CFD Markets News and Forecasts — 26-10-2018

U.S. stock-index futures plunged on Friday, pointing to a significantly lower open. Disappointing earnings reports from tech giants Amazon (AMZN) and Alphabet (GOOG) hurt the market sentiment.

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The price index for gross domestic purchases increased 1.7 percent in the third quarter, compared with an increase of 2.4 percent in the second quarter. The PCE price index increased 1.6 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 2.1 percent.

Current-dollar personal income increased $180.4 billion in the third quarter, compared with an increase of $180.7 billion in the second quarter. Accelerations in rental income, wages and salaries, and nonfarm proprietors' income were offset by a downturn in farm proprietors' income and a slowdown in dividend income.

Disposable personal income increased $155.0 billion, or 4.1 percent, in the third quarter, compared with an increase of $168.9 billion, or 4.5 percent, in the second quarter. Real disposable personal income increased 2.5 percent, the same increase as in the second quarter.

Real gross domestic product (GDP) increased at an annual rate of 3.5 percent in the third quarter of 2018, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 4.2 percent.

The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see "Source Data for the Advance Estimate". The "second" estimate for the third quarter, based on more complete data, will be released on November 28, 2018.

The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by negative contributions from exports and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the third quarter reflected a downturn in exports and a deceleration in nonresidential fixed investment. Imports increased in the third quarter after decreasing in the second. These movements were partly offset by an upturn in private inventory investment.

Intel (INTC) reported Q3 FY 2018 earnings of $1.40 per share (versus $1.01 in Q3 FY 2017), beating analysts' consensus estimate of $1.15.

The company's quarterly revenues amounted to $19.163 bln (+18.7% y/y), beating analysts' consensus estimate of $18.115 bln.

The company also issued upside guidance for Q4 FY 2018, projecting EPS of $1.22 (versus analysts' consensus estimate of $1.09) and revenues of ~$19 bln (versus analysts' consensus estimate of $18.39 bln).

INTC fell to $44.10 (-0.47%) in pre-market trading.

Alphabet (GOOG) reported Q3 FY 2018 earnings of $13.06 per share (versus $9.57 in Q3 FY 2017), beating analysts' consensus estimate of $10.41.

The company's quarterly revenues amounted to $33.740 bln (+21.5% y/y), slightly missing analysts' consensus estimate of $34.040 bln.

GOOG fell to $1,036.83 (-5.36%) in pre-market trading.

Amazon (AMZN) reported Q3 FY 2018 earnings of $5.75 per share (versus $0.52 in Q3 FY 2017), beating analysts' consensus estimate of $3.09.

The company's quarterly revenues amounted to $56.576 bln (+29.3% y/y), slightly missing analysts' consensus estimate of $57.029 bln.

The company also issued downside guidance for Q4 FY2018, projecting revenues of $66.5-72.5 bln versus analysts' consensus estimate of $73.78 bln and operating income $2.1-3.6 bln versus analysts' consensus estimate of $3.89 bln.

AMZN fell to $1,625.00 (-8.82%) in pre-market trading.

In Europe, the Stoxx Europe 600 was down 0.9%. In Asia, Japan's Nikkei 225 edged 0.4% lower, while Hong Kong's Hang Seng fell 0.7%.

U.S. futures pointed to opening falls of 0.4% and 0.5% for the Dow Jones Industrial Average and the S&P 500, respectively.

• HICP inflation expectations unchanged for 2018, 2019 and 2020; longer-term expectations stable at 1.9%

• Real GDP growth expectations revised down for 2018 and 2019, but unchanged for 2020

• Unemployment rate expectations revised down for 2018, 2019 and 2020

Respondents to the ECB Survey of Professional Forecasters (SPF) for the fourth quarter of 2018 reported point forecasts for annual HICP inflation averaging 1.7% for each of 2018, 2019 and 2020. These results are unchanged from the previous (Q3 2018) survey round. Average longer-term inflation expectations (which, like all other longer-term expectations in this SPF, referred to 2023) remained stable at 1.9%

In October 2018, households' confidence in the economic situation has been virtually stable: the synthetic index has gained 1 point. However, it still remains below its long term average (100).

In October, households' opinion concerning their future financial situation has remained virtually unchanged: the corresponding balance has been stable and remains below its long term average. Household's balance of opinion on their past personal situation has also been stable and stands below its long term average.

The share of households considering it is a suitable time to make major purchases has been virtually stable. The corresponding balance stands above its long term average since January 2016.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1533 (921)

$1.1475 (137)

$1.1440 (105)

Price at time of writing this review: $1.1370

Support levels (open interest**, contracts):

$1.1356 (5933)

$1.1332 (3257)

$1.1302 (3007)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date November, 19 is 84093 contracts (according to data from October, 25) with the maximum number of contracts with strike price $1,1450 (5933);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2975 (863)

$1.2950 (336)

$1.2912 (621)

Price at time of writing this review: $1.2816

Support levels (open interest**, contracts):

$1.2799 (1333)

$1.2779 (2298)

$1.2754 (1890)

Comments:

- Overall open interest on the CALL options with the expiration date November, 19 is 24924 contracts, with the maximum number of contracts with strike price $1,3500 (3217);

- Overall open interest on the PUT options with the expiration date November, 19 is 30873 contracts, with the maximum number of contracts with strike price $1,3000 (3119);

- The ratio of PUT/CALL was 1.24 versus 1.25 from the previous trading day according to data from October, 25

* - 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.

Overall consumer prices in the Tokyo region were up 1.5 percent on year in October, according to rttnews.

That was in line with expectations and up from 1.3 percent in September.

Core CPI, which excludes volatile food prices, advanced an annual 1.0 percent - unchanged and in line with expectations.

Individually, prices for food, housing, fuel, clothing, medical care, transportation, education and recreation all were higher.

On a monthly basis, both overall and core CPI for Tokyo were up 0.1 percent.

• Labor Market May Have More Slack Than Previously Expected

• Points to Positive Forces That Could Restrain Inflation, Including Productivity Growth Upturn

• Increased Business Investment Could Stem From Tax Cuts

• Capital Spending Upturn Not 'Just an Oil Patch Story'

• Possible Pickup in Trend Productivity Growth 'Deserves Close Monitoring'

• Some Might See Wage Gains as Leading to Inflationary Pressures

• Last Two Expansions Didn't See Wage Gains Yield a 'Material Rise' in Price Inflation

• Benchmark Interest Rate Still Below Estimates of Long-Run Level

• Monetary Policy Is a Blunt Instrument

• Financial Conditions Are One Factor to Take Into Account

• Clarida Was Responding to Question on Trump Criticism

• Central Bank Independence Important to Achieving Mandates

• Quantitative Easing Had Diminishing Returns, Potential Costs

"If the data come in as I expect, I believe that some further gradual adjustment in the federal-funds rate will be appropriate," Mr. Clarida said in his first public remarks since joining the Fed as its No. 2 official last month.

While the economic and income expectations suffered losses, the propensity to buy rose again. For November, GfK forecasts that the consumer climate will remain unchanged compared to the previous month at 10.6 points.

The mood of German consumers changed in October in comparison to the previous month. Economic and income expectations, which had continued to rise in September, are now falling. In contrast, the propensity to buy, already at a very high level, is further increasing. In the previous month it had been on a downward trajectory. Since the propensity to save is currently clearly in decline, the consumer climate remains unchanged.