News Column

MARKET ANALYSIS: Apprehensive Mood Continues As Overbought Markets Await Cues

June 24, 2014



WASHINGTON (Alliance News) - The major US index futures are pointing to a mixed opening on Tuesday, with sentiment reflecting nervousness of traders, as they chase trading cues. Ahead of the New York session, Asian stocks ended mostly to the upside, while the European markets are trading on a lackluster note, as a negative German business confidence data generated some negative sentiment. The results of house price surveys released short while ago have been disappointing. Consumer confidence and new home sales data due after the markets open may guide the market

US stocks closed Monday's session narrowly mixed, as valuation concerns overshadowed positive housing and manufacturing readings. The major averages opened little changed and declined in early trading. Although the positive data led to some buying, helping the averages recoup some their losses, the Dow Industrials and the S&P 500 Index moved decisively lower in late morning trading. Although the two averages clawed back most of their losses over the remainder of the session, they still ended lower.

The Dow Industrials ended down 9.82 points or 0.06% at 16,937 and the S&P 500 Index closed 0.26 points or 0.01% lower at 1,963. Meanwhile, the Nasdaq Composite showed volatility throughout the session before closing up 0.64 points or 0.01% at 4,369.

Fifteen of the thirty Dow components closed lower and one stock ended unchanged, while the remaining fourteen stocks advanced. Boeing (BA) and General Electric (GE) fell sharply, while JP Morgan Chase (JPM) rose 1.11%.

Airline stocks were among the worst performers of the session, while gold stocks gained ground.

On the economic front, the results of the preliminary survey for June by Markit Economics showed that its manufacturing index for the US rose to 57.5 from 56.4, the strongest improvement since May 2010.

The National Association of Realtors reported that existing home sales rose to a seasonally adjusted annual rate of 4.89 million units in May from 4.66 million units in April, marking the best reading since October 2013. Single-family sales totaled 4.33 million units, rising to the highest level since December 2013.

Inventories as measured by the months of supply eased to 5.6 months from 5.7 months. The share of first time buyers fell to 27% in May from 29% in April. The median sales price of an existing home rose 5.9% month-over-month and was up 5.1% year-over-year to USD213,400.

Commodity, Currency Markets

Crude oil futures are climbing USD0.03 to USD106.20 barrel after sliding USD0.66 to USD106.17 a barrel on Monday. Meanwhile, gold futures are rising USD4.10 to USD1,322.50 an ounce. On Monday, gold edged up USD1.80 to USD1,318.40 an ounce.

Among currencies, the US dollar is trading at 101.91 yen compared to the 101.93 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at USD1.3618 compared to yesterday's USD1.3605.

Asia

Most Asian markets advanced, with the exception of the Australian and New Zealand markets, as traders in the region chose to focus on the positive US economic data released overnight rather than on the lackluster performance on Wall Street.

After trading below the unchanged line, Japan'sNikkei 225 average recovered in the afternoon yet closed up merely 6.96 points or 0.05% at 15,376. Export stocks ended mostly higher, while real estate, retail and resource came under selling pressure.

Hong Kong'sHang Seng Index ended at 22,881, up 75.83 points or 0.33%, and China's Shanghai Composite Index closed at 2,034, up 9.57 points or 0.47%.

Meanwhile, Australia's All Ordinaries languished below the unchanged line for much of the session before closing down 17.60 points or 0.32% at 5,415. The market witnessed broad based weakness, with healthcare and financial stocks dragging the index lower.

On the economic front, a report released by the Conference Board showed that its leading economic indicators index for China rose 0.7% month-over-month in May following a 0.1% increase in April.

Europe

After opening higher and advancing further in early trading, European stocks have given back their gains. The major averages in the region are currently mixed, as traders digest German business sentiment data and look ahead to more key data from the US

In corporate news, the UK'sTate & Lyle announced the appointment of Nick Hampton as its CFO, with immediate effect, replacing Tim Lodge, who held the position since 2008. CSR narrowed its second quarter revenue guidance.

On the economic front, the IfO Institute's survey showed that German business sentiment weakened in June. The business sentiment index fell to 109.7, below the consensus estimate of 110.3. The present situation and expectations indexes were also below estimates.

US Economic Reports

Among the results of the house price surveys released short while ago, the Federal House Finance Agency's house price index remained unchanged in April compared to the previous month following a 0.7% increase in March. Economists expected a 0.5% increase for the month.

The S&P/Case-Shiller's 20-city house price index rose a less than expected 0.2% month-over-month in April. Annually, house prices rose an unadjusted 10.8% year-over-year, slower than the 11.4% increase expected by economists.

The Commerce Department is due to release its new home sales data for May at 10 am ET. The consensus estimate calls for new home sales to come in at a seasonally adjusted annual rate of 441,000.

In April, new home sales came in at a seasonally adjusted annual rate of 433,000 compared to 407,000 units in March. Inventories measured in terms of months of supply eased to 5.3 months from 5.6 months in April. The median sales price of a new home fell 2.1% month-over-month to USD275,800,

Also at 10 am ET, the Conference Board will release its consumer confidence data for June. Economists expect the consumer confidence index to rise to 83.7.

The consumer confidence index rose to 83 in May from 81.7 in April, with the upside mainly due to positive assessments concerning the labor market. The present situation index climbed 1.9 points to 80.4 and the expectations index rose 0.9 points to 84.8.

The manufacturing index compiled based on a regional survey by the Richmond Federal Reserve is also due at 10 am ET. The index is expected to remain unchanged at 7 in June.

The Treasury Department is scheduled to announce the results of its auction of 2-yeae notes at 1 pm ET.

New York Federal Reserve Bank President William Dudley is scheduled to speak to the CPA group in San Juan, Puerto Rico at 2 pm ET. San Francisco Federal Reserve Bank President John Williams is scheduled to speak on the global economy at Stanford at 6:30 pm ET.

Stocks in Focus

Micron Technology (MU) reported third quarter non-GAAP earnings of 79 cents per share compared to 85 cents per share in the year-ago period. Revenues rose 72% to USD3.98 billion. The results exceeded estimates.

Walgreen's (WAG) reported third quarter results that missed estimates.

Sonic Corp. (SONC) reported third quarter net income of 30 cents per hare, up from 26 cents per share in the year-ago period. Revenues rose to USD111.01 million from USD108.45 million last year. The results were better than expected. For 2014, the company expects to achieve earnings per share growth of 14-15% on an adjusted basis and positive same store sales in the low single-digit range for the system.

Bob Evans (BOBE) said it has appointed Brown Shoe (BWS) executive Mark Hood as its CFO, effective immediately.

Abbott (ABT) announced an agreement to acquire Russian pharma company Veropharm for about USD395 million to USD495 million.

Williams (WMB) announced that it has closed its previously announced public offering of 60.95 million shares of its common stock at USD57 per share.

Hilton Worldwide (HLT) announced that certain selling stockholders affiliated with Blackstone (BX) have commenced a secondary offering of 90 million shares of its common stock.



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Source: Alliance News


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