Goldman Sachs (GS) and Bank of America (BAC) gained 2.5% and 4.5% respectively in premarket trading this morning, a great response to the start of earnings season, says Bill Baruch.
E-mini S&P (March)
Yesterday’s close: Settled at 2605.50, up 25.00
Fundamentals: U.S benchmarks are holding ground after extending gains on the year yesterday. Tech took the leadership role it has become accustomed to, the NQ gained 2% and Netflix posted a monster 6.5% gain after announcing a subscription increase ahead of earnings after the bell today. Amazon, Google, Microsoft, Facebook and Apple and all notched sessions of +3.5 – 2.0%. Healthcare was also on fire, but the bigger story is the banking sector chipping-in. JPMorgan was initially down more than 3% premarket after reporting earnings but gained as much as 1.5% intraday before finishing +0.7%. Citigroup is up 8.3% on the week and adding another 1.25% premarket this morning. Wells Fargo slipped but this went by the wayside in anticipation of Goldman Sachs and Bank of America who reported this morning. Those two stocks have more than responded to healthy reports by gaining 2.5 and 4.5% premarket.
All things considered, this is a great response to the start of earnings season. It has also helped drowned out a Brexit debacle and the government shutdown entering its 26th day. Yesterday, U.K Prime Minister May’s Brexit deal had the worst Parliamentary reception in modern British history, and this has led to a ‘No Confidence’ vote today at 1:00 pm CT. Overall, the reaction across markets has been muted; the British Pound is in the green on the week and global equity markets are broadly higher. This is because she is expected to survive today’s test, otherwise, we imagine markets would be in a bit of disarray. Today, PM May reiterated the intent to leave the EU on March 29th and would only delay upon a credible alternative. We noted here yesterday that Germany’s Finance Minister was open to further discussions but added they are unlikely to make any major changes. Traders must keep a pulse on developments on this front and the risks associated with such.
The U.S government shutdown has slimmed the economic calendar. Retail Sales was a critical casualty this week, it was due today. The Fed releases their Beige Book at 1:00 pm CT.
Crude Oil (February)
Yesterday’s close: Settled at $52.11, up $1.60
Fundamentals: Global risk-sentiment remains favorable and this brings a showdown with today’s inventory data. Yesterday, after the bell, the private API survey reported a draw of 650,000 barrels of Crude, however, a combined build for the products of 9.204 mb. Although, they reported that inventories at Cushing fell by 796,000 barrels, it will be difficult for the tape to fight another broad increase in supplies. Expectations for today’s official EIA data come in at -1.323 mb Crude, +2.769 mb Gasoline and +1.565 mb Distillates. This would still be a composite build of 3.011 mb but significantly less than what was reported by API. Considering such, something in line with these expectations that also posts a draw at Cushing should be favorable for the market.
Gold (February)
Yesterday’s close: Settled at $1,288.4, down $2.90
Fundamentals: Gold continues to hold at the $1,290 area in a very constructive manner. Despite a retreat in Treasury prices, the yen and a strengthening dollar, gold has been as resilient as ever. Typically, that trio would weigh heavily on the metal and instead, we view this resilience as a sign of things to come. U.K Prime Minister May faces a ‘No Confidence’ vote today at 1:00 pm CT and uncertainty surrounding the path of Brexit has been a tailwind for the metal despite dollar strength. Retail Sales today was the latest casualty the record-long government shutdown. The Fed does release their Beige Book this afternoon at 1:00 pm CT.
