* U.S. equity indexes fall; Nasdaq hit hardest
* Tech, consumer discretionary weakest major S&P sectors
* Euro STOXX 600 closes down 0.36%
* Dollar, gold down; crude green
* U.S. 10-Year Treasury yield ~1.46%
Feb 25 - Welcome to the home for real-time coverage of
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EUROPE CLOSES WITH YIELDS TAKING A LIMITED TOLL (1153
EST/1653 GMT)
Rising yields are gaining momentum, but Europe is definitely
not their main battlefield.
Sure, French 10-year yields have just turned positive and
Germany's are on highs unseen since March.
But seriously, does a -0.2% return on the bund threaten the
attractiveness of European equities?
Seems unlikely and the STOXX 600 retreating by 0.36%, while
the S&P is down 1.4% seems to be answering the question.
It's obviously a different kind of game in the U.S. with
treasuries in kissing distance of 1.5%, while the economy is on
a way better track to recovery.
European Tech lost only 0.15% while the Nasdaq was going
below 2% at the time of writing, another sign that markets on
both sides of the Atlantic could be diverging somewhat.
Interestingly, European bourses which have a long track
record of underperformance, are overtaking Wall Street
year-to-date. In dollar terms, the STOXX 600 is up 3.3%
year-to-date, just above the 3.1% for the S&P 500.
Europe's traditional reflation trade winners did well today
and helped limit the damage.
Oil and gas, miners, insurers and banks are up 1.6%, 1%,
0.8% and 0.6% respectively.
(Julien Ponthus)
*****
JOBLESS CLAIMS, DURABLES, ET AL: SLOUCHING TOWARD SPRING
(1105 EST/1605 GMT)
A spate of data unleashed on Thursday provided further
evidence of the U.S. economy's slow but steady recuperation from
the lingering effects of COVID-19.
The number of U.S. workers filing first-time applications
for unemployment insurance fell more than expected
last week to 730,000, according to the Labor Department.
While the number marks a decrease of 11,000 from the
previous week amid declining COVID-19 infections and ongoing
vaccine deployment, the effects of winter storms and freezing
weather that gripped the south in recent weeks is yet to be
determined.
Other factors, including fraud in Ohio and a chip shortage
resulting in fewer shifts at auto manufacturing plants, have
helped inflate claims data, which have remained stubbornly
higher than the 665,000 peak seen during the darkest days of the
global financial recession.
"The drop may be signaling a turning point for labor market
conditions, however the data continue to suffer from noise
related to issues of backlogs and fraud," writes Nancy Vanden
Houten, lead U.S. economist at Oxford Economics. "We expect a
more sustainable labor market recovery to take hold closer to
mid-year with broader vaccine distribution and the arrival of
more fiscal support."
Ongoing jobless claims, reported on a one-week lag, also saw
a larger decrease than analysts predicted, dipping to a
still-bruisingly-high 4.419 million, the lowest level since last
March.
New orders for U.S.-made durable goods, which
includes everything from toasters to jets, jumped by 3.4% in
January according to the Commerce Department, more than triple
the 1.1% consensus.
The increase was driven in large part by rebound of civilian
aircraft orders, which soared by 389.9%.
But new orders for core capital goods, which excludes
defense and aircraft and is seen as a barometer of U.S. business
spending plans, grew at a more languid 0.5% pace, below the 0.7%
economists forecast.
"The increase in core capital goods orders was the smallest
since the recovery began back in May, but it could easily be
revised up," says Ian Shepherdson, chief economist at Pantheon
Macroeconomics. "The trend continues to rise strongly, and
business surveys suggest further solid gains over the next few
months are a decent bet."
Pending sales of pre-owned U.S. homes surprised
to the downside in January, unexpectedly dropping by 2.8%
according to the National Association of Realtors (NAR).
While the dip could be attributed to strained affordability
and record low inventories, pending home sales are still up 13%
year-on-year and remain well above pre-pandemic levels due to
swelling demand and low mortgage rates.
"There are simply not enough homes to match the demand on
the market," writes Lawrence Yun, chief economist at NAR. "That
said, there has been an increase in permits and requests to
build new homes."
In ancient history news, the U.S. Commerce Department
offered its second reading of fourth-quarter GDP,
which edged up 0.1% from its initial take to 4.1% on a quarterly
annualized basis.
Consumer spending, responsible for nearly 70% of U.S.
economic growth, was downwardly-revised to 2.4%, keeping the
headline number in check.
"Household spending slowed sharply in Q4 as expired benefits
weighed on activity," says Rubeela Farooqi, chief U.S. economist
at Pantheon Economics. "But prospects for spending and growth in
Q1 are brighter."
While stock futures enjoyed an initial bump from the largely
upbeat data, the buzz had worn off by late morning, with all
three major U.S. stock indexes in the red.
In an encore of previous two sessions, tech and
tech-adjacent shares helped drag the Nasdaq down the most.
(Stephen Culp)
*****
BAG THOSE VALUE CYCLICALS (1027 EST/1527 GMT)
Re-opening trade has made energy, banks
travel and leisure the best performing European sectors
this year, bringing Europe's STOXX 600 less than 5%
from its record highs, but a rise in bond yields has raised
fears of upending the market rally.
Goldman Sachs analysts retain a long recommendation in
value-cyclicals, as they consider these to be the most geared to
economic improvement, rising inflation risks and modestly higher
bond yields.
"Value offers cyclical upside and gearing to rising bond
yields," they say.
GS downgraded some cycicals that have performed strongly and
are starting to look expensive - industrials and
chemicals to underweight, and construction & materials
to neutral.
The U.S. bank moved up beverage, travel and leisure to their
favourite re-opening recommendations list, which includes
energy, aerospace, transport infrastructure and business
services.
It maintained neutral on technology and underweight
on consumer staples.
(Medha Singh)
*****
FTSE 100: WILL DR MARTENS GET ITS BOOTS ON THE GROUND? (0938
EST/1458 GM
Will Dr Martens put its famous black boots on the
ground of the FTSE 100 in March?
It's too close to call at this point but it's looks like a
possibility.
The iconic British shoe maker which made its stock market
debut at the end of January has seen its share price rocket from
370 pence to a high of 521 pence and is now hovering around the
500 line.
Its market cap has been moving up and down the 5 billion
pound mark, which is well higher than the laggards of the FTSE
100, utility group Pennon and WM Morrison Supermarkets
.
Relegation seems certain for the former with a market cap
well below 4 billion.
On Tuesday, index provider FTSE Russell said its indicative
review had Pennon replaced by mining group Weir,
currently at the top of the FTSE 250.
In the same statement, FTSE Russell said Dr Martens made it
to the FTSE 250 but not to the Premier League.
Standing in its way is Morrison, currently struggling to
stay above the 111th position which would boot it out of the
FTSE 100.
"It's on the fringes", commented AJ Bell investment director
Russ Mould, who stressed that with still three sessions to go,
it would be premature to make a call on the outcome.
The review of the FTSE indexes will be based on Tuesday's
market close and the results announced on Wednesday evening.
Anyhow, if Morrison is to be kicked out of the FTSE 100, who
is better equipped than Dr Martens to oblige?
Well to cite other big names, travel group TUI
and Electrocomponents are also in kissing range of a 5
billion market cap.
Here you can see how the market caps of outsiders Weir and
Dr Martens outplay current FTSE 100 members WM Morrison and
Pennon.
(Julien Ponthus)
*****
NASDAQ FUTURES: SHAKEN, AND STILL STIRRED (0858 EST/1358
GMT)
After recovering to close just modestly lower on Tuesday,
CME e-mini Nasdaq 100 futures have so far mounted a
2-day bounce. That said, the rally does not appear
sufficient on the charts to suggest recent damage has been
repaired:
Indeed, futures hit an overnight high of 13,353.75 early
Thursday. However, upside is hindered by a broken channel
resistance line from October, as well as what was a shorter-term
channel support line from November, now acting as resistance, in
the 13,400/13,440 area.
So far, the futures are backing away, and near the day's
lows.
That said, in terms of the developing structure down from
the February peak, the key level appears to be 13,468. This can
be considered to be the low of the first wave down of a
developing 5-wave decline on an Elliott Wave basis.
A failure to overwhelm this barrier can suggest that bear
forces are still in control, which will ultimately lead to a
fresh lows below Tuesday's 12,757.25 trough.
A recovery above 13,468, however, can suggest that the
5-day, more than 8%, slide into Tuesday's low, amid rising bond
yields, was corrective in nature (or a 3-wave a-b-c
decline). In that event, the futures would then be biased for
new highs.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
