Tuesday, July 3, 2018

Markets advance in a shortened trading day

Dow rose 86, advancers over decliners about 4-1 & NAZ went up 9.  The MLP index gained 2+ to the 263s & the REIT index added 3 to the 353s.  Junk bond funds fluctuated & Treasuries crawled higher.  Oil turned lower in the 73s & gold shot up (finally) 12 to 1254.

AMJ (Alerian MLP Index tracking fund)

CL=FCrude Oil75.22

GC=FGold  1,253.60

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The Dow opened the shortened trading session higher, with US equities trading closing at 1PM ET & remaining closed on Wed for the Jul 4 holiday.  While the NAZ was higher out of the gate, it changed to trade flat to lower while the S&P 500 was barely positive.  The mixed movement comes after US stocks turned higher in the final hour of trading yesterday, led by technology stocks after the major indices had spent much of the session in the red.  Energy shares were leading the advance today, with US crude oil futures climbing higher, once again.

Dow gains ahead of July 4 holiday

US automakers are expected to report an increase in June sales amid a strong economy & robust demand for SUVs.  Those results will begin rolling out today ahead of the Jul 4th holiday.  The industry sold an estimated 1.52M new cars, trucks & SUVs last month, according to Edmunds.  That would reflect a 3.4% gain versus Jun 2017, although sales were on pace to slow down compared to May.  Edmunds said strength in the US economy has created a “very thick forcefield” for automakers, offsetting headwinds such as rising interest rates & weak sales of passenger cars.  Also there are a high historically number of people who owe more money than their cars are worth.  “June sales look a bit healthier than they actually are because there was an additional selling day and weekend this year,” Edmundds said, adding that sales likely fell on a daily selling rate basis.  “This is exactly in line with how the rest of this year has gone: Sales look strong, but there are other factors at play that make this success a bit fragile.”  GM (GM) is seen posting a 5.6% increase in monthly sales & Edmunds projected gains for most automakers, including Ford  (F), 0.8%, Toyota (TM) 3.5%, Fiat Chrysler (FCAU), 7% & Honda, 3.7%.  Kelley Blue Book & Autotrader, estimated that Jun sales across the industry rose at a more modest pace of 2.1% & raised the full-year forecast slightly to 16.8M vehicles sold, citing a stronger H1 than expected.

These carmakers may drive monthly auto sales

China has issued a safety warning to its citizens traveling to the US amid rising tensions between the sides over accusations of unfair trading practices & other disputes.  The warning issued late last week & posted on the website of the Chinese Embassy in DC touches on issues from the high cost of medical treatment in the US to the importance of guarding against crime & terrorist attacks & the powers wielded by Immigration & Customs Enforcement agents.  In Beijing, Foreign Ministry spokesman Lu Kang said that China's gov was merely fulfilling its duty to warn travelers of "potential dangers."  US tariffs meant to punish China for allegedly unfair trading practices are due to take effect Fri.  Friction has also grown over the South China Sea & Taiwan.

China issues warning for citizens traveling to US

China said it's "fully prepared" for a trade war with the US as hopes dwindle for a breakthrough in tensions this week between the world's 2 biggest economies.  DC is due to start charging tariffs on $34B in Chinese imports as of Fri while Beijing has pledged to retaliate with equal tariffs on $34B in US goods.  Foreign Ministry spokesman Lu Kang said that China is "fully prepared to take a package of necessary measures" to safeguard its national interests.  US companies ranging from soybean farms to whiskey distilleries to automakers like Ford (F) & Tesla (TSLA) could suffer if China ramps up retaliatory measures.  China's list is designed to inflict pain on US farmers & other groups that are important to Pres Trump's political base.  Trade friction also threatens to ensnare major Chinese companies, with China Mobile the latest to encounter obstacles in the US market.  A US agency under the Dept of Commerce recommended yesterday against giving operating licenses to China's largest telecom carrier, citing national security risks posed by the state-run firm.  Lu called the warnings "unfounded speculation and an irrational clampdown" stemming from a Cold War mentality.  "We hope the US will provide a level-playing field for Chinese companies' investment and operation in the US and do something conducive to the mutual trust," he added.  China's stock market has fallen nearly 10% in recent weeks on fears of a trade war while its currency has dropped sharply against the $.  Central bank governor Yi Gang said the yuan's 3%  depreciation over the past 2 weeks reflects a strengthening of the $ & "the effect of external uncertainties."  The yuan, whose exchange rate is tightly controlled, is at its lowest level against the $ since Dec.  Despite that, Yi said financial risks were under control.  "The fundamentals of the Chinese economy at present are good," he said.  "Our country implements a floating exchange system consulting a basket of currencies and based on market supply and demand," Yi added. "Years of practice have shown this system to be effective and must continue to be adhered to."  Responding to questions over a safety warning to Chinese citizens traveling to the US issued by the gov late last week, Lu, the foreign ministry spokesman, said the gov was merely fulfilling its duty to warn travelers of "potential dangers."

China says "fully prepared" if trade war kicks off this week

Today is a semi holiday for stocks followed by no trading tomorrow (in the US).  There will be only limited news today, although simmering trade tensions are not going away anytime soon.  The Dow continues to hold above 24K, making the traders happy.

Dow Jones Industrials

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