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T3's Take 3: Markets Give Back Yesterday's Rally on Biotech Weakness


Today's financial recap and tomorrow's financial outlook.

Today on T3 Live

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US Markets

US stocks cooled off from Monday's rally.

The S&P 500 managed to post gains in early trading, but ultimately finished 0.4% lower. 

Energy stocks saw the largest gains due to a sharp rally in oil prices.

The NASDAQ showed relative weakness due to a significant drop in biotech. The group was spooked by Illumina (ILMN) cutting its guidance, which caused that stock to drop 10.6%. The NASDAQ Biotechnology Index ETF (IBB) dropped 3.6%, with major players such as Gelgene (CELG) and Biogen Idec (BIIB) posting 3%+ losses.

IBB has declined 25% from its $400.79 all-time high set on July 20.

Economic data showed the trade balance for August coming in at a $48.3 billion deficit, the largest in five months. Treasury yields popped and dropped as stocks fell during the day, while the US dollar lost some ground against major world currencies. 

World Equity Markets

Asian equities continued their rally from yesterday, following US gains.

The Reserve Bank of Australia left its interest rate unchanged as expected, with many analysts now expecting a rate cut by the end of the year. Japan's Central Bank (BoJ) will begin a two-day policy meeting, after which it will announce its rate decision on Wednesday.

Sentiment was also boosted by rumors that 12 Pacific Rim counties have reached an agreement on the Trans Pacific Partnership, a deal which has been in the making for the past 5 years.

The Nikkei finished up 1.0% on expectations that the BoJ will unleash a new round of stimulus.

European markets also finished higher from a rally in mining and auto stocks as oil prices headed towards $50 a barrel. The German DAX gained 0.9%, while the French CAC rose 1%.

Mining giant, Glencore, saw its shares rise again after the company released financial information that helped calm investors. Fellow mining company Lonmin surged 11.8%. The troubled Volkswagen (VW) managed to rise 3.8% higher after its new CEO, Matthias Muller, stated the company will pursue massive cost savings to curb the impact of the emissions scandal. Renault also rose after it announced intentions to strengthen ties with Japanese automaker Nissan

Oil Party

Crude oil prices extended  yesterday's gains. Both WTI and Brent added over 4% today, boosting shares of energy companies. The weakening dollar helped, as well as expectations that production will fall further.

A US oil supply forecast has predicted lower supplies in the future.

Major oil producing counries have also showed signs of willingness to come together and offer further support to the market.

And according to the EIA, global oil demand is expected to grow at its fastest pace in six years during 2016. Meanwhile, OPEC supplies have declined slightly according to the report. 

Expectations that Iran's crude oil would flood global supplies were calmed after the country's crude oil sales were forecast to fall to their lowest level in seven months.

Wednesday's Financial Outlook

US economic data for tomorrow will include MBA mortgage applications, DOE oil reports, and consumer credit.

Overseas economic data will feature Japan's leading index, German & British industrial production, Canadian building permits, Britain's NIESR GDP estimate, and Chinese FDI.

Constellation Brands (STZ), Monsanto (MON), and RPM (RPM) will announce earnings before the open tomorrow.
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