Day Traders Diary



Equity futures are pointing towards a slightly lower open as the U.S. government shutdown enters day three. The S&P 500 futures trade two points, or 0.1%, below fair value.

The federal government closed nonessential operations at midnight on Friday after the Senate failed to agree to a funding measure. This is the first U.S. government shutdown since a 16-day closure in 2013. The Senate is scheduled to vote today at noon ET on a measure that would provide funding until February 8, but it's unclear if it will pass.

An extended shutdown could dampen economic growth as it delays work (and pay) for many federal employees and government contractors, but investors don't appear too worried thus far. There has been little selling this morning, keeping stocks near the records they hit on Friday. 

Elsewhere, the Euro Stoxx 50 is up 0.2%, helped by news from Germany that the SPD party has agreed to enter formal coalition talks with Chancellor Angela Merkel's CDU/CSU party. Equity indices in the Asia-Pacific region finished Monday modestly higher.

In the bond market, U.S. Treasuries are under pressure this morning, sending yields higher across the curve. The benchmark 10-yr yield is up one basis point at 2.65%, hovering around its best level in more than three years, while the 2-yr yield is up three basis points at 2.08%.

Investors will not receive any economic data on Monday. Netflix (NFLX) will report fourth quarter results following the closing bell.

In U.S. corporate news:

  • Bioverativ (BIVV 104.21, +40.10): +62.6% after agreeing to be acquired by Sanofi (SNY 42.95, -1.65) for $105 per share.
  • Halliburton (HAL 54.40, +1.39): +2.6% after reporting better-than-expected earnings and revenues.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly higher note. Japan's Nikkei unch, Hong Kong's Hang Seng +0.4%, China's Shanghai Composite +0.4%, India's Sensex +0.8%.
    • In economic data:
      • Japan's Dec Convenience Store Sales -0.3% vs -0.3% in Dec 2016
    • In news:
      • The overall tone was quiet overall, with the tone being set by the uncertainty created by the Governmental shutdown in the US.
  • Major bourses in Europe are trading on a relatively flat note to begin the week. UK's FTSE unch, France's CAC +0.1%, Germany's DAX unch.
    • In economic data:
      • There was no economic data of note
    • In news:
      • Ample press attention being paid to the U.S. government shutdown acting as a brake on things, yet it could just as simply be a cooling off period following a hot start to the year. Market participants remain cognizant, too, that an ECB policy meeting is being held on Thursday.
      • Europe -- and Switzerland in particular -- will be a center of media attention as the World Economic Forum kicks off in Davos.
      • Reports indicate some enthusiasm around German politics after the SPD party agreed to enter formal coalition talks with Angela Merkel's CDU/CSU conservative bloc while French President Macron has reportedly held out the possibility of the UK getting a bespoke trade deal with the EU after Brexit.
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