Market Review: November 23, 2018

Terrie AmengualDaily Market Report

Closing Recap

Friday, November 23, 2018

Equity Market Recap

· U.S. stocks closed mostly lower in what was a low volume abbreviated trading session (as expected) with US stock markets closing at 1:00 PM as energy and retail names slide. Overall, it was another soft week for major averages as the Dow and S&P posted weekly declines of roughly 3.5% while the Nasdaq Comp fell 4% on the week. The 10-year yield fell to 3.03% the lowest since Sept 28, while the dollar gained. Apple (AAPL) shares still weighing on the Dow and NASDAQ, with CNBC noting it’s down 26% in the last 36 sessions since the start of October, for its sharpest downturn in a decade. Another tumble in crude oil crushed energy stocks (falling around 7%), already the worst performers in the past month with tech close behind. A multitude of factors are beating up on crude, including Saudi output and bearish EIA data. In Europe, weak German PMI data weighed on the euro, while the Pound fell on Brexit fears. China tech names fell after the WSJ reported that the U.S. is urging allies to avoid Huawei equipment. All eyes on U.S. President Donald Trump and Chinese leader Xi Jinping for their meeting at the G20. Markets will look for updates on Black Friday sales (early read has been strong online sales and steady traffic at stores) this weekend and more next week ahead of Cyber Monday.

· China stocks fell overseas, down more than 2.5% ahead of next week’s U.S./China trade talks, and as tech names under pressure over a report that the U.S. has been pressuring foreign allies to avoid doing business with China’s Huawei Technologies Co. News of pressure over Huawei comes just ahead of trade talks between U.S. President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Argentina next week.

Commodities

· Oil prices decline for the second day in a row, hitting their lowest level in over a year on the back of concerns over an increase in global supply and a slowdown in economic growth. Brent crude fell below $60 per barrel for first time since Oct ’17 while the oil contracts fall for its seventh-straight weekly fall as investors increasingly focused on a coming OPEC meeting. Oil prices set to close at 1:30 PM EST, but prior to, WTI crude was down $3.78, or about 7% to $50.80 a barrel after rising 2.3% on Wednesday, and losing 6.6% Tuesday to settle at a more than one-year low of $53.43. For the week so far, WTI is down around 9%. Oil prices have slumped more than 25% from October highs amid rising US production (data showed inventories rose for a ninth week) and after reports last week that showed Saudi Arabia oil production of near 11M barrels a day.

· Gold futures slip on Friday, pulling back from Wednesday’s two-week high, and leaving the precious metal little changed as markets keep a close eye on the dollar and the Federal Reserve interest-rate plans over coming months. Upcoming meetings with China and US regarding trade will also likely be a near-term catalyst. Gold’s Wednesday close of $1,228 was the highest for a most-active contract since early November

Currencies & Treasuries

· The U.S. dollar moved higher vs. its main currency rivals early Friday while European worries about Brexit developments ahead the weekend sent the British Pound to session lows late morning around the $1.28 level vs. the dollar (down -0.5% and off yesterday highs 1.2927). The dollar fell against the Japanese yen below 112.80 The issue of what is to happen to Gibraltar, a British-held peninsula in the south of Spain following Brexit is the latest hurdle to complete the U.K.’s divorce from Brussels, with Spain demanding to get more of a say in the future of Gibraltar. On the data front, November PMIs for the EuroZone underperformed consensus estimates, with the composite index coming in at 52.4, versus 53 expected which sent the euro lower. Meanwhile, Treasury yields fell further with the 10-year hitting lows around 3.30% while the 2-year was steady around the 2.81% level.

Top movers, stories

· AAPL fell to lowest levels since early May as concern about slowing iPhone demand has hit shares and suppliers over the last 2-weeks (follows lower forecasts from several suppliers)

· ADSK was upgraded to buy from neutral at Argus with $160 tgt

· ALL estimates lowered at Raymond James saying consensus for 2019 is unreasonably high in the context of an elevated non-cat loss environment

· ATEN rises after Reuters reported the company is exploring options that include a potential sale of the company https://bit.ly/2S7AhoY

· CC said it will see ~$20M-$30M added liability in 4Q

· COL rises after the company and its deal with UTX received approval from China with restrictive conditions, according to statement posted on the website of China State Administration for Market Regulation.

· FOXF downgraded to neutral at Bank America while raise tgt to $70 from $60 as believe shares are nearly fully valued at current levels after a roughly 85% spike since April

· MA & V active after news that the two credit-card companies offered to trim fees they charge merchants when tourists in the European Union pay with plastic, Reuters reports

· OSTK CEO Patrick Byrne is staking his company’s future on Medici Ventures, the unit that controls blockchain-based trading system tZero and more than a dozen other blockchain startups, according to The Wall Street Journal https://on.wsj.com/2KsYDGW

· TSLA lowered the prices of the Model S and Model X in China; prices for the models were lowered by 12% to 26%, the company said

Sector movers:

· Energy stocks among the biggest sector decliners as oil slumped to the lowest in a year after Saudi Arabia signaled its output may have reached a record high and growing U.S. stockpiles stoked concerns over a potential supply glut; 52-week lows for many energy names in the S&P: HAL, SLB, DVN, VLO, NOV, BHGE, NBL, FTI

· Retailers active amid online sales updates: TGT and AMZN both announced Cyber Monday sales will last throughout the week to December 1st; online spending reaching $1.75 billion as of 5 p.m. Eastern Time Thursday, up 28.6% from last year, according to Adobe Analytics data. Many customers went online using their mobile devices, with smartphones driving a record 54.4% of traffic on Thanksgiving day

· China stocks fell overseas, down more than 2.5% ahead of next week’s U.S./China trade talks, and as tech names under pressure over a report that the U.S. has been pressuring foreign allies to avoid doing business with China’s Huawei Technologies Co. News of pressure over Huawei comes just ahead of trade talks between U.S. President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Argentina next week.

· Metals were under pressure (X, STLD, FCX, BHP) as hope for progress in U.S.-China trade talks is dimming ahead of next week’s meeting between presidents Donald Trump and Xi Jinping

· Airline stocks gained (AAL, DAL, JBLU, ALK, LUV) as oil prices continued to fall amid concerns about oversupply; the bounce in airlines helped push the Dow Transports index higher

_______________________________________________________
Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading

Register