Day Traders Diary

8/1/18

The S&P 500 ended a three-session slide on Tuesday, but looks poised to open today's session flat, with the S&P 500 futures trading in line with fair value. Meanwhile, the tech-heavy Nasdaq 100 futures are up 0.3% following an upbeat earnings report and guidance from Apple (AAPL), which has helped restore faith in high-flying FAANG names.

Apple is up 4.3% in pre-market trading, on course to open at a new record, after reporting better-than-expected earnings and revenues for its fiscal third quarter on Tuesday evening. The company sold about half a million less iPhones than expected, but the average selling price topped expectations at $724 a pop.

Meanwhile, in Washington, the Fed is set to kick off day two of its policy meeting, which will conclude with the release of its latest policy directive at 2:00 PM ET. The market isn't expecting a rate hike, but it will take note of the language used in the policy statement to try to gauge the Fed's rate forecast for the rest of 2018 and beyond.

In addition to the Fed's rate decision, today's economic calendar is pretty full. Investors will receive the ADP Employment Change report for July (Briefing.com consensus +175K) at 8:15 AM ET, and both the Construction Spending report for June (Briefing.com consensus +0.2%) and the ISM Index for July (Briefing.com consensus 59.4) will be released at 10:00 AM ET.

The Trump administration is reportedly considering more than doubling planned tariffs on $200 billion worth of Chinese goods, raising the levies to 25% from 10%. This report follows an earlier report on Tuesday that the two countries are looking to restart trade negotiations.

In other markets, U.S. Treasuries are lower, pushing the benchmark 10-yr yield up two basis points to 2.98%; West Texas Intermediate crude futures are down 1.1% at $68.00 per barrel ahead of today's weekly crude inventory report, which will be released at 10:30 AM ET; and the U.S. Dollar Index is up 0.1% at 94.38.

In U.S. corporate news:

• Apple (AAPL 198.37, +8.08): +4.3% after beating earnings and revenue estimates and issuing upbeat guidance for the current quarter.
• Campbell Soup (CPB 42.50, +1.60): +3.9% following reports that activist investor Third Point has built a small stake in the company.
• Hanesbrands (HBI 20.00, -2.26): -10.2% after reporting below-consensus earnings.
• Pandora Media (P 7.66, +0.92): +13.7% after beating top and bottom line estimates.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended the midweek session on a mixed note. Japan's Nikkei +0.9%, Hong Kong's Hang Seng -0.9%, China's Shanghai Composite -1.8%, India's Sensex -0.2%.
  • In economic data:
    • China's July Caixin Manufacturing PMI 50.8 (expected 50.9; last 51.0)
    • Japan's July Manufacturing PMI 52.3 (expected 51.6; last 51.5)
    • South Korea's July Manufacturing PMI 48.3 (last 49.8). July trade surplus $7.00 billion (last surplus of $6.24 billion). July CPI +0.2% month-over-month (expected 0.4%; last -0.2%); +1.5% year-over-year (expected 1.7%; last 1.5%)
    • Australia's July AIG Manufacturing Index 52.0 (last 57.4)
    • New Zealand's Q2 Employment Change 0.5% quarter-over-quarter (expected 0.4%; last 0.6%). Q2 Participation Rate 70.9% (expected 70.8%; last 70.8%) and Q2 Unemployment Rate 4.5% (expected 4.4%; last 4.4%). Q2 Labor Cost Index +0.6% quarter-over-quarter, as expected (last 0.3%)
    • India's July Markit Manufacturing PMI 52.3 (expected 53.0; last 53.1)
    • Hong Kong's June Retail Sales +12.0% year-over-year (last 12.9%)
  • In news:
    • Last evening, Bloomberg reported that President Trump plans to increase tariffs on $200 billion worth of imports from China to 25.0% from 10.0% in hopes of pressuring Beijing into making concessions. The news followed a morning report, which claimed that top U.S. and Chinese officials are working behind the scenes to resume talks. China's Politburo noted that the domestic economy was stable during the first half of 2018, but is now facing new challenges.
    • Japanese debt faced renewed selling pressure, lifting Japan's 10-yr yield seven basis points to 0.13%.
    • The Reserve Bank of India increased its repurchase rate by 25 basis points to 6.50% while the reverse repurchase rate was increased by 25 basis points to 6.25%. This was the second consecutive rate hike, matching expectations.

• Major European indices trade lower across the board with the UK's FTSE (-1.3%) showing relative weakness. France's CAC -0.1%, Germany's DAX -0.3%.
  • In economic data:
    • Eurozone July Manufacturing PMI 55.1, as expected (last 55.1)
    • Germany's July Manufacturing PMI 56.9 (expected 57.3; last 57.3)
    • UK's July Manufacturing PMI 54.0 (expected 54.2; last 54.3). July Nationwide HPI +0.6% month-over-month (expected 0.1%; last 0.7%); +2.5% year-over-year (expected 1.9%; last 2.0%)
    • Italy's July Manufacturing PMI 51.5 (expected 53.1; last 53.3)
    • France's July Manufacturing PMI 53.3 (expected 53.1; last 53.1)
    • Spain's July Manufacturing PMI 52.9 (expected 53.1; last 53.4)
  • In news:
    • It has been reported that French officials are the most critical of the UK's approach to Brexit. This comes at a time when French President Emmanuel Macron is dealing with a domestic scandal after one of his bodyguards donned riot gear and assaulted May Day protesters. Mr. Macron survived a no-confidence vote that took place today, but his popularity has declined to a fresh low of 39%, according to Journal du Dimanche.
  • Headlines provided by Briefing.com