Barchart U.S. Morning Call
Wednesday, October 07, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.39%, although Dec S&Ps are up +2.00 points. The weaker dollar is helping to boost commodity prices, with gold climbing to yet another record high, and Treasuries are little changed despite comments made late yesterday by Kansas City Fed President Hoenig who said that the US economic rebound should support higher interest rates "sooner rather than later." Undercutting European stock prices today was the unexpected downward revision to Q2 Euro-Zone GDP after European consumer spending, investment and exports were all weaker than earlier reported. Q2 Euro-Zone GDP fell -0.2% q/q and -4.8% y/y, a sharper decline than the Sep 2 estimate of a -0.1% q/q and -4.7% y/y contraction. Helping to lift European equity prices today was the larger-than-expected +1.4% m/m increase in Aug German factory orders, which were helped by an increase in foreign demand after foreign orders rose +4.6% m/m. German factory orders have now increased for the sixth straight month, an indication that Germany's economic growth continues to accelerate.
The Asian markets today closed mostly higher with Japan up +1.11%, Hong Kong +2.07%, China closed for holiday, Taiwan +0.96%, Australia +2.27%, Singapore +0.87%, South Korea -0.15%, India -0.90%. The Japanese yen rallied to an 8-1/4 month high against the dollar today after Japanese Finance Minister Fujii was quoted in an interview with the WSJ that the strength of the yen is "acceptable." Asian commodity and energy producers led the rally in stocks today after metals prices climbed and crude oil rose. Signs of global economic growth helped to lift Asian shipping companies on expectations of increased exports, while the Baltic Dry Index, a measure of shipping costs for commodities, rose 3.3% yesterday, its steepest climb since July.
Overnight U.S. Stock News
December S&Ps this morning are trading up +2.00 points. The US stock market yesterday closed with sharp gains for the second straight session (Dow +1.37%, S&P 500 +1.37%, Nasdaq Composite +1.71%). Bullish factors included (1) carry-over strength from overseas stock markets which rallied after the Reserve Bank of Australia unexpectedly raised interest rates, signaling strength and confidence in the global economy by the Australian central bank, (2) a rally in commodity and energy producers after oil rose to 2-week high and the price of gold surged to a record high, (3) the prediction from Fidelity International that sustainable economic growth and low interest rates worldwide will spur a "multi-year" bull market in equities, led by developing nations, (4) the gain in newspaper publishers after Rupert Murdoch, the CEO of News Corp., said print and television advertising markets are picking up, and (5) the prediction from Dallas Fed President Fisher that the US is likely to undergo "a very slow process" of recovery and probably won't endure a double-dip recession.
Bearish factors included (1) the prediction from JPMorgan Chase that the "disappointing" Sep employment figures indicate that it will take the US four years to recover all the jobs lost during the recession, and (2) the report from Reis Inc. that US apartment vacancies rose to 7.8% in Q3, the highest since 1986, as job losses and falling wages are shrinking the pool of potential tenants.
Freeport-McMoRan (FCX) climbed 1.2% in European trading as the company with the world's biggest gold mine rose after gold prices jumped to a record high for a second day.
Walt Disney (DIS) advanced 2.1% in pre-market trading after the world's biggest theme-park operator was upgraded to "neutral" at Bank of America Merrill Lynch.
Coca-Cola (KO) increased 1.6% in European trading after the world's largest soft-drink maker was raised to "buy" at Deutsche Bank, which cited a "better currency and commodity outlook, stable volumes and improved domestic bottler relations."
Today's Market Focus
December 10-year T-notes this morning are trading up +1.5 ticks. Dec T-note prices yesterday closed slightly lower by -2 ticks. Bearish factors for T-note prices yesterday included (1) the rally in the equity market which saps the safe-haven demand for Treasuries, (2) the surge in gold prices to a record high of $1,045 an ounce on speculation that inflation will accelerate and erode the value of the dollar and dollar assets, and (3) supply pressures as the Treasury will auction $20 billion 10-year T-notes on Wednesday and $12 billion 30-year T-bonds on Thursday. Bullish factors included (1) comments from New York Fed President Dudley that the risk of slowing inflation is "problematic" for the economy and that interest rates should stay low for a while to ensure a "robust recovery," and (2) strong foreign demand for the Treasury's $39 billion auction of 3-year T-notes after indirect bidders snapped up 49.1% of the notes, higher than the 43.9% average seen at the last 10 auctions.
The dollar index this morning is little changed with the dollar/yen -0.09 yen and the euro/dollar -0.25 cents. The Japanese yen rose to an 8-1/4 month high against the dollar overnight after Japanese Finance Minister Fujii was quoted in the WSJ saying that the strength of the yen was "acceptable." The dollar index yesterday fell to a 1-1/2 week low and closed lower for the third straight session. Bearish factors for the dollar yesterday included (1) the surprise hike in interest rates by Australia's central bank, which fueled demand for higher-yielding assets and crimped demand for the dollar on optimism that the global economy is recovering, and (2) the jump in the euro to a 1-1/2 week high against the dollar after comments from ECB Council member Sramko that he's comfortable with the euro's current exchange rate level. Bullish factors included (1) the denial by Saudi Arabia of a report from the UK's Independent newspaper that it held talks with China and other countries on dropping the dollar as the currency for pricing crude oil, and (2) weakness in the British pound after Aug UK manufacturing unexpectedly slumped to its lowest level in 17 years.
November crude oil prices this morning are up +17 cents a barrel and Nov gasoline is trading +0.86 cent a gallon. Nov crude oil prices yesterday moved higher and closed up +$0.47 a barrel. November gasoline closed up +1.88 cents a gallon. Both Nov crude oil and Nov gasoline posted 2-week highs. Bullish factors included (1) the slump in the dollar index to a 1-1/2 week low, increasing demand for crude as a hedge against inflation, and (2) the rally in the stock market which fuels speculation that energy demand will improve as the economy recovers. Bearish factors included (1) the prediction from the Center for Strategic and International Studies that oil will remain in a $60-to-$80 trading range in the coming months with a chance that high inventories and high unused productive capacity will put downward pressure on prices, and (2) an expected build in crude oil and gasoline inventories when the weekly DOE inventory report is released Wednesday. Expectations for Wednesday's DOE inventory report are for a +2.0 million bbl increase in crude oil stockpiles, a +1.15 million bbl jump in gasoline inventories, a -450,000 bbl decline in distillates and a -0.3 point drop in the refinery capacity rate to 84.3%.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) MON-Monsanto (BEST earnings consensus $0.01), COST-Costco Wholsale (0.76), AA-Alcoa (-0.11), FDO-Family Dollar Stores (0.41), AYI-Acuity Brands (0.57), WWW-Wolverine World Wide (0.56), CYCL-Centennial Communications (0.17), HELE-Helen of Troy (0.39), RT-Ruby Tuesday (0.09).
Global Financial Calendar
| Wednesday 10/7/2009 |
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| United States |
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| 0700 ET | Weekly MBA mortgage applications for the week ended Oct 2, previous -2.8% with purchase sub-index 6.2% and refinancing sub-index -0.8%. |
| 1300 ET | Treasury auctions $20 billion 10-year T-notes. |
| 1500 ET | Aug consumer credit expected -$10.0 billion, Jul -$21.6 billion. |
| Japan |
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| 0100 ET | Aug Japan leading index CI expected 83.3, Jul 82.5. Aug coincident index CI expected 91.2, Jul 89.8. |
| Euro-Zone |
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| 0500 ET | Revised Q2 Euro-Zone GDP expected no change at -0.1% q/q and -4.7% y/y. |
| Germany |
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| 0600 ET | Aug German factory orders expected +1.1% m/m and -20.0% y/y, Jul +3.5% m/m and -19.8% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1050.60 | 2.00 | 0.19% | 07:20:12 |
| DJIA (CBOT) (Z9) | 9673 | 19 | 0.20% | 07:20:13 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2428.63 | -9.52 | -0.39% | 07:15:15 |
| London UK FTSE Index | 5121.76 | -16.22 | -0.32% | 07:15:15 |
| German Dax Index | 5654.03 | -3.61 | -0.06% | 07:15:26 |
| French CAC 40 Index | 3768.51 | -1.70 | -0.05% | 07:15:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9800 | 108 | 1.11% | 03:00:13 |
| Hong Kong Hang Seng | 21242 | 430 | 2.07% | 04:01:30 |
| China CSI 300 Index | 3005 | 0 | 0.00% | 9/30/2009 |
| Taiwan TAIEX Index | 7609 | 73 | 0.96% | 01:46:00 |
| Australian S&P 200 | 4695.7 | 104.1 | 2.27% | 01:47:03 |
| Singapore Str. Times | 2634.63 | 22.74 | 0.87% | 05:10:01 |
| South Korea KOSPI 200 | 208.94 | -0.31 | -0.15% | 05:03:27 |
| Bombay Sensex 30 | 16807 | -151.88 | -0.90% | 06:29:56 |
| Karachi KSE-100 | 9837 | 193 | 2.01% | 05:46:21 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | #VALUE! | 0.015 | 0.04% | 07:20:16 |
| Cash 10yr T-note Price | 103.080 | 0.050 | 0.15% | 07:29:31 |
| Cash 10yr T-note Yield | 3.237 | -0.018 | -0.57% | 07:29 |
| 5yr T-note (CBT)(Z9) | 116.185 | 0.015 | 0.04% | 07:20:15 |
| Cash 5yr T-note Price | 100.230 | 0.030 | 0.09% | 07:22:00 |
| Cash 5yr T-note Yield | 2.222 | -0.020 | -0.89% | 07:21 |
| 30-yr T-bond (CBT)(Z9) | #VALUE! | -0.01 | -0.03% | 07:20:21 |
| Cash 30yr T-bond Price | 107.230 | 0.085 | 0.25% | 07:29:31 |
| Cash 30yr T-bond Yield | 4.052 | -0.015 | -0.36% | 07:29 |
| Eurodollars (CME)(Z9) | 99.635 | 0.000 | 0.00% | 07:17:45 |
| Eurodollars (CME)(H0) | 99.420 | 0.005 | 0.01% | 07:16:57 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.37 | -0.22 | -0.16% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.520 | 0.000 | 0.00% | 07:05:00 |
| Bunds (Eurex) (Z9) | 122.51 | 0.08 | 0.07% | 07:15:24 |
| Euribor (Eurex) (Z9) | 99.26 | 0.01 | 0.01% | 02:43:14 |
| UK Gilts (Liffe) (Z9) | 120.37 | 0.07 | 0.06% | 07:14:43 |
| Short Stlg (Liffe) (Z9) | 99.43 | 0.02 | 0.02% | 07:10:36 |
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| Forex |
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| U.S. Dollar Index | 76.43 | 0.10 | 0.13% | 07:20:26 |
| US Dollar-Japanese Yen | 88.74 | -0.09 | -0.10% | 07:30:27 |
| EuroFX-US Dollar | 1.4698 | -0.0025 | -0.25% | 07:30:27 |
| US Dollar-Swiss Franc | 1.0302 | 0.0033 | 0.33% | 07:30:27 |
| British Pound-US$ | 1.5890 | -0.0032 | -0.32% | 07:30:27 |
| US$-Canadian Dlr | 1.0568 | -0.0026 | -0.26% | 07:30:27 |
| Yen (Globex) (Z9) | 1.1258 | -0.0007 | -0.07% | 07:20:26 |
| Euro FX (Globex) (Z9) | 1.4689 | -0.002 | -0.14% | 07:20:25 |
| SwissFranc (Globex)(Z9) | 0.9706 | -0.0031 | -0.32% | 07:20:26 |
| British Pound(Glbx)(Z9) | 1.5888 | -0.002 | -0.13% | 07:20:26 |
| Canadian$ (Globex)(Z9) | 0.9446 | 0.0010 | 0.11% | 07:20:26 |
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| Commodities |
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| Gold (Comex) (Z9) | 1044.1 | 4.4 | 0.42% | 07:20:27 |
| Silver (Comex) (Z9) | 17.375 | 0.080 | 0.46% | 07:20:25 |
| Copper (Comex) (Z9) | 277.9 | -0.6 | -0.20% | 07:20:18 |
| Crude Oil (Nymex) (X9) | 71.05 | 0.17 | 0.24% | 07:20:26 |
| Gasoline (Nymex) (X9) | 178.13 | 0.86 | 0.49% | 07:19:04 |
| Heating Oil(Nymex) (X9) | 182.33 | 0.91 | 0.50% | 07:20:25 |
| NaturalGas(Nymex)(X9) | 4.899 | 0.019 | 0.39% | 07:19:36 |
| Corn (CBOT) (Z9) | 360.75 | 2.50 | 0.70% | 07:18:06 |
| Soybeans (CBOT) (X9) | 910.25 | 0.25 | 0.03% | 07:15:48 |
| Wheat (CBOT) (Z9) | 463.50 | 3.25 | 0.71% | 07:15:39 |
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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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