North Korea tensions weigh on equity markets – Binary Options Daily Review

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Thursday 10th August 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,145.70 – 73.19 5,122.50 – 5,183.37
DAX 12,154.00 – 138.05 12,100.10 – 12,227.50
Dow Jones 22,048.70 – 36.64 21,996.69 – 22,057.19
FTSE 7,498.06 – 44.67 7,475.83 – 7,542.73
IBEX 10,596.00 – 138.70 10,525.10 – 10,705.90

Closing Markets Summary

Dow Jones

Stocks in the US closed lower on Wednesday but off the lows of the day as heightened geopolitical tensions weighed on investor sentiment with investors moving away from equities as they are deemed riskier. The US and North Korea exchanged verbal threats this week with President Donald Trump warning North Korea that any hostile action would be met with “fire and fury” and Pyongyang threatened to strike Guam, a US territory. There were also some disappointing quarterly earnings from big corporations such as Walt Disney Co. which also weighed. Economic data showed that productivity or how many goods and services US workers produce an hour rose at an annual rate of 0.9% in the second quarter from the prior three months, up from a 0.1% rate in the first quarter. Walt Disney Co. fell 3.9% a day after the media giant reported its quarterly results and announced that it plans to end its distribution deal with Netflix Inc. and launch its own ESPN and Disney streaming services. Shares in streaming-giant Netflix, a major contributor to the overall markets gains this year, fell 1.5%. Priceline Group Inc. ended down 6.9% after the online-travel broker late Tuesday posted quarterly earnings that topped forecasts, but bookings missed forecasts. TripAdvisor Inc. rose 2.5% even as the operator of travel websites reported weaker than forecast quarterly results late Tuesday. Retailer Office Depot Inc. fell almost 26% after it posted a quarterly profit that missed market forecasts. The S&P 500 closed down 0.90 of a point at 2,474.02, having been down 13 points. The Dow Jones closed down 36.64 points at 22,048.70 and the Nasdaq Composite closed down 18.13 points at 6,352.33, having been down 61 points.

Europe

European equity markets ended near the day’s lows on Wednesday following further provocative remarks out of Pyongyang which were quickly followed by a response from the US president. Responding to recent threats to the US, President Donald Trump warned America would respond to any threat with “fire and fury”. The Pan-European Stoxx 600 closed down 0.73% at 379.84. In parallel to the riskier equities the traditional safe havens such as gold and the Japanese yen were higher, with gold rising 1.27% to $1,278.60/oz. while USD/JPY was lower by 0.33% at 109.96. Economic data showed that the French central bank’s industrial sentiment gauge jumped from a reading of 103 for June to 105 in July. That led the monetary authority to forecast that the country’s GDP would expand at a 0.5% quarter-on-quarter pace over the three months to September. ISTAT reported that Italian industrial production grew by 1.1% month-on-month in June. Companies that featured included E.On which moved higher after the German power group reported better than forecast figures for the first six months of the year thanks to bigger margins at its key network business. Dutch lender ABN Amro posted a better than forecast 45% increase in its second-quarter underlying profits to €960m. Novo Nordisk was higher after beating market forecasts for its latest quarter. On regional markets the French CAC close down 73.19 points at 5,145.70, the German DAX closed down 138.05 points at 12,154.00 and the Spanish IBEX closed down 138.70 points at 10,596.00.

FTSE

The FTSE closed lower on Wednesday as investors moved away from riskier asset classes amid escalating tensions between the US and North Korea. Stocks across Europe, Asia and the Americas moved lower after North Korean leader Kim Jong Un made an explicit threat to strike US territory Guam. His order, reported in state media, came hours after US President Donald Trump warned Pyongyang not to “make any more threats” to the US, saying it would face a “fire and fury” response “like the world has never seen.” Trump’s comments came after a Washington Post report that North Korea has built a miniaturized nuclear warhead. Korea’s Kospi stock benchmark lost 1.1% as geopolitical concerns grew, while US stocks traded modestly lower. That is after the Dow Jones Industrial Average snapped a 10-session streak of wins on Tuesday following Trump’s comments. Gold producers were a bright spot as prices for the metal leapt more than 1% to around $1,279 per ounce on safe haven demand. Randgold Resources Ltd. Moved up 2.79% and Fresnillo PLC rose 4.9%. Worldpay Group PLC gained 1.3% after Vantiv Inc. said it would pay about £8 billion in cash and stock to buy the UK payments processor, completing one of the biggest deals in the quickly consolidating sector. G4S PLC fell 7.5% even as the security-services company posted a rise in first-half earnings and projected revenue growth will be in line with its medium-term target. The FTSE close down 44.67 points at 7,498.06.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Continuing Jobless Claims August 1,960K 1,968K Low
Initial Jobless Claims August 240K 240K Medium
PPI July 0.1% m/m; 2.2% y/y 0.1% m/m; 2.0% y/y High
Core PPI July 0.2% m/m; 2.1% y/y 0.1% m/m; 1.9% y/y Medium
Bloomberg Consumer Confidence August   49.6 Low
FOMC Member Dudley Speaks August     Medium
Federal Budget Balance July -73.0B -90.0B Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Industrial Production (France) June -0.5% m/m 1.9% m/m Low
Trade Balance (Italy) June 3.870B 4.342B Low

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
RICS House Price Balance July 8% 7% Medium
Construction Output June 1.5% m/m; 1.9% y/y -1.2% m/m; -0.3% y/y Low
Industrial Production June 0.1% m/m; -0.1% y/y -0.1% m/m; -0.2% y/y Medium
Manufacturing Production June 0.0% m/m; 0.6% y/y -0.2% m/m; 0.4% y/y High
Trade Balance June -11.00B -11.86B Medium
Trade Balance Non-EU June -3.00B -3.80B Medium
NIESR GDP Estimate August 0.3% 0.3% Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Core Machinary Orders (Japan) June 3.7% m/m; -1.0% y/y -3.6% m/m; 0.6% y/y Low
PPI (Japan) July 0.2% m/m; 2.4% y/y 0.0% m/m; 2.1% y/y Low
RBNZ Gov Wheeler Speaks (New Zealand) August     High
Tertiary Industry Activity Index (Japan) Aigust 0.2% m/m -0.1% m/m Medium
New Housing Price Index June 0.4% m/m 0.7% m/m Medium

Economic News Round Up MarketsWorld Bars

US worker productivity rose more thanforecast in the second quarter amid an increase in hours, the Labor Department reported that nonfarm productivity, which measures hourly output per worker, increased at a 0.9% annualized rate in the April-June period. First-quarter productivity was revised to show it edging up at a 0.1% pace instead of being unchanged as previously reported. Compared to the second quarter of 2016, productivity increased at a 1.2% rate. Forecasts were for productivity increasing at a 0.7% pace in the second quarter. The government also revised data going back to 2014, in line with recent revisions to gross domestic product figures. Those revisions showed productivity falling 0.1% in 2016, the first drop since 1982. That suggests the economy’s potential rate of growth has declined.

Inflation in China rose less than forecast in July with the data however not pointing to any change in largely neutral monetary policies. July CPI was up 0.1%, compared to a 0.2% gain seen in June and at a 1.4% annual pace, compared to forecasts for a 1.5% rise. PPI rose 5.5% as forecast. US wholesale inventories increased more than previously reported in June, to record their biggest gain in six months, as automobile stocks rose further amid declining sales. The Commerce Department reported that wholesale inventories rose 0.7% after an unrevised 0.6% increase in May. The department reported last month that wholesale inventories jumped 0.6% in June.

Forex Round Up MarketsWorld Bars

The Dollar was slightly higher against the other major currencies in quiet trade on Wednesday, as optimism over the US job market continued to support, although global geopolitical tensions still dominated investors’ attention. Investors are now eyeing US inflation reports due later in the week for indications of whether the recovery in the Dollar is sustainable in the longer term. The US Bureau of Labor Statistics reported in a preliminary report that nonfarm productivity rose 0.9% in the second quarter, ahead of forecasts for an uptick of 0.7%. The USD/JPY was down 0.25% at 110.06, off a two-month low of 109.56 hit earlier in the day after US President Donald Trump said North Korea would be “met with fire and fury” if it continued its threats. Pyongyang replied it was “carefully examining” a plan to strike Guam, where a USmilitary base is located.

The USD/CHF was down 0.78% at Fr0.9666 and EUR/CHF was down 0.92% at Fr1.13, off earlier lows of Fr1.1261. The Franc’s sharp rise against the Euro marked the largest one day change since the Swiss National Bank shocked markets when it scrapped its currency peg with the single currency in January 2015.

The Dollar remained moderately higher against the Euro, with EUR/USD up 0.15% at $1.1734 and the GBP/USD was steady at $1.2981. The Australian and New Zealand dollars were both weaker with the AUD/USD down 0.39% at $0.7882 and the NZD/USD was down 0.11% at $0.7322 as market participants were eyeing the Reserve Bank of New Zealand’s monthly policy decision due later in the day.

The USD/CAD was up 0.30% at CAD$1.2703, not far from Monday’s three-week high of CAD$1.2714, after Statistics Canada said building permits increased by 2.5% in June, beating forecasts for a 2.0% drop. The US Dollar Index was up 0.10% at 93.57, just off a one-week peak of 93.77 hit earlier in the session.

 
Commodity Round Up MarketsWorld Bars

Gold futures settled higher on Wednesday and scored their sharpest daily rise since mid-May amid a war of words between the US and North Korea. Gold for December delivery rose $16.70 to settle at $1,279.30 per ounce, posting its biggest single-session jump since May 17th. September silver rose $0.474 to settle at $16.863 per ounce, representing its sharpest daily rise since Sept. 21st, 2016, and at a nearly two-month high.

Oil futures settled higher on Wednesday after US government data showed a sharp decline in crude inventory. However, a broader risk-off move in financial markets on mounting tensions between the US and North Korea as well as concerns that global supplies aren’t falling as much as hoped kept price moves in check. US crude oil inventories fell by 6.5 million barrels to 1.15 billion barrels. West Texas Intermediate futures for delivery in September rose $0.39 to settle at $49.56 per barrel. October Brent crude rose $0.56 to settle at $52.70 per barrel.

The MarketsWorld Overview MarketsWorld Bars

The level of manufacturing output in the UK is watched closely despite its small share of the economy. It declined by 0.2% in May and a flat read is forecasts for June. The wider industrial output slipped by 0.1% and a rise of the same scale is forecast in this reading. Monitor the Pound for Binary Options trading.

 

 

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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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