Day Traders Diary

11/1/17

Equity futures are pointing to a good start for the U.S. equity market this morning as stocks trade higher around the globe. The S&P 500 futures currently trade 11 points, or 0.4%, above fair value, which would place the benchmark index in record territory at the opening bell. Investors will have a busy session today, with lots of economic data and the Fed's latest rate decision on the docket.

The Federal Open Market Committee will release its latest policy statement this afternoon at 14:00 ET, but the statement is not expected to do much more than set the stage for a December rate hike. Going into the release, the CME FedWatch Tool places the chances of a December rate hike at 98.2%.

In addition, investors will receive a sizable dose of economic data today, including the October ADP Employment Change Report (Briefing.com consensus 215K) at 8:15 ET, the October ISM Index (Briefing.com consensus 59.0) at 10:00 ET, and September Construction Spending (Briefing.com consensus -0.2%) also at 10:00 ET. October auto and truck sales will be released throughout the day.

The weekly MBA Mortgage Applications Index, which was released earlier this morning, decreased 2.6% to follow last week's 4.6% decline.

As for earnings, a bundle of notable companies will report their quarterly results following today's closing bell, including Facebook (FB 182.31, +2.25), Tesla (TSLA 332.97, +1.44), Qualcomm (QCOM 51.19, +0.18), GoPro (GPRO 10.55, +0.12), and Fitbit (FIT 6.25, +0.11), among many others.

In Washington, House Republicans originally said that they would release their tax reform bill today, but announced late last night that they will instead release the piece of legislation on Thursday. Reports indicate that lawmakers are still negotiating the specifics of the bill, including key points like how to treat retirement savings accounts and deductions for state and local taxes.

U.S. Treasuries are trading lower this morning, sending yields higher across the curve; the benchmark 10-yr yield is up one basis point at 2.39%. Meanwhile, the U.S. Dollar Index is up 0.1% at 94.55 and WTI crude futures are up 1.2% at $55.03/bbl after the American Petroleum Institute reported a draw of 5.1 million barrels on Tuesday evening.

The Energy Information Administration will release the official government crude inventory report at 10:30 ET.

In U.S. corporate news:

• U.S. Steel (X 27.80, +2.48): +9.8% after beating both top and bottom line estimates and issuing upbeat guidance for the fiscal year.
• Electronic Arts (EA 116.44, -3.16): -2.6% despite reporting above-consensus earnings.
• Wynn Resorts (WYNN 151.95, +4.46): +3.0% after The Macau Gaming Inspection and Coordination Bureau reported a 20.4% year-over-year increase in gross gaming revenue.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note. Japan's Nikkei +1.9%, Hong Kong's Hang Seng +1.2%, China's Shanghai Composite +0.1%, India's Sensex +1.2%.
  • In economic data:
    • China's October Caixin Manufacturing PMI 51.0 (expected 51.0; last 51.0)
    • Japan's October Manufacturing PMI 52.8 (expected 52.5; last 52.5)
    • New Zealand's Q3 Employment Change +2.2% quarter-over-quarter (expected 0.8%; last -0.2%). Q3 Participation Rate 71.7% (expected 70.2%; last 70.0%), and Q3 Unemployment Rate 4.6% (expected 4.7%; last 4.8%)
    • Australia's October AIG Manufacturing Index 51.1 (last 54.2)
    • South Korea's October CPI -0.2% month-over-month (expected -0.1%; last 0.1%); +1.8% year-over-year (consensus 1.9%; last 2.1%). October trade surplus KRW7.30 billion (last surplus of KRW13.46 billion). October Imports +7.4% year-over-year (expected 11.5%; last 22.6%) and Exports +7.1% year-over-year (consensus 13.0%; last 35.0%).
    • India's October Nikkei Markit Manufacturing PMI 50.3 (expected 51.5; last 51.2)
  • In news:
    • Reports in South Korean press indicated the U.S. is seeking direct diplomacy with North Korea.
    • Japan's Kyodo expects Prime Minister Shinzo Abe to request an extra budget. There was also continued speculation that Bank of Japan Governor Haruhiko Kuroda will be reappointed to another term.

• Major European indices trade in the green with Germany's DAX (+1.6%) showing relative strength after yesterday's holiday closure. France's CAC +0.5%, UK's FTSE +0.2%.
  • In economic data:
    • UK's October Manufacturing PMI 56.3 (expected 55.8; last 56.0). October Nationwide HPI +0.2% month-over-month, as expected (last 0.4%); +2.5% year-over-year (consensus 2.2%; last 2.3%)
    • Swiss October SVME PMI 62.0 (expected 61.5; last 61.7)
  • In news:
    • The UK's Brexit secretary David Davis said he is seeking an acceleration of the Brexit process, noting that a basic deal is likely even if trade talks fail. The National Institute of Economic and Social Research expects UK's inflation to hit 3.2% in the fourth quarter while the Bank of England's Official Bank rate is expected to peak at 2.0% in 2021. The central bank is expected to increase its Official Bank rate by 25 basis points to 0.50% on Thursday.
    • The overall participation has remained limited due to closures in Austria, Hungary, Lithuania, Poland, Slovakia, and Slovenia. These Central and Eastern European markets are closed for all-souls day.