Investing.com | Apr 26, 2018 12:02
US 10-year Treasury yields retreat but hold above 3 percent
US futures offered up a mixed picture this morning, with S&P 500 barely in the green after initially sliding, though the NASDAQ 100 and Dow looked a bit more robust. Stocks in Europe bounced back from a lower open with enough gusto to turn losses into gains. Shares of auto manufacturers popped, driving the STOXX Europe 600 into positive territory, after China announced it was considering a proposal to cut import duties on passenger cars.
Earlier, during the Asian session, most local indices pared declines, with both South Korea's KOSPI and Japan's TOPIX pushed higher by technology stocks. The South Korean index jumped 1.1 percent on optimism that the upcoming summit between the US and North Korea may yield economic benefits to the southern portion of the peninsula too. Japanese equities gained 0.25 percent, hitting a two-month high.
Chinese shares bucked the trend. They struggled to join the upbeat tech ride after a US probe into Huawei Technology (SZ:002502) exacerbated investor fears of an escalating trade war. The Shanghai Composite and Hong Kong's Hang Seng closed 1.35 percent and 0.9 percent lower respectively.
h2 Global Financial Affairs/h2Yesterday, the S&P 500 bounced back from an early loss, climbing 0.18 percent. Energy shares outperformed with a 0.8 percent leap. However, the biggest story was posted by Technology shares, which manage to rebound—albeit by a paltry 0.2 percent—from a slide that had pulled the broader market down. Technically, the SPX price formed a bullish hammer, right on top of the uptrend line since the February 2016 bottom, after bouncing off the 200 DMA.
As had been predicted, Facebook's (NASDAQ:FB) user privacy scandal didn't stop the social media heavyweight from crushing earnings estimates. The tech giant reported a 62.5 percent YoY growth, with a $1.69 EPS against $1.35 forecast.
While it may be understandable that advertisers can't afford to drop the world's largest social media platform, what surprised is that even after the user privacy scandal Facebook is still trying to rectify, user growth met expectations; 70 million users were added in the first quarter, despite the data breech. It may be true that there'ss no such thing as bad publicity. Facebook also announced another stock buyback, to the tune of $9 billion.
Samsung (OTC:SSNLF) also posted record earnings on Wednesday, for a fourth straight quarter; net income rose to $10.7 billion. However, the company warned of softer phone demand, adding fuel to fears that chipmakers may have peaked.
On Thursday morning Barclays (LON:BARC) posted pre-tax profits of £1.7 billion for the first quarter, higher than the £1.4 billion forecast. Outstanding payments as a result of past misconduct cases led to the UK bank reporting a statutory loss. Shares in Barclays were up 0.3 percent on the day.
The UK's Domino’s Pizza Group (LON:DOM) saw sales increase by 18.3 percent in the first quarter of 2018. Shares in the pizza delivery company were up by 3.5 per cent following the earnings release on Thursday.
Cash flow concerns for Royal Dutch Shell (LON:RDSa) saw the firm drop 2.1 percent despite posting better than expected Q1 results on Thursday. Shell reported its highest profits for three years with an increase of 42 percent in Q1.
On Thursday fin-tech firm Revolut became the UK’s first digital-only banking firm to achieve unicorn status after reporting a valuation of $1.7 billion.
After closing above 3 percent for the first time in four years yesterday, yields on US 10-year Treasurys retreated, though they held above that key level. Meanwhile, the dollar trimmed an earlier decline and advanced.
In the short term, the general perception of rising interest rates and softer European growth is boosting the greenback. However, if one looks at the bigger picture, the global de-dollarization of central bank reserves threatens to severely squeeze demand for the US currency.
At present, the euro is the preferred reserve currency for central banks, as an alternative to the USD. As well, the yuan may also become a strong contestant if China's efforts in that direction, including the recent launch of yuan-denominated oil contracts, succeed.
The euro extended a decline ahead of the European Central Bank rate decision, as German 10-year bund yields tumbled more than 3 percent—far more than the 0.25 percent decline seen in their US counterparts.
WTI crude pushed further above $68 a barrel after French President Emmanuel Macron said he believes US President Donald Trump will withdraw from the Iran nuclear deal, casting a cloud over Middle East geopolitics.
h2 Up Ahead/h2A non-binding vote on whether the UK should remain in a customs union with the European Union following Brexit will take place in the House of Commons on Thursday afternoon.
The Royal Bank of Scotland (LON:RBS) is due to release its Q1 trading update on Friday.
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Currencies
Bonds
Britain’s 10-year yield decreased one basis point to 1.525 percent.
Commodities
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