Mid-Morning Look: October 07, 2019

Auto PostDaily Market Report

Mid-Morning Look

Monday, October 07, 2019

Index

Up/Down

%

Last

 

DJ Industrials

-63.27

0.24%

26,510

S&P 500

-5.18

0.18%

2,946

Nasdaq

3.07

0.04%

7,985

Russell 2000

-2.39

0.16%

1,498

 

 

U.S. equities are mixed early as energy and telecom names outperform while markets await the start of U.S.-China trade talks later this week – though expectations for meaningful progress soured after reports this weekend that China is increasingly reluctant to agree to a broad trade deal, preferring to narrow the scope of discussions without reforming Chinese industrial policy or government subsidies. Note President Trump has said on several occasions that he wants a big deal or no deal at all. Oil prices rise early helping lift energy stocks while U.S. Treasury prices have pulled back a bit from last week’s gains, with the two-year yield up 4 bps to 1.43% and the 10-year yield 1 bps higher to 1.54%. Last week, a flurry of weak U.S. data raised hope for easier monetary policy from the Federal Reserve, with expectations now baked in for another 25 bps cut later this month from the FOMC.

 

Treasuries, Currencies and Commodities

·     In currency markets, the U.S. dollar is down slightly, but on track for a 5th straight day of declines overall after mixed economic data last week raised concerns about the US economy. The euro is up around the 1.10 level vs. the buck, while the yen is down at 1.07 and the British Pound remains volatile ahead of the Brexit vote this month

·     Commodity prices mixed as oil prices looking to add to Friday’s gains (when it snapped an 8-day losing streak) ahead of the resumption of U.S.-China trade talks later this week that can hopefully put an end to the yearlong trade tensions that have sunk commodity prices. Gold prices slide.

·     Treasury markets are little changed given no major economic data on the day and as investors await results of this week’s trade talks with China. Prices jumped last week, with yields falling broadly across the curve given weaker global economic data and rising expectations for additional Fed easing measures to combat slowing growth fears (10-year 1.535% and 2-yr 1.43%)

 

 

Macro

Up/Down

Last

 

WTI Crude

0.90

53.71

Brent

0.88

59.25

Gold

-3.90

1,509.00

EUR/USD

0.0001

1.099

JPY/USD

0.04

106.97

10-Year Note

0.005

1.534%

 

 

Sector Movers Today

·     Energy stocks with a good start to the week, rallying behind a bounce in oil prices (WTI crude up a second session after snapping its 8-day losing streak Friday); hopes for improved trade talks this week between the U.S. and China helping commodity names early

·     Tanker stocks rise (NAT, FRO, DHT) on Friday, Reuters reported freight rates to ship U.S. crude to Asia continue to surge, with costs to charter a supertanker rising to a record $12M – notes tanker rates already were rising after the Sept. 14 attacks on Saudi Arabia’s oil facilities that temporarily cut Saudi oil production, and rates have jumped even more after the U.S. last week imposed sanctions on two units of China’s COSCO, alleging involvement in ferrying crude out of Iran.

·     Semiconductors; NVDA shares rise after RBC raised price target to $217 on improving gaming GPU demand and conviction in Jan-qtr Data Center improvement; SIMO guided Q3 revenue within 5% above high-end of $104M-$108M and said gross margin is expected to be near the high-end of the company’s original guidance range of 48.0%-50.0%; ENTG shares slid as Deutsche Bank downgraded to hold from buy but upped its tgt to $49 from $46; AMD announces the Radeon RX 5500 series graphics products with RDNA gaming architecture to deliver the ultimate in high-performance, high-fidelity 1080p gaming

·     Healthcare services and providers; SDC was initiated coverage by several analysts today with mostly bullish calls (buy rated by at least seven of them and a street high tgt of $31 at JPM and low $18 at CSFB); ALGN downgraded to neutral at Guggenheim and cut tgt to $200 from $250 saying they believe it will be challenging for sentiment to improve until there is more evidence available to validate ALGN’s long-term competitive position

 

Stock GAINERS

·     AKCA +40%; IONS affiliate AKCA signed an agreement with PFE for global rights to antisense drug AKCEA-ANGPTL3-Lrx for certain diseases/Akcea and Ionis will receive $250M upfront, divided equally, up to $1.3B in milestones and tiered double-digit royalties

·     MTCH +4%; being upgraded to buy from hold at both Deutsche Bank and Nomura/Instinet as expects a limited impact from the lawsuit filed by the Federal Trade Commission

·     NVDA +3%; after RBC raised price target to $217 on improving gaming GPU demand and conviction in Jan-qtr Data Center improvement

·     PFNX +7%; after saying the FDA approved PF708 in osteoporosis, triggering a $2.5m milestone payment from Alvogen

·     RNG +5%; JPMorgan upgraded shares saying the AVYA transaction opens up an opportunity to dramatically accelerate the shift to cloud-based UCaaS, with RNG being brought into the Avaya customer base

·     SDC +1%; initiated coverage by several analysts today with mostly bullish calls (buy rated by at least seven of them and a street high tgt of $31 at JPM and low $18 at CSFB)

·     SIMO +7%; guided Q3 revenue within 5% above high-end of $104M-$108M and said gross margin is expected to be near the high-end of the company’s original guidance range of 48.0%-50.0%

·     SPWR +1%; after the U.S. said it will withdraw a previously granted Section 201 tariff exemption for bifacial solar panels (weighed on shares of Chinese solar panel makers – JKS, CSIQ

·     UBER +1%; upgraded to buy at Citigroup on improving risk/reward saying the stock has been impacted by overhangs like AB5 and the IPO lock-up/says though these overhangs will likely persist, they believe Q3 results could swing sentiment more favorably

 

Stock LAGGARDS

·     CSIQ -2%; after the U.S. Trade Representative said Friday it was eliminating a loophole granted about four months ago for bifacial solar panels.

·     HOG -2%; falls after Reuters reported Harley struggles to fire up new generation of riders with electric bike debut

·     NGM -22%; following underwhelming preliminary 24-week data from Cohort 4 in a Phase 2 clinical trial evaluating daily 1 mg doses of aldafermin in NASH patients.

·     SCS -3%; office furniture retailers (MLHR, KNL, SCS) all downgraded at Raymond James to market perform noting BIFMA reported, August incoming orders fell – year-over-year – by 2.7%

·     XENT -8%; after a trial on its drug-coated sinus balloon used to dilate the frontal sinus ostium did not meet its primary endpoint of frontal sinus patency grade at day 30, as judged by an independent reviewer

_________________________________________________________________

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