In Asian Equity Markets Japan’s Nikkei index rose to 2-1/2 month highs on Tuesday as investor confidence was boosted by a weakening yen and strong U.S. shares, lifting cyclical stocks such as exporters and financial companies. The Nikkei gained 1.5 percent to 20,197.56 points by the midday break, after hitting as high as 20,204.30 in early trade, its strongest level since June 29. The broader Topix added 1.3 percent to hit a two-year high of 1,661.22. MSCI’s broadest index of Asia-Pacific stocks outside Japan was down 0.1 percent after wobbling between positive and negative territory for much of the morning.

 

In Currency Markets the dollar held steady at near 8-week highs versus the yen on Tuesday, with investors awaiting the Federal Reserve’s policy statement this week for fresh hints on the possible pace and timing of further U.S. monetary tightening. The dollar last changed hands at 111.52 yen, trading within sight of Monday’s peak of 111.665 yen, its highest level since July 27. The euro edged up 0.1 percent to $1.1968, on track for its fourth straight days of gains, albeit modest ones. Sterling rose 0.2 percent to $1.3520. The currency rose to a 15-month high of $1.3618 on Monday on speculation that the BoE would raise interest rates soon for the first time in nearly a decade.

 

In Commodities Markets oil markets were stable on Tuesday, supported by a fall in Saudi Arabian crude exports but capped by an expected rise in U.S. shale output. U.S. West Texas Intermediate crude futures were at $50.00 per barrel, 0.2 percent above their last settlement. Brent crude futures were at $55.52 a barrel, up 4 cents.  Gold on Tuesday inched up from its lowest in over two weeks as the dollar shed some of its gains from the previous session, with market focus on a two-day Federal Reserve meeting that kicks off later in the day. Spot gold was up 0.2 percent at $1,308.86 an ounce and U.S. gold futures for December delivery edged up 0.1 percent to $1,312.60 an ounce.

 

In US Equity Markets  the S&P 500 ended slightly higher on Monday as financial stocks rose ahead of a Federal Reserve meeting, but the Nasdaq pared gains sharply as technology stocks lost ground late in the session. The Dow Jones Industrial Average rose 0.28 percent, to 22,331.35, the S&P 500 gained 0.15 percent, to 2,503.87 and the Nasdaq Composite added 0.1 percent, to 6,454.64. Big technology stocks such as Microsoft and Google parent Alphabet came under pressure late in the session after Amazon said it would move to charging businesses in one-second increments for use of its servers.

 

In Bond Markets Japanese government bond prices fell on Tuesday, weighed down by a continuing retreat in U.S. Treasuries and as Tokyo’s Nikkei rose to a 2-1/2-month high. The five-year JGB yield rose 1.5 basis points to minus 0.110 percent and the 10-year yield was up 1 basis point at 0.025 percent. The Bank of Japan conducted a regular debt-buying operation on Tuesday and helped slow the rise in JGB yields. Higher U.S. yields bolstered the greenback, with the benchmark 10-year note yield notching a one-month high of 2.237 percent overnight.

 

 

Economic Calendar

• 13:30 GMT+1 US Building Permits

 

US Equity Upgrades

• APPLIED MATERIALS (AMAT) UPGRADED TO OUTPERFORM FROM SECTOR PERFORM AT RBC CAPITAL
• ARROWHEAD (ARWR) UPGRADED TO OUTPERFORM FROM MARKET PERFORM AT WILLIAM BLAIR
• ASML (ASNL) UPGRADED TO POSITIVE FROM NEUTRAL AT SUSQUEHANNA
• BP UPGRADED (BP) TO OUTPERFORM FROM MARKET PERFORM AT BMO CAPITAL
• CATERPILLAR (CAT) UPGRADED TO BUY FROM NEUTRAL AT UBS
• COHU (COHU) UPGRADED TO BUY FROM HOLD AT NEEDHAM
• EDF (ECIFF) UPGRADED TO BUY FROM NEUTRAL AT GOLDMAN SACHS
• INFOSYS (INFY) UPGRADED TO NEUTRAL FROM SELL AT GOLDMAN SACHS
• INSTRUCTURE (INST) UPGRADED TO OVERWEIGHT FROM EQUAL WEIGHT AT MORGAN STANLEY
• MEDNAX (MD) UPGRADED TO OVERWEIGHT FROM SECTOR WEIGHT AT KEYBANC
• PLATFORM SPECIALTY PRODUCTS (PAH) UPGRADED TO BUY FROM HOLD AT SUNTRUST
• PRECISION DRILLING (PDS) UPGRADED TO OVERWEIGHT FROM NEUTRAL AT PIPER JAFFRAY

 

US Equity Downgrades

• BROOKS AUTOMATION (BRKS) DOWNGRADED TO HOLD FROM BUY AT NEEDHAM
• FINISH LINE (FINL) DOWNGRADED TO UNDERWEIGHT FROM NEUTRAL AT PIPER JAFFRAY
• PNM RESOURCES (PNM) DOWNGRADED TO SELL FROM HOLD AT WILLIAMS CAPITAL
• RESOLUTE ENERGY (REN) DOWNGRADED TO MARKET PERFORM FROM OUTPERFORM AT BMO CAPITAL
• SANCHEZ ENERGY (SN) DOWNGRADED TO NEUTRAL FROM OVERWEIGHT AT PIPER JAFFRAY
• SOUTH JERSEY INDUSTRIES (SJI) DOWNGRADED TO HOLD FROM BUY AT WILLIAMS CAPITAL
• SUPER MICRO COMPUTER (SMCI) DOWNGRADED TO NEUTRAL FROM BUY AT DA DAVIDSON
• TACTILE SYSTEMS (TCMD) DOWNGRADED TO NEUTRAL FROM BUY AT BTIG
• TAUBMAN CENTERS (TCO) DOWNGRADED TO UNDERWEIGHT FROM EQUAL WEIGHT AT MORGAN STANLEY
• TELADOC (TDOC) DOWNGRADED TO NEUTRAL FROM OUTPERFORM AT BAIRD
• TELIA (TLSNY) DOWNGRADED TO SELL FROM HOLD AT DEUTSCHE BANK
• UNITED CONTINENTAL (UAL) DOWNGRADED TO NEUTRAL FROM BUY AT BUCKINGHAM
• WIPRO (WIT) DOWNGRADED TO SELL FROM NEUTRAL AT GOLDMAN SACHS

 

US Equity Initiations

• APPIAN (APPN) RESUMED WITH A SECTOR WEIGHT AT KEYBANC
• ATHENEX (ATNX) INITIATED WITH AN OUTPERFORM AT CREDIT SUISSE
• ATLASSIAN (TEAM) RESUMED WITH A SECTOR WEIGHT AT KEYBANC
• BROOKFIELD INFRASTRUCTURE (BIP) REINITIATED WITH A NEUTRAL AT CREDIT SUISSE
• CA TECHNOLOGIES (CA) RESUMED WITH A SECTOR WEIGHT AT KEYBANC
• CARRIZO OIL & GAS (CRZO) INITIATED WITH A NEUTRAL AT CITI
• CDW COVERAGE (CDW) RESUMED WITH A BUY AT NEEDHAM
• CIRRUS LOGIC (CRUS) INITIATED WITH AN UNDERPERFORM AT BOFA/MERRILL
• DOWDUPOINT (DWDM) INITIATED WITH BUY AT DEUTSCHE BANK WITH USD 80 PRICE TARGET.
• GENMARK (GNMK) INITIATED WITH A BUY AT BOFA/MERRILL
• HOSTESS BRANDS (TWNK) INITIATED WITH AN OUTPERFORM AT RBC CAPITAL
• PAPA JOHN’S (PZZA) INITIATED WITH A BUY AT CITI
• PJT PARTNERS (PJT) INITIATED WITH AN OUTPERFORM AT JMP SECURITIES
• SONIC (SONC) INITIATED WITH A BUY AT CITI
• SYNNEX (SNX) COVERAGE RESUMED WITH A BUY AT NEEDHAM
• TECK RESOURCES (TECK) INITIATED WITH A SELL AT AXIOM