Morning Notes

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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12/04/2017 Argonaut Morning Note

U.S. stocks and government bond yields slid intraday as investors piled into haven assets. The Dow Jones Industrial Average fell 7 points to 20,651, with shares of financial and technology companies posting among the biggest losses. The S&P 500 fell 0.3% and the Nasdaq Composite lost 0.4%. Stocks have wavered in recent sessions after posting a series of records in early March. The big gainer for the day was the U.S. gold price which jumped 1.6% to 1,274 US$/oz. Details on potential U.S. policy changes like tax reform and infrastructure spending remain scarce, analysts said, giving investors few reasons to place fresh bets on the so-called Trump trade that initially lifted shares of financial and industrial companies while putting pressure on government bonds. Geopolitical developments across the globe contributed to the risk-off mood, analysts said, as Secretary of State Rex Tillerson made his first official trip to Moscow and South Korean officials sought to tamp down concerns over the possibility of a pre-emptive U.S. military strike on North Korea.

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10/04/2017 Argonaut Morning Note

President Donald Trump and Chinese President Xi Jinping professed progress in their relationship but showed no signs of consensus on trade or North Korea as they wrapped up a 21-hour summit upended by a U.S. air strike on Syria. Investors bought up shares of defence companies Friday following the strike on a Syrian air base.  Major indexes swung between slight gains and losses through much of the session after the monthly jobs report showed weak employment growth in March. Defence stocks were some of the biggest gainers. The Dow Jones Industrial Average slipped 6.9 points, or less than 0.1%, to 20,656 The S&P 500 fell 0.1% and Nasdaq Composite was flat. Rising for the day also was the U.S. gold price which added 0.2% at 1,253.80 US$/oz. The U.S. strike on Syria also sent oil prices higher. The strikes marked the first time a U.S. military operation deliberately targeted the regime of Syrian President Bashar al-Assad and came a day after President Donald Trump said the chemical attack in Idlib province this week had changed his thinking on Mr. Assad. U.S.-traded crude oil gained 1% to $52.24 a barrel.  Also Friday, investors reacted to a weaker-than-expected jobs report. The Labor Department said nonfarm payrolls rose by a seasonally adjusted 98,000 in March from the prior month. That was far below the 175,000 new jobs economists surveyed by The Wall Street Journal had expected to be added in the month.

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07/04/2017 Argonaut Morning Note

U.S. stock indexes climbed intraday as shares of energy companies rose with oil prices. Reports pointing to strength in the U.S. economy have supported stocks recently, even as investors have weighed the possibility that policies like tax cuts might not be imminent. The Dow Jones Industrial Average rose 26 points, or 0.1%, to 20673. The S&P 500 gained 0. 2% and the Nasdaq Composite added 0.2%. The U.S. price of gold dropped 0.3% at 1,251.6 US$/oz. "The economy is getting fundamentally better, even absent any tax reform," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company. "There's been a lot of skeptics out there throughout the recovery, but in general, the U.S. consumer is in a much more comfortable place."

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06/04/2017 Argonaut Morning Note

U.S. stocks slipped Wednesday, giving back the day's gains late in the session. The Dow Jones Industrial Average was up nearly 200 points early on, but retreated after the Federal Reserve released minutes from its March policy meeting that showed officials agreed that they would likely begin reducing the central bank's balance sheet later this year. The Dow Jones Industrial Average fell 16 points, or 0.1%, to 20674 Wednesday. The S&P 500 lost 0.2%, and the Nasdaq Composite fell 0.5%. U.S. gold prices hovered around the flat line eventually dropping 0.02% at 1,255.40 US$/oz. According to the minutes, some Fed officials said stock prices looked high relative to some valuation measures, citing the possibility of a correction in financial markets as a risk to their economic forecasts. Companies in the S&P 500 have traded at more than 20 times their past 12 months of earnings for 106 consecutive sessions, the longest stretch since 2010, according to FactSet. The move toward reducing the Fed's portfolio, which includes assets purchased during and after the 2007-09 recession, came after data signalled strength in the labor force, reinforcing post-election bets on an expanding U.S. economy. Stocks rose broadly early in the session following gains in oil prices and data that showed the U.S. private sector added a better-than-expected 263,000 jobs in March, according to payroll firm Automatic Data Processing Inc. and Moody's Analytics. The Labor Department's job report for March is expected Friday.

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