Morning Notes

21/04/2017 Argonaut Morning Note

U.S. stock indexes climbed intraday, led by gains in shares of financial and industrial companies. The Dow Jones Industrial Average rose 165 points, or 0.8%, to 20570 intraday. The S&P 500 was up 0.7%, and the Nasdaq Composite rose 0.9%. Also rising was the U.S. gold price overnight, which jumped 0.1% to 1,281.70 US$/oz. A stabilisation in oil prices and a stream of better-than-expected earnings reports helped lift major indexes. Signs of corporate and economic health should buoy stocks, analysts say, even as investors weigh doubts over the Trump administration's ability to push through policy changes like tax reform and fiscal stimulus. Still, some say the stock market has already largely priced in expectations of firming economic data and improving earnings.

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20/04/2017 Argonaut Morning Note

The Dow Jones Industrial Average fell Wednesday as energy shares slid with the price of oil and investors parsed another round of corporate earnings reports. Declines in energy stocks dragged on the blue-chip index, with the price of U.S. crude oil sliding 3.8% to $50.44 a barrel – its largest decline in more than a month -- after the U.S. Energy Information Administration said gasoline supplies rose for the first time since February. Energy shares were among the biggest decliners in the S&P 500, losing 1.4%. The U.S. gold price also fell overnight, dropping 0.7% to 1,280.30 US$/oz. Investors and analysts are watching for corporate earnings growth to support what many say are elevated stock prices, after signs of economic expansion and hopes for corporate-friendly policies from the Trump administration helped drive major indexes upward. Cooling economic data and concerns about the administration's ability to enact hoped-for tax cuts and regulatory rollbacks have weighed on major U.S. indexes in recent weeks, along with worries about rising geopolitical tensions. Investors' allocation to U.S. stocks fell to its lowest levels since January 2008 in a survey of global fund managers by Bank of America Merrill Lynch, with 83%, the highest ever, saying U.S. stocks are overvalued.

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19/04/2017 Argonaut Morning Note

Major stock indexes fell intraday, weighed by a slide in shares of banks and health-care companies. Investors have backed away from stocks in recent weeks while picking up government bonds as tepid economic data, as well as flaring political tensions around the world, stoked demand for haven assets. A series of disappointing earnings reports contributed to the retreat in stocks, investors and analysts said. With investors' expectations for pro-growth policies from the Trump administration waning, many say continued signs of corporate health will be key to stocks moving higher. The Dow Jones Industrial Average lost 124 points, or 0.6%, to 20512 intraday. The S&P 500 fell 0.3% and the Nasdaq Composite lost 0.3%. The U.S. gold price rose again overnight, jumping 0.4% at 1,289.20 US$/oz. Bank stocks slid after a disappointing earnings report from Goldman Sachs Group, whose first-quarter trading results fell short of those posted by its rivals. The KBW Nasdaq Bank Index of leading U.S. commercial lenders lost 0.9%.

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18/04/2017 Argonaut Morning Note

On Saturday, North Korea rolled a long-range ballistic missile, among other military equipment, through the streets of Pyongyang to commemorate the birth of the country's late founder, Kim Il Sung. The next day it unsuccessfully fired a ballistic missile, prompting a senior Trump administration official to warn that North Korea's provocative behaviour couldn't continue--a warning underlined Monday by Vice President Mike Pence, who is visiting the region.

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13/04/2017 Argonaut Morning Note

Shares of financial companies declined Wednesday, a day before Citigroup and J.P. Morgan Chase kick off earnings reporting season. The U.S. gold price was again a big gainer for the day rising 1.0% at 1,286.60 US$/oz. Big banks dragged on the broader market, underperformance that has become common in recent weeks. Over the past month, the KBW Nasdaq Bank index, a benchmark of 24 of the biggest U.S. lenders, dropped 7.5%, far exceeding the S&P 500's 1.1% decline during the same period. During this earnings season, U.S. companies were expected to report their strongest quarterly earnings since 2011, as of March 31, according to FactSet. Solid first-quarter results are needed to support the post-election stocks rally, some analysts say, noting that bets on soaring U.S. corporate profits led to the run-up in stock prices since early November. If stocks are to remain at these levels, earnings must live up to expectations, they say. "The market has priced in this earnings recovery," said Andrew Slimmon, portfolio manager with Morgan Stanley Investment Management. In the interim, investors have parsed political worries, from questions about the timing and likelihood of President Donald Trump's tax reforms to the French presidential election later this month to a spate of geopolitical worries from the Middle East to the Korean Peninsula.

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