US Market Update: Second Half of 2014 Opens with a Bang



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Article content US Market Update: Second Half of 2014 Opens with a Bang

01.07.2014 17:58 Tuesday
***Economic Data***
- (RO) Romania Central Bank (NBR) left Interest Rate unchanged 3.50%, as expected
- (US) ICSC Chain Store Sales w/e Jun 27th: w/w +1.0%; y/y: +4.6%
- (RU) Russia Q1 Final GDP Y/Y: 0.9% v 0.9% prelim
- (US) Redbook Retail Sales w/e Jun 27th: +3.1% y/y, Jun MTD: -1.7% m/m, Jun MTD: +3.3% y/y
- (BR) Brazil Jun Manufacturing PMI: 48.7 v 48.8 prior; 3rd straight contraction to an 11-month low
- (US) Jun final Market PMI Manufacturing PMI: 57.3 v 57.5
- (US) Jun ISM Manufacturing: 55.3 v 55.8e; Prices Paid: 58.0 v 60.0e
- (US) May Construction Spending M/M: 0.1% v 0.5%e
- (US) July IBD/TIPP Economic Optimism: 45.6 v 48.0e
- (MX) Mexico May Total Remittances: $2.14B v $2.2Be
- (MX) Mexico Jun Manufacturing PMI: 51.8 v 51.9 prior

- The last trading day of the second quarter failed generate any volatility from combined month-end and half-end rebalancing, and analysts highlighted that yesterday's S&P 500 volumes were about half the year-ago figures. Things have barely picked up today, and the solid PMI and auto sales figures are driving US equities sharply higher on the first day of the second half. As of writing, the DJIA is up 0.70%, the S&P500 is adding 0.60% and the Nasdaq is up 1.0%.

- Global PMI reports for the month of June trickled out overnight, with the data mixed and/or flattish in Europe, Japan and China, with practically no surprises either to the up or the downside. The US June ISM manufacturing report came in at 55.3, slightly below expectations and down a hair from the May reading of 55.4.

Prices paid slipped to 58.0 in June from 60 in May, and order backlog fell to 48.0 from 52.5 in May. The final June Markit manufacturing PMI reading came in at 57.3, a bit below the preliminary reading of 57.5. Nevertheless, the data confirms output and new orders rose at fastest pace since April 2010.

- A day after announcing six additional safety recalls covering another 7.6 million vehicles, General Motors reported a very strong June US sales figure. GM sold 267.5K units, up 1% y/y, beating expectations for a roughly 6% decline in sales.

This marked the third straight month of big sales gains since the weather-impacted winter selling season. Ford's sales fell 6%, right in line with expectations, while key truck sales fell at an even steeper rate. Like GM, Chrysler beat expectations although sales at +9.2% y/y were back in line with the February rate.

- Shares of Twitter are up more than 4% this morning after the social media firm named a new CFO. Former Goldman Sachs banker Anthony Noto has joined the firm as finance chief, while former CFO Gupta will stay with the company as head of Strategic Investments. In addition, Twitter began rolling out a potential shopping service, after tech blogs saw "buy now" buttons show up on certain tweets.

- Crude is mostly unchanged this morning in the lower half of the $105 handle as fighting rages in Iraq and the authorities in Bagdad continue to squabble over the formation of a new government. Meanwhile in Ukraine, combat is picking up again rapidly in the east after President Poroshenko's abandoned his unilateral ceasefire.

***Looking Ahead***
- (US) Jun Total Vehicle Sales: 16.40Me v 16.70M prior; Domestic Vehicle: 13.00Me v 13.11M prior
- 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v -3.8% prior
- 13:00 (MX) Mexico Jun IMEF Manufacturing Index (Seasonally Adj): 52.9e v 52.2 prior; Non-Manufacturing Index: 51.0e v 50.1 prior
- 14:00 (BR) Brazil Jun Trade Balance: $2.8Be v $712M prior; Total Exports: No est v $20.8B prior; Total Imports Y/Y: No est v $20.0B prior
- 21:30 (AU) Australia May Trade Balance: No est v -A$122M prior