CFD Markets News and Forecasts — 16-05-2018

Major US stock indexes finished trading in positive territory, helped by the growth of shares of retailers and chip manufacturers. In addition, investors weighed the impact of bond yield growth.

The focus was also on the United States. The Fed said production in factories rose in April, although new estimates for manufacturing and general industrial production showed lower growth in previous months than originally expected, casting a shadow on economic prospects. Production in the manufacturing industry increased by 0.5 percent last month, which coincided with expectations. The total volume of industrial production in April increased by 0.7 percent, and production estimates in three of the previous four months were reduced, including a sharp decrease in the estimate for February. The increase in the production of machinery by 2.3 percent strengthened the overall increase in production in factories, although the drop in the production of primary metals and finished metal products adversely affected this sector. For 12 months to April, the total volume of industrial production grew by 3.5 percent. The coefficient of used production capacity in April rose by 0.4 percentage points to 78.0 percent. Fed executives view the use of capacity as a signal about how much the economy can accelerate before inflation starts to rise.

Meanwhile, the Ministry of Trade reported that the construction of new houses in April fell by 3.7%, but this is not so important, since the bookings of new houses reached the 11-year high only a month earlier, and experts expected some digression. The annual rate of construction of new homes fell to 1.29 million units last month from a revised 1.34 million units in March, which was the strongest indicator since mid-2007. Economists had expected that they would amount to 1.31 million units. Permits for construction weakened 1.8% to 1.35 million per annum.

Most of the components of DOW finished trading in positive territory (16 out of 30). Leader of the growth were shares of NIKE, Inc. (NKE, + 2.58%). Outsider were shares of 3M Company (MMM, -1.32%).

Almost all sectors of S&P recorded a rise. The services sector grew most (+ 0.7%). The decrease was shown only by the utilities sector (-0.6%).

At closing:

Dow 24,769.00 +62.59 +0.25%

S&P 500 2,722.47 +11.02 +0.41%

Nasdaq 100 7,398.30 +46.67 +0.63%

The Washington Post and CNN have typically written false stories about our trade negotiations with China. Nothing has happened with ZTE except as it pertains to the larger trade deal. Our country has been losing hundreds of billions of dollars a year with China...

The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3 percent at an annual rate. After being unchanged in March, manufacturing output rose 0.5 percent in April. The indexes for mining and utilities moved up 1.1 percent and 1.9 percent, respectively. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier.

Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972-2017) average.

Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,352,000. This is 1.8 percent below the revised March rate of 1,377,000, but is 7.7 percent above the April 2017 rate of 1,255,000. Single-family authorizations in April were at a rate of 859,000; this is 0.9 percent above the revised March figure of 851,000. Authorizations of units in buildings with five units or more were at a rate of 450,000 in April.

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,287,000. This is 3.7 percent below the revised March estimate of 1,336,000, but is 10.5 percent above the April 2017 rate of 1,165,000. Single-family housing starts in April were at a rate of 894,000; this is 0.1 percent above the revised March figure of 893,000. The April rate for units in buildings with five units or more was 374,000.

U.S. stock-index futures were flat on Wednesday as investors assessed the impact of a surge in bond yields, mixed statistics on the housing market and industrial production, and North Korea's threat to walk away from planned meeting between its leader Kim Jong Un and the U.S. President Donald Trump in June, if Washington insists it unilaterally gives up its nuclear weapons.

Global Stocks:

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

3M (MMM) downgraded to Hold from Buy at Jefferies

Euro area annual inflation rate was 1.2% in April 2018, down from 1.3% in March. A year earlier, the rate was 1.9%. European Union annual inflation was 1.4% in April 2018, down from 1.5% in March. A year earlier, the rate was 2.0%.

The lowest annual rates were registered in Cyprus (-0.3%), Ireland (-0.1%) and Portugal (0.3%). The highest annual rates were recorded in Romania (4.3%), Slovakia (3.0%) and Estonia (2.9%). Compared with March 2018, annual inflation fell in twelve Member States, remained stable in one and rose in fourteen. In April 2018, the highest contribution to the annual euro area inflation rate came from food, alcohol & tobacco (+0.47 percentage points), followed by services (+0.45 pp), energy (+0.25 pp) and non-energy industrial goods (+0.07 pp).

• Growth in total labour costs has edged up

• Shows investment intentions remain modest, reflecting uncertainty around brexit

Japan's gross domestic product contracted 0.2 percent on quarter in the first three months of 2018, according to rttnews.

That missed expectations for a flat reading following the downwardly revised 0.1 percent gain in the three months prior (originally 0.4 percent).

On a seasonally adjusted annualized basis, GDP was down 0.6 percent - again missing forecasts for a decline of 0.1 percent following the downwardly revised 0.6 percent gain in the previous three months (originally 1.6 percent).

Nominal GDP was down 0.4 percent on quarter, missing expectations for a gain of 0.1 percent following the 0.1 percent gain three months earlier.

• Iran deal is not ideal but iran is sticking to obligations in it

• Transatlantic relationship must be able to deal with differences in opinion like on Iran deal

• We need to talk about ballistic missile programme and Iran's influence in the region

• Increases 2018 non-OPEC supply growth forecast to 1.87 mln bpd from 1.8 mln bpd previously

• Global refining runs to hit record 83 mln bpd by july-august, but will not cover all refined product demand

• "Will monitor developments closely and is ready to act if necessary to ensure markets remain well supplied"

• "Too soon" to predict impact on iran crude flows from U.S. sanctions

EUR/USD

Resistance levels (open interest**, contracts)

$1.1949 (430)

$1.1915 (222)

$1.1888 (351)

Price at time of writing this review: $1.1831

Support levels (open interest**, contracts):

$1.1777 (2818)

$1.1746 (2631)

$1.1711 (3168)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 8 is 151582 contracts (according to data from May, 15) with the maximum number of contracts with strike price $1,1500 (8700);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3668 (1698)

$1.3639 (723)

$1.3595 (938)

Price at time of writing this review: $1.3511

Support levels (open interest**, contracts):

$1.3438 (1464)

$1.3412 (2332)

$1.3348 (2482)

Comments:

- Overall open interest on the CALL options with the expiration date June, 8 is 37852 contracts, with the maximum number of contracts with strike price $1,3700 (2282);

- Overall open interest on the PUT options with the expiration date June, 8 is 40114 contracts, with the maximum number of contracts with strike price $1,3400 (2482);

- The ratio of PUT/CALL was 1.06 versus 1.06 from the previous trading day according to data from May, 15.

* - 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.

Consumer prices in Germany rose by 1.6% in April 2018 compared with April 2017. In March 2018, the inflation rate as measured by the consumer price index was +1.6%, too. The consumer price index remained unchanged in April 2018 on March 2018. The Federal Statistical Office (Destatis) thus confirms its provisional overall results of 30 April 2018.

Compared with April 2017, the prices of energy products were up 1.3% in April 2018. The rise in energy prices was thus smaller than the overall price increase. In the preceding two months, the increase in energy prices had been much smaller (March 2018: +0.5%; February 2018: +0.1%). From April 2017 to April 2018, price rises were recorded especially for heating oil (+8.0%). The prices of electricity (+1.6%), motor fuels (+0.6%) and charges for central and district heating (+0.6%) were also up on a year earlier. In contrast, price decreases were recorded in the same period for solid fuels (-1.9%) and gas (-1.3%). Excluding energy prices, the inflation rate in April 2018 would have been +1.6% as well.