Markets

Markets Quiet Despite Lira Woes; Earnings Season Almost Over

Monday, August 13, 2018, 10:32 AM, EST

  • NASDAQ Composite +0.58% Dow +0.16% S&P 500 +0.33% Russell 2000 -0.01%
  • NASDAQ Advancers: 1159 Decliners: 987
  • Today's Volume (First Hour) -18.9%

The market opened fractionally higher this morning despite weakness in both Europe and Asia. The Turkish lira remains a pressing issue, but for the most part no significant change from Friday. Aside from Omarosa's book and secret-recordings tour, its generally a quiet mid-August Monday morning. The sectors are mixed with Tech (+0.9%) back in the lead, Consumer Staples (-0.2%) are down for a fifth day but most sectors are little changed. Treasuries are a little firmer, the dollar index is off 0.2%, gold down 0.9%, and crude oil off about 0.6%.

  • No recovery in sight for the Turkish lira, which is down nearly 0.5% today and down 30% or so against the dollar in just the last two The Turkish central bank pledges to "take all necessary measures" to contains the crisis, but thus far not too much has been done. The meantime the broader concern is the contagion aspect; the MSCI Emerging Market Currency Index is down over 7% so far this year and another 0.8% this morning, taking the index back to July 2017 levels. JP Morgan's global strategist Kerry Craig says that while the issues in Turkey are "very specific to Turkey," the damage done to the lira "may fuel volatility in emerging-market assets" in the near-term.
  • Earnings season for the S&P 500 is nearly over with 453 members reported. So far we have seen an average upside beat of over 5.5% for all 11 S&P sectors, with the Energy sector posting the only negative comp (-6.35%). The quarterly earnings growth rate for the index has popped 25.5% while the sales growth rate has increased over 10%.
  • Invest at home: An short piece in Bloomberg highlights the outperformance of the US markets compared to the rest of the world. The S&P 500 Index is up about 6% for the year while the MSCI World Index (ex-US) is down about 5.7%. The divergence is the widest since 2014 but doesn't necessarily portend a pullback in the US. Fueling the US markets are strong inflows; since the beginning of the year over $60 billion has flowed into US Equity ETFs.
  • Crude oil continues under pressure this morning despite declining shipments from Iran. The recently imposed sanctions are beginning to have an impact with shipments to South Korea, Japan, Turkey, and the UAE on the wane. India and China are the two exceptions with China likely to continue importing. Bloomberg estimates shipments from Iran could fall by 1.5 million barrels per day by November, and seems that should boost prices.

Technical Take: Leaders are leading

Global equities are widely lower due in part to ongoing concerns surrounding Turkey whose currency made fresh lows today, all the while a trade war remains unresolved and spontaneous tweets have spread from the administration into the corporate sector. However animal spirits are alive here in the United States led by the technology sector. The S&P 500 technology index is up 0.9% today, +4% in August, and +6.1% QTD. For the year the tech index leads all groups with a YTD gain of 16.9% and now remains just 1.3% from its all-time high made in early July. The bull is alive and kicking in the US and its leaders are leading.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.