CFD Markets News and Forecasts — 31-05-2018

The main US stock indexes registered a moderate decline after the US decided to introduce tariffs for imports of aluminum and steel from Canada, Mexico and the European Union, raising new concerns about the trade war with its closest allies.

Investors also analyzed data on the United States. As it became known today, the index of purchasing managers in Chicago rose in May by 5.1 points to 62.7, reaching the highest level since January. In May, business activity improved, while the growth in operating activity of companies accelerated only the second time this year. All five components of the index have risen in a month, helping to return the index on an annual basis back to the expansion territory.

Meanwhile, data from the National Association of Realtors (NAR) showed that the index of unfinished housing transactions (PHSI), the forecast figure based on the signing of contracts, fell by 1.3% to 106.4 in April from a revised level of 107.8 in March. With the decrease last month, the index fell year-on-year (-2.1%) for the fourth consecutive month.

Almost all components of DOW recorded a decline (29 of 30). Leader of growth were shares of Visa Inc. (V, + 0.24%). Outsider were the shares of The Procter & Gamble Company (PG, -2.20%).

Almost all sectors of S & P finished trading in the red. The largest decrease was registered in the industrial goods sector (-1.3%). Only the technology sector showed growth (+ 0.3%).

At closing:

Dow 24,415.98 -251.80 -1.02%

S&P 500 2,705.27 -18.74 -0.69%

Nasdaq 100 7,442.12 -20.34 -0.27%

After two straight months of modest increases, pending home sales dipped in April to their third-lowest level over the past year, according to the National Association of Realtors. All major regions saw no gain in contract activity last month.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 1.3 percent to 106.4 in April from an upwardly revised 107.8 in March. With last month's decrease, the index is down on an annualized basis (2.1 percent) for the fourth straight month.

U.S. stock-index futures were flat on Thursday, as optimism over Italy trying to avoid an early election was overshadowed by worries of a looming trade war between the U.S. and the European Union (EU).

Global Stocks:

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

Personal income increased $49.5 billion (0.3 percent) in April according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $60.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $79.8 billion (0.6 percent).

Real DPI increased 0.2 percent in April and Real PCE increased 0.4 percent. The PCE price index increased0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The $42.8 billion increase in real PCE in April reflected an increase of $15.4 billion in spending for goods and a $27.5 billion increase in spending for services. Within goods, spending for gasoline and other energy goods was a leading contributor to the increase. Within services, the largest contributor to the increase was spending for household utilities.

Real gross domestic product (GDP) rose 0.3% in March as 15 of 20 industrial sectors grew, led by the mining, quarrying, and oil and gas extraction sector.

The output of goods-producing industries expanded 0.6%, mostly attributable to mining, quarrying, and oil and gas extraction. Manufacturing edged up while construction edged down.

Services-producing industries were up 0.2%, as increases in most sectors more than offset a decline in the finance and insurance sector.

The mining, quarrying and oil and gas extraction sector expanded 1.9% in March as all subsectors grew.

The oil and gas extraction subsector was up 2.1%, the fourth increase in five months. Non-conventional oil extraction rose 3.1% as crude bitumen extraction in Alberta reached a record high 8.9 million cubic metres. Conventional oil and gas extraction rose 1.3% as growth in natural gas extraction more than offset a decline in conventional crude petroleum extraction.

In the week ending May 26, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 13,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 222,250, an increase of 2,500 from the previous week's unrevised average of 219,750.

The euro area (EA19) seasonally-adjusted unemployment rate was 8.5% in April 2018, down from 8.6% in March 2018 and from 9.2% in April 2017. This is the lowest rate recorded in the euro area since December 2008. The EU28 unemployment rate was 7.1% in April 2018, stable compared with March 2018 and down from 7.8% in April 2017. This remains the lowest rate recorded in the EU28 since September 2008.

Eurostat estimates that 17.462 million men and women in the EU28, of whom 13.880 million in the euro area, were unemployed in April 2018. Compared with March 2018, the number of persons unemployed decreased by 53 000 in the EU28 and by 56 000 in the euro area. Compared with April 2017, unemployment fell by 1.633 million in the EU28 and by 1.088 million in the euro area.

Among the Member States, the lowest unemployment rates in April 2018 were recorded in the Czech Republic (2.2%), Malta (3.0%) and Germany (3.4%). The highest unemployment rates were observed in Greece (20.8% in February 2018) and Spain (15.9%).

Euro area annual inflation is expected to be 1.9% in May 2018, up from 1.2% in April 2018, according to a flash estimate from Eurostat. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in May (6.1%, compared with 2.6% in April), followed by food, alcohol & tobacco (2.6%, compared with 2.4% in April), services (1.6%, compared with 1.0% in April) and non-energy industrial goods (0.2%, compared with 0.3% in April).

In April 2018, 23.200 million persons were employed, +0.3% over March. Unemployed were 2.912 million, +0.6% over the previous month.

Employment rate was 58.4%, +0.1 percentage points over the previous month, unemployment rate was 11.2%, steady over March 2018 and inactivity rate was 34.0%, -0.2 percentage points in a month.

Youth unemployment rate (aged 15-24) was 31.1%, +0.6 percentage points over the previous month and youth unemployment ratio in the same age group was 8.9%, +0.3 percentage points over March 2018.

Broad money increased by £0.5 billion in April. Within this, the flow of households' M4 was -£3.1 billion, the lowest monthly flow for at least 20 years. The flow of private non-financial corporations' (PNFCs') M4 was £5.5 billion. The net flow of sterling credit was -£5.3 billion in April. Within this, the flow for households increased to £4.3 billion.b Net lending for consumer credit was £1.8 billion in April, up from £0.4 billion in March. Within this, net lending on credit cards was £0.6 billion and net lending for other loans and advances was £1.3 billion.

Turnover in the retail sector rose by 2.2% in nominal terms in April 2018 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.1% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO).

Real turnover in the retail sector also adjusted for sales days and holidays rose by 2.2% in April 2018 compared with the previous year. Real growth takes inflation into consideration. Compared with the previous month, real, seasonally adjusted retail trade turnover registered a stagnation.

Over a year, the Consumer Price Index (CPI) should accelerate sharply in May 2018, to +2.0% after +1.6%, according to the provisional estimate made at the end of the month. This rise in the year-on-year inflation should come from a strong year-on-year acceleration in energy prices, and to a lesser extent, in food product prices. Moreover, manufactured product prices should decline a little less than in the previous month. In contrast, tobacco prices should slow down slightly and the inflation in services should be unchanged.

Over one month, consumer prices should increase a little stronger than in April (+0.4% after 0.2%). This sharper rise should result from those of energy prices, due to the dynamism of petroleum product prices. Food prices should grow more than in the previous month, as manufactured product prices. Services prices should rise at the same pace as in the previous month and those of tobacco should edge down after a stability in April.

Year on year, the Harmonised Index of Consumer Prices should continue to accelerate (+2.3% after +1.8% in April). Over one month, it should rise more strongly too, to +0.4% after +0.2% in April.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1780 (2486)

$1.1749 (2864)

$1.1724 (662)

Price at time of writing this review: $1.1675

Support levels (open interest**, contracts):

$1.1619 (3638)

$1.1594 (2914)

$1.1562 (4280)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 8 is 164360 contracts (according to data from May, 30) with the maximum number of contracts with strike price $1,1500 (6172);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3426 (525)

$1.3391 (130)

$1.3361 (222)

Price at time of writing this review: $1.3324

Support levels (open interest**, contracts):

$1.3279 (2251)

$1.3264 (2278)

$1.3229 (1228)

Comments:

- Overall open interest on the CALL options with the expiration date June, 8 is 38992 contracts, with the maximum number of contracts with strike price $1,3600 (2292);

- Overall open interest on the PUT options with the expiration date June, 8 is 42677 contracts, with the maximum number of contracts with strike price $1,3400 (2278);

- The ratio of PUT/CALL was 1.09 versus 1.09 from the previous trading day according to data from May, 30.

* - 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.

• Employment grew at modest to moderate pace across most Fed districts

• Firms reported difficulty finding workers across skill levels

• Most districts reported modest wage growth

• Prices rose moderately in most districts

• More than half of districts reported a pickup in industrial activity

The manufacturing sector in China continued to expand in May, and at a faster rate, the National Statistics Bureau said on Thursday with a manufacturing PMI score of 51.9, cited by rttnews.

That exceeded forecasts for 51.4, which would have been unchanged from the April reading.

The bureau also said that its non-manufacturing PMI came in with a score of 54.9.

That also beat expectations for 54.8, which also would have been unchanged.

• Annual house price growth slowed to 2.4%

• Prices fell 0.2% month-on-month

• Shift in housing stock towards private renting and flats

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: "UK annual house price growth slowed modestly in May to 2.4%, from 2.6% in April. House prices fell by 0.2% over the month, after taking account of seasonal factors. Annual house price growth has been confined to a fairly narrow range of c2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period. There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent".

• The trend volume estimate for total new capital expenditure rose by 0.5% in the March quarter 2018 while the seasonally adjusted estimate rose by 0.4%.

• The trend volume estimate for buildings and structures fell by 0.6% in the March quarter 2018 while the seasonally adjusted estimate fell by 1.3%.

• The trend volume estimate for equipment, plant and machinery rose by 1.9% in the March quarter 2018 while the seasonally adjusted estimate rose by 2.5%.

• This issue includes the sixth estimate (Estimate 6) for 2017-18 and the second estimate (Estimate 2) for 2018-19.

• Estimate 6 for 2017-18 is $117,501m. This is 3.8% higher than Estimate 6 for 2016-17. Estimate 6 is 2.8% higher than Estimate 5 for 2017-18.

• Estimate 2 for 2018-19 is $87,740m. This is 1.4% higher than Estimate 2 for 2017-18. Estimate 2 is 5.7% higher than Estimate 1 for 2018-19.

Switzerland's real gross domestic product (GDP) grew by 0.6% in the 1st quarter of 2018. Although growth lost some momentum in comparison to the second half of 2017, it was nevertheless broad-based across the various business sectors.

The secondary sector expanded modestly, while growth in several service sectors accelerated, including in trade and business-related services. The entertainment industry recorded strong growth thanks to major international sporting events. On the expenditure side of GDP, growth was underpinned by consumption and investment in equipment, accompanied by a considerable increase in imports and a slightly negative growth contribution of foreign trade.