Indices fail to capitalize on earnings boost
There are two things that really strike me about overnight news and market action.
First, when putting together the corporate news section below, it amazes me just how strong and broad the recovery appears to be getting with companies from across many sectors like aerospace, defense, transportation, pharma/biotech, financials, restaurants and more not just beating by a penny but beating by a lot.
Second, despite all of these great earnings, major world indices outside of Australia and Japan are trading lower today. This indicates that markets have already priced in positive news and high expectations and that some traders are starting to take profits against results. It also suggests that the big QE3 driven advance of the last year or more (and the rally of the last week) is nearing exhaustion and range bound trading may persist for some time particularly as we move out of April into May-June, a historically seasonally soft time of the year for stock markets.
It appears that once again, the main action may be focused in individual stocks on news rather than indices. Boeing leads the way, but we may also see positioning in technology names as today is the Super Bowl of tech earnings with Apple, Facebook, Qualcomm, Citrix and Texas Instruments all reporting after US exchanges close.
In currency action today, AUD has dropped to the bottom of the league after a softer than expected Australian inflation report sparked speculation the RBA could shift its stance from neutral back toward easing, particularly with the dollar having gained so much lately. In contrast, NZD has continued to trend upward ahead of today’s RBNZ decision where another interest rate hike is widely expected. CAD remains on the soft side while defensives gold, CHF and JPY have clawed back some of their recent losses.
Boeing $1.76 vs street $1.56, raised FY guidance to $7.15-$7.35 from $7.00-$7.20
Procter & Gamble $1.04 vs street $1.02
Ryder $0.92 vs street $0.87
Canadian National $0.66 vs street $0.62
Norfolk Southern $1.17 vs street $1.15
Yum! Brands $0.87 vs street $0.84
Discover Financial $1.31 vs street $1.25
Gilead Sciences $1.48 vs street $0.92
Amgen $1.87 vs street $1.94
Dow Chemical $0.79 vs street $0.70
General Dynamics $1.71 vs street $1.64
Northrop Grumman $2.40 vs street $2.15
Economic reports released overnight and this morning include:
Canada retail sales 0.6% vs street 0.5%, previous month revised down to 0.9% from 1.3%
China flash manufacturing PMI 48.3 as expected vs previous 48.0
France flash manuf PMI 50.9 vs street 51.9
France flash service PMI 50.3 vs street 51.3
Germany flash manuf PMI 54.2 vs street 53.8
Germany flash service PMI 55.0 vs street 53.3
Eurozone flash manuf PMI 53.3 vs street 53.0
Eurozone flash service PMI 53.1 vs street 52.5
UK public sector borrowing £4.9B vs street £8.5B
UK CBI trends orders (1) vs street 7
UK CBI trends prices 9 vs street 10
UK CBI trends business optimism 33 vs street 25
Australia consumer prices 2.9% vs street 3.2% vs previous 2.7%
Singapore consumer prices 1.2% vs street 1.1%
Economic reports due later today include:
9:45 am EDT US flash manuf PMI street 56.0
10:00 am EDT US new home sales street 450K
10:30 am EDT US crude oil inventories street 3.0 mmbbls
10:30 am EDT US gasoline inventories street 1.65 mmbbls
5:00 pm EDT NZ interest rate decision 0.25% increase to 3.00% widely