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US equities had a crazy ride yesterday, with FOMC minutes taking center stage. Fed funds futures now price a 28% probability of four rate hikes this year, which is up from 24% a few days ago. FOMC’s optimistic comments on the economy provided an initial lift to stocks, but bonds sold off as a total treasury issuance of $258 billion this week caused a glut in supply. US 10 year bonds yields hit a high of 2.95% and this spooked the equity markets with Dow Jones Industrial Average (US30) selling off by more than 600 points from the high. Major European Indices also closed lower.
Among US stocks, Devon Energy (DVN) was the weakest performer in SPX 500. Advanced Auto Parts (AAP) was the best performer in SPX 500 as its results allayed fears of an Amazon entry. US Oil Services stocks were upgraded by Morgan Stanley yesterday as they forecast for horizontal oil rig count of 915 this year versus a previous forecast of 800. Helmerich & Payne (HP), Patterson-UTI Energy (PTEN), and Precision Drilling (PDS) are likely to benefit from this forecast. GE lowered its 2018 profit outlook and said it has no intention of selling down its majority stake in oil services firm Baker Hughes before 2019, a shift from its previous exploration of exiting the business.
In Europe, Barclays (BARC) has rallied by more than 4% as they plan to double dividend to 6.5 pence per share. Moneysupermarket.com fell as they gave subdued forecast for 2018. In France, Veolia Environment (VIE) posted a profit of € 401.6 million when compared to € 383.1 million last year. Bouygues SA (FR) 2017 net profit rose by nearly 50% to beat analyst expectations. ProSiebenSat.1 (PSM) shares were up by 1.67%, in spite of a fall in profits in fourth quarter as they declared a dividend of 1.93 for 2017 when compared to 1.90 a year earlier.
Top picks for the day are Arista Networks (ANET) and Cognex (CGNX) on the short side and HealthEquity Inc (HQY) on the long side.
