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US stocks continue losing streak as top Fed official talks rate hikes

On Friday, Wall Street ended softer and the tone is set to continue this week too
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The Federal Reserve has talked about more than one rate rises this year

- US benchmarks finish lower for third day 

- oil sector lags

- Fed official Evans talks monetary tightening 

Wall Street benchmarks closed flat to lower on Monday as the oil price weighed and traders were reluctant to take on risk in the current environment.

The Dow Jones  Industrial Index finished almost nine lower, or 0.04% to 20,905, while the broader based S&P 500 shed 0.2%, or almost five points at 2,373.

The tech heavy Nasdaq had hit an intra-day high earlier in the session but fell back to close just 0.01% up at 5,901.

The S&P smallcap 600 fell 0.62% to 844.25, while the S&P midcap 400 lost 0.52% at 1,722.

Across in the UK, where the FTSE 100 remained little changed,  the news agenda was dominated by the announcemen that PM Theresa May had decided to pull the trigger on the start of negotiations the UK's exit from the EU next Wednesday.

Top riser on the S&P500 was CF Industries Holdings (NYSE:CF) which added 3.76% at $30.39 after a note from Goldman Sachs said investors should buy the shares because of a better pricing environment for fertilizer.

It upgraded the company to 'buy' from 'neutral'.

The biggest loser was Kohl's Corp (NYSE:KSS) down 4.77% to $38.56.

Machinery giant Caterpillar (NYSE:CAT)  was a notable riser and saw big trading volumes,  adding 2.68% to $95.40.

In the oil sector, shares in Transocean (NYSE: RIG) dropped  2% to $12.22  after it emerged  contractor Borr Drilling  will acquire 15 of the offshore firm's rigs in a deal valued at $1.35bn. Chesapeake Energy Corp (NYSE: CHK) also shed over 2% as US crude fell to US 48.17 a barrel  - down 1.25%.

The equipment in question includes Transocean's entire jackup fleet, which  consists of 10 of its own rigs and five under construction.

In  the small cap index S&P 600,  Nektar Therapeutics (NASDAQ: NKTR ) shares surged almost 43% to US$22.11 as the biotech posted positive findings of a Phase 3 efficacy study of NKTR-181 - its opioid analgesic for pain treatment.

The candidate is designed to manage pain without high levels of euphoria that can lead to addiction with standard opioids, and it met its primary and secondary endpoints.

NKTR-181 also demonstrated a favorable safety profile, Nektar had said.

Elsewhere, in a sign of the monetary policy tightening,  Fed president in Chicago Charles Evans reportedly said he would support three interest rate hikes in total this year if economic improvement persists, and four increases if inflation moves above the central bank’s 2% target.

 

MID-SESSION

US shares were see-sawing on Monday and heading  lower as markets tried to get a handle on the macro picture and US crude prices fell.

The Dow Jones, having been up earlier, was down around 15 points at 20,899m, while the S&P500 shed around six to 2,371.

The Nasdaq lost almost nine points at 5,892.

UK Prime Minister May's decision to trigger Article 50 to begin Brexit negotiations next week sent the pound weaker against the US dollar, although this has been on the cards for months.

Despite confirmation from FBI head honcho James Comey that the bureau was investigating the Trump campaign’s links with Russia, the US markets early on were fairly quiet.

US crude was down again - with the price of a barrel slipping 0.96% to US$48.31 each. It comes as there is more drilling happening in the US, undermining Cartel OPEC's attempts to rebalance the market via the a supply cut.

Oil services group Transocean Ltd  (NYSE: RIG) dropped 2.49% to $12.16 as international contractor Borr Drilling  said it will acquire 15 of its rigs in a deal valued at $1.35bn. Chesaepeake Energy (NYSE: CHK) was down 2.08%.

Media behemoth Walt Disney Co (NYSE: DIS) gained 0.84% to $112.63 after ‘Beauty and the Beast’ topped the box-office ticket sales over the weekend.

The US listed shares for Deutsche Bank AG lost over 3% as there was more woe for investors as it revealed a rights issue to  raise nearly $9 billion.

On the losing front, Array BioPharma (NASDAQ: ARRY)fell over 2% as it withdrew a marketing application for its melanoma drug binimetinib.

 

OPEN

US  shares were heading higher at the open as oil lagged and biotech stocks were doing well.

The Dow Jones was up around 30 points at 20,943; the S&P500 gained over 36 points to 2,379, while the Nasdaq added 12 points to 5,913.

The top gainer on S&P500 was Esperion Therapeutics (NASDAQ: ESPR), which surged around 50% to $35.60 as it received postive feedback from the Fed on its drug program.

Also higher was CytomX Therapeutics Inc (NASDAQ:CTMX), up 25% as it said it would receive a US$200mln upfront payment from drugs giant Bristol-Myers Squibb Co. (NYSE:BMY).

The payment is part of the expansion of a collaboration pact to discover cancer treatments using CytomX's Probody platform.

A big, big laggard was small cap Aevi Genomic Medicine (NYSE: GNMX), which tanked over 55% as it said its lead product candidate AEVI-001 failed to beat a placebo in its SAGA clinical trial in adolescents with mGluR mutation-positive attention deficit hyperactivity disorder (ADHD).

Elsewhere, buying in the technology and consumer-staples sector offset declines in energy stocks. Chesapeake Energy (NYSE:CHK) dropped 0.95% to $5.24.

In London, FTSE 100 is almost flat -  down just 0.02% to stand at 7.432 as the City and global markets digest news that the much talked about Article 50 (the process which starts the withdrawal from the EU) will be triggered on March 29 next week.

In macro news too, traders in the US have an eye on a House Intelligence Committee hearing, which is focused on Russia's involvement with the US election last year.

PREVIEW - US set for drab start

Taking the cue from a drab start in Asia and European indices, US shares are set for a weaker start on Monday.

On Friday, Wall Street ended softer as investors became less excited about the small interest rate rise midweek and the so called Trump rally appeared to be losing steam after benchmark US shares hit all time highs earlier in March.

It comes after finance ministers and bankers from the world’s 20 largest economies met in Germany over the weekend,  where new fears over a new world order of seeming protectionism came to the fore. It has also been revealed in the last hours that the UK Prime Minister Theresa May will trigger Article 50 -  the process to leave the EU - next Wednesday (March 29).

This will begin a two year period of negotiations.

At the end of last week, the broad based S&P 500 ended down over three points at 2,378, while the benchmark Dow Jones finished at 20,914 - around 19 points lower.

The tech heavy Nasdaq closed around flat at 5,901.

Today, futures trading sees the S&P5500 starting three points lower; the Dow down five poinst and the Nasdaq starting 1.5 points lower.

Notably, today, the oil price is on the slide again with US crude (West Texas Intermediate) down 1.76% at the time of writing at $47.92 a barrel.

It looks to be a big news day in store with Microsoft founder Bill Gates meeting the newish now President Trump and the CIA, NSA and FBI testifying about Russia's alleged role in meddling in the US election.

In corporate news, a big story is that Uber president Jeff Jones has decided to step down just seven months after joining the company.

Dominion Diamond Corp (NYSE: DDC) added over 25% in pre-market trading after The Washington Companies proposed to buy it US$13.50 per share in cash.

Elsewhere, Medgenics Inc fell around 54.2% after it revealed that that SAGA trial of AEVI-001 did not meet a primary endpoint.

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