Month: February 2017

This is how the Fed could surprise markets Wednesday

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Fed is not expected to take any action, but it could turn sentiment Wednesday.

Strategists say while the Fed is not expected to raise interest rates, it could talk the talk of a confident-sounding central bank, set on hiking rates three times, as it has forecast for this year. That could be negative for bonds, and interest rates could rise as a result since many expect just two hikes.

Stocks could also see some positive spillover Wednesday from Apple’s late Tuesday earnings. Apple jumped more than 3 percent after its report.

Jim Caron, fixed income portfolio manager at Morgan Stanley Investment Management, said the risk for markets is the Fed sounds more hawkish in its 2 p.m. ET statement. Caron said he doesn’t expect to get much out of the statement, but he’s waiting for Fed Chair Janet Yellen’s Feb. 15 congressional testimony on the economy. According to Fed funds futures, traders see about a 20 percent chance of a rate hike for March.

“If she’s thinking about doing something, she’ll probably tip her hand [in February’s testimony] and set us up for what she’s going to do in the March meeting,” he said. “The March meeting is a lot closer than we all probably think … that’s particularly something to look at and focus on. CPI has been higher. Inflation seems to be stabilizing and moving higher. Economic activity and growth and a lot of those confidence measures, like consumer confidence, are looking good. Broadly speaking, the data has been good as well.”

For that reason, the data is also key on Wednesday. There are monthly auto sales issued by auto manufacturers throughout the morning. ISM manufacturing data is at 10 a.m. ET, and Markit PMI data is at 9:45 a.m. There is also the 8:15 a.m. ET release of ADP payrolls, expected at 164,000.

Stocks sold off Tuesday after a big decline Monday, but the Nasdaq turned positive. The Nasdaq was lifted by biotech stocks after President Donald Trump met with pharmaceutical company CEOs and promised less regulation and tax reform. The Dow was off 107 points at 19,864 and the S&P 500 was off 2 at 2,278. The Nasdaq rose 1 to 5,614.

Treasury yields continued to trade lower Tuesday, as investors moved into bonds amid concerns the controversy surrounding Trump’s immigration actions are slowing his other plans for the economy. There is also concern that he and advisors have made protectionist sounding comments, and that a trade war could be looming. The 10-year yield was at 2.45 percent in late trading.

“People are pessimistic about Trump. That’s what this is all about. You have to be willing to look through the noise. There’s a lot of noise,” said Woo.

The dollar declined Tuesday after Trump trade aide Peter Navarro was reported as saying Germany uses the “undervalued” euro to its advantage. Trump also told drug executives that other countries intentionally devalue their currencies to their advantage. This jawboning of the dollar led to a decline of as much as 1 percent at a low point in the dollar index Tuesday.

Bob Doll, Nuveen Asset Management chief equities strategist, said the market could change its focus Wednesday from Trump’s immigration policy. “He’s quickly going to change the subject to the Supreme Court nominee, so I think the noise will move from the immigration thing to the Supreme Court thing. It’ll fade when we have something new to talk about,” he said.

Doll said the market has been impatient about tax reform but he expects to see action by the second half of the year.

“Too many people thought we had a Republican president, a Republican House, Republican Senate and they were going to all get along peachy keen … but it’s going to be bumpy, because they’re not all going to see the ball the same way. I think it’s going to be inconsistent, and it will come back to is the economy OK and are earnings OK? If they are, the market will be OK,” he said.

There’s a flurry of earnings before the morning bell, including Anthem, Marathon Petroleum, Altria, Ingersoll-Rand, Avery Dennison, Energizer, Pitney Bowes, Johnson Controls and Tupperware. Facebook reports after the close, as does MetLife, Allstate, Ameriprise, Tractor Supply, Lincoln National, American Financial Group, IAC/InterActive, Cirrus Logic, Symantec, Cabot and Shutterfly.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian shares trade mixed, Mitsubishi Motors rally 14%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Asian shares were mixed on Wednesday as investors parsed through economic data out of Asia ahead of the FOMC meeting announcements.

Japan’s Nikkei 225 recovered from earlier losses of more than 0.5 percent to trade down 0.08 percent, breaking away from the correlation of a weaker yen hurting the benchmark index.

Shares of Toshiba fell 0.83 percent, earlier dropping as much as 3 percent after the Wall Street Journal reported Wednesday that Toshiba will stop building nuclear power plants after incurring billions of dollars of losses to complete delayed projects in the US.

Gaming giant Nintendo dropped 3.73 percent after it cut its profit outlook by 10 billion yen (USD 88 million) due to weak console sales. Its latest console, the Switch, is expected to be released in March.

Japanese automakers were also in the red, with Toyota Motor down 1.05 percent, Nissan Motor off 0.4 percent and Honda Motor slipped 0.47 percent.

But Mitsubishi Motors rallied 13.7 percent, after it revised its full fiscal year guidance from operating losses of 27.6 billion yen (USD 244 million) to profits of 1 billion yen (USD 8.8 million) on the back of better cost reduction methods.

There is “appeal in contributions from new products, such as compact SUVs for global markets and minivans for Indonesia sales growth, synergies with Nissan Motor, and cost savings over the longer term,” said Masataka Kunugimoto, research analyst at Nomura, in a note on Tuesday.

Australia’s ASX 200 was up 0.36 percent, underpinned by its gold sub-index, which was up 1.11 percent and its energy sub-index, which gained 1.12 percent.

Over in South Korea, the benchmark Kospi added 0.5 percent, after trade data showed that January exports jumped 11.2 percent from the previous year, at its fastest pace of growth since 2012.

South Korea’s December industrial output slipped 0.5 percent in December, missing a Reuters poll forecast expecting an increase of 0.3 percent.

China’s official manufacturing Purchasing Mangers Index (PMI) for January came in at 51.3, higher than a forecast of 51.2, while its official services sector PMI came in at 54.6 in January. A figure above 50 represents expansion in the sector, while a figure below 50 indicates contraction.

Mainland Chinese markets will remain shut through Thursday for the Lunar New Year holiday. Markets in Vietnam, Malaysia and Taiwan are also shut for holidays.

On the currency front, the dollar index remained under pressure trading at 99.631, compared to levels above 100 seen this week.

“The travel ban continued to weigh on US sentiment this week, whilst Trump lashed out at China, Japan and Germany, accusing them of devaluing their currencies at the dispense of the US economy,” said Matt Simpson, senior market analyst at ThinkMarkets in a note on Wednesday.

Overnight, US top trade adviser Peter Navarro accused Germany of using a “grossly undervalued” euro to gain advantage over the U.S. and its own European Union partners.

These charges were rejected by German Chancellor Angela Merkel who said “Germany is a country that has always called for the European Central Bank to pursue an independent policy,” in a news conference.

The euro climbed after the comments, hitting a two-month high of USD 1.0811 and pressuring the dollar lower below the 100 handle. At 9:30 a.m. HK/SIN, the euro/dollar stood at USD 1.0792.

The yen also rose for the fourth straight session against the softer greenback, to trade at 112.97, as the Australian dollar held steady at USD 0.7561.

The Kiwi was weaker at USD 0.728, below USD 0.7300 levels after data showed that New Zealand’s jobless rate rose to 5.2 percent in the fourth-quarter and wage growth remained muted at 0.4 percent from the previous quarter, and 1.6 percent on-year.

On Tuesday during Asian hours, US crude slipped 0.11 percent to USD 52.74 a barrel, as global benchmark Brent dipped 0.16 percent to USD 55.49.

Stateside, the Dow Jones industrial average fell 0.54 percent to close at 19,864.09, while the S&P 500 slipped 0.09 percent to finish at 2,278.87, and the Nasdaq finished up 0.02 percent at 5,614.79.

Investors will eye announcements from the Federal Reserve’s first monetary policy meeting of the year due Wednesday afternoon with the central bank expected to hold steady.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow