Daily Game Plan

by Contributor
on April 2, 2024

TODAY’S GAME PLAN:  from the trading
desk, this is not research

DATA/HEADLINES: 
10:00 a.m.: US Feb. JOLTS, US Feb. Factory Orders, 10:10 a.m.: Fed’s Bowman speaks, 12:00 p.m.: Fed’s Williams speaks, 12:05 p.m.: Fed’s Mester speaks, 1:30 p.m.: Fed’s Daly speaks

TODAY’S HIGHLIGHTS and News:  

  • Disney has pulled ahead in its proxy battle against Nelson Peltz’s Trian Partners with more than half of all shares voted
  • The NY Yankees started the season with a five-game winning streak for the first time in 32 years, beating the Arizona Diamondbacks
    5-2.

 

Global shares were mixed on Tuesday as surprisingly strong U.S. manufacturing data cast doubts over how soon the Federal Reserve might cut interest rates. Treasury
yields spurted higher, snapping a 16-month run of contraction. To an extent, the market is in waiting mode this week ahead of Friday’s non-farm payrolls report which is expected to show the economy added 200,000 jobs in March. Later on, the Job Openings and
Labor Turnover Survey (JOLTS) might help give a steer on how tight the labor market is.

 

EQUITIES:  

 

US equities edged lower on Tuesday as economic resilience curbed expectations for Federal Reserve interest-rate cuts. Tesla’s report on first-quarter deliveries will be released
Tuesday. Wall Street expects about 457,000 units, up 8% from 423,000 delivered in the first quarter of 2023. Elsewhere, UBS launched a share buyback program of up to $2 billion. In premarket trading, Clorox shares declined 1% after Citigroup downgraded the
company to neutral from buy, citing that the anticipated recovery post-cyberattack last year has largely materialized.Health insurance stocks experienced a significant drop following US regulators’ decision not to increase payments for private Medicare plans
as expected by the industry.PVH shares plummeted 23% after the company, owner of Calvin Klein, projected a larger-than-expected decline in sales for the current fiscal year, despite beating fourth-quarter expectations. Cryptocurrency-linked companies saw a
decline due to decreased demand for dedicated US exchange-traded funds, with Bitcoin dropping as much as 5.3%. Trump Media (DJT US) fell 3.8%, extending losses for a third session, following the disclosure of a more than $58 million loss in 2023. Earnings
include Paychex, Dave & Buster’s

 

Futures ahead of the bell: E-Mini S&P -0.4%, Nasdaq -0.5%, Russell 2000 -0.6%, DJI -0.6%

European stock market indexes initially rose but later trimmed their gains as traders reconsidered their expectations regarding future interest rate movements. The Stoxx Europe
600 index remained stable as trading resumed after the holiday period. On the other hand, the UK’s FTSE 100 reached a new record high, boosted by a rally in commodity stocks despite a decline in UK house prices for the first time in three months in March.
European commodity stocks experienced an uptrend due to increased prices of oil and metals, with the Stoxx Europe 600 Oil & Gas index climbing 2.7% to its highest level since October. Equinor was among the notable gainers. +4.6%, Aker BP +4.0%, and Eni +3.0%.
Stoxx 600 -0.07%, DAX -0.1%, CAC -0.13%, FTSE 100 +0.23%.

 

Asian stocks experienced gains driven by technology stocks, particularly in Hong Kong where strong gains were posted following two holiday trading sessions. The MSCI Asia Pacific
Index rose by up to 0.6%, with chipmakers TSMC and Samsung being significant contributors. Hong Kong’s benchmarks surged by over 2%, leading the region’s gains, while mainland China stocks halted a three-day advance. Japanese stocks remained steady within
a range as the yen stabilized after a fall against the dollar on Monday. Benchmarks also saw increases in Taiwan, Singapore, and South Korea. Topix -0.25%, Vietnam +0.4%, Shanghai Composite is flat, Singapore +0.5%, CSI 300 -0.4%, Philippines -0.4%, Sensex
-0.15%, Hang Seng Index +2.4%. ASX 200 +0.1%.

FIXED INCOME: 
 

Treasuries continued their decline, with 10-year yields reaching a four-month high of over 4.36%, driven by a surge in oil prices and technical factors. The rise in yields was
more pronounced in the front-end, widening the spread between 2-year and 10-year yields by 4 basis points. European rates also saw significant increases following the Treasury selloff. Fed-dated OIS rates remained relatively stable, pricing in approximately
14 basis points of rate cuts for the June meeting and 63 basis points for the December FOMC.

 

 

METALS: 
   

 

Gold surged to a record after an Israeli airstrike on Iran’s embassy in Syria bolstered bullion’s appeal for investors seeking a haven from increasing geopolitical
risks. Bullion looks to continue its 14% climb since mid-February on expectations of rate cuts in the coming months. Upcoming key drivers include Fed Chair Jerome Powell speaking Wednesday and non-farm payrolls figures due Friday. Spot gold +0.4%, silver +1.4%.

 

ENERGY:   

 

Oil prices climbed on Tuesday with WTI crude reaching $85 for the first time since October. This was influenced by Iran’s pledge of retaliation following an alleged Israeli airstrike
on its embassy in Syria, along with reduced supply from Mexico. Meanwhile, manufacturing activity in the U.S. and China expanded in March, raising expectations that improving economic growth in both countries will boost demand for oil. WTI +1.4%, Brent +1.3%,
US Nat Gas +0.7%, RBOB +0.7%

 

 

CURRENCIES:   

 

In currency markets, the US dollar erased earlier gains as investors mulled the impact of strong March US manufacturing data. The pound and the yen reversed losses
while the euro climbed vs. the dollar as Bavaria March CPI slowed to 2.3% annually from 2.6% prior. The yuan slid to a four-month low against the dollar in onshore trading Tuesday and came within a few pips of the lower end of the trading range permitted by
the central bank. In the more freely traded offshore market, the yuan has been hovering at a weaker level than the onshore daily limit for eight consecutive sessions USDCHF rallied 0.4% to a five-month high following Switzerland’s manufacturing data stronger
than estimates. US$ Index -0.1%, GBPUSD +0.1%, EURUSD +0.02%, USDJPY is flat, AUDUSD +0.22%, NZDUSD +0.05%, USDCHF -0.4%.

 

 

Data sources: Bloomberg, Reuters, CQG

 

  • Upgrades
    • AN2 Therapeutics (ANTX) Raised to Market Outperform at
      JMP; PT $6
    • Array (ARRY) Raised to Overweight at Barclays; PT $18
    • Brown-Forman (BF/B) Raised to Neutral at Citi; PT $52
    • DoorDash (DASH) Raised to Buy at CFRA; PT $158
    • Eaton Corp (ETN) Raised to Equal-Weight at Barclays;
      PT $300
    • Estee Lauder (EL) Raised to Buy at Citi; PT $175
    • Infosys (INFO IN) ADRs Raised to Buy at HSBC; PT $21.21
    • Moody’s (MCO) Raised to Overweight at Barclays; PT $450
    • StoneCo (STNE) Raised to Outperform at Bradesco BBI;
      PT $23
  • Downgrades
    • BCE (BCE CN) Cut to Market Perform at BMO; PT C$46
    • Biomea Fusion (BMEA) Cut to Neutral at JPMorgan; PT $14
    • Century Communities (CCS) Cut to Underperform at Wedbush;
      PT $82
    • Clorox (CLX) Cut to Neutral at Citi; PT $165
    • D.R. Horton (DHI) Cut to Underperform at Wedbush; PT
      $130
    • Figs (FIGS) Cut to Underperform at BofA
    • IO Biotech (IOBT) Cut to Neutral at Kempen & Co
    • Lennar (LEN) Cut to Underperform at Wedbush; PT $144
    • LGI Homes (LGIH) Cut to Underperform at Wedbush; PT $74
    • Microvast (MVST) Cut to Neutral at Janney Montgomery;
      PT $3
    • NEXTracker (NXT) Cut to Equal-Weight at Barclays; PT
      $63
    • NIO Inc. (NIO) ADRs Cut to Underweight at Barclays; PT
      $4
    • Nuvei (NVEI CN) Cut to Neutral at Seaport Global Securities
      • Cut to Peerperform at Wolfe
      • Cut to Market Perform at KBW; PT $34
    • Petco (WOOF) Cut to Underperform at BofA; PT $1.50
    • Quebecor (QBR/B CN) Cut to Market Perform at BMO; PT
      C$33
    • Ultrapar (UGPA3 BZ) ADRs Cut to Market Perform at Itau
      BBA; PT $6.30
    • Watsco (WSO) Cut to Sell at CFRA
  • Initiations

 

 

 

 

 

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