Morning Preview: November 23, 2018

Terrie AmengualDaily Market Report

Early Look

Friday, November 23, 2018

U.S. stock futures point to a weaker open on this abbreviated trading session (major US stock markets to close at 1:00 PM EST today), led by a decline in Asian stocks overnight and plunging oil prices. China stocks fell over 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. In Asian markets, The Nikkei Index was closed, the Shanghai Index dropped -65 points to end at 2,579 and the Hang Seng Index fell -91 points to settle at 25,927. In Europe, the German DAX is up around 20 points at 11,150, while the FTSE 100 is flat above the 6,950 level. WTI crude prices falls more than 4% to below $53 per barrel as selling momentum accelerates (on track for its 7th straight weekly decline). Currencies active yesterday as the dollar settled in the lower 1.32 level vs. the Canadian dollar after printing a five-month high at 1.3318 on Tuesday. Steadying oil prices have helped the Canadian Dollar find a footing after dropping sharply. Meanwhile, Sterling climbed back above $1.29 after the leak of a draft text yesterday on the UK’s future relationship with the EU after Brexit yesterday with European diplomats saying only a few manageable issues remained outstanding (but back below 1.29 this morning as the dollar moves higher). News today will likely focus on more Brexit headlines, declining oil prices and several headlines related to the pace of online retail sale and traffic and big name retailers on this Black Friday and into Cyber Monday.

Market Closing Prices Yesterday

· The S&P 500 Index gained 8.04 points, or 0.30%, to 2,649.93

· The Dow Jones Industrial Average slid -0.95 points, or 0.00%, to 24,464.69

· The Nasdaq Composite climbed 63.43 points, or 0.92%, to 6,972.25

· The Russell 2000 Index advanced 19.27 points, or 1.31% to 1,488.28

Events Calendar for Today

· 9:45 AM EST Markit US Manufacturing PMI, Nov-P…est. 55.7

· 9:45 AM EST Markit US Services PMI, Nov-P…est. 55.0

· 1:00 PM EST Baker Hughes Weekly Rig Count

World News

· Germany’s economy shrank in the three months to September, weighed down by lackluster foreign trade and households’ reluctance to buy new cars. German gross domestic product was 0.2% lower in the quarter

· South Africa’s central bank unexpectedly raised its benchmark interest rate by 25 bps to 6.75% while also presenting a gloomier outlook for growth and inflation at a policy meeting on Thursday

· Former FBI Director James Comey said he’s received a subpoena from House Republicans, adding that he’s eager to answer any questions as long as his testimony isn’t behind closed doors.

· China’s central bank continued to sell its holdings of foreign exchange in October, but eased off from September, when it recorded its largest foreign-exchange sales in 20 months. The People’s Bank of China sold a net 91.58 billion yuan ($13.21 billion) of foreign exchange in October, down from 119.4-billion-yuan net sales recorded in September.

· Eurozone consumers’ confidence is wavering, with a closely watched indicator of sentiment at its lowest level since March 2017 amid uncertainty over global economic growth and rising volatility

Sector News Breakdown

Consumer

· Tesla (TSLA) has cut prices in China by as much as a quarter to absorb the impact of the US-China trade war on consumers in the world’s biggest car market – Financial Times

· Steinhoff International said its Mattress Firm Inc unit, the largest U.S. mattress retailer, emerged out of bankruptcy with access to $525 million in exit financing, within two months of filing for Chapter 11 protection

· Nissan Motor Co.’s (NSANY) board voted unanimously to oust Chairman Carlos Ghosn from his post, and allegations emerged that Ghosn used company money to buy personal residences and enrich his sister

Energy, Materials and Industrials

· Oil prices declined for the second day in a row, hitting their lowest level in almost one year on the back of concerns over an increase in global supply and a slowdown in economic growth

· The number of fatalities from California’s Camp Fire, one of the deadliest wildfires in U.S. history, totaled 83 as of 7:27 a.m. local time, up from 81 a day earlier, according to the Cal Fire firefighting agency. Cal Fire also reported the blaze has destroyed 13,906 residences, 514 commercial and 4,232 other buildings. Bloomberg

· BP PLC (BP) has begun production from one of the U.K.’s biggest new oil developments in decades, the company said Friday, completing a project seven years and billions of dollars in the making.

Financials

· Visa (V), MasterCard (MA) have proposed lowering fees merchants face when accepting payments from non-EU credit cards, Reuters reports

· Credit Suisse (CS) downgraded to Sector Perform from Outperform at RBC Capital

Healthcare

· GlaxoSmithKline PLC (GSK) said Thursday that it signed a strategic collaboration with Kyowa Hakko Kirin Co. Ltd. for the commercialization of a drug to treat anemia associated with chronic kidney disease.

· Novartis (NVS) announced today that the European Commission, or EC, approved Luxturna, a one-time gene therapy for the treatment of patients with vision loss due to a genetic mutation in both copies of the RPE65 gene and who have enough viable retinal cells.

· Novo Nordisk (NVO) announced the headline results from PIONEER 9, a 52-week trial with oral semaglutide vs Victoza and vs placebo, all as monotherapy, in Japanese adults with type 2 diabetes

Technology, Media & Telecom

· The U.S. government is contacting key allies to get them to persuade telecommunications companies in their countries to avoid using equipment fromChina’s Huawei Technologies Co., the Wall Street Journal reported. https://bloom.bg/2TCbI4Y

· Japan’s big wireless firms may cut prices of Apple Inc.’s (AAPL) cheapest new iPhone — the XR — next week, due to subsidies being offered by the company, The Wall Street Journal reported. Concerns over demand for Apple’s newest phones have weighed on the stock since a poorly received earnings report earlier this month. Foxconn Industrial Internet Co., Apple’s biggest iPhone manufacturer, said earlier in the week that it would slash costs by $2.9 billion, owing to a “difficult and competitive year.” https://on.mktw.net/2TDoAYH

· GameStop Corp (GME) said on Wednesday it will sell its Spring Mobile business to Prime Communications LP for $700 million.

· Adobe (ADBE) Analytics said it has seen $1.75b in online spending as of 5pm ET on Thanksgiving Day, representing 28.6% growth y/y, according to an emailed statement. Based on the growth rate, Adobe Analytics now expects Thanksgiving Day to reach a record $3.7b in online retail sales, up 29% from 2017 – Bloomberg

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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.

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