Barchart U.S. Morning Call
Monday, October 26, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.15% and Dec S&Ps are up +1.50 points. The dollar, crude oil and Treasuries are weaker, while copper has pushed up to a 13-month high. Helping to propel European stocks higher is the 8.4% surge in Electrolux AB after the world's second-biggest appliance maker reported Q3 net income of 1.63 billion kroner, beating analysts' estimates of 829 million kroner. Limiting stock gains in Europe was the 9.7% tumble in ING Groep NV after the company proposed plans to riase 7.5 billion euros ($11.3 billion) in a stock sale that may dilute the value of current shares as it starts to repay a 10 billion-euro government loan sooner than originally planned. Also undercutting European share prices was the unexpected drop in the Nov German GfK consumer sentiment index which fell -0.2 to 4.0, its first decline in in 14 months, as concerns over rising energy prices and higher unemployment dampen the optimisim of an economic recovery.
The Asian markets today closed mostly higher with Japan +0.77%, China +0.03%, Taiwan +0.25%, Australia -0.60%, Singapore +0.05%, South Korea +1.27%, India -0.42%. Automakers led a rally in Asian stocks after Toyota Industries, a parts manufacturer controlled by Toyota Motor, jumped 7.4%, while Toyota Motor, the world's biggest automaker rose 1.7%. Kia Motors, South Korea's second-biggest automaker, gained 1.9% after Credit Suisse Group AG upgraded the company to "neutral" from "underperform." The upgrade also helped to boost Hyundai Motor, South Korea's largest carmaker, by 4.1%. South Korea's Q3 GDP rose 2.9% q/q, a larger-than-expected increase and the fastest pace of growth since Q1 of 2002, which is fueling speculation that South Korea may join Australia in raising interest rates when the Bank of Korea next meets on Nov 12 to review borrowing costs.
Overnight U.S. Stock News
December S&Ps this morning are trading up +1.50 points. The US stock market last Friday faded from the recent 1-year high and closed moderately lower (Dow Jones -1.08%, S&P 500 -1.22%, Nasdaq Composite -0.50%). Bearish factors included (1) a 13% plunge in Boston Scientific, which dragged health care stocks lower, (2) an 8.4% drop in Burlington Northern on weaker-than-expected Q4 guidance, which hurt transportation stocks, (3) a sharp 6.2% sell-off in Dow-component Boeing after reporting a bigger-than-expected loss and reducing its 2009 earnings guidance, and (4) continued concern about valuation levels with the S&P 500 trading at forward earnings of 17.6, well above the 5-year average of 15.3, (5) the breadth of last week's weakness with 9 of the 10 S&P 500 industries closing lower, led by the raw-materials, health care, and industrials companies.
Bullish factors included (1) an extraordinary 24% rally in Amazon on a stronger-than-expected earnings report, (2) an 8.5% surge in Apple on strong iPhone and Mac sales and hopes for new product announcements, (3) favorable earnings from New York Times, PNC Financial Services, and Capital One, (4) last Friday's stronger-than-expected Sep existing home sales report of +9.4% to 5.57 million units (versus expectations of +4.9% to 5.35 million), and (5) generally favorable Q3 earnings as 80% of companies have so far beat expectations versus the typical figure of 61%.
Verizon Communications (VZ) rallied 2.4% on speculation that its Q3 earnings results scheduled to be released later this morning will beat market expectations.
Corning (GLW) rose 1.6% in European trading after the company reported Q3 profit of 42 cents a share, better than analysts' estimates of 39 cents.
Today's Market Focus
December 10-year T-notes this morning are trading down -7 ticks. Dec T-note prices last Friday posted a new 1-month low and closed down 12 ticks. Bearish factors for T-note prices last Friday included (1) last Friday's stronger-than-expected Sep existing home sales report of +9.4% to 5.57 million units (versus expectations of +4.9% to 5.35 million), (2) supply overhang ahead of this week's heavy auction schedule, (3) some concern that the FOMC at its meeting next week may discuss a medium-term plan for removing liquidity and raising interest rates, (4) the scheduled completion this Thursday of the Fed's $300 billion Treasury purchase program, which will remove a big buyer from the Treasury market, and (5) techical weakness with a new 1-month low. The main bullish factor was the sell-off in the stock market, which boosted safe-haven demand for Treasury securities.
The dollar index this morning is weaker with the dollar/yen -0.25 yen and the euro/dollar +0.27 cents. The dollar index last Friday closed mildly higher by 0.374 points, recovering a bit from last Wednesday's 14-month low. Bullish factors included (1) last Friday's stronger-than-expected US existing home sales report, (2) last Friday's sell-off in US stocks, which sparked some safe-haven demand for the dollar, (3) some carry-over support from last Thursday's news that Bank of Canada Governor Mark Carney said that intervention to weaken the Canadian dollar "is always an option," which kept alive worries of intervention in support of the dollar from major G-7 central banks, and (4) some pre-weekend short-covering.
December crude oil prices this morning are trading down -26 cents and Dec gasoline is trading +1.79 cents. Dec crude oil prices last Friday closed down -69 cents, moving lower from last Wednesday's 1-year high of $82.00. Dec gasoline last Friday closed slightly lower by 0.04 cent, just below last Wednesday's 2-month high of 207.51 cents/gallon. Bearish factors last Friday included (1) carry-over weakness from OPEC Secretary-General El-Badri's comment last Thursday that OPEC may decide to increase production at its meeting in December depending on prices and the elimination of floating crude storage, (2) last Friday's mild rally in the dollar, (3) the reduced chances for a disruption of Nigerian oil production after the main Nigerian rebel group agreed to a renewed cease fire and peace talks, (4) the sell-off in the stock market, which depressed hopes about the economy and fuel demand, and (5) the weaker-than-expected UK Q3 GDP report of -0.4% q/q, which suggested an ongoing recession in the UK and continued weak fuel demand.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) VZ-Verizon (BEST earnings consensus $0.59), GLW-Corning (0.39), NOV-National Oilwell Varco (0.79), BIDU-Baidu (1.93), LO-Lorillard (1.52), MHP-McGraw Hill (1.05), VFC-VF Corp (1.93), VRTX-Vertex Pharm (-0.78), FLEX-Flextronics (0.09), PCL-Plum Creek Timber (0.08), BWP-Boardwalk Pipeline (.19), MAS-Masco Corp (0.08), ROP-Roper Industries (0.64), PRE-Partnerre (3.00).
Global Financial Calendar
| Monday 10/26/2009 |
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| United States |
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| 1030 ET | Dallas Fed Oct manufacturing activity index expected -0.5%, Sep -6.4%. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1300 ET | Treasury auctions $7 billion 5-year TIPS. |
| Germany |
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| 0300 ET | Nov German GfK consumer confidence survey expected +0.2 to 4.5, Oct +0.5 to 4.3. |
| France |
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| 1300 ET | Sep French total jobseekers, Aug 2,553,300. Sep jobseekers net change, Aug +18,100. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1078.40 | 1.50 | 0.14% | 07:14:12 |
| DJIA (CBOT) (Z9) | 9941 | 10 | 0.10% | 07:13:11 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2478.18 | 3.74 | 0.15% | 07:09:30 |
| London UK FTSE Index | 5253.59 | 11.02 | 0.21% | 07:09:30 |
| German Dax Index | 5763.85 | 23.60 | 0.41% | 07:09:33 |
| French CAC 40 Index | 3818.62 | 10.38 | 0.27% | 07:09:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10363 | 80 | 0.77% | 03:00:15 |
| Hong Kong Hang Seng | 22590 | 0 | 0.00% | 10/23/2009 |
| China CSI 300 Index | 3414 | 1 | 0.03% | 03:01:10 |
| Taiwan TAIEX Index | 7668 | 19 | 0.25% | 01:46:01 |
| Australian S&P 200 | 4830.3 | -29.1 | -0.60% | 01:47:03 |
| Singapore Str. Times | 2716.62 | 1.28 | 0.05% | 05:10:01 |
| South Korea KOSPI 200 | 217.45 | 2.72 | 1.27% | 05:03:24 |
| Bombay Sensex 30 | 16741 | -70.31 | -0.42% | 06:29:57 |
| Karachi KSE-100 | 9375 | 224 | 2.44% | 05:48:23 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.120 | -0.070 | -0.19% | 07:14:31 |
| Cash 10yr T-note Price | 101.020 | -0.015 | -0.05% | 07:24:31 |
| Cash 10yr T-note Yield | 3.496 | 0.006 | 0.16% | 07:24 |
| 5yr T-note (CBT)(Z9) | 115.170 | -0.040 | -0.11% | 07:14:22 |
| Cash 5yr T-note Price | 99.205 | -0.010 | -0.03% | 07:24:31 |
| Cash 5yr T-note Yield | 2.453 | 0.007 | 0.28% | 07:24 |
| 30-yr T-bond (CBT)(Z9) | 118.24 | -0.09 | -0.24% | 07:14:31 |
| Cash 30yr T-bond Price | 103.100 | -0.050 | -0.15% | 07:09:01 |
| Cash 30yr T-bond Yield | 4.301 | 0.009 | 0.21% | 07:08 |
| Eurodollars (CME)(Z9) | 99.650 | 0.000 | 0.00% | 07:12:01 |
| Eurodollars (CME)(H0) | 99.415 | -0.005 | -0.01% | 07:14:29 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 137.99 | -0.32 | -0.23% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.495 | -0.005 | -0.01% | 07:05:00 |
| Bunds (Eurex) (Z9) | 120.73 | -0.11 | -0.09% | 07:09:16 |
| Euribor (Eurex) (Z9) | 99.21 | 0.02 | 0.02% | 06:09:11 |
| UK Gilts (Liffe) (Z9) | 117.88 | -0.17 | -0.14% | 07:09:11 |
| Short Stlg (Liffe) (Z9) | 99.40 | 0.02 | 0.02% | 07:09:05 |
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| Forex |
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| U.S. Dollar Index | 75.35 | -0.12 | -0.16% | 07:14:30 |
| US Dollar-Japanese Yen | 91.81 | -0.25 | -0.27% | 07:24:33 |
| EuroFX-US Dollar | 1.5035 | 0.0027 | 0.27% | 07:24:33 |
| US Dollar-Swiss Franc | 1.0061 | -0.0027 | -0.27% | 07:24:33 |
| British Pound-US$ | 1.6340 | 0.0033 | 0.33% | 07:24:33 |
| US$-Canadian Dlr | 1.0534 | -0.0004 | -0.04% | 07:24:33 |
| Yen (Globex) (Z9) | 1.089 | 0.0032 | 0.32% | 07:14:32 |
| Euro FX (Globex) (Z9) | 1.5027 | 0.0027 | 0.18% | 07:14:31 |
| SwissFranc (Globex)(Z9) | 0.994 | 0.0025 | 0.25% | 07:14:30 |
| British Pound(Glbx)(Z9) | 1.6317 | 0.0011 | 0.07% | 07:14:32 |
| Canadian$ (Globex)(Z9) | 0.9484 | -0.0016 | -0.17% | 07:14:27 |
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| Commodities |
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| Gold (Comex) (Z9) | 1054.7 | -1.7 | -0.16% | 07:14:24 |
| Silver (Comex) (Z9) | 17.660 | -0.063 | -0.36% | 07:14:21 |
| Copper (Comex) (Z9) | 305.9 | 2.4 | 0.79% | 07:14:29 |
| Crude Oil (Nymex) (Z9) | 80.24 | -0.26 | -0.32% | 07:14:31 |
| Gasoline (Nymex) (Z9) | 207.03 | 1.79 | 0.87% | 07:06:22 |
| Heating Oil(Nymex) (Z9) | 210.78 | 0.32 | 0.15% | 07:13:12 |
| NaturalGas(Nymex)(Z9) | 5.393 | -0.091 | -1.66% | 07:14:23 |
| Corn (CBOT) (Z9) | 399.50 | 1.75 | 0.44% | 07:14:28 |
| Soybeans (CBOT) (X9) | 1010.00 | 4.00 | 0.40% | 07:11:26 |
| Wheat (CBOT) (Z9) | 550.25 | 2.50 | 0.46% | 07:13:48 |
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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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