Day Traders Diary

11/8/17

The U.S. equity market held at record highs on Tuesday, ending the session little changed, but looks poised to open Wednesday's session a step below its unchanged mark. The S&P 500 futures are currently trading four points, or 0.2%, below fair value. For the week, the benchmark index is higher by 0.1%.

U.S. Treasuries have moved in a curve-flattening trade this morning, which may put the S&P 500's financial sector at a disadvantage. The yield on the 2-yr Treasury note is up two basis points at 1.64%, while the benchmark 10-yr yield is flat at 2.31%. For the week, the 2yr-10yr spread has decreased by four basis points.

On the data front, today's lone economic report--the weekly MBA Mortgage Applications Index--was unchanged from the prior week (0.0%). 

Elsewhere, WTI crude futures are down 0.3% at $57.02/bbl, the U.S. Dollar Index is lower by 0.1% at 94.76, and gold is up 0.5% at $1,281.52/ozt.

In U.S. corporate news:

• Snap (SNAP 13.69, -1.43): -9.5% after reporting worse-than-expected third quarter revenues and disappointing growth in daily active users (DAUs). Snap lost as much as 22.0% in reaction to its earnings report, but made a sharp move higher after announcing that Chinese tech giant Tencent (TCEHY 49.80, +0.04) has purchased a 12% stake in the company.
• Take-Two (TTWO 116.30, +9.91): +9.3% after reporting above-consensus revenues and issuing better-than-expected revenue guidance.
• Fossil (FOSL 6.51, -0.34): -5.0% after issuing disappointing guidance for the fourth quarter.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mostly lower note, but losses were limited. Japan's Nikkei -0.1%, Hong Kong's Hang Seng -0.3%, China's Shanghai Composite +0.1%, India's Sensex -0.5%.
  • In economic data:
    • China's October trade surplus $38.17 billion (expected surplus of $39.50 billion; last surplus of $28.61 billion). October Imports +17.2% year-over-year (consensus 16.0%; last 18.6%) and Exports +6.9% year-over-year (consensus 7.2%; last 8.1%)
    • Japan's September Leading Index -0.6% month-over-month (last 2.0%) and September Coincident Indicator -1.9% month-over-month (last 2.0%)
  • In news:
    • President Trump visited South Korea, where he called on the North to "make a deal." While addressing the Korea National Assembly, the president said North Korea must be denied support, supply, and acceptance. President Trump is in China today.
    • Chinese debt showed brief weakness that lifted the 10-yr yield to 3.95% from 3.89% before pulling back.

• Major European indices trade just below their flat lines while Italy's MIB (-0.7%) shows relative weakness. Germany's DAX -0.1%, UK's FTSE -0.1%, France's CAC -0.2%.
  • In economic data:
    • Spain's September Industrial Production +3.4% year-over-year (expected 3.2%; last 1.9%)
    • France's September trade deficit EUR4.70 billion (expected deficit of EUR4.80 billion; last deficit of EUR4.20 billion). September Imports EUR45.00 billion (last EUR44.30 billion) and September Exports EUR40.30 billion (last EUR39.80 billion). September Current Account deficit EUR3.10 billion (last deficit of EUR1.70 billion)
  • In news:
    • Germany's Leading Economic Institutes raised their expectations for German GDP growth for 2017 to 2.0% from 1.4%. The Institutes believe that the European Central Bank should communicate an exit strategy and quickly reduce asset purchases ahead of the scheduled end for the purchase program.
    • French Finance Minister Bruno Le Marie said that France and Germany should harmonize their corporate taxes by the end of next year.