Opening Bell: EU Recession Fears, Mixed Earnings Weigh On Stocks; Iron Soars
Investing.com | Feb 06, 2019 08:10
- European recession fears weigh on EU stocks, U.S. futures
- Treasury yields drop; USD keeps climbing
- AUD sells off on RBA shift to neutral policy
- Brazilian glitch sends iron ore towards $90 level
- h2 Key Events/h2
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Canadian Building Permits for December are released Wednesday.
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Canadian Ivey PMI for January is released on Wednesday.
- Markets are closed in China, Hong Kong, Korea, Malaysia, Singapore, Taiwan and New Zealand.
- Central banks in U.K. set rates on Thursday.
- MetLife (NYSE:MET) (NYSE:earnings after market close today, with a $1.3 EPS, up from $1.1 EPS the same quarter last year.
- Twitter (NYSE:upbeat data .
- Philip Morris (NYSE:PM) (NYSE:corporate results Thursday before market open. EPS is expected to be $1.17, down from 1.27 for the same quarter last year, on $7.39 billion revenues, down from $8.29 billion revenue last year.
- Hasbro (NASDAQ:HAS) (NASDAQ:earnings report Friday before market open. Analysts expect an EPS of $1.68, down from last February’s $2.3, and revenues of $1.52 billion, down from $1.716 million for the same quarter last year.
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Canada’s S&P/TSX Composite closed up 0.64 percent on Tuesday.
- The MSCI All-Country World Index fell 0.1 percent.
- The U.K.’s FTSE 100 edged 0.3 percent lower.
- The MSCI Emerging Market Index gained 0.1 percent to
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The Canadian loonie was down 0.39 percent against the U.S. greenback early Wednesday, trading at 0.7587.
- The Dollar Index climbed 0.05 percent, paring a 0.16 percent advance when it reached the highest in almost two weeks on its fifth straight advance.
- The euro fell 0.2 percent to $1.1385, the weakest in almost two weeks.
- The British pound declined 0.1 percent to $1.2933.
- The Japanese yen advanced 0.3 percent to 109.67 per dollar.
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Canada’s 10-year yield was down early Wednesday at 1.926, a 0.67-percent decrease.
- The yield on 10-year Treasuries dropped two basis points to 2.68 percent.
- Germany’s 10-year yield fell one basis point to 0.16 percent.
- Britain’s 10-year yield slid two basis points to 1.209 percent.
- Japan’s 10-year yield declined less than one basis point to -0.013 percent.
- West Texas Intermediate crude fell 0.3 percent to $53.49 a barrel, the lowest in more than a week.
- Gold declined less than 0.05 percent to $1,314.85 an ounce.
European shares slid lower alongside futures on the German factory orders reinforced the outlook of a European slowdown and mixed earnings results failed to reassure investors that momentum is not abating.
U.S. President Donald Trump’s State of the Union address on Tuesday, lacking signals of any progress on trade talks with China, also fell short of shoring up market sentiment.
The BNPP ) dragged bank stocks lower after the French lender cut its 2020 target—though still beating full-year profits estimates—adding to the weight of broader corporate soft guidance which has been clouding the market since the end of last year. The pan-European benchmark later managed to crawl above neutral levels.
The earlier Asian session once again saw thin trading amid Lunar New Year holidays. However, Trump's comment on a two-day summit with North Korea leader Kim Jong Un at the end of the month boosted Japan’s yen rally. A stronger currency typically weighs on stocks, making a country's exports less competitive in a global market that is already hyper sensitive to trade jitters.
h2 Global Financial Affairs/h2In Tuesday's U.S. session, equities climbed for the fifth straight day, as gains in the technology sector outweighed a retreat in financial shares, triggered by falling Treasury yields. Trading volumes, though, remained low.
The Financials (-0.27 percent) slipped lower.
Earnings and economic data were mixed, giving investors little to trade on ahead of Trump’s address to the nation. Trading volumes were 15 percent below the 30-day average, raising questions as to how representative of the broader market recent price moves are. Meanwhile, the SPX tested the 200 DMA, only to retreat.
The Dow Jones Industrial Average climbed 0.68 percent, extending an upside breakout of its 100 and 200 DMAs for a third day.
The some software shares are the hiddent gems of the sector.
The Russell 2000 gained 0.22 percent, crawling above the 100 DMA, while the 200 DMA remains almost 4.5 percent away.
Overall, global equities are nearing levels not seen since November, in part spurred by the interest rate decision .
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Also looming in the background are next week's talks in Beijing between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese counterparts.
The yield on dollar seal its fifth consecutive daily rise—though the USD found resistance by the 100 DMA and a downtrend line since December 13, giving up some gains.
The shift to a neutral stance on policy. Technically, the Aussie found support by an uptrend line since the beginning of the year, as it seems to be forming an H&S Continuation pattern, bearish in a downtrend.
In commodities news, VALE ) declared force majeure on a number of futures contracts after being ordered to suspend operations in one of its key mines in Minas Gerais state—thereby raising the prospect of a supply deficit this year.
Copper climbed to its highest level year-to-date, crossing over the 200 DMA and approaching levels that would signal a bottom.
may be set for failure .
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