Markets wait nervously for outcome of Trump-Kim summit – Binary Options Daily Review

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Markets Report

Tuesday 12th June 2018
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

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Market Index Closing Level Move on day Intraday Market Range
CAC 5,459.05 + 8.83 5,452.66 – 5,475.22
DAX 12,836.00 + 69.45

12,800.20 – 12,862.00

Dow Jones 25,322.31 + 5.78 25,290.20 – 25,402.83
FTSE 7,735.35 + 54.28 7,681.07 – 7,742.47
IBEX 9,830.20 + 83.90 9,799.10 – 9,875.10

Closing Markets Summary

Dow Jones

Stock Indexes in the U.S. closed modestly higher on Monday, ahead of the highly anticipated summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore and a set of potentially market-moving central-bank meetings due later this week. Investors are also beginning to focus on central-bank meetings this week. The Federal Reserve, led by Chairman Jerome Powell, is expected to raise interest rates after its two-day meeting that begins Tuesday, while European Central Bank policy makers are expected to announce the timing of a reduction of its crisis-era asset-purchase initiative on Thursday. The weekend saw a fresh escalation of tensions between Trump and Canadian Prime Minister Justin Trudeau. The spat erupted after the G-7 meeting in Quebec ended Saturday, with Trump withdrawing his support for the group’s communiqué after Trudeau criticized U.S. tariffs on Canadian metals. Companies that featured included Sempra Energy jumped nearly 16%, for the S&P 500’s best daily gainer after activist investors Elliott Management and Bluescape Resources revealed a “value creation” strategy that could result in a further 19%-to-35% rally from current levels. Stryker Corp. fell 5.1%, the worst performer on the session, after reports from the Wall Street Journal indicated that the medical-technology-products company made a bid for Boston Scientific Corp. Boston Scientific’s stock soared by 7.4%. The S&P 500 closed up 2.97 points at 2,782.00. The Dow Jones closed up 5.78 points 25,322.31. The Nasdaq Composite closed up 14.41 points at 7,659.93.

Europe

European equities finished higher on Monday, with Italian stocks posting their best session in more than a year and as investors pushed past this weekend’s acrimonious Group of Seven meeting in Canada. Italy’s benchmark surged after the country’s new finance minister offered reassuring comments about the euro zone. Investors are also watching closely for news from Singapore, where U.S. President Trump is scheduled to meet North Korean leader Kim Jong Un in a historic summit. The pan-European Stoxx Europe 600 Index finished 0.7% higher at 387.94, the first rise in five sessions. Italy’s FTSE MIB index rose by 3.4%, the strongest percentage rise since April 2017. The euro was firmer against the dollar with the EUR/USD at 1.1794 from 1.1771 late Friday in New York. Italian stocks and bond prices leapt as Italian Economy Minister Giovanni Tria said the country’s new government is committed to the euro, according to an interview with Italian newspaper Corriere Della Serra published Sunday. That appeared to allay fears that Italy’s new antiestablishment coalition government led by the 5 Star and the League parties would ditch the shared currency. Tria also confirmed the government’s goal of decreasing Italy’s debt this year and in 2019, which helped lift Italian bank stocks. Public debt in the eurozone’s third-largest economy exceeds 130% of gross domestic product. Investors seemed to brush off this weekend’s G-7 meeting in Quebec, where the U.S.’s relationship with its long-running allies continued to deteriorate. Trump withdrew his support for the group’s communiqué after Canadian Prime Minister Justin Trudeau repeated his criticism of U.S. tariffs on Canadian metals. Investors will also be eagerly awaiting news from Trumps face-to-face meeting with Kim, the first between a sitting U.S. president and a North Korean leader, which is scheduled for Tuesday at 9 a.m. Singapore time. Companies that featured included Italian bank stocks which were among Monday’s winners, with shares of Italy’s largest lender, UniCredit SpA up 6.2% and Intesa Sanpaolo SpA up by 6.6%. Inmarsat PLC rose 12.7%, the biggest gainer on the Stoxx 600, extending a 13% leap in the prior session before the British satellite telecommunications company late Friday said it rejected a takeover offer from EchoStar Corp. that “very significantly undervalued” its prospects. Deutsche Post AG fell 3.1%, with a few brokers cutting their price targets on the German logistics company after Friday’s profit warning for 2018. The shares slumped 4.7% on Friday. Daimler AG dropped 0.9% after German weekly Bild am Sonntag reported late Saturday that Germany’s Federal Motor Transport Authority found five illicit software-functions that allegedly manipulate emissions-testing. On regional markets the French CAC closed up 8.83 points at 5,459.05, the German DAX closed up 69.45 points at 12,836.00 and the Spanish IBEX closed up 83.90 points at 9,830.20.

FTSE

The FTSE 100 closed higher on Monday as investors shrugged off a troubled G7 meeting at the weekend and weak readings on the U.K. economy thanks to positive ‘chatter’ ahead of Tuesday’s historic summit between North Korean leader Kim Jong Un and US President Donald Trump and key central bank meetings later in the week. Investor sentiment was helped by positive remarks from Donald Trump and US Secretary of State, Mike Pompeo, before their summit with Kim, and the Italian finance minister’s commitment to the euro at the weekend, with the latter triggering a rally in his country’s bonds. The pound was down 0.19% against the dollar at 1.33815 and by 0.48% versus the euro to 1.1341, after both UK industrial production and the goods trade balance fell short of forecasts. Economic data showed that UK industrial output declined in April at the fastest rate in five and a half years, with the trade deficit also widening as exports fell by more than imports. Industrial production fell 0.8% compared to March versus forecasts for an increase of 0.1%, the same as in March. Year-on-year, industrial production was only up 1.8%, down from a 2.9% rise the month before and well short of the 3.1% that was forecast, leaving quarterly growth at -0.8% in April, after a marginal rise in the first quarter. A fall in manufacturing output for the third month in a row was the main cause, with a 1.4% month-on-month drop in April, worsening from the 0.1% fall a month before and with the biggest reverse since October 2012 putting it some distance from the 0.3% growth that had been forecast. For the second quarter so far, the growth rate at -0.5% following a 0.2% increase in the first quarter. Construction output rose 0.5% month-on-month in April on a seasonally adjusted basis, bouncing back from a 2.3% decline the prior month, but this was well short of the 2.2% rally that had been forecast. The UK trade deficit widened to £5.28bn in April from £3.22bn, bigger than the £2.5bn deficit that had been forecast, as exports of goods and services both declined. Trade with the US in particular saw the weakest deficit since 2002. Investors were also looking ahead to later this week with the Federal Reserve expected to hike rates for the second time this year, the Bank of Japan expected to leave them on hold and the European Central Bank forecast to make an announcement on tapering. Companies that featured included satellite company Inmarsat which moved up 12.6% after saying on Friday that it had received and rejected a bid approach from US rival EchoStar on the basis that it “very significantly undervalued” the group and its prospects. BCA Marketplace, the car auction house and owner of WeBuyAnyCar.com, surged 11.85% after it rejected an approach from private equity group Apax Partners, which is mulling a potential buyout of the company. Vodafone moved up after saying it will cut its Vodacom stake to 60.5% from 64.5% following Vodacom’s plans to issue shares. Old Mutual slipped 1.9% as it said its IPO range for wealth management arm Quilter was set at 125p to 155p per share. The FTSE 100 closed up 54.28 points at 7,735.35.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
NFIB Small Business Optimisim May 105.2 104.8 Low
CPI May 0.2% m/m; 2.8% y/y 0.2% m/m; 2.5% y/y Medium
Core CPI May 0.2% m/m; 2.2% y/y 0.1% m/m; 2.1% y/y High
Real Earnings May -0.1% m/m -0.1% m/m Low
Redbook June   0.1% m/m; 4.0% y/y Low
Cleveland CPI May   0.2% m/m Low
Federal Budget Balance May -135.5B 214.0B Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Non-Farm Payrolls (France) Q1 0.3% q/q 0.3% q/q Medium
Italian Quarterly Unemployment Rate (Italy) May 11.1% 11.0% Low
ZEW Economic Sentiment (Germany) June -13.0 -8.2 High
ZEW Economic Sentiment (euro zone) June 2.1 2.4 Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
Average Earnings ex Bonus April 2.9% 2.9% Low
Average Earnings + Bonus April 2.6% 2.6% High
Claimant Count Change May 11.3K 31.2K High
Employment Change 3m/3m May 124.0K 3m/3m 197.0K 3m/3m Medium
Unemployment Rate April 4.2% 4.2% Medium
NIESR GDP Estimate June   0.1% Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Home Loans (Australia) April -1.9% m/m -2.2% m/m Medium
NAB Business Confidence (Australia) May 9 10 Medium

Economic News Round Up MarketsWorld Bars

The Office for National Statistics reported that output in the UK manufacturing sector fell 1.4% in April from the prior month, forecasts had been for a gain of 0.3%. On an annualized basis, manufacturing production rose 1.4% in April, compared to forecasts for a 3.1% increase. In March, manufacturing production rose 2.9% from the year before. Industrial production fell 0.8% in April, compared to a gain of 0.1% in the previous month. Forecast had been for a 0.2% advance. Year-on-year, industrial production rose 1.8% in April. Forecasts were for a 2.7% increase. The reading came after a 2.9% rise in March.

Forex Round Up MarketsWorld Bars

The U.S. dollar was lower and the pound fell on Monday after a slew of disappointing UK economic reports, while the euro was slightly higher as markets braced for a big news week, which includes meeting of the Federal Reserve and the European Central Bank. The pound was pressured lower after a report showing that UK manufacturing output fell by the most in almost six years in April, dampening the outlook for the economy. Another report showed that Britain’s trade deficit widened in the three months to April, as exports declined. A third report indicated that the UK economy grew by just 0.2% in the three months to May adding to fears over the economic impact of Brexit. The GBP/USD was down 0.16% at 1.3384 after having risen to a high of 1.3441 earlier. Sterling was also lower against the euro, with the EUR/GBP up 0.49% at 0.8821. The euro was higher against the dollar, with the EUR/USD up 0.30% at 1.1805. The dollar reversed early losses against the safe haven yen, with the USD/JPY up 0.33% at109.91. The Canadian dollar extended losses, with USD/CAD up 0.53% at 1.2993 as concerns over deteriorating relations between Washington and Ottawa weighed. The U.S. dollar index was down 0.10% at 93.46.

 
Commodity Round Up MarketsWorld Bars

Gold prices ended with a modest gain on Monday after holding to a tight trading range throughout the session, with an overall a wait-and-see mood taking hold ahead of the much-touted meeting over North Korea’s denuclearization and a batch of major central bank gatherings in the coming week. August gold rose 50 cents to settle at $1,303.20 an ounce, holding between a low of $1,297.80 and high of $1,307. July silver settled up 1.3% at $16.952 an ounce.

Oil prices settled higher Monday, getting a lift from the expected supply disruptions in Iran and Venezuela, even after a report of rising crude output from Saudi Arabia ahead of a much-anticipated producer meeting later this month. After swinging between losses and gains, U.S. benchmark July West Texas Intermediate crude rose 36 cents to settle at $66.10 a barrel. August Brent crude settled flat at $76.46 a barrel.

The MarketsWorld Overview MarketsWorld Bars

The highly anticipated and historic meeting between the unpredictable leaders of the U.S. and South Korea is scheduled to take place in Singapore today. The primary on the secretive agenda will be the issue of denuclearization of North Korea which will also want guarantees to safeguard its regime. A successful meeting will be positive for markets and could send the safe-haven Japanese yen lower, while a failure could weigh on markets and boost the safe-haven yen. Social Media: Investors will be on tender hooks over outcome of historic meeting.

 

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The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects Barry Jenkins’ (MarketsWorld Analyst) current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterized by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable. This message is intended for recipient only and not for further distribution without the consent of MarketsWorld.

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