CFD Markets News and Forecasts — 29-08-2018

The main US stock indices grew moderately, while the S & P 500 and Nasdaq again updated their record highs, helped by the rise in the price of Amazon.com (AMZN) and Alphabet (GOOG) shares, as well as optimism about trade negotiations between the US and Canada.

In addition, as it became known, unfinished transactions for the sale of housing fell in July, continuing the general trend of recent months, reflecting the lack of supply in the market. The National Association of Realtors said on Wednesday that its forecast domestic sales index based on contracts signed last month fell by 0.7% to 106.2 in July. Economists had expected an increase of 0.3%.

Quotes of oil rose by about 1.7%, supported by news of the fall in supplies of Iranian oil, as well as fresh data from the Ministry of Energy of the United States on oil products stocks. The export of Iran's crude oil and condensate in August should fall below 70 million barrels for the first time since April 2017, long before November 4, the start date of the second round of US economic sanctions, showed preliminary data on trade flows from Thomson Reuters Eikon.

Most components of DOW have finished trading in positive territory (18 out of 30). The leader of the growth were shares of Microsoft Corporation (MSFT, + 1.60%). Outsider were the shares of Walgreens Boots Alliance, Inc. (WBA, -0.89%).

All sectors of S & P recorded a rise. The commodities sector grew most (+ 0.8%).

At closing:

Dow 26,124.57 +60.55 +0.23%

S & P 500 2,914.04 +16.52 +0.57%

Nasdaq 100 8.109.69 +79.65 +0.99%

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.6 million barrels from the previous week. At 405.8 million barrels, U.S. crude oil inventories are at the five year average for this time of year.

Total motor gasoline inventories decreased by 1.6 million barrels last week and are about 5% above the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories remained virtually unchanged last week.

Distillate fuel inventories decreased by 0.8 million barrels last week and are about 8% below the five year average for this time of year. Propane/propylene inventories increased by 2.6 million barrels last week and are about 12% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 1.7 million barrels last week.

Pending home sales stepped back in July and have now fallen on an annual basis for seven straight months, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.7 percent to 106.2 in July from 107.0 in June. With last month's decline, contract signings are now down 2.3 percent year-over-year.

U.S. stock-index futures traded flat on Wednesday, as investors awaited news on progress in the talks between the U.S. and Canada.

Global Stocks:

The price index for gross domestic purchases increased 2.3 percent in the second quarter, compared with an increase of 2.5 percent in the first quarter. The PCE price index increased 1.9 percent, compared with an increase of 2.5 percent. Excluding food and energy prices, the PCE price index increased 2.0 percent, compared with an increase of 2.2 percent.

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

Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second quarter of 2018, according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 4.1 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; the revision primarily reflected upward revisions to nonresidential fixed investment and private inventory investment that were partly offset by a downward revision to personal consumption expenditures (PCE). Imports which are a subtraction in the calculation of GDP, were revised down.

Amazon (AMZN) target raised to $2500 from $1850 at Morgan Stanley

Canada's current account deficit (on a seasonally adjusted basis) narrowed by $1.6 billion in the second quarter to $15.9 billion. A lower deficit on trade in goods more than offset higher deficits on trade in services and investment income in the quarter.

In the financial account (unadjusted for seasonal variation), strong foreign investment in Canadian private corporate bonds led the inflow of funds in the quarter.

The deficit on international trade in goods and services narrowed by $2.2 billion to $12.3 billion in the second quarter, the lowest deficit in a year.

The goods deficit fell by $3.3 billion to $5.3 billion in the second quarter, led by a higher surplus with the United States.

The goods surplus with the United States rose by $3.4 billion, mostly on stronger exports. Meanwhile, the deficit with non-US countries widened by $0.1 billion to $16.3 billion. On a country basis, the largest improvements to trade balances were with China, Hong Kong and Switzerland, while the most important declines were with United Kingdom and South Korea.

Barrick Gold (ABX) upgraded to Neutral from Sell at Citigroup

Hewlett Packard Enterprise (HPE) reported Q3 FY 2018 earnings of $0.44 per share (versus $0.30 in Q3 FY 2017), beating analysts' consensus estimate of $0.37.

The company's quarterly revenues amounted to $7.764 bln (+3.5% y/y), beating analysts' consensus estimate of $7.674 bln.

The company issued in-line guidance for Q4, projecting EPS of $0.39-0.44 (versus analysts' consensus estimate of $0.42). It also raised FY 2018 EPS to $1.50-1.55 from its prior guidance of $1.40-1.50 (versus analysts' consensus estimate of $1.47).

HPE rose to $16.99 (+1.49%) in pre-market trading.

Helen Dickinson OBE, Chief Executive, British Retail Consortium:

"Despite significant increases in costs in the supply chain, this month's figures show that retailers are keeping price increases faced by consumers to a minimum. However, current inflationary pressures pale in comparison to potential increases in costs retailers will face in the event the we leave the EU without a deal. If that does happen retailers will not be able to shield consumers from price increases.

The EU and UK negotiating teams must deliver a Withdrawal Agreement in the coming weeks to avoid the severe consequences that would result from such a cliff edge scenario next March."

EUR/USD retraces on Wednesday the gains it made on Tuesday as the dollar rises on hopes of a new North American trade agreement including Canada, and a better-than-expected U.S. consumer confidence index, which came out Tuesday afternoon. EUR/USD falls 0.2% to 1.1677. However, in a broader scheme, EUR/USD is firm, UniCredit analysts say, which should help lift EUR/JPY, given "the yen seems to be a less-favored safe-haven currency than the Swiss franc and the dollar itself after the Bank of Japan made it clear that it will not exit its ultra-loose monetary policy any time soon. - via WSJ

EUR/USD

Resistance levels (open interest**, contracts)

$1.1786 (1946)

$1.1742 (2375)

$1.1718 (5087)

Price at time of writing this review: $1.1678

Support levels (open interest**, contracts):

$1.1619 (2952)

$1.1581 (4331)

$1.1538 (5648)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date September, 7 is 133797 contracts (according to data from August, 28) with the maximum number of contracts with strike price $1,1500 (10472);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2982 (3449)

$1.2952 (1193)

$1.2912 (610)

Price at time of writing this review: $1.2872

Support levels (open interest**, contracts):

$1.2825 (3032)

$1.2798 (2647)

$1.2765 (1125)

Comments:

- Overall open interest on the CALL options with the expiration date September, 7 is 36691 contracts, with the maximum number of contracts with strike price $1,2950 (3449);

- Overall open interest on the PUT options with the expiration date September, 7 is 33785 contracts, with the maximum number of contracts with strike price $1,2900 (3032);

- The ratio of PUT/CALL was 0.92 versus 0.92 from the previous trading day according to data from August, 28.

* - 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.

Japan's consumer confidence weakened further in August to the lowest level in a year, according to rttnews.

The seasonally adjusted consumer confidence index dropped to 43.3 in August from 43.5 in July.

Moreover, this was the lowest score since August last year, when it marked the same 43.3.

The sub-index for income growth fell to 41.8 in August from 42.2 in the previous month. Similarly, the component index for employment decreased from 48.0 to 47.7.

The gauge measuring willingness to buy durable goods worsened to 42.0 from 42.2, while the index for overall livelihood rose to 41.7 from 41.6.

The survey was conducted among 8,400 households on August 15.

• For Limiting Side Effects Rate Rise Is Possible

• But Needs To Be Weighed With Policy Effects

In July 2018, household expenditure on goods slowed down: +0.1% in volume after +0.3 % in june and +1.1 % in May. Consumption of food product increased a little (+0.2%) and the one of engineered goods was almost stable (+0.1%). Energy consumption decreased slightly (-0.2 %).

In July, food consumption increased slightly (+0.2%). In particular, purchases of agri-food products (dairy products, cereals, pasta, cans of food, etc.) increased a little, as well as the sales of drinks. However, the consumption of meat and meat products declined slightly. Tobacco consumption declined for the second consecutive month.

In Q2 2018, GDP in volume terms rose at the same pace as in Q1: +0.2%. Household consumption expenditures faltered slightly (−0.1% after +0.2%), whereas total gross fixed capital formation recovered sharply (GFCF: +0.8% after +0.2%). Overall, final domestic demand excluding inventory changes contributed as much to GDP growth as in Q1 (+0.2 points).

Imports bounced back this quarter (+1.0% after −0.4%) as did exports to a lesser extent (+0.2% after −0.4%). All in all, foreign trade balance contributed negatively to GDP growth, −0.3 points, after a neutral contribution in Q1. Conversely, changes in inventories drove GDP on (+0.2 points after 0.0 points).

Production in goods and services barely accelerated in Q2 2018 (+0.2% after +0.1%). It fell back again in goods (−0.3% after −0.6%) while it continued to grow in services (+0.4% after +0.3%).

Output in manufactured goods fell back again this quarter (−0.2% after −1.0%). Production in refinery stepped back (−10.2% after −1.6%) due to technical maintenance; production in electricity and gas dropped too (−1.7% after +1.8%). However, construction bounced back (+0.5% after −0.4%).

In August of this year, the consumer mood in Germany did not present a uniform picture. While economic expectations improved, income expectations and the propensity to buy declined a bit. GfK forecasts a slight decrease in consumer climate for September of 0.1 points in comparison to the previous month to 10.5 points.

Despite turbulent political times throughout the world, economic expectations - at least initially - have stopped their multi-month downswing and have increased noticeably. The income outlook is dropping, however, and propensity to buy has declined somewhat. Both indicators still show an overall good level. Since the propensity to save remained almost unchanged this month, the consumer mood has regressed slightly.