Morning Notes

24/02/2017 Argonaut Morning Note

Declines in biotechnology shares dragged down the Nasdaq Composite, pressuring an index that has soared so far this year. The Nasdaq fell 0.5% intraday but is up more than 8% in 2017, outperforming both the Dow Jones Industrial Average and the S&P 500, which are up more than 5%. The tech-heavy index has closed at a fresh high 19 times so far this year-its most records in a year since 1999, according to the WSJ Market Data Group. The Nasdaq Biotechnology Index shed 0.4% while technology shares also slipped, putting the Nasdaq Composite on course for a second straight day of declines. The S&P 500 rose less than 0.1% and the Dow industrials rose 0.2% intraday, on course to close at a fresh high. The U.S. gold price also rose overnight up 1.0% at 1,249.30 US$/oz. Stocks have climbed since Election Day, as corporate earnings have improved, data has shown growth in the U.S. economy and investors have bet the new U.S. administration will implement tax cuts and fiscal stimulus. Some investors remain cautious, however, noting stocks are getting expensive. Companies in the S&P 500 traded at about 22 times their past 12 months of earnings as of Wednesday, above their 10-year average of 15.8, according to FactSet.

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23/02/2017 Argonaut Morning Note

U.S. stocks bounced around the flat line Wednesday as a pullback in the price of oil weighed on shares of energy companies. Energy companies in the S&P 500 were the worst performers in the index Wednesday, falling 1.1%, as the price of U.S.-traded crude oil declined. On Tuesday, oil rose to its highest settlement since December. The S&P 500 and the Nasdaq Composite slipped 0.1% in recent trading, while the Dow Jones Industrial Average rose 0.1%. The U.S. gold price was up slightly overnight finishing at 1,237.30 US$/oz. The pause follows a strong day of gains on Tuesday when all three indexes closed at new records. Small daily moves, most of which are minor gains, have been a theme for the stock market in recent months. The S&P 500 has not posted a 1% or more decline in 90 trading days, the longest stretch since 2006, according to WSJ Market Data Group. Similarly, the index has failed to post a 1% or more gain since Dec. 7, the longest such stretch since 2014. Even without big moves, since Dec. 7 the S&P 500 has risen about 5.5%. Federal Reserve officials said they anticipated raising short-term interest rates "fairly soon" and some officials said it might be appropriate to move "potentially at an upcoming meeting," according to minutes from the Fed's latest meeting published Wednesday.

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22/02/2017 Argonaut Morning Note

U.S. stocks intraday climbed toward fresh records, lifted by gains in shares of energy and consumer-staples companies. The Dow Jones Industrial Average had added 67 points, or 0.3%, to 20691, heading toward its eighth consecutive closing high. The S&P 600 had gained 0.4% and the Nasdaq Composite had risen 0.3%, after the three indexes closed at records Friday. Investors have been betting that potential tax cuts and fiscal stimulus will boost corporate profits and keep stocks moving higher, as interest rates rise from ultralow levels. Some analysts have warned that stocks have become pricey relative to their historical averages. The 12-month forward price-to-earnings ratio for the S&P 500 rose Friday to its highest level since 2004, according to FactSet. Shares of consumer-staples companies in the S&P 500 rose 0.7% intraday and were among the best performers in the broad index. The U.S. gold price finished slightly lower at 1,236.2 US$/oz.

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21/02/2017 Argonaut Morning Note

U.S. markets closed were closed overnight for the President’s day public holiday. Global stocks continued their slow climb higher Monday, even as political jitters drove steep swings in the European government bond markets. In European stock markets, the basic resources sector led Monday's gains amid a recovery in copper and oil prices. The Stoxx Europe 600 added 0.2% in its ninth advance in 10 sessions after Asian shares ended a touch firmer, drawing encouragement from Friday's late advance on Wall Street. "If [President Donald] Trump can actually execute spending in infrastructure and lower tax rates in U.S., it'll have a profound knock-on effect in the world, and that is why I'm generally positive about stock markets," said Michelle McGrade, chief investment officer at TD Direct Investing in London. Recent gains in Europe have come despite escalating concerns over Greece's bailout and coming elections in France, Germany and the Netherlands, which have rattled the region's sovereign bond markets.

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20/02/2017 Argonaut Morning Note

The Dow Jones Industrial Average turned slightly positive at the 4 p.m. close Friday, by fewer than five points, continuing its streak of record closes. The blue-chip index added 4 points to 20,624, marking its seventh straight close at a new high. The S&P 500 added 3.9 points, and the Nasdaq Composite added 24 points. For the week, the Dow industrials and S&P 500 recorded gains that exceeded 1%. Some investors said Friday's lacklustre performance marked a pause after signs of economic expansion, improving corporate profits and the potential for tax cuts and deregulation helped push stocks to multiple highs in recent sessions. Energy shares in the S&P 500 slipped as the price of U.S. crude oil edged down 0.5% to $53.47 a barrel. A record surplus of gasoline, brought on by a decline in U.S. consumption, is emerging as a threat to the yearlong rally in crude prices, some analysts said. Some investors said Friday that with stocks at records, questions remain about the prospects for policies such as increased government spending and corporate tax adjustments that have fuelled stocks' rally and prompted selling in government debt since the U.S. election.

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