Live Index – Tue, 25 Aug 2015 Premarket
September E-mini S&Ps (ESU15 +3.65%) are up +3.50% and European stocks are up +4.75% as they shed overnight losses and rallied sharply after the PBOC cut its interest rate and reserve requirement ratios. Stocks also rose after analysts at JPMorgan Chase said a deep correction in the U.S. stock market is unlikely and it is time to start buying the dip after the recent market rout. Commodity prices and emerging-market currencies also rallied sharply after the PBOC cut interest rates. European stocks received a boost after German Aug IFO business confidence unexpectedly rose. Asian stocks closed mixed: Japan -3.96%, Hong Kong +0.72%, China -7.63%, Taiwan +3.58%, Australia +2.72%, Singapore +1.51%, South Korea +0.70%, India +1.13%. China’s Shanghai Composite fell to an 8-month low and Japan’s Nikkei Stock Index dropped to a 6-1/2 month low. The Asian markets were closed by the time China lowered interest rates so they have yet to react to the PBOC’s actions.
The dollar index (DXY00 +0.77%) is up +0.85%. EUR/USD (^EURUSD) is down -0.97% after ECB Vice President Constancio said that medium-term inflation risks in the Eurozone are “very low” and the ECB may respond to any material change to the outlook for price stability. USD/JPY (^USDJPY) is up +1.40%.
Sep T-note prices (ZNU15 -0.52%) are down -20.5 ticks as the sharp rally in stocks curbs the safe-haven demand for government debt.
The PBOC lowered the 1-year lending rate by 25 bp to 4.6% effective Wednesday and cut the 1-year deposit rate by 25 bp to 1.75%. The PBOC also lowered banks’ reserve requirement ratios by 50 bp to 18.00% in an attempt to boost bank lending. This is the fifth time in the last nine months the PBOC has cut its benchmark lending rate.
ECB Vice President Constancio said that medium-term inflation risks in the Eurozone are “very low” and “as always, the ECB Governing Council stands ready to use all instruments available within its mandate to respond to any material change to the outlook for price stability.”
The German Aug IFO business climate unexpectedly rose +0.3 to 108.0, better than expectations of -0.4 to 107.6.
Key U.S. news today includes: (1) June FHFA house price index (expected +0.4% m/m, May +0.4% m/m), (2) Jun S&P CaseShiller composite-20 home price index (expected +0.10% m/m and +5.10% y/y, May -0.18% m/m and +4.94% y/y), (3) Aug Markit services PMI (expected -0.6 to 55.1, Jul +0.9 to 55.7), (4) July new home sales (expected +5.8% to 510,000, Jun -6.8% to 482,000), (5) Aug U.S. consumer confidence from the Conference Board (expected +2.5 to 93.4, Jul -8.9 to 90.9), (6) Aug Richmond Fed manufacturing index (expected -3 to 10, Jul +7 to 13), (7) U.S. Congressional Budget Office’s release of its budget and economic outlook, and (8) the Treasury’s auction of $ 26 billion of 2-year T-notes.
There are 7 of the Russell 1000 companies that report earnings today: Best Buy (consensus $ 0.34), Toll Brothers (0.50), DSW (0.42), Valspar (1.26), Jack Henry (0.67), Solera Holdings (0.80), Lumentum Holdings (0.20).
U.S. IPO’s scheduled to price today include: none.
Equity conferences during the remainder of this week include: 9th Annual South East Asia Australia Offshore & Onshore Conference on Tue-Wed, 9th Annual Mining the Territory Conference on Wed, Pareto Healthcare Conference on Fri.
Best Buy (BBY -3.02%) reported Q2 EPS of 49 cents, better than consensus of 34 cents.
Apple (AAPL -2.50%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Wells Fargo.
JPMorgan Chase (JPM -5.27%) was upgraded to ‘Buy’ from ‘Outperform’ at CLSA.
Sherwin-Williams (SHW -2.69%) was upgraded to ‘Buy’ from ‘Neutral’ at Sterne Agee CRT.
Macy’s (M -3.50%) was upgraded to ‘Hold’ from ‘Sell’ at Deutsche Bank.
Adobe (ADBE -5.83%) was upgraded to ‘Outperform’ from ‘Neutral’ at Baird.
American Eagle (AEO -1.07%) was upgraded to ‘Outperform’ from ‘Market Perform’ at FBR Capital.
Bank of America (BAC -5.03%) was upgraded to ‘Outperform’ from ‘Market Perform’ at Bernstein.
SunEdison (SUNE +0.09%) was downgraded to ‘Neutral’ from ‘Buy’ at UBS.
Toll Brothers (TOL -4.73%) reported Q3 EPS of 36 cents, weaker than consensus of 49 cents.
KLX Inc. (KLX) reported Q2 adjusted EPS of 62 cents, higher than consensus of 58 cents.
Raven Energy Holdings reported a 10.4% passive stake in SunCoke Energy Partners (SXCP -6.80%) .
Ilex Partners reported a 5.0% passive stake in Genie Energy (GNE -2.54%) .
Great Point Partners reported a 5.87% passive stake in Adamas Pharmaceuticals (ADMS -5.73%) .
Fortune Brands (FBHS -5.27%) was initiated with a ‘Buy’ at Cantor with a price target of $ 58.
Sep E-mini S&Ps (ESU15 +3.65%) this morning are up +65.50 points (+3.50%) after China cut interest rates. Monday’s closes: S&P 500 -3.94%, Dow Jones -3.57%, Nasdaq -3.78%. The S&P 500 on Monday sold off to a 10-1/4 month low and settled sharply lower on negative carryover from Monday’s 8% plunge in China’s Shanghai Composite index. Stocks were also hurt by weakness in energy and raw-material producers after crude oil plunged to a 6-1/2 year low and copper sank to a 6-year low, and by panic selling and liquidation of stocks that pushed the VIX volatility index up to nearly a 4-year high. Stocks recovered from their worst levels on bargain hunting with the new 10-1/4 month low in the S&P 500.
Sep 10-year T-notes (ZNU15 -0.52%) this morning are down -20.5 ticks. Monday’s closes: TYU5 +17.00, FVU5 +11.50. Sep T-notes rallied on Monday to a 4-1/4 month nearest-futures high on strong safe-haven demand for T-notes after global stock markets plunged, and reduced inflation expectations that may prompt the Fed to delay an interest rate increase after crude oil dropped to a 6-1/2 year low and helped push the 10-year T-note breakeven inflation rate down to a 6-1/3 year low.
The dollar index (DXY00 +0.77%) this morning is up +0.790 (+0.85%). EUR/USD (^EURUSD) is down -0.0113 (-0.97%). USD/JPY (^USDJPY) is up +1.66 (+1.40%). Monday’s closes: Dollar Index -1.676 (-1.76%), EUR/USD +0.02338 (+2.05%), USD/JPY -3.59 (-2.94%). The dollar index on Monday sank to a 7-month low and closed sharply lower. The dollar was hurt by the plunge in global equity markets, which fueled speculation the Fed will delay an interest rate increase. USD/JPY slumped to a 7-1/4 month low as the rout in global stocks boosted the safe-haven demand for the yen.
Oct crude oil (CLV15 +2.62%) this morning is up +$ 1.17 a barrel (+3.06%) and Oct gasoline (RBV15 +1.22%) is up +0.0211 (+1.61%). Monday’s closes: CLV5 -2.21 (-5.46%), RBV5 -0.0765 (-5.53%). Oct crude and gasoline on Monday closed sharply lower with Oct crude at a 6-1/2 year low. Crude oil fell on the plunge in world stock markets and the slowdown in the Chinese economy, which will likely curb world energy demand. Crude oil prices also fell on comments from Iran’s Oil Minister who said his country will seek to regain oil sales and its crude output “at any cost.”
|US||0900 ET||Jun FHFA house price index expected +0.4% m/m, May +0.4% m/m.|
|0900 ET||Jun S&P CaseShiller composite-20 home price index expected +0.10% m/m and +5.10% y/y, May -0.18% m/m and +4.94% y/y.|
|0945 ET||Aug Markit services PMI expected -0.6 to 55.1, Jul +0.9 to 55.7. Aug Markit composite PMI, Jul +1.1 to 5|
|1000 ET||Jul new home sales expected +5.8% to 510,000, Jun -6.8% to 482,000.|
|1000 ET||Aug consumer confidence (Conference Board) expected +2.5 to 93.4, Jul -8.9 to 90.9.|
|1000 ET||Aug Richmond Fed manufacturing index expected -3 to 10, Jul +7 to 13.|
|1000 ET||U.S. Congressional Budget Office releases budget and economic outlook.|
|1300 ET||Treasury auctions $ 26 billion of 2-year T-notes.|
|GER||0200 ET||Revised German Q2 GDP, previous +0.4% m/m and +1.6% y/y (nsa).|
|0400 ET||German Aug IFO business climate expected -0.4 to 107.6, Jul 108.0. Aug IFO current assessment expected unch at 113.9. Aug IFO expectations expected -0.4 to 102.0, Jul 102.4.|
|UK||0430 ET||UK Jul index of services, Jun +0.3% m/m and +0.4% 3-mo/3-mo.|
|EUR||0650 ET||ECB Vice President Vitor Constancio speaks at an event in Mannheim, Germany.|
|JPN||1950 ET||Japan Jul PPI services expected +0.4% y/y, Jun +0.4% y/y.|
|Toll Brothers Inc||TOL US||4:49||Q3 2015 Earnings Release||Q3 2015||0.496|
|Best Buy Co Inc||BBY US||7:00||Q2 2016 Earnings Release||Q2 2016||0.342|
|DSW Inc||DSW US||7:00||Q2 2016 Earnings Release||Q2 2016||0.423|
|Valspar Corp/The||VAL US||7:30||Q3 2015 Earnings Release||Q3 2015||1.259|
|Best Buy Co Inc||BBY US||8:00||Q2 2016 Earnings Call||Q2 2016|
|DSW Inc||DSW US||8:30||Q2 2016 Earnings Call||Q2 2016|
|Toll Brothers Inc||TOL US||11:00||Q3 2015 Earnings Call||Q3 2015|
|Valspar Corp/The||VAL US||11:00||Q3 2015 Earnings Call||Q3 2015|
|Solera Holdings Inc||SLH US||17:00||Q4 2015 Earnings Call||Q4 2015|
|Jack Henry & Associates Inc||JKHY US||Aft-mkt||Q4 2015 Earnings Release||Q4 2015||0.67|
|Solera Holdings Inc||SLH US||Aft-mkt||Q4 2015 Earnings Release||Q4 2015||0.797|
|Lumentum Holdings Inc||LITE US||Q4 2015 Earnings Release||Q4 2015||0.195|