Thursday, May 2, 2013

Trader's Highlight

DJI- NEW YORK, May 1 (Reuters) - U.S. stocks fell sharply on Wednesday as the latest economic data continued a trend of indicators pointing to anemic growth while bellwether companies disappointed on revenue.

Equities briefly pared their losses after the Federal Reserve said it would continue its policies of stimulating the economy, though the decision was expected, and shares subsequently slid back to their lows of the day.

About 70 percent of stocks traded on the New York Stock Exchange closed lower while three-fourths of Nasdaq-listed shares ended in negative territory.

The Fed said recent budget tightening in Washington could be a risk to growth, even as it noted some improvement in the labor market.
Equities have performed well of late, with the S&P 500 hitting both intraday and closing record highs on Tuesday, though a trend of discouraging data indicated that the Fed wouldn't ease up on its accommodative monetary policy of quantitative easing.

"That the Fed won't end QE any time soon is positive for stocks in the near term, but the data we've seen is creating a lot of angst for investors," said Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tennessee.

U.S. private-sector employers added 119,000 jobs in April, well below economists' expectations, according to a report from payrolls processor ADP. A separate report from the Institute for Supply Management showed the U.S. manufacturing sector expanded only modestly in April.
Adding to concerns, growth in China's factory sector unexpectedly slowed last month as new export orders fell, raising fresh doubts about the world's second-largest economy after a disappointing first quarter.
Materials and energy stocks led declines as expectations of slower growth pushed basic materials prices lower. An index of commodities .TRJCRB fell 1.7 percent while the S&P energy index .SPNY slid 1.6 percent and the S&P materials index .SPLRCM lost 1.8 percent. Copper prices CMCU3 fell 3.6 percent, the most in a day since early April 2012.

The S&P 500 has recently ended sessions much stronger than its early lows as traders bought equities on signs of weakness.

"We're a bit overextended, which is leading to some profit taking," said Gibbs, who helps oversee about $400 billion. "But relative to historical measure, we're not in an expensive market, and we would view declines as buying opportunities."

The Dow Jones industrial average .DJI lost 138.85 points, or 0.94 percent, to 14,700.95 at the close. The Standard & Poor's 500 Index .SPX dropped 14.87 points, or 0.93 percent, to finish at 1,582.70. The Nasdaq Composite Index .IXIC slid 29.66 points, or 0.89 percent, to close at 3,299.13.

The S&P 500 is up 11 percent so far this year. April marked the index's sixth consecutive month of gains.

Of the 342 companies in the S&P 500 that have reported earnings so far this season, 68.7 percent have beaten expectations and 43.2 percent have reported revenue above forecasts. Over the past four quarters, 67 percent have beaten earnings forecasts and 52 percent have beaten revenue expectations.
About 6.53 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, above the daily average so far this year of about 6.36 billion shares.

Oil- NEW YORK, May 1 (Reuters) - Oil fell more than 2 percent to settle below $100 a barrel on Wednesday as soft economic data from China stoked pessimism about the global demand outlook and as U.S. crude oil inventory rose to a record level.

Brent crude futures LCOc1 fell $2.42 to settle at $99.95 a barrel, after dipping below $99 during the session for the first time since April 23.

Crude stocks in the United States rose by 6.7 million barrels last week to a record 395.3 million barrels, data from the Energy Information Administration showed, far exceeding forecasts of a 1 million-barrel build and pressuring U.S. oil prices. EIA/S

U.S. oil CLc1 settled down $2.43 at $91.03 a barrel. It hit a session low of $90.11, falling through its 50-day, 100-day, and 200-day moving averages.

"The market reared its head after we saw oil stocks jump to a three-decade high, and gasoline demand basically dropped to a decade low," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

Trading volumes were high, with Brent 14 percent above its 30-day moving average and U.S. crude over 20 percent higher.

During the session, the spread between Brent and U.S. crude narrowed to $8.39, the lowest since June 2012. It closed just below $9 for the second straight day.

The Brent contract slid 7 percent in April, its biggest monthly drop in 11 months, on the back of a series of indicators suggesting the global economy remains fragile.

DOUBTS ABOUT GROWTH

Growth in China's manufacturing sector unexpectedly slowed in April as new export orders fell, raising new doubts about the strength of the economy after a disappointing first quarter.
"China’s manufacturing data was a big miss, and obviously when China speaks, we listen," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.

In the United States, the pace of manufacturing growth slowed in April as the sector expanded only modestly, an industry report showed, adding to signs the economy cooled as the second quarter got underway.
Figures on U.S. private-sector jobs growth also came in below market expectations, two days before the government's closely watched non-farm payrolls data. (Full Story)

"The combination of ample supply and weak fuel demand levels with disappointing economic data wiped out $4 of market rebound in a couple of days," said McGillian.

The U.S. Federal Reserve said it will keep buying $85 billion in bonds each month to keep interest rates low and spur growth, but added it could lift or taper this pace of purchases depending on the economy's path.
The European Central Bank is widely expected to cut interest rates to a record low of 0.5 percent after data showed inflation in the euro zone had fallen to a three-year low and unemployment had hit a record of 12.1 percent.
Oil market fundamentals showed plentiful supplies, which also pressured prices.

Supply from the Organization of the Petroleum Exporting Countries is forecast to average 30.46 million barrels per day (bpd)in April, up from 30.18 million bpd in March, a Reuters survey showed.

The Buzzard oilfield in the North Sea, an important contributor to the Brent crude benchmark, was on schedule to restart later on Wednesday, trade sources said, after a steam release caused the field to be shut down on Monday.
 
CBOT SOYBEAN- Chicago Board of Trade soybean futures were lower on Wednesday on talk that soybeans may be imported to the U.S. from South America, traders said.

"I have not heard that beans have been imported but there has been chatter for months that it could happen, it's happened before when stocks were tight. It would make more sense to me if meal were imported, meal is what is needed," a trade source said.

Pressure also stemmed from signs of slower than expected economic growth in China, the world's largest buyer of soybeans, traders said.

Growth in China's manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.

Profit taking also weighed on prices as did the potential for increased U.S. soybean acreage this year due to slow seedings of corn due to wet weather.
Heavy rainfall and some snow across the western two-thirds of the U.S. Midwest will push farmers, many of whom just began planting corn this week, from the fields in the coming days.

Soybean spot basis bids ranged from sharply up to sharply lower across the U.S. Midwest on Wednesday after historically high basis levels and the highest futures in a month spurred a large increase in farmer sales during the first two days of this week, dealers said.
No soybean or soymeal deliveries on the May contract. Soyoil deliveries totaled 1,010 contracts. Term house account stopped 332, Merrill customer stopped 104, Newedge customer stopped 336.

Key chart resistance for July is at its 50-day moving average of $14.01-1/2. The nine-day relative strength index is at 47.

 
FCPO- SINGAPORE, April 30 (Reuters) - Malaysian palm oil futures edged higher on Tuesday after a near 2 percent loss the previous day, but gains were limited by falling exports and investor caution ahead of a holiday.

Malaysian exports of palm oil products dropped 4.3 percent to 1,305,120 tonnes in April from a month ago, cargo surveyor Intertek Testing Services said on Tuesday.
Trading was subdued as investors avoided taking positions ahead of the Labour Day holiday on Wednesday, with the market shifting its focus to Malaysia's palm stocks level in April.

"The market is stagnant ahead of the holiday tomorrow and the exports were no surprise," said a dealer with a foreign commodities brokerage in Kuala Lumpur.

"Production numbers will be eyed. Stocks will likely be marginally lower and that could pressure prices as people are expecting a sharper drop."

By the market close, the benchmark July contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,286 ringgit ($752) per tonne, supported by bargain-hunting after prices fell as much as 2.4 percent the day before.

Total traded volumes were thin at 27,106 lots of 25 tonnes each compared to the average 35,000 lots a day seen so far this year.

Technicals showed palm oil is expected to revisit its April 26 high of 2,334 ringgit per tonne, said Reuters market analyst Wang Tao.
With exports slowing compared to a month ago, investors are now turning their hopes to near-stagnant production to help cut stockpiles in Malaysia. Inventory at the world's second-largest producer of the edible oil stood at 2.17 million tonnes in March, down from February's 2.43 million tonnes.

Export demand may take a further hit as Indonesia's move to slash its crude palm oil export tax to 9 percent in May from April's 10.5 percent could hurt Malaysia's price competitiveness, analysts said.
"Even though (Indonesia's tax) is still higher than the 4.5 percent imposed by the Malaysian government, the cut ... heightened concerns that palm oil stocks may remain high," Malaysia's Affin Investment Bank said in a note to clients on Tuesday.

In other markets, Brent oil fell towards $103 per barrel on Tuesday, weighed by worries about the demand outlook, though losses were capped on hopes that the U.S. Federal Reserve and European Central Bank may do more to stimulate the global economy.
In vegetable oil markets, U.S. soyoil for July delivery BON3 edged up 0.1 percent in late Asian trading. The Dalian Commodities Exchange is closed for Labour Day and will only resume trading on Thursday.

REGIONAL EQUITY- JAKARTA, May 1 (Reuters) - Southeast Asian stock markets were closed on Wednesday due to the May Day holiday, except the Indonesian market .JKSE, which closed 0.53 percent higher after real estate companies reported higher-than-expected first-quarter results.

The Jakarta Composite Index .JKSE continued its rally for a second day and hit a fresh high of 5,062.67 before closing at 5,060.92, boosted by property companies .JKPROP which were up 2.97 percent.

Shares of Kawasan Industri Jababeka KIJA.JK soared as much as 13.3 percent to an all-time high of 340 rupiah after the company's quarterly net profit quadrupled from a year earlier.
Lippo Cikarang LPCK.JK and Agung Podomoro Land APLN.JK rose more than 5 percent to 7,350 rupiah and 500 rupiah, respectively.