U.S. equities wavered on either side of the unchanged mark and ultimately closed mixed, though a catalyst for direction could possibly come later in the week when the economic calendar begins to heat up. Treasury yields and crude oil prices were lower, the U.S. dollar was little changed and gold was modestly higher. Equity news was light, while across the pond, the UK announced it will trigger Article 50 to formally start the Brexit process on March 29.
The Dow Jones Industrial Average (DJIA) decreased 9 points (0.1%) to 20,906 and the S&P 500 Index shed 5 points (0.2%) to 2,373, while the NASDAQ Composite was nearly 1 point higher at 5,902. In moderate volume, 752 million shares were traded on the NYSE and 1.7 billion shares changed hands on the NASDAQ. WTI crude oil traded $0.40 lower to $48.91 per barrel and wholesale gasoline ticked $0.01 higher to $1.61 per gallon. Elsewhere, the Bloomberg gold spot price gained $5.26 to $1,234.52 per ounce, and the dollar index, a comparison of the U.S. dollar to six major world currencies, was flat at 100.31.
Movado Group Inc (NYSE:MOV) $25) reported a fiscal 4Q profit of $0.22 per share, a penny short of the FactSet estimate, as sales declined 8.7% year-over-year (y/y) to $130.8 million, below expectations of $136.9 million. The luxury watch maker said it expects the retail segment to remain “difficult”, as a shift from “brick-and-mortar shopping” to ecommerce continues to challenge the high-end watch market. Despite the report, shares closed nicely higher.
Economic front quiet, calendar for rest of the week light
Treasuries were higher, with the economic calendar void of any major reports today, as the yields on the 2-year note and the 30-year bond declined 3 basis points (bps) to 1.29% and 3.08%, respectively, and the yield on the 10-year note decreased 4 bps to 2.46%.
This week's economic calendar will decelerate somewhat and will remain dormant tomorrow, but later in the week we'll see a couple key reads on housing in the form of new and existing home sales, along with preliminary looks at manufacturing demand and activity in the form of durable goods orders and Markit's Manufacturing PMI Index. Weekly initial jobless claims and MBA Mortgage Applications will also be reported.
The stock markets attempted to pare a spate of losses after having pulled back from all-time highs reached in early March. The U.S. dollar experienced some fresh choppiness and Treasury yields pared their recent rally, with the markets grappling with upbeat economic data, soothed concerns over the pace of any future Fed rate hikes, along with continued political uncertainty, domestically and abroad.
Political infighting, Presidential tweets, North Korean missile launches, oil falling below $50, European political uncertainty, higher bond yields, and the Fed raising rates: none of those forces have knocked stocks off their recent uptrend. Volatility remains remarkably low but that doesn't mean it won't pick up—investors should be prepared for bouts of volatility, and pullbacks along the way. The U.S. economy continues to expand; although there are signs that first quarter growth could be on the weak side, largely due to continued seasonal issues. We believe that economic growth is generally accelerating, a thought bolstered by the Fed’s confidence to raise rates again. Politics, both here and abroad, are keeping policy uncertainty high and should also contribute to bouts of volatility.
Modest losses in Europe, Asia mostly lower
European equities finished mostly lower in the wake of the conclusion of the G20 meeting of finance ministers and central bank officials, where the pledge to resist protectionism was scrapped, stoking concerns over global trade. Adding to the anxiety, U.K. Prime Minister May announced that she will trigger Article 50 to formally start the Brexit process on March 29, where it will begin an estimated two years of negotiations. Meanwhile, political uncertainty in France continues to ramp up, as the top five candidates running in the forthcoming Presidential election will debate tonight.
In economic news, producer prices in Germany were slightly cooler than expected for February, while wages in the Eurozone increased at a faster pace than forecasts, and housing prices in the UK were in line with estimates. The euro and the British pound traded lower against the greenback following the Brexit announcement, while bond yields in the region were mixed.
Stocks in Asia finished mostly lower amid sparse news and lighter than usual volume due to markets in Japan being closed for a holiday. Mainland Chinese shares rose and equities in Hong Kong gained ground, despite a flare-up in concerns over the nation’s property market after data showed a marked increase in housing prices, and not only within just the larger cities. As well, the conclusion to the G20 meeting had little impact, even though officials dropped a pledge to avoid protectionism.
The banking sector weighed on Australian securities with increased debate over the nation’s housing sector and the government’s backing of fresh regulatory oversight of property investing. Elsewhere, stocks trading in South Korea and India declined.
Tomorrow, the international economic calendar will include leading indicators from China and the House Price Index from Australia. Also, a plethora of releases will flow from the UK, including CPI, the Retail Price Index, PPI, the House Price Index and public sector borrowing.