Asian Morning Briefing : U.S. Stocks Closed Mixed

 


LAST      CHANGE  % CHG 
DJIA                 17408.25  5.74    0.03% 
Nasdaq               5033.56   -10.83  -0.21% 
S&P 500              2083.39   -2.66   -0.13% 
apan: Nikkei 225     20595.55  202.78  0.99% 
Hang Seng            24018.8   102.78  0.43% 
Shanghai Composite   3954.56   68.24   1.76% 
S&P BSE Sensex       27549.53  37.27   0.14% 
Australia: S&P/ASX   5387.9    5.8     0.11% 
UK: FTSE 100         6568.33   -2.86   -0.04% 
 
 
                    PRICE CHG  YIELD% 
U.S. 2 Year          -3/32     0.713 
U.S. 5 Year          -8/32     1.574 
U.S. 10 Year         -15/32    2.185 
Australia 10 Year    -19/32    2.749 
China 10 Year        -18/32    3.55 
India 10 Year        5/32      7.905 
Japan 10 Year        -5/32     0.378 
German 10 Year       -9/32     0.632 
 
 
                          LAST(MID)  CHANGE 
Australia $ (AUD/USD)     0.7361     0.0001 
Yen (USD/JPY)             124.43     0.01 
S. Korean Won (USD/KRW)   1178.63    0.12 
Chinese Yuan (USD/CNY)    6.4        0.0005 
Euro (EUR/USD)            1.1153     0.0001 
WSJ Dollar Index          88.49      0 
 

        MARKETS AT A GLANCE
        (Data as of approximately 5 p.m. ET)
        SNAPSHOT:
        U.S. stocks ended little changed, pausing after two days of tumult spurred by fears over Chinese growth. Treasurys pulled back as anxiety over the global outlook dialed back, gold prices retreated and the dollar pared gains. U.S. oil prices fell to a six-year low as a combination of factors weighed on the benchmark contract.
        OPENING CALL:
        Conventional wisdom has been that once the Fed lifts off, the dollar will climb and commodities will fall--containing inflation worries and boosting demand for long-dated Treasurys. But the risk, say some money managers, is markets moving in the opposite direction of what many have positioned for. "Investors are one chapter ahead of the Fed's playbook," says Gene Tannuzzo at Columbia Threadneedle. "Once the Fed actually raises rates, we could see the effect of 'buy the rumor and sell the news.'" Many investors expect a stronger dollar as higher interest rates from the Fed attract global money in a low-rate world. But if he's right, a softer dollar could send commodities prices higher and push up U.S. long-term yields.
        EQUITIES:
        U.S. stocks finished little changed, pausing after two days of tumult spurred by fears over Chinese growth.
        Stocks have been volatile in recent sessions, as market participants have wrestled with the devaluation of China's currency and its implications for the health of the country's economy. Thursday saw wide intraday swings, with the Dow Industrials trading in a 140-point range on light volumes before ending near where they began.
        Energy stocks tumbled after oil prices fell to a new six-year low. The S&P 500 Energy index shed 1.4%, notching the biggest decline among major S&P sectors. Consumer discretionary and financial stocks made gains.
        Many investors say that even with a slowdown in China, the U.S. economy remains on track to expand moderately this year, which bodes well for corporate earnings in the months ahead. Earnings in the second quarter have come in largely above investor expectations, though growth was hard to come by.
        "The market panicked Tuesday and Wednesday morning, and then when people really thought about it, they realized, 'I don't think this is going to become an all-out currency war,'" said Jim Tierney, chief investment officer of concentrated U.S. growth at AB.
        Individual companies whose sales have significant exposure to China have been hit hard, including consumer names like YUM Brands Inc. and casino resorts such as Wynn Resorts Ltd. and Las Vegas Sands Corp.
        Companies in the S&P 500 are on track to post a 0.6% decline in second-quarter profits, compared with the 4.5% drop forecast at the start of the earnings season, according to FactSet.
        Among individual stocks, Cisco Systems Inc. led the Dow industrials higher, with shares up 2.9%. The network-equipment giant said Wednesday the company's recent rebound remains on track and its fiscal fourth-quarter results topped expectations.
        Markets across most of Asia staged a relief rally Thursday, three days after China's surprise devaluation of the yuan. Currencies like the Malaysian ringgit and the Indonesian rupiah rebounded from their lowest levels against the U.S. dollar since the Asian financial crisis in the late 1990s, while stocks from Japan to Hong Kong also bounced.
        FOREX:
        The dollar pared gains against the euro and the yen as investors looked past solid numbers for U.S. retail sales and jobless claims and focused on China's monetary policy and falling inflation expectations.
        Investors remained uneasy about whether recent China's currency moves and plunging oil prices will weigh on the Federal Reserve's decision to raise U.S. short-term interest rates in September, blunting the dollar's momentum.
        Concerns about global inflation and China's slowing economy have risen, particularly after the People's Bank of China's recent devaluation of the yuan roiled markets and sparked fears of currency wars among regional trading partners.
        In the U.S., economists have lowered inflation expectations on the consumer-price index to 1.1% by December, from 1.3% one month earlier, and revised oil-price forecasts by year-end for benchmark WTI at just under $51 a barrel from $58 a barrel.
        The uncertainty has nudged back expectations for the first Fed rate increase since 2006 toward the end of the year, and even into early 2016. Higher interest rates would draw yield-hungry investors to the dollar.
        Markets calmed following a two-day plunge in the yuan as the Chinese currency's decline slowed, and the PBOC commented that the currency will stabilize and rise eventually.
        U.S. economic data continue to improve modestly. U.S. retail sales for July signaled that American consumers picked up spending, helping to raise the outlook for growth from July through September. U.S. retail sales in July increased 0.6% from the prior month, the Commerce Department said, equaling economists' expectations. Sales numbers were flat in June and rose briskly in May.
        Many economists forecast U.S. consumer spending will accelerate over the remainder of 2015, of which retail sales represent an important component. Consumer spending, which has been rising slowly for much of the year, accounts for more than two-thirds of total economic output.
        In addition, U.S. initial jobless claims, a proxy for layoffs, increased by 5,000 to a seasonally adjusted 274,000, the Labor Department said. Claims came in just above economists' expectations, but held near multidecade lows and signaled an economy that is adding jobs.
        BONDS:
        Investors stepped out of the shelter of U.S. government debt for the first time in three days as anxiety over the global growth outlook dialed back.
        Riskier assets stabilized after being rattled by worries over China's economic growth over the past two days. A solid retail sales report pointed to an improving U.S. economy, bolstering the case for the Federal Reserve to raise short-term interest rates next month.
        "We are back to looking at the U.S. economy and it looks healthy and moving quickly to meet the Fed's goals for employment and growth," said Thomas Roth, executive director in the U.S. government bond trading group at Mitsubishi UFJ Securities (USA) Inc. in New York. "Unfortunately the rest of the world is not so good so it is hard for the market to determine how it all adds up in Fed Chairwoman Janet Yellen's head."
        A $16 billion sale of 30-year Treasury bonds drew average demand, contributing to price weakness in the bond market.
        Investors had sought safety in ultrasafe Treasury debt after China on Tuesday surprised investors by devaluating its currency, which heightened concerns over the world's second-largest economy and its potential ramifications globally.
        Anxiety in global financial markets dialed back after Chinese central bank officials ruled out a significant decline in the yuan and said that China has the financial firepower to defend the currency as needed.
        Meanwhile, U.S. retail sales rose a seasonally adjusted 0.6% in July from a month earlier, the Commerce Department said Thursday. Excluding cars, sales rose 0.4% in July, the third consecutive month of solid gains.
        Fed funds futures showed that investors and traders see a 45% likelihood of a rate increase at the September meeting, up from 39% on Wednesday, according to data from the CME Group.
        COMMODITIES:
        U.S. oil prices fell to a new six-year low as a combination of worries about global economic growth to a strengthening dollar, increasing crude supplies and a major U.S. refinery outage weighed on the market.
        The U.S. oil benchmark has now fallen more than 31% since topping out this year in early June and is down more than 60% since June of last year, as the full scope of booming U.S. production became clear and the world's oil cartel refused to cut back on production in an effort to maintain market share rather than shore up prices. Analysts say there is little on the horizon that would suggest a reversal in crude anytime soon, and some say it could soon break below $40 a barrel--an unthinkable milestone just one year ago.
        "We are now trading at levels not seen since the depths of the great recession," said Stephen Schork, president of research consultancy The Schork Group. "The overall trend in this market is very bearish."
        Analysts said macroeconomic factors including a strengthening dollar and continued concerns about growth in China, a key driver of oil demand growth, in the wake of its currency devaluation earlier in the week weighed on prices.
        "It's more of a macro mood play because of the concerns about the global economy," said Phil Flynn, senior account executive at brokerage Price Futures Group in Chicago.
        (MORE TO FOLLOW) Dow Jones Newswires
        August 13, 2015 17:31 ET (21:31 GMT)

        Still, the outage of a 290,000-barrel-a-day distillation unit at BP PLC's Whiting refinery in Indiana was expected to reduce commercial crude demand, further adding to stockpiles. Other U.S. refineries are starting to slow production and approach maintenance season now that the U.S. is past the peak of summer driving demand.
        Meanwhile, the U.S. Energy Information Administration said that Iran could begin selling as much as 100,000 barrels a day from storage before the end of the year. That came one day after the International Energy Agency said Iraq oil production rose to an all-time record of 4.2 million barrels a day in July, adding to global supplies.
        Gold prices fell after firm U.S. economic data reanimated investor concerns that the Federal Reserve is drawing closer to raising interest rates.
        TODAY'S HEADLINES:
        China's Central Bank Defends Handling of Yuan Plunge
        Chinese central bank officials offered a rare public defense after this week's unexpected devaluation, saying the yuan will eventually resume its climb.
        Chinese Port City Searches for Clues After Devastating Blasts
        Authorities raised the death toll from explosions in the city of Tianjin to at least 50 as they searched for the cause of twin blasts.
        Goldman to Buy Assets from GE Capital Bank
        General Electric has agreed to sell GE Capital Bank's online deposit platform and about $16 billion in deposits to Goldman Sachs Bank USA.
        Samsung Unveils 2 New Devices and Mobile Payment System
        Samsung Electronics is leaning on smartphones with bigger screens and a mobile payment system to try to fend off competition from rivals like Apple.
        Applied Materials Gives Weak Guidance
        Applied Materials gave muted guidance for the current quarter, and said revenue rose less than expected in the July quarter.
        Americans Boost Spending
        Americans stepped up spending on everything from cars to clothing in July, giving the economy a much-needed jolt as it entered the year's second half.
        Coke Names President, Possible Successor to CEO
        Coca-Cola named James Quincey president and chief operating officer, making the 19-year company veteran a possible successor to Chief Executve Muhtar Kent.
        EU Extends Deadline for Google Antitrust Response
        The European Union has extended Google's deadline until Aug. 31 to respond to charges that the U.S. company is skewing its search results to favor its own comparison-shopping service.
        Tesla to Raise $500 Million in Stock Sale
        Electric-car maker Tesla Motors plans to sell $500 million in stock to fund its hefty spending on projects like its coming Model 3 vehicle and an advanced battery factory in Nevada.
        Glencore Cuts Capital Spending
        Glencore said it would write down the value of its oil assets in Chad by $790 million and cut its capital expenditure this year to preserve cash, as the commodities group battles with weaker prices.
        RECENT DJ EXCLUSIVES:
        WSJ Survey: Fed May Raise Rates Slowly, and End Up Back at Zero
        Yuan Slide Takes Toll on Chinese Firms
        U.S. Seeks to Seize $1 Billion in Telecom Probe
        ECB Saw China and Possible U.S. Rate Hike Fallout as Risks in July
        Jessica Alba's Startup, Honest, Valued at $1.7 Billion
        TODAY'S CALENDAR:
        (All times GMT, followed by country and event)
        2245 NZ Q2 Retail Trade Survey
        0300 NZ Jul NZ Government bonds held for non-residents
        0500 SIN Jun Retail Sales
        0530 FRA Q2 GDP - preliminary figures
        0600 GER Q2 GDP - 1st release
        0630 IND Jul Monthly WPI (all commodities)
        0645 FRA Q2 Flash estimate of job creation
        0730 THA Weekly International Reserves
        0800 TAI Q2 Revised GDP
        0800 ITA Q2 GDP preliminary estimate
        0830 HK Q2 GDP
        0900 EU Q2 Flash Estimate GDP
        0900 EU Jul Harmonised CPI
        1130 IND Weekly foreign exchange reserves
        1230 US Jul PPI
        1230 CAN Jun Monthly Survey of Manufacturing
        1315 US Jul Industrial Production & Capacity Utilization
        1400 US Aug University of Michigan Survey of Consumers - preliminary
        1800 CAN Bank of Canada Weekly Financial Statistics
        (END) Dow Jones Newswires

        August 13, 2015 17:31 ET (21:31 GMT)