CFD Markets News and Forecasts — 09-08-2018

The major US stock indexes finished trading mostly in the red, suffering from a fall in the base materials sector and continuing concerns about trade disputes. However, some support to the market was provided by the next batch of corporate reporting.

According to FactSet, over 85% of companies from the S & P 500 have already published accounts, and their total profit in the second quarter increased by 24% compared to the same period last year.

Investors also estimated the US data. The Ministry of Labor reported that initial applications for unemployment benefits fell to 213,000 from 219,000. Economists had expected that claims for unemployment benefits would increase to 220,000 from 218,000 initially declared for the previous week. The four-week moving average was reduced to 214,250, which is 500 units less than in the previous review.

A separate report from the US Department of Labor showed that in July the producer price index remained unchanged from June. Without taking into account volatile prices for food and energy, the indicator increased by 0.1% compared to the previous month. Prices excluding food, energy and volatile trading indicators in July rose by 0.3%. Economists had expected that the index in July will grow by 0.2% compared to the previous month, as well as the base index. In annual terms, the producer price index rose by 3.3% against + 3.4% and in June. Expected to increase by 3.4%.

Components of the DOW index finished trading mixed (14 in positive territory, 16 in negative territory). Outsider were the shares of International Business Machines Corporation (IBM, -1.42%). The leader of growth was the shares of DowDuPont Inc. (DWDP, + 2.04%).

Most S & P sectors recorded a decline. The greatest decrease was shown by the base materials sector (-0.7%). The services sector grew most (+ 0.2%).

At closing:

Dow 25.509.23 -74.52 -0.29%

S&P 500 2,853.58 -4.12 -0.14%

Nasdaq 100 7,891.78 +3.46 +0.04%

Total inventories of merchant wholesalers, except manufacturers' sales branches and offices, after adjustment for seasonal variations but not for price changes, were $632.4 billion at the end of June, up 0.1 percent from the revised May level. Total inventories were up 5.1 percent (±3.9 percent) from the revised June 2017 level. The May 2018 to June 2018 percent change was revised from the advance estimate of virtually unchanged to up 0.1 percent.

The June inventories/sales ratio for merchant wholesalers, except manufacturers' sales branches and offices, based on seasonally adjusted data, was 1.25. The June 2017 ratio was 1.31.

U.S. stock-index futures rose slightly on Thursday, as a strong earnings season, which is currently winding down, helped overshadow concerns over trade tensions between the U.S. and China.

Global Stocks:

• Says Russian Financial System Is Stable

The national trend in housing starts decreased in July, reflecting a decline in the SAAR of multi-unit dwellings in urban centres from the near-historical high registered in June. Despite decreasing in July, the trend remains well-above historical averages, reflecting elevated levels of multi-unit starts in most major markets that has more-than-offset declining single starts.

The trend in housing starts was 219,988 units in July 2018, compared to 221,738 units in June 2018, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

Nationally, new house prices edged up 0.1% in June, largely due to rising construction costs across the country. The cost of softwood lumber, which is widely used in residential construction, has been on the rise. According to the Industrial Product Price Index, the price of softwood lumber (except tongue and groove and other edge worked lumber) rose 34.3% year over year in June.

Among the 11 surveyed census metropolitan areas (CMAs) reporting growth in June, the largest increases were in Montréal (+1.0%) and Ottawa (+0.7%). Builders in both markets linked the gains to rising construction and land development costs. Other notable rises occurred in St. Catharines-Niagara (+0.5%) and Greater Sudbury (+0.4%).

In the west, prices for new homes were up in Calgary (+0.3%), Edmonton (+0.2%) and Vancouver (+0.2%). The increase in Vancouver follows five months of flat prices

The Producer Price Index for final demand was unchanged in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in June and 0.5 percent in May. On an unadjusted basis, the final demand index increased 3.3 percent for the 12 months ended in July.
In July, a 0.1-percent rise in the index for final demand goods offset a 0.1-percent decline in prices for final demand services.
The index for final demand less foods, energy, and trade services moved up 0.3 percent in July, the same as in June. For the 12 months ended in July, prices for final demand less foods, energy, and trade services climbed 2.8 percent.

In the week ending August 4, the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 218,000 to 219,000. The 4-week moving average was 214,250, a decrease of 500 from the previous week's revised average. The previous week's average was revised up by 250 from 214,500 to 214,750.

(company / ticker / price / change ($/%) / volume)

Walt Disney (DIS) target raised to $112 from $108 at Imperial Capital

21st Century Fox (FOXA) reported Q4 FY 2018 earnings of $0.57 per share (versus $0.36 in Q4 FY 2017), beating analysts' consensus estimate of $0.53.

The company's quarterly revenues amounted to $7.941 bln (+17.7% y/y), beating analysts' consensus estimate of $7.524 bln.

FOXA rose to $45.84 (+0.84%) in pre-market trading.

The Russian ruble falls to a two-year low against the dollar, taking USD/RUB to a high of 66.7190, following U.S. sanctions in response to a nerve agent attack in the U.K. Danske Bank says USD/RUB could rise to 72.0 if sanctions become law and Russia retaliates. "Any major selloff of Russian local debt, local credit and stocks would amplify outflows from the RUB." EUR/RUB, which reached a near four-month high of 77.33 on Thursday, could rise to 83.50 in this scenario, it says.

• Threat of protectionism remains prominent

• Risk of heightened market volatility needs monitoring

• If all threatened tariff measures are implemented, average US tariff rate would rise to highest in 50 years

• Indicators point to broad-based growth still but at a somewhat slower pace than that in 2017

Sterling extends its slide on Thursday, reaching its lowest against the dollar in nearly a year at 1.2842, according to FactSet. Commerzbank describes sterling movements as "dangerous," warning its fall risks becoming "self-reinforcing." It notes the lack of an "obvious trigger" for Wednesday's sharp drop--albeit linked to concerns the U.K. could leave the European Union without agreeing a deal--which it describes as "worrying." If sterling develops "self-reinforcing tendencies" then expect "an acceleration of the downtrend," Commerzbank says. EUR/GBP trades flat at 0.9012, having reached a high of 0.9032 overnight, according to FactSet.

Statement by Reserve Bank Governor Adrian Orr:

"The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement. The direction of our next OCR move could be up or down.

While recent economic growth has moderated, we expect it to pick up pace over the rest of this year and be maintained through 2019.

Robust global growth and a lower New Zealand dollar exchange rate will support export earnings. At home, capacity and labour constraints promote business investment, supported by low interest rates. Government spending and investment is also set to rise, while residential construction and household spending remain solid.

The labour market has tightened over the past year and employment is roughly around its maximum sustainable level. We expect the unemployment rate to decline modestly from its current level.

There are welcome early signs of core inflation rising. Inflation will increase towards 2 percent over the projection period as capacity pressures bite. This path may be bumpy however, with one-off price changes from global oil prices, a lower exchange rate, and announced petrol excise tax rises expected. We will look through this volatility as appropriate, and only respond to any persistent movements in inflation".

Consumer prices in China were up 2.1 percent on year in July, according to rttnews.

That exceeded expectations for 2.0 percent and was up from 1.9 percent in June.

On a monthly basis, CPI added 0.3 percent after easing 0.1 percent in June.

The bureau also said that producer prices jumped an annual 4.6 percent - beating forecasts for 4.5 percent and down from 4.7 percent in the previous month.

Registered unemployment in July 2018 - According to SECO surveys, at the end of July 2018, 106,052 unemployed people were enrolled in the Regional Employment Centers (RAV), 527 less than in the previous month. The unemployment rate remained at 2.4% in the month under review. Compared to the same month of the previous year, unemployment fell by 27,874 (-20.8%). Youth unemployment in July 2018 Youth unemployment (aged 15-24) increased by 1'070 (+ 10.0%) to 11'807. Compared to the same month of the previous year, this represents a decrease of 3,856 persons (-24.6%).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1732 (3066)

$1.1714 (1548)

$1.1686 (2762)

Price at time of writing this review: $1.1603

Support levels (open interest**, contracts):

$1.1566 (1180)

$1.1538 (4143)

$1.1504 (5477)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 7 is 123728 contracts (according to data from August, 8) with the maximum number of contracts with strike price $1,1500 (10906);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3067 (870)

$1.3038 (713)

$1.3014 (554)

Price at time of writing this review: $1.2874

Support levels (open interest**, contracts):

$1.2799 (3068)

$1.2769 (2710)

$1.2736 (1276)

Comments:

- Overall open interest on the CALL options with the expiration date September, 7 is 31295 contracts, with the maximum number of contracts with strike price $1,3450 (3338);

- Overall open interest on the PUT options with the expiration date September, 7 is 28229 contracts, with the maximum number of contracts with strike price $1,2900 (3068);

- The ratio of PUT/CALL was 0.90 versus 0.88 from the previous trading day according to data from August, 8.

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.