US HEALTHCARE: Abbott Labs (ABT): M&A Speculation

• US Stocks continue to drift higher late Monday - but remain off record highs from earlier in the month as the US Gov enters shutdown day 19. Currently, the DJIA trades up 531.63 points (1.15%) at 46,720.6 vs record high of 47,034.92  on Oct 3, S&P E-Minid Future up 75.75 points (1.13%) at 6,778.25 vs record high of 6,812.25 on Oct 8, Nasdaq up 337.4 points (1.5%) at 23,017.28 vs. record high of 23,098.98 on Oct 10.
• Information Technology, Communication Services and Industrials sector shares lead advances in late trade, supporting the Tech sector: Super Micro Computer +6.82%, ON Semiconductor +5.54%, Apple +4.49% and Arista Networks +4.05%.
• Communication Services gainers included: Trade Desk +4.74%, Netflix +3.88%, Meta Platforms +2.21% and Live Nation Entertainment +1.83%; while Industrials supported by Jacobs Solutions +5.14%, United Airlines Holdings +3.84%, Delta Air Lines +3.77% and Leidos Holdings +3.30%.
• Conversely, a mix of Consumer Staples and Utilities sector shares underperformed in the first half: Church & Dwight Co -0.99%, Molson Coors Beverage -0.99%, Walmart -0.93% and Altria Group -0.89%, while Constellation Energy -3.67%, Vistra -2.74%, NRG Energy -0.42% and Pinnacle West Capital -0.11%.
• Expected corporate earnings announcements after the close include: Cleveland-Cliffs, Crown Holdings, Steel Dynamics, AGNC Investment Corp and Zions Bancorp - the regional bank in the spotlight last week after it "disclosed a $50 million charge-off for a loan underwritten by its wholly-owned subsidiary, California Bank & Trust," Bbg reported. Western Alliance, the second bank in the hot seat after announcing bad loans/investments last week, announces Tuesday after the close.
• Additional corporate earnings expected this week include: Halliburton, PulteGroup, Lockheed Martin, Northrop Grumman, GM, Netflix, Capital One, Texas Inst, AT&T, Alcoa, American Airlines, Valero, Ford, Intel, General Dynamics, Baker Hughes and Procter & Gamble.

• RES 4: 154.39 76.4% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 153.82 1.618 proj of the Sep 17 - 26 - Oct 1 price swing
• RES 2: 152.61/153.27 High Oct 14 / 10 and the bull trigger   
• RES 1: 151.40 High Oct 16 
• PRICE: 150.57 @ 17:14 BST Oct 20
• SUP 1: 149.38 Low Oct 17
• SUP 2: 148.86 50-day EMA   
• SUP 3: 147.82 High Oct 3  
• SUP 4: 147.09 Trendline support drawn from the Apr 22 low 

A short-term corrective bear cycle in USDJPY remains intact and Friday’s print below the 20-day EMA, at 150.12, strengthens the short-term bear condition. The break of this average signals scope for a deeper retracement towards 50-day EMA, at 148.86. Note that moving average studies remain in a bull-mode position highlighting a dominant uptrend. The bull trigger has been defined at 153.27, the Oct 10 high.   

• The USD index trades a touch firmer to start the week, extending the bounce from Friday’s lows by around 0.1% to 98.60. China third quarter GDP slowed to 4.7% Y/y, however the print came in marginally above expectations, prompting minimal impact on broader risk sentiment and the greenback. President Trump expressed optimism around US-China trade talks (albeit with clear focus points), keeping major equity benchmarks in the green Monday.
• Despite the broadly contained price adjustments across G10 FX, the Japanese yen has had a volatile session, registering a 92 pip range. Developments regarding Japan's LDP and Ishin parties forming a coalition initially boosted USDJPY to 151.20, before hawkish remarks from BoJ board member Takata and headlines on the BOJ revising the economic growth forecast up assisted a solid reversal to 150.28 session lows. Price has subsequently consolidated close to unchanged levels around 150.75.
• Elsewhere, New Zealand Q3 CPI came in at 1.0% Q/q overnight, one tenth above market expectations. While the data overall was close to RBNZ expectations, NZD does stand 0.40% higher on the session, assisted by the constructive price action for major equity indices late Monday. Despite the bounce for NZDUSD, bearish conditions remain firmly intact, with the pair remaining just 1.15% above cycle lows at 0.5683, 6-month lows for the pair.
• It is also worth noting that EURCHF has fallen 0.25%, further narrowing the gap to a crucial cluster of support between 0.9206-22. Clearance of the lows would place EURCHF at its lowest since the peg removal in 2015.
• In emerging markets, the Colombian peso has significantly underperformed peers following the negative newsflow on US tariff threats against Colombia and weaker-than-expected economic activity data published on Monday. USDCOP has risen 1.5% on the session, extending the bounce from Friday’s cycle lows to around 3.2%.
• Looking ahead, UK fiscal data will be published ahead of Canada CPI on Tuesday, while markets will remain focussed on Friday’s US inflation data.