CFD Markets News and Forecasts — 25-10-2018

Major US stock indices have risen strongly, helped by favorable reports from Microsoft, Twitter, Ford and Visa, as well as the rally in the technology sector, the services sector and the financial sector.

The focus of investors was also data on the US housing market. The National Association of Realtors reported that unfinished home sales transactions rose slightly in the United States as a whole, and increased significantly in both the West and the Midwest. The index of pending home sales rose to 104.6 in September from 104.1 in August. However, compared to the same period last year, contracts signed decreased by 1.0%, which led to an annual decline for the ninth consecutive month. Lawrence Yun, chief economist at NAR, says that, despite the fact that we are still seeing a decline on an annualized basis, the latest monthly increase is a good stabilizing trend. "This shows that buyers are still on the sidelines, waiting to get back into inventory review, and the market price is right," he said.

In addition, today the representative of the Federal Reserve Clarida confirmed the Central Bank's plans to gradually increase interest rates and explained why strong economic growth may not cause an increase in inflation, which requires a more drastic increase in interest rates. He said that the economy, more than in the previous 10 years, was close to the Fed's target figures, designed to increase employment while maintaining price stability, and noted that the question was how to maintain achievements.

Most of the components of DOW finished trading in positive territory (23 of 30). The growth leader was Microsoft Corporation (MSFT, + 6.31%). The outsider was Verizon Communications Inc. (VZ, -1.69%).

Almost all sectors of the S & P recorded an increase. The technological sector grew the most (+ 3.0%). Decline showed only the utilities sector (-0.9%)

At the time of closing:

Dow 24,984.35 +400.93 +1.63%

S & P 500 2,705.61 +49.51 +1.86%

Nasdaq 100 7,318.34 +209.94 +2.95%

Pending home sales rose slightly in September and saw substantial increases in both the West and Midwest, according to the National Association of Realtors.

The Pending Home Sales Index, increased 0.5 percent to 104.6 in September from 104.1 in August. However, year-over-year, contract signings dropped 1.0 percent make this the ninth straight month of annual decreases.

Lawrence Yun, NAR chief economist, says that even though we are still seeing year-over-year declines, the latest monthly increase is a good, stabilizing trend. "This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right," he said.

U.S. stock-index futures rose on Thursday, pointing to a rebound after the previous day's plunge. Strong earnings reports from a raft of companies supported the market sentiment as well.

Global Stocks:

• OPEC+ mulls options for 2019 output level to prevent imbalance

• General inflation will stay near the current level until the end of the year

• Core inflation indicators are rising from previously reached lows

• Price pressure rises amid rising wages

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

• Talked about weaker momentum not a downturn

• Country specific factors are leading to weaker momentum

• Export performance is coming back toward normal after an extraordinary move higher

• Trade uncertainty between US and China has slowed momentum

Ford Motor (F) target lowered $10 from $12.50 at BofA/Merrill

Caterpillar (CAT) upgraded to Hold from Sell at DZ Bank

• data consistent with baseline scenario

• private consumption is fostered by employment growth and rising wages

• business investment is supported by solid domestic demand, financial conditions and corporate profitability

• protectionism, emerging, financial markets remain prominent

• significant stimulus is still needed for inflation over the medium-term

• net asset purchases will continue until the end of the year

• anticipates adding asset purchases in December

New orders for manufactured durable goods in September increased $2.0 billion or 0.8 percent to $262.1 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 4.6 percent August increase. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders decreased 0.6 percent. Transportation equipment, also up three of the last four months, led the increase, $1.8 billion or 1.9 percent to $97.4 billion.

Shipments of manufactured durable goods in September, up four of the last five months, increased $3.3 billion or 1.3 percent to $256.8 billion. This followed a 0.9 percent August increase. Transportation equipment, up three of the last four months, led the increase, $2.9 billion or 3.3 percent to $89.4 billion.

The international trade deficit was $76.0 billion in September, up $0.6 billion from $75.5 billion in August. Exports of goods for September were $141.0 billion, $2.5 billion more than August exports. Imports of goods for September were $217.0 billion, $3.1 billion more than August imports.

Wholesale inventories for September, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $644.1 billion, up 0.3 percent (from August 2018, and were up 5.1 percent (±3.9 percent) from September 2017. The July 2018 to August 2018 percentage change was revised from up 1.0 percent (±0.2 percent) to up 0.9 percent (±0.2 percent).

In the week ending October 20, the advance figure for seasonally adjusted initial claims was 215,000, an increase of 5,000 from the previous week's unrevised level of 210,000. The 4-week moving average was 211,750, unchanged from the previous week's unrevised average of 211,750.

Twitter (TWTR) reported Q3 FY 2018 earnings of $0.21 per share (versus $0.10 in Q3 FY 2017), beating analysts' consensus estimate of $0.14.

The company's quarterly revenues amounted to $0.758 bln (+28.5% y/y), beating analysts' consensus estimate of $0.701 bln.

TWTR rose to $ 31.56 (14.6%) in pre-market trading.

Merck (MRK) reported Q3 FY 2018 earnings of $1.19 per share (versus $1.11 in Q3 FY 2017), beating analysts' consensus estimate of $1.14.

The company's quarterly revenues amounted to $10.794 bln (+4.5% y/y), slightly missing analysts' consensus estimate of $10.896 bln.

The company also issued guidance for FY 2018, projecting EPS of $4.30-4.36 (compared to its prior guidance of $4.22-4.30 and analysts' consensus estimate of $4.29) and revenues of $42.1-42.7 bln (compared to its prior guidance of $42-42.8 bln and analysts' consensus estimate of $42.54 ).

MRK rose to $71.50 (+1.36%) in pre-market trading.

"At today's meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term".

Int'l Paper (IP) reported Q3 FY 2018 earnings of $1.56 per share (versus $1.08 in Q3 FY 2017), beating analysts' consensus estimate of $1.48.

The company's quarterly revenues amounted to $5.901 bln (+7.0% y/y), generally in line with analysts' consensus estimate of $5.871 bln.

IP closed Wednesday's trading session at $39.69 (-4.08%).

Altria (MO) reported Q3 FY 2018 earnings of $1.08 per share (versus $0.90 in Q3 FY 2017), beating analysts' consensus estimate of $1.06.

The company's quarterly revenues amounted to $5.292 bln (+3.3% y/y), beating analysts' consensus estimate of $5.207 bln.

The company also issued in-line guidance for FY 2018, projecting EPS of $3.95-4.03 compared to its prior guidance of $3.94-4.03 and analysts' consensus estimate of $4.00.

MO fell to $62.12 (-0.3%) in pre-market trading.

Visa (V) reported Q4 FY 2018 earnings of $1.21 per share (versus $0.90 in Q4 FY 2017), beating analysts' consensus estimate of $1.20.

The company's quarterly revenues amounted to $5.434 bln (+11.9% y/y), generally in-line with analysts' consensus estimate of $5.432 bln.

V rose to $136.01 (1.30%) in pre-market trading.

Ford Motor (F) reported Q3 FY 2018 earnings of $0.29 per share (versus $0.44 in Q3 FY 2017), beating analysts' consensus estimate of $0.28.

The company's quarterly revenues amounted to $34.660 bln (+3.0% y/y), beating analysts' consensus estimate of $32.955 bln.

The company also reaffirmed FY 2018 EPS guidance at $1.30-1.50 versus analysts' consensus estimate of $1.31.

F rose to $8.46 (+3.42%) in pre-market trading.

Tesla Inc. (TSLA) reported Q3 FY 2018 earnings of $2.90 per share versus a loss of $0.07 in Q3 FY 2017 and analysts' consensus estimate of a $2.92 loss.

The company's quarterly revenues amounted to $6.824 bln (+128.6% y/y), beating analysts' consensus estimate of $6.266 bln.

TSLA rose to $313.99 (+8.84%) in pre-market trading.

Microsoft (MSFT) reported Q1 FY 2019 earnings of $1.14 per share (versus $0.84 in Q1 FY 2018), beating analysts' consensus estimate of $0.96.

The company's quarterly revenues amounted to $29.089 bln (+18.5% y/y), beating analysts' consensus estimate of $27.923 bln.

MSFT rose to $106.20 (+3.79%) in pre-market trading.

Barrick Gold (ABX) reported Q3 FY 2018 earnings of $0.08 per share (versus $0.16 in Q3 FY 2017), beating analysts' consensus estimate of $0.06.

The company's quarterly revenues amounted to $1.837 bln (-5.0% y/y), beating analysts' consensus estimate of $1.798 bln.

ABX rose to $13.12 (+0.08%) in pre-market trading.

Today the focus will be on the ECB's monetary policy meeting and the press conference of President Draghi. Deutsche Bank do not expect any serious statements or policy changes, but they nevertheless believe that the meeting will be interesting given the recent easing in macro data and political events in Italy.

"Perhaps Draghi could change the risk assessment from balanced to downward. Note that the preliminary composite PMI for the eurozone in October sank by 1.4 points m / m, being worse than expected and having noted the minimum value since September 2016. This may indicate that the economic slowdown in the summer was not so temporary. "

The ifo Business Climate Index fell to 102.8 points in October from 103.7 points in September. Firms were less satisfied with their current business situation and less optimistic about the months ahead. Growing global uncertainty is increasingly taking its toll on the German economy.

In manufacturing the index fell significantly due to markedly less optimistic business expectations. Assessments of the current business situation fell to their lowest level since March 2017. Incoming orders continued to decline. Capacity utilisation fell by 0.5 points to 87.1 percent.

In the services sector the business climate deteriorated due to far less favourable assessments of the current business situation. Business expectations, by contrast, were upwardly revised somewhat.

The number of employed increases by 183,900 people in the third quarter of 2018 compared to the previous quarter (0.95%) and stands at 19,528,000. In terms seasonally adjusted, the quarterly variation is 0.48%. Employment has grown by 478,800 people (2.51%) in the last 12 months. Employment increased this quarter by 49,700 people in the public sector and by 134,200 in the private. In the last 12 months, employment has increased by 373,300 people in the private sector and 105,500 in the public. Employees increase this quarter by 176,300

EUR/USD

Resistance levels (open interest**, contracts)

$1.1547 (984)

$1.1497 (144)

$1.1467 (105)

Price at time of writing this review: $1.1413

Support levels (open interest**, contracts):

$1.1388 (2852)

$1.1366 (5983)

$1.1338 (3340)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date November, 19 is 84394 contracts (according to data from October, 24) with the maximum number of contracts with strike price $1,1450 (5983);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3037 (717)

$1.2992 (313)

$1.2951 (475)

Price at time of writing this review: $1.2915

Support levels (open interest**, contracts):

$1.2864 (2236)

$1.2847 (3126)

$1.2825 (1334)

Comments:

- Overall open interest on the CALL options with the expiration date November, 19 is 24103 contracts, with the maximum number of contracts with strike price $1,3500 (3218);

- Overall open interest on the PUT options with the expiration date November, 19 is 30208 contracts, with the maximum number of contracts with strike price $1,3000 (3126);

- The ratio of PUT/CALL was 1.25 versus 1.27 from the previous trading day according to data from October, 24

* - 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.

A negative start of trading on the stock markets of Europe is expected, following a sharp drop in prices in the U.S and in the APR trading. Concerns about geopolitical tensions, trade wars, and global economic growth have weakened investor sentiment.

• Not adjusting policy stance based on recent market drop

• Tariffs pose risk to the economy.

• The fundamentals of the economy are strong

Australia's 'AAA' rating is underpinned by an effective policymaking framework that has supported 27 consecutive years of GDP growth in the face of substantial external, financial, and commodity price shocks. The government's credible commitment to fiscal consolidation from a debt level that is broadly in line with the current 'AAA' median also supports the rating.

Fitch expects real GDP to expand by 3.3% in 2018, following a jump in growth during the first half of the year, which compares favourably against the current 'AAA' median of 2.7%. Above-trend growth is underpinned by a strong global economy, resilient consumption, and increasing investment. We forecast growth to ease towards trend, reaching 2.8% in 2019 and 2.7% in 2020 on slower global growth and softer consumption. Rising public infrastructure investment will support near-term growth, particularly as the drag from declining mining investment fades.

• Most Businesses Expect Labor Demand to Increase Modestly Over Next Six Months

• Manufacturers Raised Prices of Finished Goods As Tariffs Pushed Up Materials Costs

• Retailers Raised Selling Prices as Transportation Costs Increased

• Dallas District Reported 'Robust Growth' Driven by Manufacturing, Retail Activity

• Several Districts Reported Manufacturers Faced Rising Materials, Shipping Costs

• Widespread Labor Shortages Linked to Wage Increases, Constrained Growth

• Consumer Spending Increased at a Modest Pace

• Many Firms Reported High Turnover Rates, Difficulty Retaining Workers

September 2018 monthly values are actual and compared with September 2017.

Goods exports rose $536 million (14 percent) to $4.3 billion.

Goods imports rose $930 million (19 percent) to $5.9 billion, a new monthly high, with the previous high in November 2017.

The monthly trade balance was a deficit of $1.6 billion (36 percent of exports), the largest monthly deficit on record.

Fruit led the export rise, up $188 million (118 percent) to $347 million:

• gold kiwifruit led the rise, up $122 million in value and 22,285 tonnes in quantity

• green kiwifruit also rose, up $62 million (56 percent) in value and 42 percent in quantity.

Logs, wood, and wood articles rose $75 million (19 percent) to $466 million.

Meat and edible offal rose $61 million (20 percent) to $367 million.

Milk powder, butter, and cheese fell $32 million (4.1 percent) to $759 million.

The monthly movements for September 2018 for our top export partners (ranked by total annual goods exports) were:

China - up $73 million (8.4 percent) to $946 million, led by kiwifruit (up $44 million) and meat and edible offal (up $41 million), partly offset by milk powder (down $37 million).

Australia - up $110 million (15 percent) to $854 million, led by rises in crude oil (up $36 million) and iron and steel (up $21 million).

EU - up $81 million (23 percent) to $438 million, led by kiwifruit (up $44 million), mainly green kiwifruit.

USA - up $28 million (8.5 percent) to $354 million, with the increase spread over many commodities.

Japan - up $65 million (26 percent) to $317 million, led by kiwifruit (up $47 million).