For those just getting to their desks, here is a summary of what you missed in the overnight session, courtesy of JPM's Adam Crisafulli
There was a lot of news and headlines over the last 72 hours but none of it is having a dramatic effect on trading. Eurozone equities and US futures are both flat-to-up small. Asia generally saw gains overnight (note that a few markets were closed, including mainland China and Taiwan). What happened overnight? The big incremental headlines were the manufacturing PMIs and for the most part they were mixed-to-inline (eco data isn’t surprising on the upside to the extent it did over the last few months although there aren’t signs of a dramatic slowing either).
Tax skepticism remains very high in the press w/a bunch of neg. reports over the last few days (there is doubt around both the scope and timing of a potential bill with the conversation gradually shifting from “comprehensive reform” to instead a small package of “cuts”) although markets seem more concerned about missing the upside associated w/a final tax deal than they are about being caught long on a tax disappointment (thus for the time being headlines such as “Trump and Ryan discuss taxes” or “tax plan makes progress in Washington” will help to buoy stocks more than “Trump has neither a clear WH tax plan nor adequate staff yet to see through a planned tax reform” will hurt them).
Calendar for Mon 4/3 – the focus for Mon will be on the manufacturing PMIs/ISMs (US manufacturing ISM at 10amET), US auto sales for Mar, Fed speakers (Dudley, Harker, and Lacker), the Senate Judiciary Committee vote on Gorsuch, and Trump’s meeting w/Egypt’s Sisi. For March auto sales JPM and the consensus expect another strong month of sales w/the SAAR coming in at 17.2M (note this follows Feb’s 17.5M and 16.6M in March of 2016). We think that ATP’s will be flattish y/y but think that incentives will rise mid-teens on a y/y basis, below February’s +18.4%. Ford estimates (St -5.9%, JPM -5%); GM estimates (St +7%, JPM +6%).
Europe – the major indices are flat-to-up small. Top performers include basic resources, chemicals, staples, healthcare, and energy while banks, insurance, media, retail, and real estate are lagging. The PMIs aren’t having a huge impact on trading (although the UK number is weighing a bit on the GBP). Imagination is getting hit hard (down ~60%) after Apple said it would no longer use the co’s graphics IP. The news is weighing on Dialog Semi (which is also an AAPL supplier). Banco Popular is one of the weakest stocks in Europe after an internal audit indicated financial shortcomings. The SX7P bank index in general is one of the weakest in Europe. Sovereign yields are trading down small throughout Asia. The EUR is flat-to-up small vs. the USD.
FX/Treasuries – the DXY is up small so far Mon morning. The GBP is getting hit on the weak UK manufacturing PMI while the JPY and EUR are both flat-to-up small vs. the USD. Treasuries are pretty steady so far this morning.
Asia – stocks generally saw gains in Asia: Japan (TPX +0.29%, NKY +0.39%), HK (Hang Seng +0.62%, HSCEI +0.4%), Korea (KOSPI +0.34%), Australia (ASX 200 +0.13%), and India (up ~55- 80bp for the major indices). Mainland China and Taiwan were both closed. Most of the major news in Asia concerned eco data. The PMIs in Asia this morning weren’t spectacular (but they weren’t horrible either and recall the China NBS readings, out Fri, were solid). In Japan top performers included staples, utilities, and healthcare while fins, energy, and real estate lagged. Toshiba slumped ~5.5% amid worries it could postpone its earnings report for a third time. In Hong Kong most of the major sub-groups saw gains w/the exception of consumer staples; top performers included tech, telecoms, and discretionary. The Macau gaming numbers for Mar were very strong although those stocks have had big gains already (thus Galaxy ended up only ~1% and Sands finished flat). China Unicom, Lenovo, Geely Auto, and AAC Tech all saw solid gains while China Mengniu ended down ~2%. In South Korea, the two tech giants both saw gains (Hynix +2.57%, Samsung Electronics +0.58%, and NAVER +2.11%) while industrials lagged (POSCO -2.9%, Hyundai Steel -3.25%, etc.).