.0). In line with the euro area, confidence deteriorated strongly in industry, services, and retail trade, while it increased slightly in the construction sector and remained unchanged among consumers. The fall in EU confidence in the financial services sector was slightly less pronounced than in the euro area.
By contrast to the euro area, EU managers’ employment expectations improved in retail trade, while they remained broadly stable in services. Price expectations differed from the euro area mainly in retail trade, where they decreased markedly.”
European Commission DG ECFIN, “Economic Sentiment Indicator. Mar 2018“, 27 Mar 2018 More
“Economic sentiment in the 19-countries sharing the euro slipped for the third month in a row in Mar 2018, data from the European Commission showed on Tuesday, suggesting economic growth in the bloc was not as steady as previously thought.
The Commission’s Economic Sentiment Indicator fell to 112.6 in Mar 2018 from a revised 114.2 in Feb 2018, below the average forecast of 113.4 in a Reuters poll of 34 economists.
The downbeat reading of economic sentiment paired with falling inflation expectations for consumers and manufacturers alike, as well as earlier data suggesting loan growth and money supply in euro zone had also slowed, kicked the euro off a 5-week high.
Frictions between the West and Russia and trade restrictions imposed by U.S. President Donald Trump have spooked markets in recent weeks and appear to have also left their mark on managers and consumers in the real world, analysts said.
The European Central Bank (ECB) recently said that euro zone growth may even outperform expectations in the near term, but the sentiment data is a further indication of a weakening trend, after business morale in Germany, the bloc’s largest economy, fell to an 11-month low last week.
“While the economy continues to perform strongly, some clouds have re-emerged on the horizon,” analysts at ING wrote in a note to clients.
The Commission expects the euro zone economy to increase by 2.3% in 2018 after 2.4% growth in 2017.
The euro zone economy is still propped up by the ECB buying some EUR 2.5 trillion (USD 3.11 trillion) worth of debt over the past 3 years, which has helped growth but has done little to boost inflation, which remains well under the ECB’s target of close to but below 2%.
Declining economic sentiment in the euro zone fall was caused by declining optimism among managers in the manufacturing, services and retail sectors, while the construction sector showed a small improvement in sentiment.
In the retail sector, where the fall was sharpest, respondents gave a more negative assessment of the present business situation and their outlook for orders and employment.
Consumer sentiment was unchanged in Mar 2018, compared to Feb 2018, the Commission said, confirming an earlier flash estimate.
The Commission’s Business Climate Indicator, which points to the phase of the business cycle, also fell by more than forecast in Mar 2018 to 1.34 from 1.48 in Feb 2018.” Reuters
EU: Business Climate Indicator. Mar 2018
Press Release Extract [eu_bci]
Business Climate Indicator decreases in March
In March, the Business Climate Indicator (BCI) for the euro area decreased (-0.14 points to +1.34). Managers’ appraisals of past production, stocks of finished products, overall order books, and their production expectations worsened markedly. Meanwhile, managers’ assessment of export order books deteriorated only slightly.“
European Commission DG ECFIN, “Business Climate Indicator. Mar 2018“, 27 Mar 2018 More
US: CB Consumer Confidence Index. Mar 2018
Press Release Extract [us_cci]
The Conference Board Consumer Confidence Index® decreased in March, following an increase in February:
- The Consumer Confidence Index decreased from 130.0 in Feb 2018 to 127.7 in Mar 2018.
- The Present Situation Index decreased from 161.2 in Feb 2018 to 159.9 in Mar 2018.
- The Expectations Index declined from 109.2 in Feb 2018 to 106.2 in Mar 2018.
“Consumer confidence declined moderately in March after reaching an 18-year high in February,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions declined slightly, with business conditions the primary reason for the moderation. Consumers’ short-term expectations also declined, including their outlook for the stock market, but overall expectations remain quite favorable. Despite the modest retreat in confidence, index levels remain historically high and suggest further strong growth in the months ahead.”
Consumers’ assessment of current conditions eased in March. The percentage saying business conditions are “good” increased from 36.5 percent to 37.9 percent, however those claiming business conditions are “bad” also increased, from 11.3 percent to 13.4 percent. Consumers’ assessment of the labor market was marginally more favorable. Those claiming jobs are “plentiful” increased from 39.1 percent to 39.9 percent, while those claiming jobs are “hard to get” decreased from 15.1 percent to 14.9 percent.
Consumers were moderately less optimistic about the short-term outlook in March. The percentage of consumers anticipating business conditions will improve over the next six months decreased from 25.0 percent to 23.0 percent, while those expecting business conditions will worsen increased from 9.4 percent to 9.8 percent.
Consumers’ outlook for the job market was also less positive. The proportion expecting more jobs in the months ahead decreased from 22.4 percent to 19.1 percent, while those anticipating fewer jobs increased from 12.4 percent to 12.6 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement decreased from 23.5 percent to 22.0 percent, however, the proportion expecting a decrease also declined, from 8.6 percent to 7.2 percent.”
The Conference Board, “ Consumer Confidence Index. Mar 2018“, 27 Mar 2018 (10:00) More
“The Conference Board said on Tuesday its consumer confidence index dropped 2.3 points to a reading of 127.7 in Mar 2018 from a slightly downwardly revised 130.0 in Feb 2018, which was the highest level since Nov 2000. The index was previously reported at 130.8 in Feb 2018.
“The stock market has been volatile and consumers don’t like market volatility. The pullback in confidence is not a concern for the economic outlook this year,” said Chris Rupkey, chief economist at MUFG in New York. “Still, we wonder if the decline in confidence means that the economy may have seen its best days already for this cycle.”
U.S. stocks have been under pressure over the past two months as worries about inflation led some investors to speculate that the Federal Reserve could raise interest rates more aggressively than currently anticipated.
Wall Street has also been roiled by the threat of a global trade war after the Trump administration imposed tariffs on steel and aluminum imports. President Donald Trump last week signed a memorandum targeting up to $60 billion in Chinese goods with tariffs over what his administration says is misappropriation of U.S. intellectual property.
The Bloomberg Dollar Spot Index (DXY) rose. Prices of U.S. Treasuries climbed as fund managers bought bonds to rebalance their portfolios for the end of the quarter in advance of more government debt supply.
The Conference Board survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, increased to 25.0 in Mar 2018, the strongest reading since May 2001, from 24.0 in Feb 2018.
That measure, which closely correlates to the unemployment rate in the Labor Department’s employment report, suggests that labor market slack continues to shrink. “This report combined with the March jobless claims data points to another 200,000-plus reading on payrolls in March, which we judge would push the unemployment rate down to 4.0% from 4.1 %,” said John Ryding, chief economist at RDQ Economics in New York.
The economy added 313,000 jobs in Feb 2018. Labor market tightness has left economists optimistic that wage growth will soon pick up. That, together with lower income taxes, are expected to spur consumer spending in the coming quarters.
Retail sales have declined for 3 straight months, leading economists to expect a slowdown in consumer spending in Q1/2018. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a robust 3.8% annualized rate in Q4/2017.
Rising house prices could also boost consumer spending. A separate report on Tuesday showed the S&P CoreLogic Case-Shiller composite index of home prices in 20 metropolitan areas increased 6.4% in the 12 months to Jan 2018 after rising 6.3% in Dec 2017. Higher house prices are bolstering household wealth. But the house price inflation is being driven by an acute shortage of homes available for sale, which is hurting the housing market.
“If we continue to see a steady stream of buyers and owners remain largely uninterested in selling, we can expect prices to continue to rise,” said Danielle Hale, chief economist at realtor.com.” Reuters
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei 225 movements over the past week [Chart: Google Finance]
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
^ CSI 300 movements over the past week [Chart: Google Finance]