Barchart U.S. Morning Call
Thursday, September 24, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.82% and Dec S&Ps are down -1.20 points. European markets are lower on carry-over weakness from yesterday's fall in US markets after the Fed signaled the US economy isn't growing enough for stimulus measures to end. The dollar is slightly higher while copper prices dropped to a 3-week low and crude oil fell to a 2-1/2 week low. German business confidence rose to a 1-year high in Sep, indicating Europe's largest economy will continue to strengthen. The Sep German IFO business climate rose +0.8 to a 1-year high of 91.3, although below expectations for a +1.5 increase to 92.0. Retail stocks are weaker in Europe after Hennes & Mauritz AG, Europe's second-largest clothing retailer, reported Q3 net income of 3.46 billion kroner ($504 million), lower than analysts' estimates of 3.5 billion kroner after revenue at stores open at least a year fell 11% last month, the fourth consecutive monthly decline and worse than July's 3% decrease. Airline stocks are also weaker in Europe today after Air France fell 2.8% when UBS gave Europe's largest airline a "sell" recommendation in new coverage while British Airways Plc dropped 3.7% after Europe's third-largest carrier was downgraded to "hold" from "buy" at Citigroup. which said mid-cycle share-price valuations were reached "far earlier than expected."
The Asian markets today closed mixed with Japan up +1.67%, Hong Kong -2.52%, China +0.68%, Taiwan -0.71%, Australia -0.69%, Singapore -0.69%, South Korea -1.04%, India +0.37%. Japanese stocks closed higher after a three-day holiday despite Japanese exports falling for the 11th consecutive month in Aug. Japan's Aug exports tumbled -36% y/y as the economic recovery struggled to gain traction. From a month earlier, exports fell 0.7%, the second straight decrease which suggests the boost in overseas demand that helped the Japanese economy to expand in Q2 may be moderating as governments exhaust stimulus spending. Mining companies were weaker and China's Jiangxi Copper fell 3.6% after copper prices fell to a 3-week low. Japan Air, which is under government supervision following state bailouts, tumbled 16% after Asia's most indebted carrier asked the government for a fourth bailout since 2001 and raises speculation that the carrier's lenders may ask the government to split the company up.
Overnight U.S. Stock News
December S&Ps this morning are trading down -1.20 points. The US stock market yesterday pushed higher after the mid-afternoon FOMC meeting statement but then plunged into the close and finished lower on the day (Dow -0.83%, S&P 500 -1.01%, Nasdaq Composite -0.69%). The S&P 500 Index climbed to an 11-1/2 month high before shedding its gains and closing lower. Bearish factors included (1) the drop in raw material companies and commodity and energy producers after crude oil tumbled, copper prices fell and coal producers slid after Macquarie Group Ltd. downgraded the coal industry to "neutral" from "overweight," saying demand from China is slowing, (2) weakness in life insurance companies after Morgan Stanley downgraded the US life insurance industry to "in line" from "attractive," (3) the prediction from the Dutch Securities Board that the global economy may face a decade of "very modest" growth after the recession and bank bailouts disrupted government finances, (4) the warning from the Organization for Economic Cooperation and Development (OECD) that the global economy may be at risk of experiencing new asset bubbles because of record low interest rates throughout the world, and (5) the prediction from Bank of Canada Governor Carney who said that despite the signs of economic growth in all major global regions, the rebound still lacks signs of "self-sustaining" private demand for underpinning.
Bullish factors included (1) the jump in weekly US mortgage applicaions to their highest level since May, signaling an improvement in the housing market, (2) the post-FOMC statement that said the economy has picked up and that it will leave interest rates at a record low for an extended period, (3) strength in technology stocks after the research firm Gartner said global personal-computer shipments will drop less this year than previously forecast as demand in emerging markets boosts sales, and (4) the report from Eurekahedge Pte that hedge fund assets increased by $21.4 billion in August, their fourth straight monthly increase.
Electronic Arts (ERTS) fell 3.3% in European trading after Microsoft said "there's no truth" to the speculation that it plans to acquire Electronic Arts.
Red Hat (RHT) climbed over 5% in pre-market trading after reporting Q2 sales of $183.6 million, ahead of analysts estimates of $179.4 million, and reporting Q2 profit of 20 cents a share, also ahead of analyst estimates of 15 cents a share. Bank of America upgraded Red Hat to "buy" from "neutral" following the earnings release.
Today's Market Focus
December 10-year T-notes this morning are trading up +2 ticks. Dec T-note prices yesterday overcame early weakness and surged after the mid-afternon post-FOMC meeting statement and closed up +13 ticks. Bullish factors for T-note prices yesterday included (1) the post-FOMC statement that said the Fed will extend its mortgage security purchase program until Q1-2010, three months later than originally scheduled, and (2) the post-FOMC statement that said the FOMC will leave interest rates "exceptionally low" for an "extended period," easing concerns that the Fed would begin an interest rate tightening campaign. Bearish factors included (1) overall weak demand for the Treasury's $40 billion 5-year T-note auction after the bid-to-cover ratio fell to 2.40, below the 2.51 level at last month's auction and reduced foreign participation after indirect bidders fell to 45% from 56% at last month's auction, (2) supply pressures ahead of Thursday's $29 billion 7-year T-note auction, and (3) the post-FOMC statement that said the economy has "picked up."
The dollar index this morning is higher with the dollar/yen -0.56 yen and the euro/dollar +0.35 cents. The dollar index yesterday slumped to a 1-year low after the post-FOMC meeting statement and finished lower on the day. Bearish factors included (1) the post-FOMC statement stating that the fed funds rate will stay "exceptionally low" for an "extended period," hurting the dollar's interest rate differential outlook, (2) strength in the euro which rallied to a 1-year high against the dollar after the Sep French business confidence indicator jumped +6 points to an 11-month high of 85, its fifth consecutive month of improvement, and (3) the expansion of the Sep Euro-Zone PMI composite index for a second month after it rose to a 16-month high of 50.8. Bullish factors for the dollar included (1) dollar-supportive comments from Jean-Claude Juncker, head of the Euro-Zone finance chiefs, who said "unemployment will continue to rise globally until late 2011" and that "the worst is yet to come," and (2) the prediction from ECB Governing Council member Ewald Nowotny who said that "instead of a V-development, we'll experience an L-shaped recovery" or a protracted recovery in the Euro-Zone.
November crude oil prices this morning are down -58 cents a barrel and Nov gasoline is trading -0.76 cent a gallon. Nov crude oil prices yesterday fell sharply and closed down -$2.79 a barrel. November gasoline closed down -7.48 cents a gallon. Nov crude slipped to a 1-week low and nearest futures Sep gasoline tumbled to a 2-month low. Bearish factors included (1) the unexpected increase in weekly crude oil inventories (+2.85 million bbl versus expectations of -1.4 million bbl) as crude oil inventories now stand +9.1% above their 5-year average for the period, (2) the much larger-than-expected increase in gasoline inventories (+5.41 million bbl versus expectations of +500,000 bbl) as US gasoline demand slumped in the past week to 8.70 million bpd, an 8-month low, (3) the larger-than-expected climb in distillate stockpiles (+2.96 million bbl to a 26-1/2 year high of 170.8 million bbl and 28% above the period's 5-year average), and (4) overall weak demand after US fuel consumption for the week ended Sep 18 dropped -3.3% to 18.5 million bpd, the lowest in nearly 3-months. Bullish factors include (1) the plunge in the dollar index to a 1-year low, and (2) the plan by China to set up oil reserves equivalent to 100 days of its net imports before 2020 which will lead to increased Chinese crude oil imports to fill the reserves once storage facilities in China have been built.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) MKC-McCormick (BEST earnings consensus $0.54), COMS-3Com (0.05), RAD-Rite Aid (-0.15.), TIBX-Tibco Software (0.11), MTN-Vail Resorts (-1.11), TXI-Texas Industries (-0.04), SCS-Steelcase (0.02), SCHL-Scholastic (0.83), AM-American Greetings (0.06).
Global Financial Calendar
| Thursday 9/24/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected +5,000 to 550,000, previous -12,000 to 545,000. Weekly continuing claims expected -47,000 to 6.183 million, previous +129,000 to 6.230 million. |
| 1000 ET | Aug existing home sales expected +2.1% to 5.35 million, Jul +7.2% to 5.24 million. |
| 1030 ET | Chicago Fed President Charles Evans delivers opening remarks at Chicago Fed's international banking conference on the topic "The International Financial Crisis: Asset Price Exuberance and Macro Prudential Regulation." |
| 1300 ET | Treasury auctions $29 billion 7-year T-notes. |
| Japan |
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| 0030 ET | Jul Japan all industry activity index expected +0.6% m/m, Jun +0.1% m/m. |
| 1950 ET | Minutes of the May BOJ monetary policy meeting. |
| 1950 ET | Aug Japan corporate services price index expected -3.5% y/y, Jul -3.5% y/y. |
| Germany |
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| 0400 ET | Sep German IFO business climate expected +1.5 to 92.0, Aug +3.1 to 90.5. Sep IFO current assessment expected +1.6 to 87.7, Aug +1.7 to 86.1. Sep IFO expectations expected +1.6 to 96.6, Aug +4.6 to 95.0. |
| France |
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| 1200 ET | Aug French total jobseekers, Jul 2,535,200. Aug jobseekers-net change, Jul +10,700. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1057.70 | -1.20 | -0.11% | 07:22:12 |
| DJIA (CBOT) (Z9) | 9704 | -13 | -0.13% | 07:22:12 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2456.33 | -20.29 | -0.82% | 07:17:15 |
| London UK FTSE Index | 5118.65 | -20.72 | -0.40% | 07:17:15 |
| German Dax Index | 5679.26 | -22.79 | -0.40% | 07:17:24 |
| French CAC 40 Index | 3806.99 | -14.80 | -0.39% | 07:17:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10544 | 174 | 1.67% | 03:00:16 |
| Hong Kong Hang Seng | 21051 | -545 | -2.52% | 04:01:30 |
| China CSI 300 Index | 3081 | 21 | 0.68% | 03:01:06 |
| Taiwan TAIEX Index | 7324 | -53 | -0.71% | 01:46:01 |
| Australian S&P 200 | 4701.2 | -32.9 | -0.69% | 02:47:03 |
| Singapore Str. Times | 2667.43 | -18.51 | -0.69% | 05:10:01 |
| South Korea KOSPI 200 | 222.35 | -2.34 | -1.04% | 05:03:26 |
| Bombay Sensex 30 | 16781 | 61.93 | 0.37% | 06:29:56 |
| Karachi KSE-100 | 9714 | 277 | 2.94% | 06:26:22 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.560 | 0.020 | 0.05% | 07:22:12 |
| Cash 10yr T-note Price | 101.260 | 0.030 | 0.09% | 07:31:31 |
| Cash 10yr T-note Yield | 3.407 | -0.011 | -0.33% | 07:31 |
| 5yr T-note (CBT)(Z9) | 115.210 | 0.010 | 0.03% | 07:22:04 |
| Cash 5yr T-note Price | 99.285 | 0.010 | 0.02% | 07:31:31 |
| Cash 5yr T-note Yield | 2.398 | 0.027 | 1.13% | 07:31 |
| 30-yr T-bond (CBT)(Z9) | 119.63 | 0.03 | 0.08% | 07:22:13 |
| Cash 30yr T-bond Price | 105.145 | 0.105 | 0.31% | 07:31:31 |
| Cash 30yr T-bond Yield | 4.179 | -0.019 | -0.44% | 07:31 |
| Eurodollars (CME)(Z9) | 99.620 | 0.010 | 0.01% | 07:21:07 |
| Eurodollars (CME)(H0) | 99.420 | -0.005 | -0.01% | 07:18:21 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.82 | 0.27 | 0.19% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.520 | 0.000 | 0.00% | 05:37:14 |
| Bunds (Eurex) (Z9) | 120.80 | 0.32 | 0.27% | 07:17:18 |
| Euribor (Eurex) (Z9) | 99.32 | 0.02 | 0.02% | 06:31:17 |
| UK Gilts (Liffe) (Z9) | 117.14 | 0.25 | 0.21% | 07:17:05 |
| Short Stlg (Liffe) (Z9) | 99.49 | 0.01 | 0.01% | 07:17:24 |
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| Forex |
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| U.S. Dollar Index | 76.27 | 0.22 | 0.29% | 07:22:20 |
| US Dollar-Japanese Yen | 90.73 | -0.56 | -0.61% | 07:32:24 |
| EuroFX-US Dollar | 1.4769 | 0.0035 | 0.35% | 07:32:24 |
| US Dollar-Swiss Franc | 1.0234 | -0.0035 | -0.35% | 07:32:24 |
| British Pound-US$ | 1.6193 | -0.0149 | -1.49% | 07:32:24 |
| US$-Canadian Dlr | 1.0736 | -0.0009 | -0.09% | 07:32:24 |
| Yen (Globex) (Z9) | 1.1029 | 0.0055 | 0.55% | 07:22:17 |
| Euro FX (Globex) (Z9) | 1.4763 | -0.0034 | -0.23% | 07:22:19 |
| SwissFranc (Globex)(Z9) | 0.9774 | -0.0009 | -0.09% | 07:21:48 |
| British Pound(Glbx)(Z9) | 1.6201 | -0.0215 | -1.31% | 07:22:10 |
| Canadian$ (Globex)(Z9) | 0.9309 | -0.0043 | -0.46% | 07:22:15 |
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| Commodities |
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| Gold (Comex) (Z9) | 1015.4 | 1.0 | 0.10% | 07:22:24 |
| Silver (Comex) (Z9) | 16.810 | -0.100 | -0.59% | 07:21:57 |
| Copper (Comex) (Z9) | 277.4 | -3.4 | -1.21% | 07:22:19 |
| Crude Oil (Nymex) (X9) | 68.39 | -0.58 | -0.84% | 07:22:21 |
| Gasoline (Nymex) (X9) | 171.35 | -0.76 | -0.44% | 07:21:25 |
| Heating Oil(Nymex) (X9) | 177.42 | -1.62 | -0.90% | 07:22:18 |
| NaturalGas(Nymex)(X9) | 4.745 | -0.009 | -0.19% | 07:22:14 |
| Corn (CBOT) (Z9) | 325.75 | -4.50 | -1.36% | 07:19:43 |
| Soybeans (CBOT) (X9) | 912.00 | -8.50 | -0.92% | 07:20:57 |
| Wheat (CBOT) (Z9) | 459.25 | -0.75 | -0.16% | 07:20:36 |
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About the author
Get Barchart U.S. Morning Call delivered to your email inbox! Sign up for free here. Barchart U.S. Morning Call is written by the experienced members of the Commodity Research Bureau and the Barchart Research Team. Commodity Research Bureau (CRB) has been providing research to the financial and commodity community since 1934. If you have any questions for our analysts, please contact us at support@crbtrader.com. Sent every morning, "Morning Call" summarizes overnight global market news, along with a U.S. market forecast for the day ahead. It Includes upcoming earnings reports, a global financial calendar, and quote board overview of where the markets are standing.
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