Techs Boost Stock Futures As China Stock Market Rallies

Stock futures climbed Monday as China-based names spearheaded an early tech advance, after hints of government support spurred a China stock market rally.


Advanced Micro Devices (AMD), and Taiwan Semiconductor (TSM) helped foster some early strength among chipmakers.  Polaris (PII) and Halliburton (HAL) rose early, following their third-quarter results. Philips (PHG) and Hasbro (HAS) fell hard after earnings.  Computer accessories maker Logitech (LOGI) rose ahead of its earnings report, due after today’s close. American Railcar (ARII), Fiat Chrysler (FCAU) and Jacobs Engineering (JEC) gained on merger and acquisition news.

Intel (INTC) and Caterpillar (CAT) led the Dow 0.4% above fair value. The S&P 500 also advanced 0.4%, with Jacobs Engineering and Citizen’s Financial Group (CFG) on top. Hasbro and Mattel (MAT) posted the deepest declines.

Nasdaq 100 futures jumped 0.6%. China-based names posted the top four gains on the index.

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China Stock Market: Still In Bear Territory

China stocks charged into the week with Hong Kong’s Hang Seng index bounding 2.3% higher while the Shanghai Composite spiked 4.1% — its best session in three years. A letter from President Xi Jinping to private entrepreneurs reportedly pledged “unwavering support” for the country’s private sector. And comments from Vice Premier Liu Yandong on Saturday stirred speculation that the government may be set for additional stimulus measures.

Despite Monday’s gains, China’s benchmarks remain in bear market territory. The Shanghai Composite was down 26% from its February high. The Hang Seng was down 22%. China receives October consumer confidence and business confidence data this week.

In Japan, Tokyo’s Nikkei 225 rose 0.4%. In Europe, markets held firm in afternoon trade, with London’s FTSE 100 up 0.8%, Frankfurt’s DAX showing a 0.5% gain and the CAC-40 in Paris trading 0.3% higher.

Intel, Citizen’s Financial Upgraded; China Techs Soar

Advanced Micro Devices climbed 2.9%, ahead of its third-quarter report, due out Wednesday. The chipmaker is still extended above a June breakout. It is in the sixth week of a 31% deep consolidation.

Intel rose 1.1% in premarket trade. Intel received an upgrade to buy, from neutral, from Nomura. AMD is looking to turn around a five-week decline that left shares 12% below their 10-week moving average on Friday.

China-based names led early gains with International (CTRP) up 5%, (JD) rising 3.4% and NetEase (NTES) and Baidu (BIDU) up around 3% apiece. Those stocks — as well as most of the other leading China names — have been beaten significantly by U.S. trade war concerns. All are trading down sharply from highs posted just before the onset of retaliatory sanctions in May and June. Baidu reports third-quarter results on Wednesday.

Citizen’s Financial surged 5.9% to top the S&P 500. Bank of America upgraded the stock to a buy, saying the stock was oversold and a downturn in the credit cycle is not imminent.

M&A News: Jacobs, Fiat, American Rail

Fiat Chrysler jumped 5% after agreeing to sell its Magneti Marelli car-parts unit in a $7.1 billion deal. Japan’s Calsonic Kansei, owned by private investment firm KKR & Co. (KKR), creates an auto parts maker with $17 billion in annual revenue. It will supply parts back to Fiat through a multiyear agreement. KKR shares rose 1% in premarket action.

Jacobs Engineering jumped 2.4% after reporting it would sell its chemical and resources unit to Australia-based Worley Parsons for $3.3 billion. Jacobs is trading just below its October high, and up 8% since clearing a cup-with-handle base in July.

American Railcar spiked more than 50% after agreeing to a $1.75 billion buyout headed by investment firm ITE. Billionaire investor Carl Icahn reportedly holds 11.9 million shares of American Railcard. Icahn said it became a majority shareholder of the stock in 2010, generating a total return on the investment of $757.2 million, a 423% gain.

Stock Futures: Halliburton, Polaris Earnings

Halliburton added 1.6% after narrowly topping analysts’ expectations for the third quarter. Capacity and budget restraints limited third quarter performance, but the company projected the curbs were temporary. Halliburton shares ended Friday 32% below a high set in May.

Snowmobile and off-road vehicle maker Polaris jumped 4.6% before the open. The Medina, Minn. outfit reported a 22% EPS gain, well above consensus targets. Revenue just met views. The company said results included $40 million in estimated tariff cost increases. POlaris shares are down 31% from a June high.

Chicago National Activity Index Dips

U.S. markets look to a heavy week of earnings news includes reports from (AMZN), Google parent Alphabet (GOOGL) and Microsoft (MSFT), among many others. The Commerce Department’s first estimate for third quarter GDP growth is due out Friday.

Monday’s leading economic release, from the Chicago Federal Reserve, pointed to a mild slowing of growth in manufacturing. The National Activity Index eased to 0.17 for September, down from August’s 0.18 reading and disappointing economist projections for a rise to 0.27.


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The post Techs Boost Stock Futures As China Stock Market Rallies appeared first on Investor's Business Daily.

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