Barchart U.S. Morning Call
Monday, October 12, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +1.26% and Dec S&Ps are up +7.70 points, both at 1-year highs. The dollar is weaker which has boosted commodity price, with silver surging to a 14-1/2 month high and crude oil climbing to a 3-week high. Sep German wholesale prices unexpectedly fell -0.2% m/m while the larger-than-expected -8.1% y/y drop marked the eleventh consecutive month of year-over-year price declines. Leading European share prices higher today is the 6.5% jump in Royal Philips Electronics NV, Europe's biggest consumer-electronics maker, after it reported an unexpected Q3 profit of 174 million euros ($256 million), when analysts had been expecting a 44.7 million euro loss. Fiat SpA, Italy's largest automaker, gained 6.1 after Morgan Stanley said in a report that investors may not have fully accounted for synergy potential with Chrysler Group LLC. Steelmakers in Europe strengthened after the World Steel Association predicted that the global steel market has bottomed and will grow by 9.2% next year as demand rebounds in the US, Europe and Japan.
The Asian markets today closed mixed with Japan closed for holiday, Hong Kong -0.93%, China -0.38%, Taiwan +0.37%, Australia -0.28%, Singapore +1.05%, South Korea -0.62%, India +2.31%. South Korean oil refiners lost ground after Woori cut its profit estimates for the companies and said refiners may report "earnings shock" in Q3 after margins for premium products narrowed and the won strengthened. Steelmakers in China fell after the Xinhua News Agency said Baoshan Iron & Steel, China's largest steelmaker, will cut November prices on hot-rolled and cold-rolled steel products by 400 yuan a metric ton, which may prompt other Chinese steelmakers to do the same which may cut into their future earnings. Limiting losses in Asian-Pacific markets was the strength in semiconductor and computer-memory chip makers after Deutsche Bank AG predicted that Q3 earnings for the companies will beat analysts' estimates.
Overnight U.S. Stock News
December S&Ps this morning are trading up +7.70 points and posted a fresh 1-year high. The US stock market last Friday bounced between gains and losses into early afternoon and then rallied to close higher (Dow +0.80%, S&P 500 +0.56%, Nasdaq Composite +0.72%). The S&P 500 Index climbed to a 2-week high. Bullish factors included (1) the unexpected narrowing of the Aug US trade deficit as US exports climbed for the fourth straight month to their highest level this year, a sign that the global economy may be on the mend, (2) strength in computer and computer-service companies after Barclays Plc upgraded the computer hardware industry to "positive" from "neutral," saying server and storage demand is picking up, (3) a rally in managed-care companies after analysts at Barclays said the shares had fallen too much on concern over Congress's pending overhaul of the health-care industry, and (4) the prediction from Morgan Keegan & Co. that with more US stocks trading at 52-week highs than at any time since Jun 2007, it bodes well for further price gains.
Bearish factors included (1) the report from the US Labor Department that showed job openings in the US fell in Aug to the lowest level in at least nine years, which signals that the economy hasn't improved enough to prompt companies to increase hiring, (2) the prediction from Evergreen Investments LLC that the US economy may slow to 1.5% growth in Q4 from 4% growth in Q3 as there is yet to be a ceiling on the unemployment rate or a floor on house prices, and (3) the 13 bp jump in the yield on the 10-year T-note after hawkish comments from Fed Chairman Bernanke that may signal the Fed will begin its interest rate tightening campaign sooner-than-expected.
General Electric (GE) rose 1.8% in pre-market trading after the biggest maker of appliances for new US homes rose on carry-over support from the surprising jump in Philips Q3 earnings. GE will post its earnings on Oct 16.
Plum Creek Timber (PCL) jumped 3.7% in European trading after the forest-products company was raised to "neutral" from "underweight" at JPMorgan Chase.
Today's Market Focus
December 10-year T-notes this morning are trading up +3 ticks. Dec T-note prices slumped last Friday and closed down -28 ticks. Bearish factors for T-note prices last Friday included (1) hawkish comments from Fed Chairman Bernanke who said that the Fed will be prepared to tighten monetary policy when the outlook for the economy "has improved sufficiently," indicating the Fed may be prepared to hike interest rates sooner rather than later, (2) supply overhang as bond dealers distribute the $78 billion in bonds and T-notes auctioned by the Treasury last week, and (3) the prediction from RBC Capital Markets that Thursday's "sloppy" $12 billion 30-year T-bond auction with weak foreign demand is in all probablility the first sign that foreign buying fatigue is setting in for US Treasuries. Bullish factors included (1) dovish comments from Fed Governor Tarullo who said that "although we can expect positive growth to continue beyond the third quarter, economic activity remains relatively weak" and that interest rates are likely to stay low for "an extended period," and (2) the report from the US Labor Department that showed US job openings in Aug fell by -21,000 to 2.39 million, the fewest since records began in 2000, signaling the US economy hasn't improved enough to prompt more hiring.
The dollar index this morning is weaker with the dollar/yen +0.37 yen and the euro/dollar +0.27 cents. The dollar index last Friday closed higher. Bullish factors for the dollar last Friday included (1) comments from Fed Chairman Bernanke who said that the Fed will be prepared to tighten monetary policy when the outlook for the economy "has improved sufficiently," which was a positive comment for the dollar's interest rate differentials, (2) the unexpected narrowing of the Aug US trade balance as exports climbed to their highest level of the year, and (3) the prediction from Brown Brothers Harriman & Co. that the yen will probably decline against the dollar over the next year as "momentum" fades from a tax break that the Japanese government gave to companies to encourage repatriation of overseas profits back to Japan. Bearish factors included (1) comments from Kansas City Fed President Hoenig who said "right now, monetary policy is extremely accommodative and will remain so," indicating he sees no hurry to raise interest rates, and (2) comments from Fed Governor Tarullo that while the US economy is growing again, the strength of the recovery shouldn't be exaggerated, and that interest rates are likely to stay low for "an extended period."
November crude oil prices this morning are up +$1.20 a barrel and at a 3-week high while Nov gasoline is trading +2.35 cents a gallon. Nov crude oil prices last Friday gyrated on both sides of unchanged in a volatile session before finally closing up 8 cents a barrel. November gasoline closed down -1.17 cents a gallon. Bearish factors included (1) the rally in the dollar index, (2) the report from the IEA that showed OPEC's compliance with its promised oil production cuts fell to 62% in Sep from 66% in Aug as more members cheat on their quotas and increase oil production, and (3) the prediction from tanker tracker Oil Movements that OPEC will increase oil shipments by +0.7% to 22.54 million bpd in the four weeks ending Oct 24. Bullish factors included (1) the IEA's hike in its 2010 global oil demand forecast for a third month to 86.1 million bpd, +350,000 bbl more than a previous forecast, on a stronger outlook for the world economy and higher-than-expected consumption in Asia and the Americas, and (2) the prediction from Bayerische Landebank that crude oil prices may soon rise to $80 a barrel as rising equity markets reinforce hopes that the global economy is on the mend, while a weaker dollar prompts investors to seek a hedge against inflation by purchasing commodities.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) SCHW-Charles Schwab (BEST earnings consensus $0.17), FAST-Fastenal (0.33), JBHT-J.B. Hunt Transport Services (0.28).
Global Financial Calendar
| Monday 10/12/2009 |
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| United States |
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| n/a | Government offices closed for Columbus Day; Markets open regular hours. |
| 1315 ET | U.S. Treasury assistant secretary for economic policy, Alan Krueger, speaks at the NABE annual meeting. |
| Germany |
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| 0200 ET | Sep German wholesale price index expected +0.3% m/m and -7.7% y/y, Aug +0.7% m/m and -8.3% y/y. |
| France |
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| 0530 ET | French Finance Minster Christine Lagarde and Bank of France Governor and ECB Council member Christian Noyer speak about indebted households and a government bill regulating credit. |
| United Kingdom |
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| 1901 ET | Sep UK RICS house price balance expected 1.7%, Aug 1.8%. |
| Japan |
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| n/a | Markets closed for Health-Sports Day. |
| Canada |
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| n/a | Markets closed for Thanksgiving Holiday. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1075.80 | 7.70 | 0.72% | 07:13:30 |
| DJIA (CBOT) (Z9) | 9869 | 62 | 0.63% | 07:13:20 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2471.23 | 30.64 | 1.26% | 07:08:30 |
| London UK FTSE Index | 5230.26 | 68.39 | 1.32% | 07:08:30 |
| German Dax Index | 5809.09 | 97.21 | 1.70% | 07:08:32 |
| French CAC 40 Index | 3858.81 | 59.20 | 1.56% | 07:08:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10016 | 0 | 0.00% | 10/9/2009 |
| Hong Kong Hang Seng | 21299 | -200 | -0.93% | 04:01:30 |
| China CSI 300 Index | 3152 | -12 | -0.38% | 03:01:16 |
| Taiwan TAIEX Index | 7600 | 28 | 0.37% | 01:46:00 |
| Australian S&P 200 | 4739.8 | -13.1 | -0.28% | 01:47:03 |
| Singapore Str. Times | 2680.47 | 27.96 | 1.05% | 05:10:07 |
| South Korea KOSPI 200 | 214.23 | -1.34 | -0.62% | 05:03:25 |
| Bombay Sensex 30 | 17027 | 384.01 | 2.31% | 06:29:57 |
| Karachi KSE-100 | 9643 | -126 | -1.29% | 05:47:31 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | #VALUE! | 0.030 | 0.08% | 07:13:10 |
| Cash 10yr T-note Price | 102.005 | -0.005 | -0.02% | 07:00:01 |
| Cash 10yr T-note Yield | 3.382 | 0.002 | 0.05% | 07:00 |
| 5yr T-note (CBT)(Z9) | 116.015 | 0.010 | 0.02% | 07:11:47 |
| Cash 5yr T-note Price | 100.040 | 0.000 | 0.00% | 07:00:01 |
| Cash 5yr T-note Yield | 2.348 | 0.000 | 0.00% | 07:00 |
| 30-yr T-bond (CBT)(Z9) | #VALUE! | 0.04 | 0.10% | 07:11:53 |
| Cash 30yr T-bond Price | 104.215 | 0.000 | 0.00% | 07:00:01 |
| Cash 30yr T-bond Yield | 4.223 | 0.000 | 0.00% | 07:00 |
| Eurodollars (CME)(Z9) | 99.615 | 0.005 | 0.01% | 06:52:13 |
| Eurodollars (CME)(H0) | 99.375 | 0.020 | 0.02% | 07:11:32 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.13 | 0.00 | 0.00% | 10/9/2009 |
| EuroyenTibor(SGX)(Z9) | 99.490 | -0.030 | -0.03% | 03:53:22 |
| Bunds (Eurex) (Z9) | 122.13 | 0.04 | 0.03% | 07:08:29 |
| Euribor (Eurex) (Z9) | 99.16 | 0.03 | 0.03% | 06:10:57 |
| UK Gilts (Liffe) (Z9) | 120.45 | 0.60 | 0.50% | 07:08:28 |
| Short Stlg (Liffe) (Z9) | 99.40 | 0.01 | 0.01% | 07:08:17 |
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| Forex |
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| U.S. Dollar Index | 76.21 | -0.14 | -0.19% | 07:13:25 |
| US Dollar-Japanese Yen | 90.16 | 0.37 | 0.42% | 07:23:32 |
| EuroFX-US Dollar | 1.4759 | 0.0027 | 0.27% | 07:23:32 |
| US Dollar-Swiss Franc | 1.0283 | -0.0031 | -0.31% | 07:23:32 |
| British Pound-US$ | 1.5800 | -0.0043 | -0.43% | 07:23:32 |
| US$-Canadian Dlr | 1.0336 | -0.0087 | -0.87% | 07:23:33 |
| Yen (Globex) (Z9) | 1.1109 | -0.0025 | -0.25% | 07:13:31 |
| Euro FX (Globex) (Z9) | 1.4761 | 0.0054 | 0.37% | 07:13:31 |
| SwissFranc (Globex)(Z9) | 0.9733 | 0.004 | 0.41% | 07:13:07 |
| British Pound(Glbx)(Z9) | 1.58 | -0.0032 | -0.20% | 07:13:24 |
| Canadian$ (Globex)(Z9) | 0.9682 | 0.0102 | 1.06% | 07:13:25 |
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| Commodities |
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| Gold (Comex) (Z9) | 1055.3 | 6.7 | 0.64% | 07:13:32 |
| Silver (Comex) (Z9) | 17.880 | 0.190 | 1.07% | 07:13:32 |
| Copper (Comex) (Z9) | 286.2 | 2.4 | 0.85% | 07:13:32 |
| Crude Oil (Nymex) (X9) | 72.97 | 1.20 | 1.67% | 07:13:31 |
| Gasoline (Nymex) (X9) | 179.15 | 2.35 | 1.33% | 07:12:51 |
| Heating Oil(Nymex) (X9) | 187.8 | 2.52 | 1.36% | 07:12:05 |
| NaturalGas(Nymex)(X9) | 4.888 | 0.118 | 2.47% | 07:13:05 |
| Corn (CBOT) (Z9) | 371.25 | 9.00 | 2.48% | 07:12:28 |
| Soybeans (CBOT) (X9) | 977.50 | 13.50 | 1.40% | 07:12:16 |
| Wheat (CBOT) (Z9) | 478.75 | 10.75 | 2.30% | 07:12:10 |
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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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