Barchart U.S. Morning Call
Monday, October 05, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.23% and Dec S&Ps are up +6.10 points. The dollar is weaker this morning after the Group of Seven finance ministers omitted any mention of the dollar's weakness in their final communique. European stocks received a boost after the Sep Euro-Zone PMI composite index was revised up +0.3 to a 16-month high of 51.1, adding to signs that the European economy continues to recover from recession. Also supporting a gain in European stock prices was the +2.0 point increase in the Oct Euro-Zone Sentix investor confidence to a 15-month high of -12.6 and a smaller-than-expected -0.2% m/m decrease in Aug Euro-Zone retail sales, although on a year-over-year basis Euro-Zone retail sales declined -2.6% y/y, the 15th consecutive monthly decline. Limiting stock gains was comments from the CEO of HSBC Holdings Plc who said that there may be a second global economic slump and that he wasn't convinced the worst was over and that the "reality is that profits will be quite reduced."
The Asian markets today closed mostly lower with Japan down -0.59% at a 2-1/4 month low, Hong Kong +0.26%, China closed for holiday, Taiwan +0.35%, Australia -0.62%, Singapore -0.80%, Soth Korea -2.57%, India -1.56%. Asian markets closed mostly lower on catch-up from last Friday's drop in US and European share prices after US Sep payrolls declined more than forecast and US Aug factory orders unexpectedly declined. The yen is weaker today after Japanese Finance Minister Fujii warned "if currencies show some excessive moves in a biased direction, we will take action," hinting at BOJ intervention in the currency markets if the yen continues to srengthen. The yen's appreciation threatens to undermine Japan's export-driven economic recovery which is already feeling the effects of near-record high unemployment and deflationary price declines.
Overnight U.S. Stock News
December S&Ps this morning are trading up +6.10 points. The US stock market last Friday sold-off sharply early but then recovered most of its losses and closed slightly lower (Dow -0.23%, S&P 500 -0.45%, Nasdaq Composite -0.46%). The S&P 500 Index tumbled to a 3-week low. Bearish factors included (1) the larger-than-expected loss of jobs in US Sep nonfarm payrolls, raising concern that the economy will struggle to recover, (2) the prediction from Wells Fargo that unemployment in the US is probably higher than the 26-year high of 9.8% reported for Sep because the employment participation rate declined in Sep to 65.2%, the lowest since May 1986 and is a sign that the number of people searching for work is declining as the discouraged unemployed quit looking for jobs, (3) the unexpected decline in US Aug factory orders, (4) the prediction from well-known bank analyst Meredith Whitney that the US economic recovery will falter as banks continue to curb lending to small companies, and (5) concerns over the health of the US banking system after the FDIC reported that the number of US banks that can't collect on at least 20% of their loans climbed to an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Bullish factors included (1) speculation that recent disappointing US economic data will at least prevent the Fed from raising interest rates anytime soon, and (2) strength in technology stocks after Oppenheimer predicted that the PC market may grow by more than 10% next year, driven by hardware upgrades and increased business spending on technology.
Microsoft (MSFT) is up 1.1% in European trading after CEO Steven Ballmer was quoted in London saying the next few years will be the "best yet" for the information-technology industry.
Wells Fargo (WFC) is up 1.9% and JPMorgan Chase (JPM) is up 1.4% in pre-market trading after Goldman Sachs raised its ratings on US large banks to "attractive," citing the outlook for earnings.
Today's Market Focus
December 10-year T-notes this morning are trading up +4 ticks. Dec T-note prices last Friday shot higher early to a 5-1/4 month high but then ground lower the remainder of the day to close down -1.5 ticks. The 10-year T-note yield posted a 4-1/2 month low of 3.10%. Bullish factors for T-note prices last Friday included (1) the larger-than-expected loss of jobs in the Sep nonfarm payrolls (-263,000 versus expectations of -175,000), (2) the smaller-than-expected increase in Sep hourly earnings which posted the smallest year-over-year increase in 5 years (+0.1% m/m and +2.5% y/y versus expectations of +0.2% m/m and +2.6% y/y), and (3) comments from Boston Fed President Rosengren that the Fed and the government should maintain policies that support economic growth until a self-sustaining recovery is assured. Bearish factors included (1) comments from Richmond Fed President Lacker that the Fed will need to raise interest rates when the economic recovery is "firmly" in place even if unemployment lingers near 10%, and (2) supply pressures ahead of $78 billion in Treasury auctions of bonds and notes that begin with a $7 billion 10-year TIPS auction on Monday.
The dollar index this morning is lower with the dollar/yen +0.13 yen and the euro/dollar +0.41 cents. The dollar is weaker this morning after finance ministers and central bankers from the G-7 nations failed to address the dollar's recent decline. The dollar index last Friday rallied to a 3-1/2 week high early but then shed it gains and closed lower. Bearish factors for the dollar last Friday included (1) the weaker-than-expected US Sep payrolls report, which reinforces speculation that the Fed will be forced to hold interest rates near zero for an extended period which weakens the dollar's interest rate differentials, and (2) strength in the yen after Japanese household spending unexpectedly increased in Aug and Japan's unemployment rate unexpectedly declined in Aug, fueling optimism that Japan's economy may be strengthening. Bullish factors included (1) comments from French Finance Minister Lagarde that a strong dollar is in "everyone's interest", and (2) the prediction from BNP Paribas that developing nations which saw their currencies decimated following the financial crisis will continue to increase their foreign-exchange reserves "for years to come," thereby boosting the dollar.
November crude oil prices this morning are down -75 cents a barrel and Nov gasoline is trading -1.31 cents a gallon. Nov crude oil prices last Friday moved lower and closed down -$0.87 a barrel. November gasoline closed down -1.70 cents a gallon. Bearish factors included (1) the weaker-than-expected Sep US nonfarm payroll report, which raised skepticism that fuel demand will recover with the US labor market still weak, (2) the unexpected decline in Aug US factory orders, which signals flagging US industrial energy demand, and (3) the increase in Sep Russian crude production to 10.01 million bpd, +1.7% y/y and a new post-Soviet high, along with the increase in Sep Russian crude exports in Sep by +4% y/y to 5.47 million bpd, which puts more crude oil on the global market and lessens the impact of OPEC production cuts. Bullish factors included (1) the weaker dollar, which benefits most commodities priced in dollars, and (2) the unexpected drop in the Aug Japan unemployment rate along with the unexpected increase in Aug Japan household spending, which may portend to higher energy consumption in the world's second-largest economy.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) MOS-Mosaic (BEST earnings consensus $0.35), RPM-RPM International (0.44), AGP-Amerigroup (0.57), RBN-Robbins & Meyers (0.20), TISI-Team Inc. (0.11).
Global Financial Calendar
| Monday 10/5/2009 |
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| United States |
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| 1000 ET | Sep ISM non-manufacturing index expected +1.6 to 50.0, Aug +2.0 to 48.4. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1300 ET | Treasury auctions $7 billion 10-year TIPS. |
| 1830 ET | New York Fed President William Dudley speaks at Fordham Law School. |
| France |
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| 0350 ET | Revised Sep French PMI services expected no change at 52.2. |
| Germany |
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| 0355 ET | Revised Sep German PMI services expected no change at 52.2. |
| Euro-Zone |
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| 0400 ET | Revised Sep Euro-Zone PMI composite expected +0.1 to 50.9, previous 50.8. Revised Sep PMI services expected no change at 50.6. |
| 0430 ET | Oct Euro-Zone Sentix investor confidence expected +2.5 to -12.1, Sep +2.4 to -14.6. |
| 0500 ET | Aug Euro-Zone retail sales expected -0.5% m/m and -2.4% y/y, Jul -0.2% m/m and -1.8% y/y. |
| United Kingdom |
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| 0430 ET | Sep UK PMI services expected +0.4 to 54.5, Aug +0.9 to 54.1. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1027.80 | 6.10 | 0.60% | 07:08:26 |
| DJIA (CBOT) (Z9) | 9478 | 43 | 0.46% | 07:06:49 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2374.95 | 5.41 | 0.23% | 07:03:45 |
| London UK FTSE Index | 4991.31 | 2.61 | 0.05% | 07:03:45 |
| German Dax Index | 5483.47 | 15.57 | 0.28% | 07:03:46 |
| French CAC 40 Index | 3658.77 | 8.87 | 0.24% | 07:03:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9674 | -57 | -0.59% | 03:00:19 |
| Hong Kong Hang Seng | 20429 | 54 | 0.26% | 04:01:30 |
| China CSI 300 Index | 3005 | 0 | 0.00% | 9/30/2009 |
| Taiwan TAIEX Index | 7438 | 26 | 0.35% | 01:46:01 |
| Australian S&P 200 | 4573.3 | -28.4 | -0.62% | 03:03:32 |
| Singapore Str. Times | 2583.73 | -20.8 | -0.80% | 05:10:01 |
| South Korea KOSPI 200 | 210.38 | -5.56 | -2.57% | 05:03:27 |
| Bombay Sensex 30 | 16866 | -268.14 | -1.56% | 06:29:57 |
| Karachi KSE-100 | 9488 | 33 | 0.35% | 05:46:18 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.920 | 0.040 | 0.10% | 07:08:38 |
| Cash 10yr T-note Price | 103.175 | 0.045 | 0.14% | 07:17:00 |
| Cash 10yr T-note Yield | 3.202 | -0.017 | -0.51% | 07:16 |
| 5yr T-note (CBT)(Z9) | 116.240 | 0.030 | 0.07% | 07:08:38 |
| Cash 5yr T-note Price | 100.290 | 0.035 | 0.11% | 07:17:30 |
| Cash 5yr T-note Yield | 2.182 | -0.023 | -1.06% | 07:17 |
| 30-yr T-bond (CBT)(Z9) | 121.67 | 0.11 | 0.28% | 07:08:28 |
| Cash 30yr T-bond Price | 108.295 | 0.060 | 0.17% | 07:18:30 |
| Cash 30yr T-bond Yield | 3.986 | -0.010 | -0.26% | 07:18 |
| Eurodollars (CME)(Z9) | 99.640 | 0.005 | 0.01% | 07:03:30 |
| Eurodollars (CME)(H0) | 99.425 | 0.010 | 0.01% | 07:04:16 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.50 | -0.11 | -0.08% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.515 | 0.005 | 0.01% | 03:47:16 |
| Bunds (Eurex) (Z9) | 122.64 | -0.03 | -0.02% | 07:03:46 |
| Euribor (Eurex) (Z9) | 99.27 | 0.00 | 0.01% | 04:29:49 |
| UK Gilts (Liffe) (Z9) | 120.04 | 0.14 | 0.12% | 07:03:47 |
| Short Stlg (Liffe) (Z9) | 99.40 | -0.04 | -0.04% | 06:59:39 |
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| Forex |
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| U.S. Dollar Index | 76.87 | -0.18 | -0.23% | 07:08:36 |
| US Dollar-Japanese Yen | 89.93 | 0.13 | 0.14% | 07:18:47 |
| EuroFX-US Dollar | 1.4617 | 0.0041 | 0.41% | 07:18:47 |
| US Dollar-Swiss Franc | 1.0336 | -0.0014 | -0.14% | 07:18:47 |
| British Pound-US$ | 1.5930 | -0.0017 | -0.17% | 07:18:47 |
| US$-Canadian Dlr | 1.0744 | -0.0054 | -0.54% | 07:18:46 |
| Yen (Globex) (Z9) | 1.1121 | -0.0042 | -0.42% | 07:08:20 |
| Euro FX (Globex) (Z9) | 1.4623 | 0.0036 | 0.25% | 07:08:38 |
| SwissFranc (Globex)(Z9) | 0.9681 | 0.001 | 0.10% | 07:08:05 |
| British Pound(Glbx)(Z9) | 1.5935 | 0.0021 | 0.13% | 07:08:10 |
| Canadian$ (Globex)(Z9) | 0.9306 | 0.0071 | 0.77% | 07:07:54 |
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| Commodities |
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| Gold (Comex) (Z9) | 1005.2 | 0.9 | 0.09% | 07:08:40 |
| Silver (Comex) (Z9) | 16.255 | 0.025 | 0.15% | 07:08:40 |
| Copper (Comex) (Z9) | 268.2 | 0.0 | 0.00% | 07:08:47 |
| Crude Oil (Nymex) (X9) | 69.20 | -0.75 | -1.07% | 07:08:46 |
| Gasoline (Nymex) (X9) | 172.78 | -1.31 | -0.75% | 07:08:38 |
| Heating Oil(Nymex) (X9) | 177.48 | -2.2 | -1.22% | 07:07:00 |
| NaturalGas(Nymex)(X9) | 4.727 | 0.009 | 0.19% | 07:08:06 |
| Corn (CBOT) (Z9) | 332.75 | -0.75 | -0.22% | 07:08:28 |
| Soybeans (CBOT) (X9) | 882.00 | -3.00 | -0.34% | 07:08:24 |
| Wheat (CBOT) (Z9) | 444.00 | 2.75 | 0.62% | 07:08:36 |
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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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