Asian & Australia Equities Recap
Asian markets closed up across the board with declining concerns about a global trade war and speculation that North Korea is willing to give up its nuclear program. The Nikkei and Topix were up 1.79% and 1.27% respectively with energy, tech and utilities stocks outperforming. While all sectors were up, telecom, financials and real estate were the largest underperformers. Bank of Japan (BOJ) Governor Haruhiko Kuroda reiterated that the 2% inflation target is a top priority for the Bank of Japan. This may allay investor concerns about a deceleration in the quantitative easing policy pursued by the BOJ.
Hong Kong and Chinese markets closed up with the Hang Seng +2.09%, Hang Seng China Enterprise Index +2.67% and the CSI 300 +1.12%. All sectors were positive with tech, energy and financials stocks the largest outperformers while consumer staples, financials and real estate stocks were the biggest laggards.
In the Land Down Under, Aussie stocks were up in sympathy with Chinese and Japanese equities. The ASX finished +1.14% with telecom, utilities and energy stocks the largest outperformers. Consumer staples, financials and real estate stocks with the biggest underperformers. Retail sales for January were below consensus at 0.1% m/m vs. consensus 0.4%. The Reserve Bank of Australia (RBA) decided to leave its policy rate unchanged.
European Equities Recap
European equities are up across the board with the Euro Stoxx 600 +0.57%. Regional indices are also positive with the FTSE 100 +1.14%, DAX +1.00% and the CAC 40 +0.71%. Autos & Parts, materials and insurance stocks are the largest outperformers with real estate, media and food & beverage stocks the biggest underperformers. Germany February PMI was reported to be 52.7 vs. 59.8 for January. Germany Retail PMI for February was reported as 53.8 vs. 53.0 for January. Italian equities are rebounding this morning following yesterday’s sell-off after the mixed results from Italian parliamentary elections. If today’s rally holds, Italian equities will close above last Friday’s close.
Rates & Commodities Recap
US government bond yields are rallying with the yield on the 10-year back to 2.90%. 2-year fixed swaps rates are now imply a rate of 2.53%. The US Dollar index is down 0.44% with weakness against most major G7 currencies. In spite of the mixed Italian parliamentary elections, the EUR€ is up 0.73% this week. The strength in AUD$ is surprising given the the RBA’s decision to hold rates unchanged. While interest rate differentials favor the USD$, the AUD$ appears to be trading on speculation about capital flows. As a result, given Aussie exposure to capital flows related to industrial and base metals, we would expect the AUD$ to trade on speculation about potential for more tariffs. While the USD$ is weak in aggregate this AM, commodity prices are up across the board. WTI is now currently well above USD$63/barrel. We continue to reiterate our play on US E&Ps:
SPDR S&P Oil & Gas Exploration & Production ETF (XOP) Bull Call Spread
Precious metals are up across the board, even in the face of a weaker JPY¥. Does this suggest that investors are hedging the recent bounce back from concerns about a global trade war? We continue to favor our two Gold-related options trades as hedges for long-only portfolios:
VanEck Vectors Gold Miners ETF (GDX) Bull Call Spread
SPDR Gold Trust (GLD) Bull Call Spread
Cryptocurrencies Recap
Major cryptocurrencies are down across the board. Ripple is now down over 11% after trading up yesterday on speculation that Coinbase is posed to add the cryptocurrency to its suite of cryptocurrencies. Coinbase has denied this is under consideration. Two of Japan’s major cryptocurrency organizations will merge and form a self-regulating body: Japan Cryptocurrency Business Association (JCBA) and Japan Blockchain Association (JBA) will be merging in the wake of deepening discussions about stronger regulations. Zhang Ye, head of the technology unit at China’s Securities Regulatory Commission suggests Blockchain technology will need centralization. While he believes in the potential of blockchain, he suggests it needs to rely on a centralized infrastructure.
US Markets Pre-Market Preview & Recap
US equities are pointing to a positive open in NY again. The VIX is currently trading below 18.0. Implied volatility continues to mean-revert downwards for S&P 500, Russell 2000 and Nasdaq index options. However, while overall implied volatility is coming down, Skew on S&P 500, Russell 2000 and Nasdaq options remains rich. This “implies” investors are buying puts, but not at the same rate as they were last week.
US equity markets rallied again yesterday, with the S&P 500 +1.10%, Russell 2000 +0.84%, and the Nasdaq +1.00%. All sectors of the S&P 500 were higher, with Utilities, Financials, and Real Estate the biggest outperformers, while Healthcare, Tech, and Consumer Staples were the biggest underperformers. Market breadth was positive for the second day in a row with advances outpacing declines; the put-call ratio supports this sentiment as calling buying outpaced put buying on the S&P500.
XL Group Ltd (XL), CF Industries Holdings (CF), and Everest Re Group (RE) were the biggest gainers in the S&P 500 yesterday, while Marriott International (MAR), JB Hunt Transport Services (JBHT), and Nordstrom Inc. (JWN) were the biggest laggards. Clearside Biomedical (CLSD) and Transcontinental Realty Investors (TCI) were two of the most notable gainers on the Russell 2000, while Dermira Inc. (DERM) and Sparton Corp. (SPA) were two notable laggards. Micron Technology (MU) and Incyte (INCY) were the biggest positive movers in the Nasdaq, while Marriott International (MAR) and JB Hunt Transport Services (JBHT) were the biggest negative movers.
Source - https://www.quantamize.com/morning-quant-ride-mar-6-18/
Submitted March 06, 2018 at 08:59AM by QuantalyticsResearch http://ift.tt/2oTJmoj
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