Friday, October 23, 2015

Transcription

1 On Tap 9:30 a.m. U.S. / EU trade negotiations 11th round concludes with a press conference call 9:45 a.m. Oct US Flash Manufacturing PMI (expected 52.3) Recent Analyst Ratings Actions There are no analyst ratings changes. SNAPSHOT U.S. stock futures nudge higher; dollar mixed; 10-year Treasury yield at 2.051%; Nymex at $45.44; gold at $ Watch for: U.S. flash manufacturing PMI; Canada CPI; US/EU trade negotiations press conference; updates from Procter & Gamble, American Airlines, State Street, Thomson Reuters, AMC Entertainment OPENING CALL U.S. stock futures edged higher Friday, as the prospect of further stimulus from the European Central Bank continued to drive global markets higher. In Europe, the Stoxx Europe 600 was up 1.0% midmorning following gains across Asian markets. Japan s Nikkei Stock Average climbed 2.1% as the ECB s stance and comments from an adviser to Prime Minister Shinzo Abe added to speculation about further monetary easing from the Bank of Japan. Equity markets remain addicted to the rush of continued central bank policy stimulus, said Ian Williams, economist and strategist at brokerage Peel Hunt. Few expected the message following the ECB meeting to be even more dovish than in September, but that is how it turned out. Ahead Friday, investors will focus on Markit s preliminary manufacturing PMI for October, which should offer another window into how the strong dollar and weakness overseas are affecting U.S. manufacturers. Forecasters expect the index to soften slightly from the end of September from 53.1 to The earnings season will also continue with reports from Procter & Gamble Co., American Airlines Group Inc., and Thomson Reuters Corp. EQUITIES Microsoft is making strides on its cloud-computing push, the company s latest quarterly results show, reducing the software giant s dependence on the weak personal computer market. The company on Thursday reported a 2% increase in earnings and 12% drop in revenue for its fiscal first-quarter. But the quarterly results, which topped Wall Street expectations, were substantially better after stripping out factors such as currency exchange rates and a prior decision to reduce Microsoft s smartphone sales. Meanwhile, the company is laying off about 1,000 employees, or about 1% of its workforce, a person familiar with the situation said. The cuts are in addition to earlier moves to shed about 7,800 jobs in connection with plans to scale back the former Nokia Corp. handset business. AT&T lifted its full-year earnings forecast as the carrier thinks more cost savings will come from its $49 billion acquisition of DirecTV.

2 The company, which reported its third-quarter results Thursday, said the integration of DirecTV is going well, noting that customer additions at the satellite service rose after the deal closed in July even though it hadn t yet started widespread cross-selling of its products. Overall, however, AT&T had a net loss of video subscribers in its latest quarter, showing a total of 25.4 million. While DirecTV added 26,000 U.S. subscribers after the deal, AT&T s U-verse television business lost 92,000 subscribers. Amazon.com reported a surprise profit for its third quarter, thanks in part to its fastgrowing cloud-computing division, while sales surged more than expected. Shares climbed 11% after hours. Jack Dorsey is giving back to Twitter, the company he co-founded nearly a decade ago and now oversees. A week after announcing mass layoffs, the Twitter CEO said he would be giving roughly one-third of his Twitter stock to the company s employee equity pool. According to Mr. Dorsey s tweet making the announcement, the donated amount is equal to about 1% of the company. Mr. Dorsey said that move is to reinvest directly in our people. Twitter s shares fell 0.48% to $29.16 on Thursday. At that price, the 1% stake Mr. Dorsey is donating is worth about $198.2 million. FOREX Some upbeat economic data in the eurozone, which could discourage the ECB from scaling up its bond-buying stimulus program, helped the euro stage a modest rebound from its heavy losses on Thursday. Growth in eurozone private sector activity picked up pace in October, against expectations for a slight slowdown, data showed Friday. The common currency rose 0.4% against the dollar to $ on the news. In Asia, the dollar was steady against the yen. BONDS The yield on the benchmark 10-year Treasury bond was at 2.051% in European trade, widening from 2.025% Thursday. The 10-year yield, a bedrock for global finance, has fallen from this year s peak of 2.5% set in June. Demand has been lifted by concerns over China s economic slowdown and its potential global ramifications. Still, the 10-year Treasury yield has failed to trade sustainably below the 2% mark, a level it briefly breached a couple of times earlier this month. Many riskier assetsstocks, emerging-market currencies and corporate bonds sold by lower-rated firmshave recovered some lost ground after getting hit in August and September, when fears over the global outlook were heightened.

3 Sentiment has been improving this month as investors expect the Federal Reserve to wait longer before raising short-term interest rates. Speculation has also been growing that the Bank of Japan and the ECB would increase monetary stimulus to support growth. Both the Fed and the BOJ will meet next week to set interest-rate policy. COMMODITIES Oil prices rose in Europe, boosted by the prospects of new stimulus measures from the ECB, but were still on track for a weekly loss. The market was also looking forward to data later on Friday expected to show another decrease in the number of rigs drilling for oil in the U.S. Although the rig count has fallen by more than 60% since last year, production has kept near multiyear highs and inventories have recently increased. The outlook for more ECB stimulus improves the sentiment, but the continued U.S. crude oil build weighs on prices, said Michael Poulsen, analyst at Global Risk Management. Brent crude, the global oil benchmark, rose 0.5% to $48.30 a barrel on London s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.1% at $45.44 a barrel. Still, both benchmarks were on track to fall by about 4% for the week. Gold was up 0.6% at $1, a troy ounce. Other Top Stories Of The Day Eurozone Private Sector Activity Picks Up in October Activity in the eurozone s private sector picked up in October, a surprise development that suggests the currency area s modest recovery has yet to be weakened by slowdowns in China and other large developing economies. ECB: Forecasters Cut Inflation Outlook Forecasters polled by the European Central Bank cut their inflation outlook for the current year and the next two, a report published by the ECB showed Friday.

4 Abe Adviser Calls for Fresh Fiscal Stimulus in Japan Etsuro Honda says additional stimulus of up to around $40 billion is needed to resuscitate Japan s sputtering economy, not more action from the Bank of Japan. China Home Prices Rise China s housing prices and sales are showing sustained signs of improvement so far this year, but sluggish investment in real-estate development suggest that an overall turnaround in the property market will take time. Obama Vetoes Defense Policy Bill The president s rejection of the $612 billion military spending bill intensifies a battle between the White House and Congress. Paul Ryan Declares Bid for House Speaker Rep. Paul Ryan (R., Wis.) locked in support from the remaining two of the three groups he said would be necessary for him to launch his candidacy for House speaker. Putin Says Assad Backs Russian Support to Rebels Fighting ISIS The Russian president said he has received permission from the Assad regime to offer support to rebels in Syria who are prepared to really fight against Islamic State-even though Russian jet fighters have been bombing opposition groups there for weeks. Today In Canada Earnings scheduled ATCO Ltd. (ACO.X.T) third-quarter results; analysts expect earnings of 63 Canadian cents a share

5 Economic indicators (all times ET) September consumer price index at 8:30 a.m. Stocks to watch Milestone Apartments (MST.UN.T) said it would acquire 15 properties for $502 million Calendar items (all times ET) none