Market Overview (05.10.2017)
by Aaron.J | Hans.S | Yilin.Z
ContentsMarket Today
Indices
Commodities
Currency
Econ & Policy
Economic Indicators
Policy
Business News
Energy
Consumers
Financials
Information Tech
Calendar
Economic Calendar
Market Today
S&P 500 (-0.1% at 2,397) Dow Jones (-0.2% at 20,975) NASDAQ (+0.3% at 6,121) U.S. stocks held near record levels Tuesday, but were unable to extend gains as sliding oil prices weighed on commodity shares. Bank of America Merrill Lynch recently reported that inflows into U.S. stocks are at a nine-year low, as investors opt for European markets, thanks to rebounding corporate earnings and a return to growth for the euro area economy.
FTSE 100 (+0.5% at 7,379) Britain's FTSE 100 on Wednesday hovered just shy of a one-month high, as strong earnings updates underpinned recent gains and Barratt outperformed peers, despite TalkTalk’s 10% drop.
Nikkei 225 (+0.3% at 19,900) The Nikkei 225 index advanced to a 17-month high on Wednesday, although some reservations surrounding regional security issues and US political developments curbed market gains.
ForexUS Dollar Index (DXY): The dollar has been strong in recent sessions, as the market is expecting a rate hike at the June meeting. Fed fund futures have been pricing in nearly a 100% chance of a rate increase in June and a 63% chance of another increase at the December meeting, However, the (DXY) did come under some pressure in overnight trading, following the dismissal of James Comey as FBI director by US President Donald Trump. (DXY: -0.06% at 99.4)
EUR/USD: attempted to gain ground during the Asian session today, rising to within reach of the 1.0900 level. However, this area proved to be solid resistance and sellers have subsequently pushed the pair off the highs of the session. EUR/USD is currently trading at 1.0869, a loss of 0.04% from Tuesday’s North American close. (EUR/USD: 0.04% at 1.0878)
British Pound: remains locked in a narrow trading range and price action could remain quite dull in today’s session, as the market is awaiting the latest policy decision from the , which is due Thursday at 07:00 ET. At present, the pair is trading at 1.2945 a gain of 0.08% over Tuesday’s North American close. (GBP/USD: 0.08% at 1.2944)
Japan Yen: has made a strong run to the upside since bottoming in April and is currently taking a breather from the advance. The pair is currently trading at 113.82, a loss of 0.16% from Tuesday’s North American close. (USD/JPY: -0.11% at 113.89)
CommoditiesGold dropped to an eight-week low on Tuesday assafe-haven demand continued to fade in the wake of Emmanuel Macron’s victory inthe French election and as expectations for tighter US monetary policy liftedbond yields. (Gold Prices:-0.23% at $1,265.06)
Oil prices rose on Wednesday after a larger-than-expected fall in U.S. crudeinventories, but concerns about rising output from the United States, Libya andNigeria weighed on markets.(Brent Crude Futures: -1.81%at$50.88 a barrel. WTI Futures: -1.83%at $48.71a barrel)
Steel Shanghai steel futures rose for a third straightday on Wednesday, supported by worries over tighter supply after China'sleading steel-producing city launched a fresh campaign to improve air quality.(Shanghai Steel Rebar Futures:+2.5% at 3,077 yuan per tonne. Iron Ore Contract:+1%at467yuantonne.)
Econ & Policy
Americas
US import prices rose 0.5% in April which was above consensus expectations of a 0.2% gain on the month. The March data was revised higher to show a 0.1% gain compared with the original estimate of a 0.2% decline. The year-on-year increase strengthened to 4.1%, the sharpest gain since February 2012.
Europe
ECB’s Draghi Continues To Back Current Monetary Policy. In his introductory remarks to the Dutch Parliament on Wednesday, President Draghi stated that the downside risks to the Euro area had diminished further while also repeating that it was too early to declare success.
Asia and Pacific
Chinese CPI 1.2% vs. 1.1% forecast from 0.9% in the preceding month. Headline annual inflation has slowed sharply in recent months, a potentially ominous sign for the world’s second-largest economy, which has defied the odds with its steady economic expansion over the past four quarters.
Chinese PPI 6.4% vs. 6.9% forecast from 7.6% in the preceding month. The PPI inflation index surged 7.8% in the 12 months through February, the fastest since the financial crisis. After years of contraction, producer prices have been dragged higher by fiscal policies and efforts to reduce the country’s overcapacity issues. PPI inflation has been largely driven by mining and heavy industry, with raw materials registering double-digit percentage gains.
PolicyAmericas
FBI Director Comey fired, Stock futures decline, gold up: Following the abrupt firing of FBI Director James Comey, U.S. stock index futures have taken a dip, as the news is likely to soak up oxygen in Washington and make tax and healthcare reform more difficult. Safe havens are getting a bid, with gold up $0.8% to $1225/ounce. "It is essential that we find new leadership for the FBI that restores public trust and confidence in its vital law enforcement mission," read a letter from the White House.
Trump to meet Russian foreign minister: The action is causing additional turmoil on Capitol Hill as Comey had been the one leading an investigation into possible Trump campaign ties to Russia. It also comes as Trump meets with Russian Foreign Minister Sergei Lavrov today, marking the highest level in-person meeting between the President and the Russian government since he took office.
Ross: 3% GDP growth won't happen this year: The Trump administration will "certainly" not be able to achieve the 3% GDP growth it hoped for in 2017, according to Commerce Secretary Wilbur Ross, citing economic policies that have yet to be implemented as the reason for the delay. "The Congress has been slow-walking everything," he told Reuters in an interview. "We don't even have
Europe
Trump set to arm the Kurds: In a decision bound to infuriate Turkey, President Trump has approved plans to directly arm Kurdish fighters battling ISIS, as they close in on their capital of Raqqa. Turkey, a NATO ally, considers the YPG to be a terrorist group that threatens its borders. The move also comes ahead of President Erdogan's first meeting next week with Trump in Washington.
IMF on board for Greek bailout: "It seems to me that yes, finally [the IMF will provide funding to Greece]," Slovakia's finance minister said at the EBRD's annual meeting in Nicosia. "We have to congratulate Christine Lagarde." According to Tradeweb data, the current yield on Greek 10-year government debt (5.633%) has fallen to its lowest level since the nation's debt restructuring in March 2012.
Asia and Pacific
New president in South Korea: Moon Jae-in has been sworn in as president of South Korea as Pyongyang's ambassador to the U.K. said the country is preparing for its sixth nuclear test. The liberal human rights lawyer took 41.1% of the vote, promising to shore up the nation's fragile economy, improve relations with the North and seek more balanced diplomacy towards the U.S. and China.
Business News
"Tesla (NASDAQ:TSLA) solar glass roof orders open this afternoon. I think it will be great. More in about 10 hours..." Elon Musk tweeted overnight. "Solar roof can be ordered for almost any country. Deployment this year in the US and overseas next year." Tesla's glass roof panels were announced in 2016 and come in four styles: smooth, textured, slate and Tuscan.
ConsumersWalt Disney (NYSE:DIS) fell 2.4% AH following a mixed report where profits came in ahead of expectations, but revenues were fairly short. The Parks business was a bright spot, with sales up 9% and operating income up 20%. Operating income in Disney's film business rose 21% despite a decrease in revenue, while ESPN was hit by higher programming costs.
The board meetings this week at Ford (NYSE:F) have been extended to give directors more time to press CEO Mark Fields on strategy, WSJ reports. He has the carmaker on a path to spend heavily on autonomous vehicle R&D and ride sharing ventures to reverse its shrinking U.S. market share. Shares of Ford are down 16% over the last 52 weeks, compared to GM's 11% gain and Tesla's (TSLA) 53% rip.
Cutthroat competition in the razor wars is having Procter & Gamble (NYSE:PG) and Unilever (NYSE:UL) sharpening their blades. Going after the Dollar Shave Club, Gillette has revamped its subscription-based service, which will now be called "Gillette on Demand." It will allow customers to either text for a shipment or subscribe to get every fourth order free.
Abercrombie & Fitch is working with investment bank Perella Weinberg Partners to field takeover interest from other retailers, sources told Reuters. The company has struggled as its logo-stamped t-shirts and sweaters, once popular among teenagers, have lost their fashion appeal. It's a vulnerable acquisition target: ANF shares are trading at a 17-year low.
Wal-Mart (NYSE:WMT) is preparing to pay about $300M to end a probe of bribery by its employees in markets including Mexico, India and China. The deal would mark a significant concession by the U.S. government, Bloomberg reports. In October 2016, Wal-Mart rebuffed a proposal by U.S. prosecutors to pay at least $600M to settle the same corruption probe.
FinancialsBarclays (NYSE:BCS) CEO Jes Staley will come under the spotlight at the bank's annual general meeting today as shareholders get the chance to vote on his re-election to the board. The Financial Conduct Authority is already probing his role in a whistleblower scandal and he reportedly intervened in a recent row between his brother-in-law and one of Barclays' biggest customers.
Qatar's royal family has asked approval from Germany's financial regulator to boost its stake in Deutsche Bank (NYSE:DB) to more than 10%, sources told Bloomberg, stating the request was made several months ago. Should the increase take place, they would become the bank's largest shareholder, ahead of Chinese conglomerate HNA Group which holds just less than 10% of the lender.
Information TechnologyMicrosoft (NASDAQ:MSFT) has been granted a patent for augmented reality headwear that can monitor what one eats, warn about calorie content and makes food recommendations based on nutritional needs. It might also be used to help guide decisions around food preparation, shopping and choosing restaurants. Shazam for food?
Apple (NASDAQ:AAPL) has sent official press invites for its upcoming Worldwide Developers Conference, confirming plans to hold a keynote event on June 5. "Technology must intersect with the liberal arts and the humanities, to create new ideas and experiences that push society forward." Expect to see new versions of OS, and possibly new hardware like updated iMacs and Apple's rumored Siri speaker.
Snap (NASDAQ:FB) will report earnings for the very first time today, likely using the opportunity to show that it can grow its user base and ad money. But competition is quickly heating up, with Facebook copying similar offerings and functions on its platform. SNAP's stock has also been on a roller-coaster ride for the last couple of months, following its blockbuster IPO on March 2.
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