Day Traders Diary

1/17/19

U.S. futures give back Wednesday's gains, as disappointing corporate results and lingering concerns over U.S.-China trade relations dampen investor sentiment. The S&P 500 futures trade 13 points, or 0.5%, below fair value.

Morgan Stanley (MS 41.85, -2.64, -5.9%) followed up yesterday's better than expected results reported by Goldman Sachs (GS) and Bank of America (BAC) with a disappointing miss on revenue and earnings for the fourth quarter. Morgan Stanley's results were adversely impacted by the volatile global market environment last quarter.

Separately, The Wall Street Journal reported yesterday afternoon that U.S. prosecutors are seeking criminal charges against Huawei for stealing trade secrets from U.S. companies. Follow-up reports indicate U.S. lawmakers are introducing legislation to ban the sale of U.S. parts to Chinese telecom equipment companies that violate U.S. sanctions or export control laws.

On the data front, investors will receive the weekly Initial Claims (Briefing.com consensus 221,000) and Continuing Claims report at 8:30 a.m. ET. The Philadelphia Fed Index for January (Briefing.com consensus 10.5) will also be released at 8:30 a.m. ET.

U.S. Treasuries edge higher, pushing the 2-yr yield and 10-yr yield lower by one basis point each to 2.53% and 2.72%, respectively. The U.S. Dollar Index is flat at 96.04. WTI crude is down 1.5% to $51.54/bbl.

In U.S. Corporate news:

• Morgan Stanley (MS 41.85, -2.64): -5.9% after the bank reported below-consensus top and bottom lines for the fourth quarter.
• CSX Corporation (CSX 64.00, -1.38): -2.1% despite the railroad operator beating earnings estimates and announcing a new $5 billion buyback program. 
• PPG Industries (PPG 100.54, -2.00): -2.0% after the company issued downside guidance for its Q1 earnings. PPG also beat earnings earnings estimates and reported in-line revenue. 
• Taiwan Semi (TSM 34.96, -0.68): -1.9% after the Apple (AAPL 154.00, -0.94, -0.6%) supplier guided Q1 revenue below consensus. The company did beat earnings estimates, though.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note, though the losses were minor. Japan's Nikkei -0.2%, Hong Kong's Hang Seng -0.5%, China's Shanghai Composite -0.4%, India's Sensex +0.2%, South Korea's Kospi +0.1%, Australia's ASX All Ordinaries +0.3%.
  • In economic data:
    • Australia's November Invest Housing Finance -4.5% month-over-month (last 0.6%) and November Home Loans -0.9% month-over-month (expected -1.5%; last 2.1%)
    • Hong Kong's December Unemployment Rate 2.8% (last 2.8%)
    • Singapore's December trade surplus SGD1.94 billion (last surplus of SGD3.80 billion). December Non-oil exports -8.5% year-over-year (expected 1.5%; last -2.8%)
  • In news:
    • The Wall Street Journal reported yesterday afternoon that U.S. prosecutors are seeking criminal charges against Huawei for stealing trade secrets from U.S. companies.
    • The People's Bank of China conducted another large liquidity injection which added a net CNY380 billion through reverse repurchases.
    • China will report its fourth quarter growth figures on Sunday evening.

• Major European indices trade on a lower note. STOXX Europe 600 -0.3%, Germany's DAX -0.5%, UK's FTSE 100 -0.7%, France's CAC 40 -0.5%, Italy's FTSE MIB -0.4%, Spain's IBEX 35 -0.1%.
  • In economic data:
    • Eurozone December CPI 0.0% month-over-month (expected -0.2%; last -0.2%); +1.6% year-over-year, as expected (last 1.9%). December core CPI +0.5% month-over-month, as expected (last 0.5%); +1.0% year-over-year, as expected (last 1.0%)
    • Italy's November trade surplus EUR3.84 billion (expected surplus of EUR2.89 billion; last surplus of EUR3.78 billion)
  • In news:
    • Opposition leaders in the UK refused to meet with British Prime Minster Theresa May to discuss how to proceed with Brexit unless the prime minister rules out the possibility of withdrawing from the EU without a deal.
    • European officials are reportedly willing to extend the withdrawal date past March 29, but the UK has yet to request such an extension.
  • Headlines provided by Briefing.com