Day Traders Diary

3/26/18

The U.S. equity market is on course to reclaim a nice chunk of last week's heavy losses this morning following a Wall Street Journal report that the U.S. and China have quietly started negotiating to improve American access to Chinese markets. The S&P 500 futures are trading 39 points, or 1.5%, above fair value.

In addition to the WSJ article, the S&P 500's 200-day simple moving average (2585) is also providing the market with some support; the S&P 500 finished a tick above the key technical level on Friday after losing a total of 6.0% throughout the week.

Overseas, equity indices in the Asia-Pacific region began the week on a mixed note, while the major bourses in Europe currently sport modest gains. The U.S. dollar is down 0.5% against the euro (1.2414) and 0.7% against the British pound (1.4230), but is up 0.3% against the Japanese yen (105.10).

In the bond market, U.S. Treasuries are under pressure this morning, pushing yields higher across the curve; the yield on the benchmark 10-yr Treasury note is up one basis point at 2.84%, while the yield on the 2-yr note is higher by three basis points at 2.29%.

Market participants won't receive any economic data today.

In U.S. corporate news:

• Finish Line (FINL 13.58, +3.03): +28.7% after agreeing to be acquired by UK-based JD Sports Fashion for $13.50 per share.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region began the week on a mixed note. Japan's Nikkei +0.7%, Hong Kong's Hang Seng +0.8%, China's Shanghai Composite -0.6%, India's Sensex +1.4%.
  • In economic data:
    • New Zealand's February trade surplus NZD217 million (expected deficit NZD100; last deficit NZD655 million). February Imports NZD4.24 billion (expected NZD4.63 billion; last NZD4.94 billion) and February Exports NZD4.46 billion (expected NZD4.56 billion; last NZD4.29 billion)
    • Singapore's February Industrial Production -0.5% month-over-month (expected -8.4%; last 4.7%); +8.9% year-over-year (consensus 5.1%; last 16.9%)
  • In news:
    • China launched a yuan-denominated crude oil contract to rival current dollar-denominated benchmarks like Brent and WTI.
    • China's Ambassador to the United States Cui Tiankai said his country is analyzing all options in response to U.S. tariffs, including a potential reduction of U.S. Treasury purchases. Separate reports indicate U.S. and Chinese trade officials are working on an agreement to avert a trade war.
    • The South Korean press reported that South Korea's Trade Ministry and U.S. counterparts have agreed in principle to renegotiate the current trade agreement.

• Major European indices trade on a mostly higher note while Italy's MIB (-0.1%) underperforms modestly. Germany's DAX +0.7%, UK's FTSE +0.5%, France's CAC +0.4%.
  • In economic data:
    • UK's Gross Mortgage Approvals 38,100 (expected 39,200; last 40,100)
    • France's Q4 GDP +0.7% quarter-over-quarter (expected 0.6%; last 0.6%); +2.5% year-over-year, as expected (last 2.5%)
    • Italy's non-EU trade surplus EUR1.99 billion (last deficit of EUR520 million)
  • In news:
    • Italy's acting Prime Minister Paolo Gentiloni resigned after the weekend election of parliamentary speakers. Forza Italia's Maria Elisabetta Alberti Casellati became the Senate president while Robert Fico of Movimento Cinque Stelle was elected president of the lower chamber. The weekend started with reports of a disagreement between Forza Italia and Lega, regarding the willingness to work with Movimento Cinque Stelle, but the two parties appear to be united once again.
    • Former Catalan leader Carles Puigdemont was arrested in Germany on sedition charges. Standard & Poor's raised Spain's credit rating to A- from BBB+, maintaining a Positive outlook.