Barchart U.S. Morning Call
Thursday, October 08, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.74% and Dec S&Ps are up +9.50 points. Global stock prices are pumped up from better-than-expected earnings from Alcoa, while the drop in the dollar index to a 2-week low has boosted most commodity prices with gold climbing to its third consecutive record high. Raw-material producers are leading a rally in European shares after the CEO of Alcoa said "we do see growth, substantial growth I might add, in China, and a stabilization in North America." Alcoa soared over 7% in European trading, while Xstrata Plc, the world's fourth-biggest copper producer, advanced 3.4% as copper prices shot up to a 2-week high. Also helping to boost European shares was the larger-than-expected increase in the Sep Bank of France business sentiment which rose +3 to a 15-month high of 92 as government stimulus spending fosters economic growth. Undercutting stock prices is the 3% decline in Lloyds Banking Group Plc after the FT reported that the UK's biggest mortgage lender is preparing to raise 15 billion pounds ($24 billion) in a share sale and leave the government's asset insurance program. Banks in Ireland are also slumping with Allied Irish Banks Plc down 7% and Bank of Ireland Plc losing nearly 5% after Irish Finance Minister Lenihan said the country's biggest banks may need further money from the state even after selling real-estate loans to the government.
The Asian markets today closed mostly higher with Japan up +0.34%, Hong Kong +1.18%, China closed for holiday, Taiwan -1.38%, Australia +1.55%, Singapore +0.62%, South Korea +0.99%, India +0.22%. Sep Japanese corporate bankruptcies fell -18% y/y, their fastest pace of decline in over four years, as an easing in the credit crunch is enabling firms to stay in business. Shipping companies in Japan gained after Bank of America Merrill Lynch upgraded the sector to "neutral" from "underperform," while Australia's S&P/ASX 200 Stock Index climbed to a 1-year high after the country's jobless rate fell to 5.7%, its first decline in five months, and the statistics bureau reported that the number of people employed in Sep unexpectedly rose 40,600 from Aug. The Australian dollar surged to a 14-month high on the news as market expectations increased for another rate hike by the RBA as soon as next month.
Overnight U.S. Stock News
December S&Ps this morning are trading up +9.50 points as better-than-expected earnings from Alcoa starts Q3 earnings season off on a positive note. The US stock market yesterday gyrated on both sides of unchanged and finally closed mixed (Dow -0.06%, S&P 500 +0.27%, Nasdaq Composite +0.32%). Bullish factors included (1) the jump in weekly US mortgage applications to their highest level since May as the recent drop in mortgage rates boosted the MBA's purchase sub-index to a 10-month high, which signals an improvement in the beleaguered US housing market, (2) the report from Kronos Inc. showing that US discount, grocery, restaurant and specialty stores hired a larger percentage of applicants in August for the eighth straight month, signaling the economy is stabilizing and may grow next year, (3) the prediction by LPL Financial that the S&P 500 could rally to 1,125 by year-end as "a combination of revenue growth plus companies exceedng margins will lift stocks over the next several weeks," and (4) the prediction from Citigroup that they expect 20% gains in global equities by the end of 2011 as "this is the period towards the end of most global recessions when equity prices rise sharply even though earnings are still falling."
Bearish factors included (1) the slump in homebuilders after Deutsche Bank AG predicted housing stocks will plunge if US lawmakers don't extend a tax credit for first-time homebuyers, (2) weakness in energy producers after crude oil prices tanked, (3) the -$12.0 billion decline in Aug US consumer credit, the seventh straight monthly contraction and the longest string of declines since 1991, which signals consumer spending may remain weak as banks continue to tighten lending standards and mounting job losses make consumers reluctant to borrow, (4) the sell-off in telephone companies after AT&T, the second-largest mobile telephone company, in a policy reversal due to pressure from the FCC, said it will let iPhone customers use Internet phone services on the same airwaves as standard wireless calls, making cheap calls over the Internet more convenient for iPhone users and possibly hurting AT&T's earnings, and (5) the prediction from Nobel Prize-winning econimist Stiglitz that global economies are still in a "severe recession" and that governments will have to kick-start growth because monetary policy can't go any further.
Alcoa (AA) jumped over 5% in after-hours trading and is now trading over 7% higher in Europe after the largest US aluminum producer reported an unexpected Q3 profit of 4 cents a share, exceeding analysts' estimates for a 9-cent loss. Alcoa benefited from improving metal prices and saved money by cutting jobs and raw-material costs.
Pepsico (PEP) rose nealy 1% in pre-market trading after it reported Q3 profit of $1.08 a share, ahead of analysts' estimates of $1.03.
Today's Market Focus
December 10-year T-notes this morning are trading down -5 ticks. Dec T-note prices yesterday rallied throughout the day and closed up +19 ticks. Bullish factors for T-note prices yesterday included (1) speculation that the central bank of Russia, Bank Rossii, which intervened in the currency market yesterday and bought up to $1 billion in dollars to stall the ruble's advance will invest those dollars and purchase Treasuries, and (2) strong demand for the Treasury's $20 billion 10-year T-note auction that had a bid-to-cover ratio of 3.01, well above of the 2.55 average for the last 10 auctions. Bearish factors included (1) hawkish comments from Kansas City Fed President Hoenig who said that the US economic rebound should support higher interest rates "sooner rather than later," and (2) a possible decrease in demand for Treasuries in favor of German bunds after the prediction from Raiffeisen KAG that the German 10-year bund will yield as much as 40 bp less than the similar-maturity Treasury note by the end of Jun on ECB "credibility" because the Fed was more aggressive than the ECB in measures to counter the recession, which has boosted the prospects for inflation.
The dollar index this morning is trading at a 2-week low with the dollar/yen -0.25 yen and the euro/dollar +0.68 cents. The dollar index yesterday recovered from early weakness and closed higher. Bullish factors for the dollar yesterday included (1) dollar-positive comments from Kansas City Fed President Hoenig who said that the US economic rebound should support higher interest rates "sooner rather than later," (2) the unexpected downward revision to Q2 Euro-Zone GDP, and (3) the action by Russia's central bank to buy between $750 million and $1 billion in dollars in an attempt to slow the advance of the ruble. Bearish factors included (1) the action by Deutsche Bank AG to cut its dollar forecast for next year to $1.40 per euro from a prior forecast of $1.15, predicting the Fed will err on the side of caution and keep interest rates lower for longer than other nations, (2) the jump in the yen to an 8-1/4 month high against the dollar after Japanese Finance Minister Fujii was quoted in the WSJ saying that the strength of the yen was "acceptable," and (3) the larger than expected increase in Aug German factory orders which climbed for the sixth consecutive month.
November crude oil prices this morning are higher by +69 cents a barrel and Nov gasoline is trading +1.23 cents a gallon. Nov crude oil prices yesterday gave up an early rally and moved lower after the release of the DOE inventory report, finally closing down -$1.31 a barrel. November gasoline closed down -5.24 cents a gallon. Bearish factors included (1) the stronger dollar, (2) the larger-than-expected increase in weekly gasoline inventories (+2.94 million bbl versus expectations of +1.15 million bbl), (3) the +3.5% increase in US gasoline production to 9.42 million bpd in the week ended Oct 2, the highest level since Aug 2008, (4) the unexpected increase in weekly distillate inventories which rose to a 26-1/2 year high of 171.8 million bbl (+679,000 bbl versus expectations of -450,000 bbl) and are now 30% above their 5-year average, and (5) the unexpected increase in the refinery capacity rate (+0.4 to 85.0% versus expectations of -0.3 to 84.3%. Bullish factors included (1) the unexpected decline in weekly crude oil inventories (-978,000 bbl versus expectations of +2.0 million bbl), and (2) the comment from Algerian Oil Minister Khelil that he doesn't expect OPEC to increase oil production at its December meeting as a "weak" global economic recovery may fail to revive oil demand.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) PEP-Pepsico (BEST earnings consensus $1.03), MAR-Marriott International (0.13), ISCA-International Speedway Corp. (0.37), GIGM-Gigamedia Limited (0.11), PCBK-Pacific Continental Corp. (0.16).
Global Financial Calendar
| Thursday 10/8/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected -11,000 to 540,000, previous +17,000 to 551,000. Weekly continuing claims expected +15,000 to 6.105 million, previous -70,000 to 6.090 million. |
| 1000 ET | Aug wholesale inventories expected -1.0%, Jul -1.4%. |
| 1100 ET | Sep ICSC chain store sales expected -1.5% y/y, Aug -2.0% y/y. |
| 1300 ET | Treasury auctions $12 billion 30-year T-bonds. |
| 1330 ET | Richmond Fed President Jeffrey Lacker speaks at the Council for Economic Education's Annual Conference. |
| 1535 ET | Fed Governor Daniel Tarullo speaks on the topic "In the Wake of the Crisis" at a luncheon in Phoenix. AZ. |
| 1900 ET | Fed Chairman Ben Bernanke delivers the keynote speech at a Fed hosted conference on "Key Developments in Monetary Economics." Bernanke's topic is an update on the Fed's balance sheet. |
| 2045 ET | Kansas City Fed President Thomas Hoenig speaks at an economic forum hosted by the Kansas City Fed's Oklahoma City branch. |
| Japan |
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| 0030 ET | Sep Japan bankruptcies, Aug -1.0% y/y. |
| 0100 ET | Sep Japan Eco watchers survey current expected 42.5, Aug 41.7. Sep Eco watchers survey outlook, Aug 44.0. |
| 0200 ET | Sep Japan machine tool orders, Aug -71.5% y/y. |
| 1950 ET | Aug Japan machine orders expected +2.2% m/m and -25.4% y/y, Jul -9.3% m/m and -34.8% y/y. |
| France |
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| 0230 ET | Sep Bank of France business sentiment expected +2 to 91, Aug +2 to 89. |
| 0245 ET | Aug French trade balance expected -2.5 billion euros, Jul -1.3 billion euros. |
| Germany |
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| 0600 ET | Aug German industrial production expected +1.8% m/m and -17.0% y/y, Jul -0.9% m/m and -17.0% y/y. |
| United Kingdom |
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| 0700 ET | Bank of England announces interest rate decision and asset purchase target (expected no change to 0.50% benchmark rate and no change to the 175 billion pound asset purchase program). |
| Euro-Zone |
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| 0745 ET | ECB announces interest rate decision (expected no change to the 1.00% 2-week refinancing rate). |
| 0830 ET | ECB President Jean-Claude Trichet speaks at monthly press conference. |
| Canada |
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| 0830 ET | Sep Canadian housing starts expected 146,500, Aug 150,500. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1063.10 | 9.50 | 0.90% | 07:11:51 |
| DJIA (CBOT) (Z9) | 9750 | 77 | 0.80% | 07:09:25 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2442.75 | 17.91 | 0.74% | 07:07:45 |
| London UK FTSE Index | 5138.16 | 29.26 | 0.57% | 07:07:45 |
| German Dax Index | 5702.34 | 61.59 | 1.09% | 07:07:45 |
| French CAC 40 Index | 3798.03 | 41.62 | 1.11% | 07:07:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9832 | 33 | 0.34% | 03:00:15 |
| Hong Kong Hang Seng | 21493 | 251 | 1.18% | 04:01:30 |
| China CSI 300 Index | 3005 | 0 | 0.00% | 9/30/2009 |
| Taiwan TAIEX Index | 7503 | -105 | -1.38% | 01:46:01 |
| Australian S&P 200 | 4768.6 | 72.9 | 1.55% | 01:47:03 |
| Singapore Str. Times | 2650.95 | 16.32 | 0.62% | 05:10:01 |
| South Korea KOSPI 200 | 211.01 | 2.07 | 0.99% | 05:03:27 |
| Bombay Sensex 30 | 16844 | 36.88 | 0.22% | 06:29:57 |
| Karachi KSE-100 | 9741 | -96 | -0.97% | 05:48:04 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | #VALUE! | -0.050 | -0.13% | 07:11:53 |
| Cash 10yr T-note Price | 103.210 | -0.020 | -0.06% | 07:22:30 |
| Cash 10yr T-note Yield | 3.189 | 0.007 | 0.23% | 07:22 |
| 5yr T-note (CBT)(Z9) | 116.245 | 37.490 | -0.11% | 07:12:02 |
| Cash 5yr T-note Price | 100.280 | -0.030 | -0.09% | 07:19:01 |
| Cash 5yr T-note Yield | 2.188 | 0.020 | 0.91% | 07:18 |
| 30-yr T-bond (CBT)(Z9) | #VALUE! | -0.05 | -0.13% | 07:12:30 |
| Cash 30yr T-bond Price | 108.190 | -0.010 | -0.03% | 07:22:30 |
| Cash 30yr T-bond Yield | 4.004 | 0.002 | 0.04% | 07:22 |
| Eurodollars (CME)(Z9) | 99.625 | 0.000 | 0.00% | 07:11:29 |
| Eurodollars (CME)(H0) | 99.415 | -0.010 | -0.01% | 07:12:26 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.35 | -0.02 | -0.01% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.520 | 0.000 | 0.00% | 07:05:00 |
| Bunds (Eurex) (Z9) | 122.78 | -0.01 | -0.01% | 07:07:46 |
| Euribor (Eurex) (Z9) | 99.19 | -0.02 | -0.02% | 06:46:38 |
| UK Gilts (Liffe) (Z9) | 120.39 | -0.10 | -0.08% | 07:07:46 |
| Short Stlg (Liffe) (Z9) | 99.42 | -0.01 | -0.01% | 07:06:52 |
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| Forex |
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| U.S. Dollar Index | 76.00 | -0.39 | -0.51% | 07:12:45 |
| US Dollar-Japanese Yen | 88.36 | -0.25 | -0.29% | 07:22:46 |
| EuroFX-US Dollar | 1.4760 | 0.0068 | 0.68% | 07:22:46 |
| US Dollar-Swiss Franc | 1.0274 | -0.0054 | -0.54% | 07:22:47 |
| British Pound-US$ | 1.6049 | 0.0080 | 0.80% | 07:22:47 |
| US$-Canadian Dlr | 1.0563 | -0.0049 | -0.49% | 07:22:46 |
| Yen (Globex) (Z9) | 1.1331 | 0.0043 | 0.43% | 07:12:41 |
| Euro FX (Globex) (Z9) | 1.4766 | 0.0098 | 0.67% | 07:12:45 |
| SwissFranc (Globex)(Z9) | 0.9746 | 0.0073 | 0.75% | 07:12:01 |
| British Pound(Glbx)(Z9) | 1.6059 | 0.0127 | 0.80% | 07:12:46 |
| Canadian$ (Globex)(Z9) | 0.9473 | 0.0070 | 0.74% | 07:12:38 |
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| Commodities |
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| Gold (Comex) (Z9) | 1055.5 | 11.1 | 1.06% | 07:12:41 |
| Silver (Comex) (Z9) | 17.840 | 0.340 | 1.94% | 07:12:21 |
| Copper (Comex) (Z9) | 286.4 | 8.5 | 3.04% | 07:12:42 |
| Crude Oil (Nymex) (X9) | 70.26 | 0.69 | 0.99% | 07:12:42 |
| Gasoline (Nymex) (X9) | 173.26 | 1.23 | 0.71% | 07:10:05 |
| Heating Oil(Nymex) (X9) | 179.31 | 1.2 | 0.67% | 07:12:42 |
| NaturalGas(Nymex)(X9) | 4.957 | 0.053 | 1.08% | 07:12:18 |
| Corn (CBOT) (Z9) | 364.25 | 4.50 | 1.25% | 07:12:44 |
| Soybeans (CBOT) (X9) | 917.75 | 5.75 | 0.63% | 07:12:44 |
| Wheat (CBOT) (Z9) | 468.75 | 5.50 | 1.19% | 07:12:34 |
Recent articles from this author
- Barchart U.S. Morning Call - Tuesday, March 16, 2010
- Barchart U.S. Morning Call - Monday, March 15, 2010
- Barchart U.S. Morning Call - Friday, March 12, 2010
- Barchart U.S. Morning Call - Thursday, March 11, 2010
- Barchart U.S. Morning Call - Wednesday, March 10, 2010
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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