Daily Market Review - 04 May 2015

Crude Oil Prices Decline on China Demand & Saudi Output

In commodities trading on Tuesday, crude oil prices declined. This came after data showed that activity in China’s factory sector fell to an 11-month low while Saudi Arabia said that its current production was close to an all-time high. The flash HSBC/Markit Purchasing Managers’ Index (PMI) dropped in March to 49.2. This missed expectations for a reading of 50.6. Since this number is below the 50-point level, this is an indication of a contraction on a monthly basis and not growth. As a result, investors’ concerns were prompted regarding the strength of the world’s No.2 economy. Added to this, a report overnight showed that Saudi Arabia, which is OPEC’s biggest producer, is now pumping around 10 million barrels of crude oil per day. This number is an all-time high and it is also almost 350,000 bpd above the figure Saudi Arabia gave to OPEC for its February output. As a result, Brent crude oil futures were trading at $55.58 a barrel at 0301 GMT, down 34 cents. Also on the downside was U.S. WTI crude oil which dropped 48 cents to trade at $46.97 a barrel.

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USD Declines on Poor Housing Data

In currency trading on Monday, the U.S. dollar (USD) traded broadly lower against most major currencies. This came after data showed that existing home sales in the U.S. in February rose less-than-expected. Also weighing on the currency markets was the uncertainty as to when the U.S. Federal Reserve is likely to increase interest rates which continued to weigh on demand for the greenback. In their report, the National Association of Realtors showed that U.S. existing home sales increased 1.2% to 4.88 million units last month from 4.82 million in January. This missed analyst expectations for existing home sales to rise 1.7% to 4.90 million units in February. Meanwhile, the euro traded higher with EUR/USD up 1.04% to 1.0932. This came after the euro found some support after Greek authorities said on Friday that they were moving towards meeting the requirements of international creditors on a more detailed reform plan in order to secure the additional bailout funds required to prevent the country’s bankruptcy. Against the British pound the greenback managed to trade higher with GBP/USD down 0.22% to 1.4921. This came after the Confederation of British Industry reported earlier that its index of industrial order expectations fell to zero this month from a reading of 10 in February. Analysts had expected the index to slip to 9 in March. In other currency trading, the U.S. dollar traded lower against the Swiss franc and the Japanese yen with USD/CHF down 0.74% to 0.9675 and with USD/JPY down 0.32% to 119.65. Against the currencies in Australia, New Zealand and Canada the USD traded lower with AUD/USD up 0.91% to 0.7845, NZD/USD up 0.80% to 0.7626, while USD/CAD declined 0.21% to trade at 1.2526. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.58% to 97.49.

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U.S. Stocks Lower At the Close

In stock trading on Monday, U.S. stocks erased modest gains in the last 15 minutes of trading. Many analysts have attributed the recent volatility in the stock markets to volatility in the currency markets. As a result, questions regarding the profitability of multinational corporations have now started to surface. At the close of trading, the Dow Jones Industrial Average (DJIA) declined 11.61 points, or 0.1%, at 18,116.04, with more than half of its 30 components ending with losses. Also on the downside was the S&P 500 index (SPX) which dropped 3.68 points, or 0.2%, 2,104.42, with four out of its main 10 sectors closing lower. Following the downward trend was the Nasdaq Composite index (COMP) which closed 15.44 points, or 0.3%, lower at 5,010.97. This decline came as biotechnology stocks led the losses with the iShares Nasdaq Biotechnology (ETF IBB, -0.20%) down 2.3 percent. Meanwhile, the monetary policy still was in the spotlight, with St. Louis Federal Reserve President James Bullard telling CNBC Monday that the dovish statement from last week may have misplaced investor expectations about the first rate hike. Bullard also said the market could throw another “tantrum” with the Fed possibly raising rates later this year. Also, Fed Vice Chair Stanley Fischer speaking at the Economic Club of New York, said rate hike is likely to be warranted this year.

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In the Spotlight – Morgan Stanley’s Top 5 Stock List Does Not Include Apple

On Monday, Morgan Stanley named its top five favorite “megacap” stocks. Surprisingly, the most valuable public company in the world, Apple Inc. (AAPL, +0.06%), did not make it into the top five. In fact, Apple showed up at number 15 overall. The top 5 list was prepared by analyst Adam Parker and his team and they worked through 41 companies with market capitalizations of more than $100 billion. They also used different sets of criteria in order to ascertain the top 5 while the 41 companies were ranked them from best to worst.

International Business Machines Corp. (IBM, -0.06%) was the only tech company to make it into the top five while the other 4 companies included Bank of America Corp. (BAC, +0.25%), Gilead Sciences Inc. (GILD, -0.11%), J.P. Morgan Chase & Co. (JPM, -0.02%) and Citigroup Inc. (C, +0.02%). According to the Morgan Stanley list, some of the worst companies included Exxon Mobil Corp. (XOM, +0.02%), Walt Disney Co. (DIS, -0.02%) and UnitedHealth Group Inc. (UNH, +0.71%).

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Morgan Stanley prepared their list based on five different categories which included (1) “What’s in the Price”, (2) Consensus estimate, (3) 36-month quantitative model, (4) total return over the next five years and the (5) “Quantamental” approach. For example, in order to obtain a score for the total return over the next 5 years, Morgan Stanley sorted the stocks using a formula based on price appreciation and dividend yield. Based on this, Facebook Inc. (FB, +0.14%) came out the big winner while Apple was near the bottom of the list. Also, for the ‘Quantamental’ approach, the analysts ranked the companies based on the results of their three-month alpha model, the 24-month relative-return model, and in-house bull/bear ratio. For this category, Apple came in 26th while Gilead, Bank of America, J.P. Morgan, Microsoft Corp. and Oracle Corp. were the leaders.

Daily Market Review - 20 March 2015

Oil Prices Volatile Before Rig Count Data

In commodity trading on Friday, crude oil futures were choppy in Asian trading. This came as investors are awaiting the rig count data out of the U.S. for the week while investors also weighed volatile currency markets. On the New York Mercantile Exchange, light sweet crude futures for April delivery, which will expire on Friday, traded at $43.65 a barrel, down 31 cents, or 0.7%, in the Globex electronic session. Meanwhile, crude futures for delivery in May, which will become the front month, were trading at $45.41 a barrel, down 12 cents. Also, Brent crude on London’s ICE Futures exchange traded at $54.40 a barrel, down 3 cents. In the last trading session, crude oil prices resumed their decline in response to a stronger U.S. dollar (USD) as well as to rising oil stockpiles in the U.S. As a result, Brent was down 2.6 percent while NYMEX crude lost 1.6%. Today, investors are awaiting the report on the latest U.S. drilling rig-count numbers from oil services company Baker Hughes which will be released later in the day.

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U.S. Stocks End Lower

On Thursday, U.S. stocks pulled back after their rally on Wednesday as a result of the monetary policy statement by the U.S. Federal Reserve which pushed the S&P 500 index (SPX) to its highest close in two weeks. At the close of U.S. trading on Thursday, the SPX declined 10.23 points, or 0.5%, to settle at 2,089.27. This came in response to a drop in energy stocks as well as declining oil prices. Also on the downside was the Dow Jones Industrial Average (DJIA) which dropped 117.16 points, or nearly 0.7%, to end at 17,959.03. During the trading session on Thursday, the blue-chip index declined as much as 142 points. Breaking the downward trend was the Nasdaq Composite index (COMP) which advanced by 9.55 points, or 0.2%, to close at 4,992.38. This tech-heavy index, which briefly traded above 5,000 on Thursday, has climbed for four straight sessions so far this week. The biggest gainer on the Nasdaq was Wynn Resorts Limited (NASDAQ:WYNN), which rose 7.06 or 5.74% to 129.98. This came after Brean Capital set a buy rating and a price target of $174 a share for the Nevada-based developer of high-end hotels and casinos. Wynn was also the top performer on the S&P 500 index , just ahead of Urban Outfitters Inc. (NASDAQ:URBN), which gained 1.60 or 3.55% to 46.70. Also, the CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 0.79% to 14.08.

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USD Pushes Higher Despite Poor Philly Fed Report

In currency trading on Thursday, the U.S. dollar (USD) traded higher against most major currencies. This increase came despite the fact that data released yesterday showed that manufacturing activity in the Philadelphia-region expanded at the slowest pace in 13 months in March. According to the report by the Federal Reserve Bank of Philadelphia, their manufacturing index deteriorated to a reading of 5.0 in March from February’s reading of 5.2. Analysts were expecting the index to rise to 7.1 in March. Meanwhile in other economic news, the U.S. Department of Labor said on Thursday that the number of individuals filing for initial jobless benefits in the week ending March 14 increased by 1,000 to 91,000 from the previous week’s total of 290,000. Analysts had expected initial jobless claims to rise by 2,000 to 292,000 last week. In a separate report, data showed that the current account deficit in the U.S. widened to $113.5 billion in the fourth quarter from $98.9 billion in the third quarter. Analysts had expected the current account deficit to widen to $103.2 billion in the last quarter. Despite the negative data, in currency trading, the greenback traded higher against the euro with EUR/USD trading at 1.0622, down 2.26%. This comes ahead of European Union talks to discuss Greece’s bailout later in the day yet ahead of these talks, the European Parliament President Martin Schulz warned that Greece’s financial situation was “dangerous”, with debt payments looming. Meanwhile, against the Japanese yen and the British pound the greenback traded higher with USD/JPY up 0.65% to 120.89 and with GBP/USD down 1.68% to 1.4730. Also, the Swiss franc declined with USD/CHF up 1.32% to 0.9911. This came after the Swiss National Bank said it was keeping its benchmark interest rate unchanged at minus 0.75% which was in line with market expectations. The central bank left the target range for the three-month Libor unchanged at between minus 1.25% and minus 0.25%. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 2.25% to 99.58.

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In the Spotlight – So When Will the Federal Reserve Increase Interest Rates?

All bets are on as economists are now speculating when the U.S. Federal Reserve will make the first rate hike since the financial crisis. The choices are June or September. But it seems that not all economists are placing their bets behind one of these months and October has also been added as the month for the first rate rise.

To put it in perspective, according to the FedWatch calculator of the GME Group, which is derived from federal-fund futures, October is the first month in which the probability of a rate hike is at 65 percent. For June, the current probability for a rate hike is 11% while for a September rate hike, the current probability is at 44 percent.

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Despite the higher probability for an October rate increase, few would expect an October move. The Federal Reserve holds its news conference and gives out economic projections and the infamous “dot plot” on a quarterly basis. Also, the Fed Chairwoman Janet Yellen said on Wednesday that every meeting is a “live meeting” and that they could hold a conference call at any time. Despite this, economists find it hard to imagine that the Fed would be uncomfortable with increasing interest rates in September but ready to move shortly before Halloween. In their monetary policy statement on Wednesday, Yellen said that a rate rise in April is “unlikely” but that it could be appropriate at later meetings. For this year, there are Federal Open Market Committee meetings in June, July, September, October and December.  So which month are you betting on?

Daily Market Review - 23 March 2015

U.S. Stocks Score Big Weekly Gains

On Friday, U.S. stocks finished higher. This came after stocks rebounded from the trading session on Thursday to score the strongest gains for the week. At the close of U.S. trading, the Nasdaq Composite index (COMP) rose 0.7% to close at 5,025.42. For the week, this blue chip index advanced 3.2% achieving its highest close in 15 years. On Friday, this index ended only 0.4 percent short off its all-time closing high which it reached on the 10th of March, 2000. Also on the upside was the S&P 500 index (SPX) which advanced 0.9%, or 18.83 points, to close at 2,108.10. For the week, this benchmark climbed 2.7 percent which was boosted by the policy statement made by Federal Reserve Chairwoman Janet Yellen last Wednesday. Yellen stated that the central bank will raise interest rates slower than it had planned to just a few months ago. As a result, the SPX shifted away from its three-week losing streak and the index now stands just 0.4% below its record close which it reached on the 2nd of March. Also on the upside was the Dow Jones Industrial Average (DJIA) which rose 0.9%, or 168.62 points, to close at 18,127.65. This blue chip index rose 2.1% for the week. According to a note from economists at Credit Suisse on Friday, the comments from the Fed on Wednesday were dovish yet they still expect the central bank to raise interest rates in June this year. Citing improving corporate credit and earnings revisions stabilizing, they also lifted their year-end target for the S&P 500 by 20 points to 2,170. Other analysts have stated that interest rate hikes are only likely to occur in September or October this year.

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Oil Prices Decline As Saudi Arabia Rejects Output Cut

In Asian trading on Monday, crude oil prices declined almost by a percentage point. This came in response to comments made by Saudi Arabia over the weekend which made it clear that this OPEC member would not unilaterally cut its output in order to defend prices. Since June 2014, oil prices have been on a rapid downward trend and analysts have expected Saudi Arabia, OPEC’s biggest producer, to curb its output. To date though, Riyadh has maintained a stable output. This move has been made in order to defend the country’s market share against non-OPEC producers like Russia and the United States, where production has increased as a result of the shale exploration boom. As Saudi oil minister Ali al-Naimi said on Sunday, “We tried, we held meetings and we did not succeed because countries (outside OPEC) were insisting that OPEC carry the burden and we refuse that OPEC bears the responsibility.  The production of OPEC is 30 percent of the market, 70 percent from non-OPEC … everybody is supposed to participate if we want to improve prices.” As a result, U.S. WTI crude was down 58 cents and trading at $45.99 a barrel while the benchmark Brent crude oil futures was trading at $54.79 a barrel, down 53 cents from their last settlement.

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USD Lower As Fed Statement Weighs

In currency trading on Friday, the U.S. dollar (USD) traded broadly lower against a basket of other major currencies. This came in response to improved risk sentiment while fresh hopes for progress on the Greek debt front were evident. Meanwhile, the Federal Reserve’s latest policy statement, which was released last Wednesday, continued to weigh on the greenback. This came after the Fed indicated that U.S. economic growth has moderated and that interest rates will rise at a slower pace than previously forecast. The euro managed to extend earlier gains with EUR/USD up 1.06% to 1.0771. This came after the European Commission said it made $2 billion of unused funds available to Greece to help the country avert a cash crunch. Also on the upside were the Japanese yen and the Swiss franc which traded higher against the greenback with USD/JPY down 0.09% to 120.70 and with USD/CHF also down 1.24% to trade at 0.9778. In the minutes of the Bank of Japan’s (BoJ) most recent policy meeting, it was evident that the government had dropped their calls to hit the bank’s inflation target “at the earliest date possible”. This was a clear signal to the Bank that it should not rush in accelerating inflation through expanding stimulus measures further. Also on the upside was the British pound with GBP/USD up 0.83% to 1.4876. Earlier, the U.K. Office for National Statistics reported that public sector net borrowing rose by £6.22 billion in February. This was less than the expected increase of £7.70 billion. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.91% to 98.54.

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In the Spotlight – Facebook Pushes into Top 10 Position on the SPX

Whether you ‘Like’ it or not, Facebook Inc. (FB, +1.27%) is climbing up the ladder. On Friday, the social network giant’s stock rallied to an all-time high which pushed the company’s market valuation into the top ten among all S&P 500 index (SPX) companies. On the week, Facebook’s stock climbed 7.4 percent. This marked the company’s biggest weekly gain in eight months. As a result, Facebook’s market capitalization was boosted by $16.1 billion to $231.6 billion which pushed the company passed blue-chip bank J.P. Morgan Chase & Co. (JPM, +0.90%) at $228.2 billion. The next company on Facebook’s radar is General Electric & Co. (GE, +0.28% GE, +0.28%) which is at a market valuation of $255 billion.

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To put it into perspective, the S&P 500 is a benchmark index that comprises 500 of the biggest U.S. companies. Making it in place number one is Apple Inc. (AAPL) with a market cap of $742.6 billion with Google (GOOGL) in second place with a market cap of $381.7 billion. In third place is Berkshire Hathaway Inc. (BRK.B) with a market cap of $357.6 billion. Added to this, there are ten companies with market caps just below Facebook’s which includes six current Dow Jones Industrial Average (DJIA) components and one former Dow member such as Procter & Gamble Co. (PG) with a market cap at $225.2 billion, Walt Disney Co. (DIS) at $182.5 billion and Coca-Cola Co. (KO) at $174.8 billion. Facebook’s market cap now stands above those of 24 of the thirty components of the Dow Jones.

Daily Market Review - 19 March 2015

USD Falls After Fed Statement

In currency trading on Wednesday, the U.S. dollar (USD) traded lower against most major currencies. The greenback also fell to its lowest level against the euro (EUR) in eight days. This decline came after the monetary policy statement by the U.S. Federal Reserve yesterday which gave a strong implication that the central bank will maintain its benchmark rate lower for longer. According to Mike O’Rourke, the chief market strategist at Jones Trading, the median reading on the Fed’s quarterly “dot plot,” which measures the Federal Open Market Committee members’ expectations for the Fed funds rate, fell from 1.125% to 0.625% for December 2015. Based on this, markets now only expect the Fed to raise interest rates by September this year. The EUR/USD rose briefly above $1.10 but by the close of U.S. trading, the currency pair traded at $1.0873 which marked the biggest one-session move against the USD since the end of 2008. On Tuesday, the EUR/USD currency pair traded at $1.0598. In other forex trading, the U.S. dollar traded mixed against the Japanese yen and the Canadian dollar with USD/JPY trading at 120.23 yen, compared with ¥121.34 on Tuesday while CAD/USD was down to 1.2580 Canadian dollars, compared with $1.2766 late Tuesday. Many analysts have said that the Fed’s statement was more dovish than anyone had expected. They feel that this was a deliberate move in order to curtail the dollar’s rapid rise, and was less a reflection of when the Fed actually intends to raise rates. As was widely expected, the Fed removed language pledging to be “patient” before raising interest rates, but they also promised to be so-called data-dependent going forward. This means that the central bank will focus more on economic reports to determine when to raise rates. Janet Yellen, the Fed Chairwoman, also partly attributed the decline in exports and inflation to the rapidly rising U.S. dollar.

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NYMEX Crude Declines on U.S. Supplies

In Asian trading on Thursday, crude oil prices declined. This came as investors are concerned regarding oversupply as a result of U.S. inventory data while the timing of a widely expected rate hike by the Federal Reserve was shrugged off. On the New York Mercantile Exchange, West Texas Intermediate crude oil traded at $46.58 a barrel, down 0.15%. Meanwhile, on the Intercontinental Exchange (ICE), Brent crude for delivery in April advanced on Wednesday by 5.16% or 2.76 to trade at $56.27 a barrel. The spread between the international and U.S. domestic benchmarks reached its highest level in more than two weeks. Overnight on Wednesday, crude oil prices surged. This came after the Federal Reserve said it will likely raise interest rates at some point this year by removing a reference of staying patient from its minutes. This has prompted investors to assume that interest rate hikes will only occur in September this year.  Meanwhile, in its weekly inventory report, the Energy Information Administration (EIA) said that the oil supply in the U.S. last week grew by 9.6 million barrels to reach an 80-year high at 458.5 million. Also, at the Cushing Oil Hub in Oklahoma, inventories last week grew by 2.8 million barrels as storage levels reportedly exceeded 70% capacity. As a result of the increased storage level, investors are now concerned that Cushing could reach full capacity sooner than expected. If this happens, oil prices could plunge. To give a comparison, this time last year, the inventory levels at Cushing were at roughly 25% capacity.

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U.S. Stocks Rally on Fed Statement

The wait is over and the Federal Reserve has now spoken. As a result, U.S. stocks traded higher on Wednesday. This came after the Federal Open Market Committee indicated a slower pace of rate hikes while also removing the word “patient” from its policy statement. At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) advanced 227.11 points, or 1.3%, to close at 18,076.19. This came after the blue chip index traded down 101 points just before the statement’s release while also traded within a 400-point range on the session. Also, 28 of the Dow’s 30 components finished higher, with Caterpillar Inc. (CAT, +3.67%) and Chevron Corp. (CVX, +3.42%) leading the gains. Also on the upside was the Nasdaq Composite index (COMP) which gained 45.39 points, or 0.9%, to close at 4,982.83. This came after the tech heavy index was down about 17 points before the statement. Following the upward trend was the S&P 500 index (SPX) which surged 25.14 points, or 1.2%, to close at 2,099.42. All ten of the index’s sectors finished higher on the day and these gains were led by the energy and utilities sectors. Prior to the Fed’s statement, the SPX traded down 8 points.

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In the Spotlight – AT&T Makes Its Exit As Apple Steps In      

The time to say goodbye to AT&T Inc. (T, +0.09%) is now as they exit the Dow Jones Industrial Average (DJIA). But in true AT&T style, the company exited on a high note with a 2.1 percent increase on volume of 47.8 million shares. This is almost double the full-day average of 23.5 million shares. Also, according to the current Dow divisor, the 69 cent gain on AT&T’s stock added a little more than four points to the Dow which also rallied over 200 points on the day.

AT&T is no stranger to the Dow and already from March 14, 1939 through to April 8, 2004, AT&T became a component of the blue chip index. At that time, the company was known as American Telephone & Telegraph but then the name was changed to AT&T Corp. on April 20, 1994.  On November 21, 2005, AT&T reentered the blue-chip barometer in its current form. Also, SBC Communications took on the name of AT&T Inc. after closing its acquisition of the former Dow component. Since AT&T has reentered the Dow, their stock has climbed 38% compared to the increase in the Dow of 68 percent up.

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As AT&T exits the Dow, Apple Inc. is ready to step in on Thursday. What is interesting is that many analysts have commented that Apple is likely to have little impact on the Dow’s performance. In fact, according to Nicholas Colas, chief market strategist at ConvergEx, the performance of the Dow is more likely to be impacted by “whether it can continue to attract fresh funds and how much fuel the U.S. dollar (USD) has left in its tank.” Despite this, the fact is the inclusion of Apple in the blue-chip index is a nod to the tech giant’s strength as a company and a brand.

Daily Market Review - 25 March 2015

U.S. Stocks Decline On Interest Rate Hike Concerns

On Tuesday, U.S. stocks declined for the second straight day. This came in response to positive economic data out of the U.S. which prompted investors to worry regarding the timing that the Federal Reserve will increase interest rates and as a result, the Dow industrials lost more than 100 points. In her latest policy statement last week Wednesday, Chairwoman Janet Yellen stated that the timing of interest rate hikes would be “data dependent” and with better than expected results coming out of the U.S., investors are concerned that this will give the Fed more reason to hike rates sooner than later. At the close of U.S. trading, the Nasdaq Composite index (COMP) declined 16.25, or 0.3%, at 4,994.73. Also on the downside was the Dow Jones Industrial Average (DJIA) which dropped 104.90 points, or 0.6%, to 18,011.14. For the blue chip index, 24 of the 30 components finished lower. Following the downward trend was the S&P 500 index (SPX) which fell 12.92 points, or 0.6%, to 2,091.50. All 10 of the main sectors of the index ended with losses while homebuilder stocks rallied in response to the positive new-home sales data released on Tuesday. Also on Tuesday, St. Louis Federal Reserve President James Bullard spoke at CityWeek in London and he said that the Fed’s zero-rate interest policy is no longer appropriate and that a rate hike this summer would not strangle the U.S. economic recovery. However, Bullard also warned that the reaction to the first rate hike may be ‘violent’, because of a mismatch in market expectations.

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NYMEX Crude Oil Gains On Positive API Data

In Asian trading on Wednesday, crude oil prices rose. This came after U.S. industry data showed a sharp decline in gasoline and distillate supplies. In their weekly report, the American Petroleum Institute (API) said that last week, crude oil supplies rose 4.8 million barrels. Meanwhile, distillate stocks declined by 641,000 barrels while gasoline supplies fell by 2.6 million barrels. On the New York Mercantile Exchange, WTI crude for delivery in May traded at $47.58 a barrel, up 0.39%. Investors have now turned their attention to the more widely watched weekly inventory report from the Energy Information Administration (EIA) which is due out on Wednesday. In their report last week, the EIA stated that the oil supply in the U.S. for the week ending the 4th of March increased by 9.6 million barrels to reach an 80-year high at 458.5 million. Also, in Oklahoma, at the Cushing Oil Hub, inventories for the week ending the 4th of March increased by 2.8 million barrels as storage levels reportedly exceeded 70% capacity. On Tuesday morning, Texas light sweet futures prices surged to a daily high of $48.35 a barrel. This came after the Labor Department in the U.S. released the Consumer Price Index (CPI) for the month of February which rose 0.2%, one month after declining 0.1%. The slight uptick last month ended a three-month streak of declines. On a year-over-year basis, the CPI remained unchanged from its February 2014 level, though analysts had forecasted it to slip by 0.1% from last year’s figure. Meanwhile, on Tuesday, on the Intercontinental Exchange (ICE), Brent oil for delivery in May fell 1.41 percent to 55.13 a barrel.

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Positive U.S. Data Pushes USD Higher

In currency trading on Tuesday, the U.S. dollar (USD) traded broadly higher against most major currencies. This came after positive U.S. consumer price inflation and new home sales data fueled fresh optimism over the strength of the economy. The greenback strengthened after data showed that consumer prices in the U.S. rose in February by 0.2%. This was in line with market expectations after rebounding from a 0.7% decline in January. Also, core inflation, which excludes food and energy costs, increased in February by 0.2% after a similar gain in January. Core inflation was up 1.7 percent from the same month last year. This marked the largest increase since November 2014. In a separate report by the Commerce Department, data showed that new home sales in the U.S. increased 7.8% to an annual unit rate of 539,000 in February. This marked the highest level since February 2008. Also, the preliminary reading of the U.S. manufacturing purchasing managers’ index (PMI) rose to 55.3 in March. From 55.1 in February, this marked the highest level since October 2014. In currency trading, the EUR/USD traded at 1.0904, down 0.37%. The greenback traded mixed against the Japanese yen and the Swiss franc with USD/JPY up 0.12% to 119.87 and with USD/CHF down 0.83% to 0.9582. Also, the British pound traded lower with GBP/USD down 0.63% to 1.4861. Against the currencies in Australia, New Zealand and Canada, the U.S. dollar traded higher with AUD/USD down 0.11% to 0.7870, NZD/USD down 0.35% to 0.7625 and with USD/CAD steady at 1.2519. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.42% to 97.64.

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In the Spotlight – CFO Ruth Porat Moves From Morgan Stanley To Google

Change is good and on Tuesday, Google Inc. (NASDAQ:GOOGL) announced that they have hired Chief Financial Officer Ruth Porat from Morgan Stanley (NYSE:MS). Porat will be taking over from the current Google CFO, Patrick Pichette, who said on the 10th of March that he would be retiring. Meanwhile, at Morgan Stanley, Jonathan Pruzan who is the co-head of the bank’s global financial institutions group in investment banking, will become CFO. Pruzan, 46, joined Morgan Stanley in 1994.

Google’s move of hiring Ruth Porat is a clear indication that the internet giant is aiming to rein in costs as it invests in new businesses such as and internet-connected eyeglasses and self-driving cars. Porat is well known for implementing an effective cost-cutting strategy across several business lines at Morgan Stanley. In fact, the bank cut its expenses, excluding compensation, to 29% of its revenue last year. This was down from 34% in 2012. Meanwhile, costs at Google have increased substantially as the company embarks on a number of new projects. Last year, Google’s revenue might have increased 19% but their total expenses rose 23.4% percent.

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In trading on Tuesday, the shares of Google increased by 2.5% after Porat’s appointment was announced by both companies. Porat will start working at Google on the 26th of May and so far, Google has not disclosed how much they will be paying her. To put it in perspective, the total compensation to Google’s departing CFO was twice as much as Porat’s for the three years through 2013. That is, $62.2 million compared to $29.6 million, according to public filings by the companies. We wish Ruth Porat the best of luck in her new endeavor.

Daily Market Review - 26 March 2015

NYMEX Crude Rebounds in Asia With Tensions in Yemen

In commodity trading in Asia on Thursday, crude oil prices rebounded. This came as events in Yemen offered crude oil support as Saudi Arabia and allies bomb Houthi rebel positions while President Abdrabbuh Mansour Hadi hangs onto power. On Wednesday, on the Intercontinental Exchange (ICE), Brent crude for delivery in May traded at $56.45 a barrel, up $1.34 or 2.43 percent. Meanwhile, on the New York Mercantile Exchange on Thursday, WTI crude for delivery in May traded at $49.70 a barrel, up 0.99 percent. As a result of increasing geopolitical tensions in Yemen as a result of the advance of the Iranian-backed Houthi rebels, crude oil futures surged on Wednesday. By the afternoon, global oil prices spiked by more than a dollar. This came after it was reported that Saudi Arabia is moving heavy military equipment, including artillery to its border with Yemen. This buildup came in response to the seizure of the al-Anad base which is a Yemen airbase that had previously been used by U.S. troops in their fight against Al-Qaeda. Oil traders are sensitive to risky geopolitical news involving Saudi Arabia, which has 16 percent of the world’s oil reserves and maintains the world’s largest crude oil production capacity. Also on Wednesday, in its weekly report, the U.S. Energy Information Administration stated that crude inventories in the U.S. for the week ending the 20th of March, increased by 8.2 million barrels from the previous week. This increase pushed the crude inventories in the country to 466.7 million barrels which marks its highest level in 80 years.

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USD Declines As Poor Data Weighs

In currency trading on Wednesday, the U.S. dollar (USD) traded broadly lower against most major currencies. This came after data showed that durable goods orders in the U.S. declined unexpectedly in February. As a result, investor concerns were prompted regarding the strength of the economy in the country. In their report, the U.S. Commerce Department said that total durable goods orders, which include transportation items, declined 1.4% in February. This missed expectations for a gain of 0.4 percent. Also, orders for durable goods in January were revised down to a 2.0% gain from a previously reported increase of 2.8%. Data also showed that core durable goods orders, excluding volatile transportation items, declined by 0.4% in February. This again missed expectations for a 0.3% gain. Core durable goods orders were flat in January. Meanwhile, the EUR/USD traded at 1.1002, up 0.70% after coming off a low 1.0901. The euro strengthened after data showed that German business confidence improved in March which then boosted the outlook for the euro area’s largest economy. According to the Ifo Institute, the business climate index rose to 107.9 this month, up from 106.8 in February. Economists were expecting a reading of 107.3. In other currency trading, the USD traded lower against the Swiss franc and the British pound with USD/CHF down 0.15% to 0.9567 and with GBP/USD up 0.56% to 1.4931. Against the Japanese yen, the U.S. dollar traded lower with USD/JPY down 0.39% to 119.28. Elsewhere, against the currencies in Australia, New Zealand and Canada, the greenback traded lower with AUD/USD up 0.23% to 0.7897, NZD/USD up 0.36% to 0.7681, while USD/CAD edged down 0.10% to trade at 1.2481. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.34% to 97.10.

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 U.S. Stocks Decline on Poor Data

In stock trading on Wednesday, U.S. stocks declined. This marked the 3rd consecutive losing session and it came as investors dumped technology and biotech shares. As a result, the S&P 500 and the Dow industrials recorded the sharpest losses in two weeks. This also occurred after one of the year’s biggest mergers, a deal between Kraft Foods Group Inc. and H.J. Heinz Co., was announced in the morning. At the close of U.S. trading, the S&P 500 index (SPX) declined 30.45 points, or 1.5% to 2,061.05. Nine of the index’s 10 main sectors finished lower yet energy stocks gained as a result of increasing oil prices which were prompted by intensifying conflict in Yemen. Also on the downside was the Dow Jones Industrial Average (DJIA) which lost 292.60 points, or 1.6% to 17,718.54. This blue chip index turned negative for the year. Following the downward trend was the Nasdaq Composite index (COMP) which suffered its steepest decline since April 2014. This tech heavy index dropped 118.21 points, or 2.4%, at 4,876.52 with biotechnology stocks hit the hardest. Analysts viewed the sell off as a response by investors regarding uncertainty as to when the Federal Reserve will increase interest rates. As John Manley, chief equity strategist at Wells Fargo Advantage Funds, explained, “Typically, high-multiple stocks, such as biotechs and technology stocks get clipped badly during such times.”

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In the Spotlight – Heinz and Kraft to Join Forces

On Wednesday, the merger between Kraft Foods Group Inc. (NASDAQ:KRFT) and H.J. Heinz Co. was announced. The deal is expected to close in the second half of 2015. H.J. Heinz Co. is owned by 3G Capital and Warren Buffett’s Berkshire Hathaway Inc. and they are well known as the ketchup making company. Kraft on the other hand is well known as the maker of Velveeta cheese. This merger will create North America’s third-largest food and beverage company. In premarket trading on Wednesday, the shares of Kraft increased to trade at $82.50, up 34%.

The combined Kraft-Heinz company will be led by Bernardo Hees who is the Chief Executive of Heinz. The new company will also have revenue of about $28 billion which is less than half of what Pepsi Co. (NYSE:PEP) had in 2014. Pepsi is the market leader in food and beverage.

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Like many other packaged food makers, Kraft has been negatively impacted by a decline in demand as consumers shift to products that are perceived to be healthier. Over the last few months, the company overhauled its senior management and they also stated that they would start to develop new products in order to meet changing consumer preferences. The merger between the two companies is not expected to cause any friction as there is limited overlap between the two companies. Heinz makes ketchup, sauces and frozen foods while Kraft sells cheese, Oscar Mayer meats, packaged meals as well as Maxwell House coffee. As a result, the combined publicly traded company will have eight brands worth over $1 billion each and the merger is expected to save about $1.5 billion in annual costs by the end of 2017.

In terms of shares, Kraft shareholders will own a 49% stake in the combined company while Heinz shareholders will hold 51%. Also, Kraft shareholders will get one share in the combined company, to be called the Kraft Heinz Co, as well as a special cash dividend of $16.50 for every share held. Berkshire and 3G Capital will fund the special dividend, which totals about $10 billion. As of Tuesday, Kraft’s market value was about $36 billion. In 2013, 3G Capital and Berkshire Hathaway acquired Heinz for $23.2 billion.

Daily Market Review - 27 March 2015

Fourth Losing Day for U.S. Stocks

While the number four might be lucky for some, it sure isn’t for the U.S. stock market which has now declined for the fourth consecutive session. After a volatile trading session on Thursday, U.S. stocks traded lower while the S&P 500 index (SPX) turned negative for the year and also recorded its longest losing streak since the beginning of the year. With tensions in the Middle East as well as uncertainty as to when the Federal Reserve will raise interest rates, investors have now turned to safe havens such as the Japanese yen (JPY) and gold. Meanwhile, the better-than-expected report on jobless claims did little to alleviate concerns of a marked slowdown in the economy during the first quarter. At the close of U.S. trading, the SPX declined 4.90 points, or 0.2%, to 2,056.15. Eight of the index’s 10 sectors closed in the red and while technology stocks declined on Wednesday, they rebounded on Thursday with modest gains. Also on the downside was the Dow Jones Industrial Average (DJIA) which declined more than 100 points in early trade, but then closed 40.31 points, or 0.2%, lower at 17,678.23. Following the downward trend was the Nasdaq Composite index (COMP) which ended the session down 13.16 points, or 0.3%, to 4,863.36. Interestingly, the decline in U.S. stocks was a part of a broader global slide. In trade on Thursday, the Stoxx Europe 600 index (SXXP) dropped 0.9% while in Japan, the Nikkei 225 index (NIK) posted the biggest losses in two months, with a 1.4% decline.

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NYMEX Crude Oil Dips in Asia

In Asian trading on Friday, crude oil prices declined. This came in response to tensions in Yemen as well as mixed data out of the Japan. On Thursday, officials from the Saudi Arabian government said that they launched ‘Operation Decisive Storm’ in Yemen in order to protect the country from Houthi militias. Also, on Friday, Japan reported that the national core CPI, which excluded perishables but included energy, for February rose 2.0%. This was less than the 2.1% year-on-year gain expected. Also, the unemployment rate came in at 3.5% as expected. This was down from 3.6% in January, while the job offers to seekers index met its 1.15 expectation. This was up from 1.14 in January and posting the highest reading since 1.19 in March 1992. Meanwhile, household spending fell 2.9% which was less than the 3.2% year-on-year decline seen in real terms. In commodity trading, on the New York Mercantile Exchange, crude oil for May delivery fell 0.93% to $50.95 a barrel. Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery advanced $1.48, or 2.61%, to trade at $57.96 a barrel on Thursday. This came after crude oil touched a session high of $59.76 which marked the strongest level since the 9th of March.

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USD Higher on Positive U.S. Data

On Thursday, the U.S. dollar (USD) traded mostly higher against most major currencies. This came in response to positive data which showed that the number of people filing for unemployment assistance in the U.S. last week fell to a five-week low. As a result, optimism over the strength of the job market was sparked. In their report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending March 21 declined by 9,000 to 282,000. The total for the previous week was at 291,000. This beat analysts’ expectations which expected initial jobless claims to fall by 1,000 to 290,000 last week. Meanwhile, another report showed that the U.S. service sector expanded at the fastest rate this month since September. According to Markit, the research group, the preliminary reading of its services purchasing managers index (PMI) rose to 58.6 from a final reading of 57.1 in February. In currency trading, the EUR/USD declined 0.27% to 1.0940. Also, against the Japanese yen and the Swiss franc, the greenback traded lower with USD/JPY down 0.38% to 119.01 and with USD/CHF steady at 0.9589. The pound also slipped lower, with GBP/USD down 0.09% to 1.4868. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.22% to 97.29. This was off session lows of 96.32.

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In the Spotlight – Can Yemen Impact Oil Prices?

Currently, there is tension in Yemen as Houthi rebels try and take over the country. With President Abed Rabbo Mansour Hadi fleeing to Saudi Arabia, investors are now wondering how Yemen can impact oil prices. Currently, the country produces approximately 130,000 barrels of crude oil a day. While this amount is minimal, Yemen still has the power to rally oil prices simply because of its location.

Yemen is located at the Bab el-Mandab Strait which is a key chokepoint in international shipping. According to the U.S. Energy Information Administration, because of its location, Yemen is important in terms of international energy trade. The reason for this is, in 2013, 3.8 million barrels of oil a day passed through Bab el-Mandeb. If the Strait is closed, it would keep tankers in the Persian Gulf from reaching the Suez Canal and the SUMED Pipeline which would then force them around the tip of Africa. As a result, the transportation of oil in the region will be severely disrupted.

At the moment, with Saudi Arabia and other Gulf nations having launched airstrikes against rebel forces in Yemen’s capital and across the country, there is now potential for a closure of the Strait. Added to this, Saudi Arabia, which is the largest oil producer in the Middle East, has now gotten involved in the conflict.

After the president of the country fled Yemen, crude for May delivery on the New York Mercantile Exchange settled with a gain of 3.6%. Also, Brent crude on the ICE Futures exchange rose 2.5%. Both continued to trade sharply higher on Thursday following news of the airstrikes. As James Williams, an energy economist at WTRG Economics, explained, Yemen “not only has the potential threat to 3.8 million barrels a day of crude and products through Bab el-Mandeb, but its long border with Saudi Arabia and the Iranian support of the Houthis combined with the presence of al Qaeda in Yemen create a longer-term threat for the Saudis.”

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Despite the current events, many analysts don’t believe that the oil rally will last. As Michael Lynch, president of Strategic Energy & Economic Research (SEER), said “When it becomes clear that the military action is limited to areas far distant from the Saudi oil fields and border, and that the threat of a wider conflict is small, prices should retreat to previous levels.”

Daily Market Review - 30 March 2015

USD Higher on Friday on Positive U.S. Data

On Friday, the U.S. dollar (USD) traded moderately higher against most major currencies. This came despite disappointing 4th quarter growth data out of the U.S. while the report on consumer sentiment remained positive. In their report, the U.S. Bureau of Economic Analysis said that fourth quarter GDP (gross domestic product) increased 2.2 percent. This was in line with a preliminary estimate yet it was below expectations for a growth rate of 2.4 percent. Meanwhile in a separate report, the University of Michigan said that its consumer sentiment index rose to 93.0 in March from a reading of 91.2 in February. This beat expectations for a rise to 92.0. Also, the University of Michigan reported that its inflation expectations for the next 12 months remained unchanged at 3.0 percent in March. In currency trading, the EUR/USD traded down 0.11% to 1.0872. The sentiment on this single currency remained vulnerable after Greece failed to secure a quick cash payment from the euro zone rescue fund on Wednesday in order to prevent potential bankruptcy next month. Against the British pound, the USD traded lower with GBP/USD up 0.32% and trading at 1.4897. This came as demand for the GBP increased after the Governor of the Bank of England (BOE), Mark Carney, said that the central bank’s next move on interest rates would be upward. Also, against the Swiss franc and the Japanese yen, the USD traded steady with USD/CHF at 0.9624 and with USD/JPY at 119.18. Against the currencies in Australia, Canada and New Zealand, the U.S. dollar traded higher with AUD/USD down 0.91% to 0.7757, USD/CAD up 0.41% to 1.2535 and with NZD/USD down 0.49% to 0.7562. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.62, up 0.08%.

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U.S. Stocks Gain But Post Steep Weekly Loss

In U.S. trading on Friday, stocks managed to break their four day losing streak and closed higher. Despite this increase, the main benchmark indices posted the biggest weekly loss since the end of January this year. The main benchmark indices rallied in the last 15 minutes of the trading session and this came after the release of remarks by Janet Yellen, the Chairwoman of the Federal Reserve, regarding the central bank’s monetary policy. Yellen stated that while interest rates will likely be increased this year, the central bank would remain cautious regarding this move. As Yellen said, “I expect that conditions may warrant an increase in the federal funds rate target sometime this year.” At the close of U.S. trading, the Nasdaq Composite index (COMP) advanced 27.86 points, or 0.6%, to 4,891.22. For the week, this tech-heavy index finished down 2.7 percent. The biggest losers on the index were biotechnology stocks and the iShares Nasdaq Biotechnology lost 5.2% over the week. Also on the upside was the S&P 500 index (SPX) which rose 4.87 points, or 0.2%, at 2,061.02. For the week, the index lost 2.2% yet moved back into positive territory for the year after the gain on Friday. Following the upward trend was also the Dow Jones Industrial Average (DJIA) which climbed up 34.43 points, or 0.2% at 17,712.66. For the week, the blue chip index declined 2.3% with transportation stocks among the biggest losers this week. The Dow Transportation Average (DJT) lost 4.9 percent over the week.

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NYMEX Crude Oil Lower With Focus on Yemen

In Asian trading on Monday, crude oil futures held weaker. This came as investors look ahead to the March jobs report in the U.S. while events in Yemen are being closely monitored by the markets. On the New York Mercantile Exchange, crude oil for May delivery fell 0.74% to $48.15 a barrel. On Friday last week, crude oil futures dropped sharply as fears over an imminent disruption to supplies from the Middle East was caused as a result of the ongoing turmoil in Yemen. On Friday on the ICE Futures Exchange in London, Brent for May delivery dropped $2.78, or 4.7% to trade at $56.41 a barrel. On Thursday last week, global oil prices increased by more than three dollars. This came after Saudi Arabia and a coalition of Gulf region allies launched air strikes in Yemen to counter Iran-backed Houthi rebels besieging the southern city of Aden. Meanwhile on Friday, the industry research group Baker Hughes (NYSE:NYSE:BHI) said that the number of rigs drilling for oil in the U.S. fell by just 12 last week to 813. Analysts have been hoping that a reduction in the rig count will eventually reduce the glut of crude flowing into the market. However despite this, total U.S. crude oil inventories stood at 466.7 million barrels as of last week. This marks the highest supplies in at least 80 years which is a clear indication that the cheap oil prices have not yet affected the output.

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In the Spotlight – March Nonfarm Payroll Report to be Released on Good Friday

Investors are now turning their attention to the release of the March nonfarm payrolls report which is expected to be released on the 3rd of April. This day is also Good Friday which is a holiday and so the markets will be closed in the U.S. As a result, investors will need to wait until after the weekend in order to see the market reaction to the jobs report.

What is interesting is that it is not uncommon for the jobs report and for Good Friday to coincide. In fact, according to the Bureau of Labor Statistics, since 1980, there have been eleven occasions when the March jobs report was released on Good Friday. The two most recent incidences occurred in 2010 as well as 2012. Adding to this, it is interesting to note that in the last 12 months, the release of the nonfarm payroll report has had very little reaction from the markets despite the fact that this report is one of the most important economic indicators that investors follow in order to assess the health of the economy. Over the past year, the market has reacted very little to jobs data releases, both positive and negative, and in fact, the S&P 500 index (SPX) moved on average roughly 0.6% in either direction on jobs day. On only 3 occasions, the index moved more than one percent after the report release. As Colin Cieszynski, chief market strategist at CMC Markets, explained, “The reason the reaction had been so muted is due to the Federal Reserve’s transparency about its policy decisions. The Fed made it clear how it would proceed with the rate hikes as labor market improves and whether it happens in June or July or September does not make much difference.”

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Recent jobs numbers have signaled decent growth yet they have failed to point to an overheating labor market. In fact, the average number of monthly payroll gains over the past 12 months has been 266,000. According to analysts, the forecast for March jobs gains is 255,000, while the unemployment rate is expected to remain at 5.5%.

Meanwhile, on Monday, the U.S. is to release reports on personal spending and pending home sales.

Daily Market Review - 31 March 2015

U.S. Stocks Rally On Deal News

On Monday, U.S. stocks gained while the main indices booked gains for the second consecutive session. This increase came in response to deal announcements as well as to dovish comments from China’s central-bank chief. In deal announcements, Teva Pharmaceutical Industries Ltd. (TEVA, +0.84%) announced on Monday that they would buy Auspex Pharmaceuticals Inc. (ASPX, +41.53%). This deal has been valued $3.2 billion and the shares of Auspex rose to $100.36 after the announcement. In other deal news, the shares of Catamaran Corp. (CTRX, -0.15%) rose 24% on Monday. This came after UnitedHealth Group Inc. (UNH, -0.21%) announced that it would buy the pharmacy-benefit manager for around $12.8 billion in cash. The shares of UnitedHealth rose 3.4 percent. At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) advanced 263 points, or 1.5%, to 17,947.44. Twenty nine of the blue chip index’s 30 components ended with gains. Also on the upside was the S&P 500 index (SPX) which rose 25.22 points, or 1.2%, to 2,086.24. The biggest gainer was the energy sector which rose 2.1 percent. Following the upward trend was the Nasdaq Composite index (COMP) which gained 56.22 points, or 1.2%, to 4,947.44. Meanwhile on Sunday, the governor of the PBOC said that he saw “more room” for China to ease policy if the economy stays soft and inflation continues to weaken. As a result, on Monday, Chinese stocks closed at a seven-year high.

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USD Higher on Positive U.S. Data

In currency trading on Monday, the U.S. dollar (USD) traded broadly higher against most major currencies. This came after the release of positive U.S. economic reports while comments by the Janet Yellen, Chairwoman of the Federal Reserve, on Friday, continued to support. On Friday, Yellen said in a speech that a rate hike may be warranted later this year, but she also added that weakening inflation pressures could force the Fed to delay. Meanwhile, the U.S. Commerce Department said in their report that personal spending rose 0.1% in February. This was below expectations for a gain of 0.2% while personal spending dropped 0.2% in January. Their report also showed that personal income rose 0.4 percent in February. This beat analyst expectations for a 0.3% increase. Separately, the U.S. National Association of Realtors reported that pending home sales rose 3.1% in February after rising 1.2 percent in January. This beat expectations for a 0.4% gain. The EUR/USD declined 0.39% to trade at 1.0846 while GBP/USD also traded down 0.54% to 1.4812. On Monday, the Bank of England (BoE) said that total net lending to individuals increased by ₤2.5 billion in February, up from ₤2.4 billion in January. They also reported that mortgage approvals rose to a six-month high in February. Against the Japanese yen and the Swiss franc, the USD traded higher with USD/CHF up 0.23% to 0.9646 and with USD/JPY up 0.63% to 119.90. The greenback also traded higher against the currencies in Australia, New Zealand and Canada with AUD/USD down 1.27% to 0.7657, NZD/USD down 0.44% to 0.7531 and with USD/CAD up 0.47% to 1.2667. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.55% to 98.16.

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Gold Declines & Trades Near $1,180

On Tuesday, gold prices declined for the third consecutive session. This came as a broadly stronger U.S. dollar (USD) dampened the appeal of the precious yellow metal. On the Comex division of the New York Mercantile Exchange, gold futures for delivery in June touched an intraday low of $1,179.30 a troy ounce. This marked the weakest level since the 20th of March. The commodity then traded at $1,180.60 during European morning hours, down $4.70, or 0.4 percent. On Monday, gold traded up $15.40, or 1.28%, to close at $1,185.30. In March, the price of the precious metal has declined almost 3 percent. This comes as the greenback strengthens amid growing expectations for higher interest rates in the U.S. later this year. Early on Tuesday, the dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.3% to 98.61. This month, the index is on track to post a gain of 3 percent. A strong U.S. dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. In other commodity trading, and elsewhere on the Comex, silver futures for May delivery dropped 18.7 cents, or 1.12%, to trade at $16.48 a troy ounce. Also on the downside was copper for May delivery which declined 2.2 cents, or 0.78%, to trade at $2.760 a pound.

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In the Spotlight – What You Need to Know Before GoDaddy Goes Public

GoDaddy is heading towards an initial public offering (IPO) and it has been approved to trade on the New York Stock Exchange with the symbol GDDY. As a company that registers Internet domains, GoDaddy is expected to set pricing for its shares on Tuesday and it has stated that it expects shares to trade between $17 and $19.

In 2014, GoDaddy had 13 million customers with revenue of $1.4 billion and a net loss of $143.3 million. This was down from $199.9 million in 2013. The company makes its money through domain products, hosting and presence services and business applications.

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Before GoDaddy starts to trade, here are some things you should know. The IPO proceeds will be used by GoDaddy to pay off some of its debt. In 2011, the company was bought by private-equity firms Silver Lake and KKR & Co. as well as technology Crossover Ventures. When GoDaddy goes public, the company predicts that they will make $396 million in proceeds from shares of its stock. This is based on $18 a share. After using some of the proceeds to pay off its debt, GoDaddy will also make a payment of $3 million to Bob Parsons, its founder and former CEO. The balance of the funds will be used for general corporate expenses. GoDaddy had $1.5 billion indebtedness as of the 31st of December, 2014.

It is important to note that while GoDaddy is the largest registrar of domain names, it makes sense that the company is worried about domain-hosting competitors like Edurance, Web.com and even Google, which it says recently launched a beta domains service. However, in its S-1 filing, GoDaddy also points to some non-domain competitors like eBay and Facebook, which it says can offer small businesses other ways of marketing. GoDaddy also stated that the URL itself may by losing pertinence. In the filing, GoDaddy says as people use search engines or social media to get to a site, the domain name may not matter as much in the future. So do you think now is the time to trade GoDaddy shares?

Daily Market Review - 18 March 2015

Brent Crude Falls Towards $53

On Wednesday, the price of Brent crude oil fell towards $53 a barrel. This came as U.S. crude stocks were forecast to have surged for the 10th straight week to a new record high which fuelled supply concerns of a global oil glut. As a result of a weaker U.S. dollar (USD), a floor under the prices was maintained. By 0108 GMT, Brent crude oil for delivery in May declined 24 cents to trade at $53.27 a barrel. This came after the commodity ended the previous session at $53.51 a barrel, up 7 cents. Meanwhile, U.S. crude oil for delivery in April traded at $42.64 a barrel, down 81 cents. This came after settling the previous session 42 cents lower at $43.46. In early Asian trading on Wednesday, U.S. crude prices declined by $1.02 a barrel to $42.44. This came after data was released on Tuesday by the American Petroleum Institute, an industry group, which showed that crude inventories rose by 10.5 million barrels in the week to March 13 to 450 million. This missed analysts’ expectations for an increase of only 3.8 million barrels. According to API, the crude stocks at the Cushing, Oklahoma delivery hub increased by 3 million barrels. Investors have now turned their attention to the more widely watched official inventory data which will be issued later today by the U.S. Energy Information Administration (EIA). As Ben LeBrun, market analyst at Sydney’s OptionsXpress, explained, “The market is now watching for the EIA data to confirm the build in crude stocks. If it’s better than expectations they’ll be a short-term bounce in oil prices.” LeBrun also explained that the expiry of the Brent contract on Monday as well as the West Texas Intermediate (WTI) forward contract on the 20th of March “is adding a bit of fuel, adding to volatility in the market.” Meanwhile, the outcome of the Federal Reserve policy statement on Wednesday will also have an impact on oil prices. That is, if interest rate hikes in the U.S. will be pushed back, this will likely cause the dollar to weaken, however, only in the short run. Despite this, a weaker greenback should support oil prices because it makes commodities denominated in the dollar cheaper for holders of other currencies and it also expands their purchases of commodities and other assets.

USD Gains Some Ground

On Tuesday, the U.S. dollar (USD) regained some ground against other major currencies. This came in response to improved investor sentiment ahead of the Federal Reserve’s highly-anticipated policy statement due on Wednesday. Meanwhile, in economic news, the U.S. Commerce Department reported on Tuesday that housing starts declined by 17.0% in February to hit 897,000 units. This was down from January’s total of 1.081 million units, and it also missed expectations for a decline of 2.4% to 1.049 million. The report also showed that the number of building permits issued last month increased by 3.0% to 1.092 million units from January’s total of 1.060 million. Analysts expected building permits to fall by 0.5% to 1.065 million units in February. In currency trading, the EUR/USD rose 0.35% to 1.0604. This came after the euro was boosted after the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 1.8 points to 54.8 in March from February’s reading of 53.0. Analysts had expected the index to improve by 5.2 points to 58.2 in March. Also, the index of euro zone economic sentiment increased to a 13-month high of 62.4 in March from 52.7 in February. This was above forecasts for a gain to 58.2. In other currency trading, the U.S. dollar held steady against the Japanese yen, with USD/JPY at 121.30 while the greenback pushed higher against the British pound, with GBP/USD down 0.64% to 1.4735. Against the Australian dollar and the Swiss franc, the greenback traded mixed with USD/CHF down 0.35% to 1.0039 and with AUD/USD down 0.25% to trade at 0.7622. Also, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.20% to 99.93.

U.S. Stocks Fall As Investors Prepare for Fed Statement

In U.S. trading on Tuesday, stocks ended the volatile trading session broadly lower. Investors have now turned their attention to the policy statement of the Federal Reserve expected out today as it will provide more indication regarding the timeline of interest rate hikes. At the close of trading, the S&P 500 index (SPX) dropped 6.99 points, or 0.3%, at 2,074.20. Nine of the benchmark index’s 10 main sectors finished lower. Also on the downside was the Dow Jones Industrial Average (DJIA) which declined 128.34 points, or 0.7%, to 17,849.08. The blue chip index saw 25 of its 30 members posting losses. Breaking the downward trend was the Nasdaq Composite index (COMP) which advanced 7.93 points, or 0.2%, at 4,937.43. This boost was helped by an increase in Apple Inc.’s (AAPL, +0.09%) share price of a 1.7% gain. Also boosting the Nasdaq were the shares of American Airlines which jumped 6.9 percent to $53.69 after an announcement that it would join the S&P 500. Meanwhile, the economic data that was released on Tuesday showed that construction on new U.S. homes declined in February. This was mostly as a result of a harsh winter. On the upside though, the number of permits issued jumped which is a clear indication that construction will pick up in the spring. Due to the softer data released over the past two months, expectations of a rate hike have been pushed further out. As a result, the markets have been rallying on ‘bad news,” which was seen delaying a rate hike, and falling on “good news.” Also, so far this year, the S&P 500 index (SPX) has moved largely sideways, rising less than 1% since the start of the year.

In the Spotlight – Is Apple Going to Launch an Online TV Service?

Apple Inc. (AAPL, +0.09%) has been working hard to boost their company and after the recent release of the iWatch, the company now has new plans to build an online television service. According to reports, the technology giant is currently in talks with programmers. Apple’s goal is to offer a slimmed-down bundle of TV networks by as early as this fall. The new Apple service is expected to offer approximately 25 channels which will be anchored by broadcasters such as CBS, ABC and Fox. Added to this, the TV service would also be available on Apple devices such as the Apple TV. The idea is to offer consumers a bundle with well-known channels like CBS, ESPN and FX, while leaving out the many smaller networks in the standard cable TV package.

In terms of Apple’s new project, NBCUniversal has not been included in the talks. NBCUniversal is the owner of the NBC broadcast network and cable channels like USA and Bravo. The omission of NBCUniversal is as a result of a fall-out between Apple and Comcast Corp. (CMCSA, +0.02%), which is NBCUniversal’s parent company.

Last year, Comcast and Apple were in talks about working together on a streaming television platform. The goal was to combine Apple’s expertise in user interfaces with Comcast’s strength in broadband delivery. Unfortunately, Apple started to believe that they were being stringed along by Comcast while the cable giant focused on its own X1 Web-enabled set-top box. Despite this, analysts have stated that it may be difficult for Apple to launch a service without NBCUniversal channels. It seems though that Apple is making a plan and according to reports, the giant is currently also in talks with Walt Disney Co. (DIS, -0.06%), CBS Corp. (CBS, +0.02%) as well as 21st Century Fox Inc. (FOX, -1.02%).