Day Traders Diary

5/25/17

 The S&P 500 settled at a record high yesterday after the FOMC minutes from the May 2-3 meeting were received well by investors. The benchmark index looks poised to extend its record level this morning with the S&P 500 futures trading five points, or 0.2%, above fair value.

OPEC decided to extend its production cut agreement by nine months to March 2018. However, the magnitude of the cut is expected to stay the same. Nearly a dozen non-OPEC producers, including Russia, Mexico, and Kazakhstan, will likely participate in the extension. The decision to extend the supply cut is a combative response to persistently high U.S. production, which has weighed on the price of crude oil over the last few months.

Crude oil went on a two-week rally ahead of the decision, adding 12.2% from May 9 to May 23. This morning, however, the commodity is down 1.4% at $50.64/bbl.

U.S. Treasuries trade slightly higher this morning with the benchmark 10-yr yield slipping one basis point to 2.24%. Meanwhile, the CBOE Volatility Index (VIX 9.98, -0.04, -0.4%) has returned to a historically low level. Yesterday, the VIX closed below the 10.00 mark, which has only happened around a dozen times.

On the data front, investors will receive Initial Claims (Briefing.com consensus 238,000) and April Advance International Trade in Goods. Both reports will cross the wires at 8:30 ET.

In U.S. corporate news:

HP (HPQ 19.58, +0.57): +3.0% after reporting better than expected earnings/revenues and issuing upbeat guidance.

Dollar Tree (DLTR 76.50, -1.58): -2.0% after missing bottom-line estimates and issuing below-consensus guidance.

Best Buy (BBY 57.04, +6.69): +13.3% after beating top and bottom line estimates.

Signet Jewelers (SIG 52.00, -2.53): -4.6% after missing on the top and bottom lines.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Thursday on a higher note. Japan's Nikkei +0.4%, Hong Kong's Hang Seng +0.8%, China's Shanghai Composite +1.4%, India's Sensex +1.5%.

In economic data:

Singapore's Q1 GDP -1.3% quarter-over-quarter (expected -1.0%; last -1.9%); +2.7% year-over-year, as expected (last 2.5%)

Hong Kong's April trade deficit HKD34.10 billion (last deficit of HKD42.30 billion). April Imports +7.3% month-over-month (last 13.0%) and April Exports +7.1% month-over-month (last 16.9%)

In news:

Overnight reports from the OPEC meeting indicate that the supply freeze will be extended for nine months, which is disappointing to participants who hoped to hear about an export cut.

The Bank of Korea left its repurchase rate unchanged at 1.25%, as expected.

Major European indices trade near their flat lines with Italy's MIB showing relative weakness. UK's FTSE unch, Germany's DAX -0.1%, France's CAC -0.1%, Italy's MIB -0.5%.

In economic data:

UK's Q1 GDP +0.2% quarter-over-quarter (expected 0.3%; last 0.3%); +2.0% year-over-year (consensus 2.1%; last 2.1%). Index of Services +0.2% (consensus 0.3%; last 0.4%). Q1 Business Investment +0.6% quarter-over-quarter (expected 0.2%; last -0.9%); +0.8% year-over-year (last -0.9%). BBA Mortgage Approvals 40,800, as expected (last 40,900)

Italy's March Industrial New Orders -4.2% month-over-month (last 5.2%); +9.2% year-over-year (last 7.8%). March Industrial Sales +0.5% month-over-month (last 2.0%); +7.2% year-over-year (last 4.6%)

Spain's Q1 GDP was left unrevised at 0.8% quarter-over-quarter, as expected (last 0.8%); +3.0% year-over-year, as expected (last 3.0%)

In news:

British political parties will resume campaigning on Friday after a suspension was called in the wake of the terrorist attack in Manchester.

U.S. President Donald Trump is in Brussels today, meeting with representatives from the European Union and North Atlantic Treaty Organization.

NATO is in the process of adding Montenegro as its 29th member. The accession is expected to be completed on June 5.