Opening Bell: USD Falls, Brent Oil Leaps; Tech Stocks Back On Top
Investing.com | Dec 12, 2017 07:20AM ET
by Pinchas Cohen
h2 Key Events/h2
Despite a suicide bomber's attack yesterday in one of Manhattan's busiest transit hubs during the morning rush hour, US stocks continued to rally. The Dow Jones Industrial Average closed a third day of gains, while the S&P 500 and the NASDAQ Composite each saw their fourth accumulation day.
The Russell 2000, an index of small cap stocks which has the most to gain if Congressional tax cuts are enacted, actually declined. Similarly, Financials, another segment considered to be tax cut beneficiaries, was the worst performer among S&P 500 sectors, down 0.25 percent.
On the other hand, the Technology sector which has been the best performing sector this year and has thus been seeing investors rotating out and into less highly valuated Financials, led the advance, gaining 0.86 percent. As of yesterday’s, close, tech shares are up 30.89 percent YTD, outperforming the S&P 500 benchmark's 17.45 percent gain by 45 percent and outperforming the 19.74 percent financial sector gain by 24 percent.
h2 Global Financial Affairs/h2This morning in Asia however, the US rally was nothing but a dim memory. The Nikkei failed to maintain a 26-year high, while Chinese stocks—both on the mainland’s Shanghai Composite and Hong Kong’s Hang Seng—slipped lower.
European shares extended their losses, both as an extension of today's Asian session, as well as on the heels of yesterday’s European declines. The STOXX 600, Germany's DAX and France's CAC 40 all retreated from the top of their respective ranges. This decline may have been due to profit-taking, or it could have a special bearish implication, considering that it follows a rebound in technology shares, boosted by the prospect of European digital services provider Atos's (PA:ATOS) $5.1 billion offer for Amsterdam-based digital security company Gemalto (AS:GTO). When good news fails to support shares, it reeks of sector or even overall weakness.
This morning the dollar declined. Should the slide continue till close of trading today, it would confirm yesterday’s bearish Hanging-Man, which followed a bearish Shooting-Star.
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In a mirror image, yesterday the euro formed an Inverted Hammer which is bullish upon confirmation of a higher close. The single currency price is on course to do just that, thereby forming a bullish Hammer.
Sterling erased earlier gains today after the UK trade secretary said his country strives for a “virtually identical” trading relationship to the one it now has with the EU. It might have been more meaningful to pound investors if this sentiment had been expressed by a representative of the European Union, which has been taking a hard line regarding the 'divorce', ever since the Brexit vote in mid-2016. The pound meanwhile found support above its uptrend line since November 3.
WTI crude is on track for its fourth day of gains, while Brent crude catapulted above $65 a barrel, a two-and-a-half year high, after British refiner Ineos said it would shut down its Forties Pipeline system, one of the most important oil pipelines in the world, because of an expanding hairline crack.
Gold rebounded from a five-month low, as it trades in a range in which an upside breakout would complete a massive, 5-year bottom. The implied implied target would reach 20 percent, passing the neckline toward $1,650.
Nickel led industrial metals lower after a return move to its H&S top neckline and a broken uptrend line since July.
h2 Up Ahead/h2- November U.K. inflation may show signs of ebbing when released today. Consensus sees CPI growth holding at 3%, raising hopes the squeeze on households has abated.
- Germany’s ZEW Index of investor optimism for December slipped to 17.4 from the previous reading of 18.7.
- Fed policy makers announce their next policy decision on Wednesday.
- The ECB, Bank of England and Swiss National Bank set monetary policy at their respective meetings on Thursday.
- Among top U.S. economic reports this week are consumer inflation on Wednesday and retail sales on Thursday.
- European lawmakers continue to debate Brexit and weigh moves on the next step, while the sixth round of North America Free Trade Agreement negotiations are scheduled to begin later this month.
Stocks
- The Stoxx Europe 600 Index dipped less than 0.05 percent as of 8:26 London time (3:26 EDT).
- The U.K.’s FTSE 100 gained less than 0.05 percent to the highest in two weeks.
- Germany’s DAX rose less than 0.05 percent.
- Japan’s Nikkei 225 Stock Average decreased 0.3 percent.
- The MSCI Asia Pacific Index sank 0.2 percent.
- The MSCI Emerging Markets Index dipped 0.5 percent.
- S&P 500 Futures increased less than 0.05 percent to 2,665.00, the highest on record.
Currencies
- The Dollar Index declined 0.7 percent, paring from a 0.11 percent decline.
- The euro gained less than 0.05 percent to $1.1771.
- The British pound rose 0.1 percent to $1.3348.
- The Japanese yen climbed 0.1 percent to 113.48 per dollar.
Bonds
- The yield on 10-year Treasuries fell one basis point to 2.38 percent.
- Germany’s 10-year yield gained less than one basis point to 0.30 percent.
- Britain’s 10-year yield climbed one basis point to 1.211 percent.
- Japan’s 10-year yield dipped less than one basis point to 0.047 percent, the lowest in a week.
Commodities
- West Texas Intermediate crude rose 0.7 percent to $58.40 a barrel, the highest in more than two weeks.
- Gold increased 0.1 percent to $1,243.48 an ounce.
- Copper declined 0.2 percent to $3.01 a pound.
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