CFD Markets News and Forecasts — 23-11-2018

November data pointed to another robust increase in U.S. private sector output, supported by resilient rates of expansion at both manufacturing and service sector companies. However, the latest survey also revealed a loss of momentum for new business growth, with order books improving at the slowest pace since December 2017. At the same time, private sector firms indicated greater caution in terms of staff hiring, with payroll numbers expanding at the weakest rate for almost one-and-a-half years. Adjusted for seasonal influences, the IHS Markit Flash U.S. Composite PMI Output Index registered 54.4 in November, down from 54.9 in October but still well above the 50.0 no-change threshold. The average reading so far in the final quarter of 2018 is broadly in line with that seen during the third quarter (54.8).  

U.S. stock-index futures fell on Friday, as oil prices hit their lowest in a year, while investors remained cautious ahead of the U.S.-China trade talks at the G20 summit next week.

Global Stocks:

Wall Street. Stocks before the bell

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

The Consumer Price Index (CPI) rose 2.4% on a year-over-year basis in October, following a 2.2% increase in September. Month over month, the CPI increased 0.3%, with prices for airfares, passenger vehicles and travel tours accelerating the most.

Prices rose in all major components in the 12 months to October, with the transportation (+4.3%) and shelter (+2.5%) indexes contributing most to the increase. Gasoline prices rose 12.0% year over year in October, matching September's increase.

Prices for durable goods increased 0.9% in the 12 months to October. With lower rebates and more new model-year vehicles available, the purchase of passenger vehicles index rose 1.7% on a year-over-year basis, after increasing 0.6% in September.

The price of services rose 2.7% on a year-over-year basis in October. Prices for travel tours were up 3.0% on a year-over-year basis, after decreasing 4.4% in September. On a month-over-month basis, air transportation prices rose 4.6%. Mortgage interest costs increased 7.0% in the 12 months to October, reflecting interest rate increases in the past year.

The gain was led by food and beverage stores and, to a lesser extent, general merchandise stores and motor vehicle and parts dealers. Sales were down at gasoline stations and building material and garden equipment and supplies dealers. Excluding gasoline stations, retail sales rose 0.4%.

Sales were up in 6 of 11 subsectors, representing 75% of retail trade.

After removing the effects of price changes, retail sales in volume terms increased 0.5%.

Retail sales were up 0.9% in the third quarter following a 1.1% gain in the second quarter. In volume terms, retail sales increased 0.4% in the third quarter.

• If Went Back To EU After Losing Vote, EU Won’t Give US More

• Nymex Hitd 13-Month Intraday Low at $52.19

• ICE Brent Benchmark Crude Oil Futures Hit One-Year Intraday Low at $60.29/Bbl

The Russian oil company said it has earmarked RUB963 billion for capital investments and RUB151.5 billion for the acquisition of non-current assets.

The company said RUB211.2 billion will be used for long-term financial investments.

Slower order book growth and falling exports were accompanied by deteriorating optimism about the outlook, as well as rising costs and prices.

According to the flash reading (which is based on approximately 85% of usual monthly replies), the IHS Markit Eurozone Composite PMI fell from 53.1 in October to 52.4 in November. The latest reading was the lowest since December 2014.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: “The cooling of Eurozone business growth to a fouryear low adds to signs that the economy faces a disappointing end of the year. “Manufacturing remains the main area of weakness, linked in part to having been hit hard once again by deteriorating exports. The slowdown is also being temporarily exacerbated by persistent disappointing car sales. However, November also brought further signs that the manufacturing-led slowdown is spilling over to services, as consumer and corporate demand was often reported to have weakened in the face of headwinds such as rising political uncertainty, tighter financial conditions and higher prices.”

"We think yesterday's pound rally on the positive political, non-binding, declaration looks overdone," the bank says. "We doubt this secures a passage of the EU withdrawal bill at its first attempt in U.K. parliament, hitting the pound," it adds. According to media reports, former Brexit Secretary Dominic Raab says the U.K. parliament will vote down the deal. - via WSJ

November PMI survey data showed a further slowdown in growth of Germany’s private sector, with output of goods and services rising the least in almost four years and the pace of job creation also moderating. New order growth eased closer to stagnation amid a further decrease in new exports, which was in turn reflected in a weakening of business expectations. On the price front, the rate of inflation of charges for goods and services eased to six-month low, though still remained elevated by historical standards. Businesses continued to report strong cost pressures, linked in part to rising fuel and energy prices.

The IHS Markit Flash Germany Composite Output Index fell for the third month in a row in November, down from 53.4 in October to a 47- month low of 52.2.

At 54.2 in November, the IHS Markit Flash France Composite Output Index was little changed from 54.1 in October, highlighting the joint-weakest rise in private sector activity in close to two years. Manufacturing production contracted for the second month running, albeit marginally. Anecdotal evidence suggested that the downturn reflected falling demand, particularly for autos, and challenging market conditions.

Commenting on the Flash PMI data, Eliot Kerr, Economist at IHS Markit said: “The latest flash results pointed to a second consecutive contraction in manufacturing production as goods producers continued to mention weak automotive sector demand. Nonetheless, overall private sector output growth remained solid as the service sector reported robust growth. “Despite input price inflation easing, panellists continued to cite higher raw material prices, particularly for oil. With pricing power muted, margins remained under pressure. “The latest survey responses also revealed that recent protests over fuel taxes adversely affected the economy, with some panellists blaming demonstrations for lengthened delivery times.”

He said he expects wage growth to pick up faster than central-bank forecasts suggest, boosting inflation.

"In this case, we would probably need to return to something like a neutral stance rather earlier than implied by the current yield curve," Mr. Saunders said, according to a text of his remarks published by the central bank.

“After my conversation with Theresa May, our positions remain far away. My Government will always defend the interests of Spain. If there are no changes, we will veto Brexit”.

European stock futures look a little better to start the day after the decline seen yesterday. This should provide some level of calm in the markets after the losses observed in Chinese stocks and US stock futures.

Australian private sector output growth recovered some ground in November, with sharper increases in both the manufacturing and service sectors. That said, the rate of expansion remained relatively modest. Meanwhile, the rate of job creation eased to a three-month low. There were signs of weakening cost inflation, particularly for service providers, while output prices also increased at a slower pace than in October.

The headline index signalled a pick-up in growth in the Australian private sector during November, rising to 52.9 from 52.0 in October. The rate of expansion in business activity was solid and the fastest since June, but remained relatively weak. Both the manufacturing and service sectors saw sharper rises in output than in the previous month. Growth was led by manufacturing, where production rose to the greatest extent in seven months.

German economic growth has stalled. As the Federal Statistical Office (Destatis) already reported in its first release of 14 November 2018, the gross domestic product (GDP) in the third quarter of 2018 was by 0.2% lower - upon price, seasonal and calendar adjustment - than in the second quarter of 2018. This was the first quarter-on-quarter decrease since the first quarter of 2015. In the first half of 2018, the GDP had increased, by 0.5% in the second quarter and by 0.4% in the first quarter.

The slight quarter-on-quarter decline in the gross domestic product was mainly due to the development of foreign trade in the third quarter of 2018. According to provisional calculations, exports of goods and services fell by 0.9% on the second quarter of 2018. At the same time, imports were up 1.3%.

As regards domestic demand, there were mixed signals. Gross fixed capital formation in machinery and equipment rose by 0.8%, and in construction even by 0.9%, on the previous quarter. Household final consumption expenditure was down 0.3%, one reason being private households' reluctance to buy new cars. Together with higher imports, this led to an above-average increase in inventories. Government final consumption expenditure was slightly higher than in the previous quarter (+0.2%).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1476 (2274)

$1.1456 (2522)

$1.1442 (920)

Price at time of writing this review: $1.1410

Support levels (open interest**, contracts):

$1.1377 (4444)

$1.1359 (3467)

$1.1335 (5348)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date December, 7 is 124595 contracts (according to data from November, 21) with the maximum number of contracts with strike price $1,1200 (5853);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2983 (1831)

$1.2956 (1364)

$1.2931 (592)

Price at time of writing this review: $1.2871

Support levels (open interest**, contracts):

$1.2781 (648)

$1.2768 (1820)

$1.2746 (2505)

Comments:

- Overall open interest on the CALL options with the expiration date December, 7 is 55959 contracts, with the maximum number of contracts with strike price $1,3500 (4777);

- Overall open interest on the PUT options with the expiration date December, 7 is 48089 contracts, with the maximum number of contracts with strike price $1,2500 (4415);

- The ratio of PUT/CALL was 0.86 versus 0.83 from the previous trading day according to data from November, 21

* - 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.