One further U.S. rate rise still on cards this year after latest Fed minutes – Binary Options Daily Review

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Markets Report

Global Markets

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Thursday 12th October 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,362.41 – 1.24 5,338.14 – 5,367.38
DAX 12,970.68 + 21.43 12,925.20 – 12,976.30
Dow Jones 22,872.89 + 42.21 22,821.66 – 22,872.89
FTSE 7,533.81 – 4.46 7,519.60 – 7,550.17
IBEX 10,278.40 + 136.10 10,247.30 – 10,313.10

Closing Markets Summary

Dow Jones

Stocks in the U.S. closed higher on Wednesday with the three main indexes all closing a record highs after minutes from the Federal Reserve’s policy-setting gathering in September indicated a desire to increase rates one additional time despite stubbornly low inflation. However some Federal Reserve policy members expressed concerns about inflation running below its annual 2% target, while others worried that waiting for inflation to normalize policy could lead to an overheated market. Kansas City Fed President Esther George said Wednesday that waiting for inflation to hit the central bank’s 2% target before further raising interest rates could be a mistake and lead to a possible overheating of the economy. Chicago Fed President Charles Evans said one more rate-increase before the end of 2017 isn’t set in stone, during a speech in Zurich. The market is now pricing in a nearly 90% chance of a rate increase by the year end. Economic data showed that U.S. job openings fell to 6.08 million in August from 6.14 million. Companies that featured included BlackRock Inc. which rose 1.8% after the investment manager posted better than forecast quarterly results. Delta Air Lines Inc.’s rose 0.7% after the air carrier’s results topped market forecasts. Micron Technology Inc.’s fell 0.9% after the memory-chip company late Tuesday said it would sell about $1 billion in new shares. Barracuda Networks Inc. fell 12% after the cloud-computing company late Tuesday matched forecasts for earnings and topped those for revenue and billings. Alibaba Group Holding Ltd. shares rose 0.9% after the Chinese e-commerce giant said it would nearly triple spending on cutting-edge research, as it tries to keep pace with Amazon.com Inc. The Dow Jones closed up 42.21 points at 22,872.89. The S&P 500 closed up 4.60 points at 2,555.24. The Nasdaq Composite closed up 16.30 points at 6,603.55.

Europe

European equity markets closed little changed on Wednesday ahead of the release of the minutes of the US central bank’s last policy meeting amid news that the Spanish government has asked officials in Catalonia to explicitly clarify their position. Overnight, Catalan president Carles Puigdemont said he had accepted the popular mandate to push for independence but asked that the effects of the declaration be “suspended to pursue a dialogue over coming weeks without which a mutually agreed solution cannot be found”. The ambiguous wording of that message was a relief for some observers, it left others in doubt as to his true intentions. Indeed, on Wednesday Spanish PM Mariano Rajoy opened the door to the possible suspension of some of Catalonia’s devolved powers, by activating but not applying article 155 of the Constitution should Catalan authorities announce that they had indeed issued a declaration of independence. Yet in an unexpected twist, it was revealed that Madrid had agreed a deal with the Socialist party to begin study a possible reform of the Constitution in six months’ time. Article 155 requires the central government first issue a formal requirement to the regional authorities in question to return to the country’s legal framework. The pan-European Stoxx 600 index closed little changed at 390.15, however the Spanish IBEX rose 1.34%. Spain’s benchmark 10-year government bonds were rallying, pushing their yield down by six basis points to 1.64%. Economic data showed that hamornised consumer prices in Spain rose 1.8% year-on-year in September below forecasts for a rise of 1.9%. France’s harmonised CPI was revised higher from a 1.0% pace on the year to 1.1%, forecasts were for a rise of 1.0%. Spanish banks were among biggest gainers in Europe after the independence talks were put on hold. Shares of Banco de Sabadell SA rose 2.2%, CaixaBank SA gained 2.1%, and Banco Santander SA rose 1.1%. Gerresheimer AG rose 2.1% after a well-received earnings report. On regional markets the French CAC closed down 1.24 points at 5,362.41, the German DAX closed up 69.61 points at 12,970.68 and the Spanish IBEX closed up 136.10 points at 10,278.40.

FTSE

The FTSE 100 closed slightly lower on Wednesday as investors looked for the next reason to push markets towards record territory. The FTSE 100 has recently been boosted by a slide in the pound and by renewed confidence that Prime Minister Theresa May can hold onto her cabinet’s support for her Brexit plans. It’s up 0.2% for the week with one trading session to go, stretching its October gain to 2.2%. The pound was at 1.3208 against the dollar, little changed from 1.3204 seen on Tuesday. In Brexit news May has said the ball is now in the European Union’s court for moving negotiations along. She has also warned that the U.K. government is preparing for the divorce talks to fail and to end with no Brexit deal. U.K. negotiators are in Brussels this week for a fifth round of negotiations, but the discussions were put on hold on Wednesday. EU leaders are holding a summit on Oct. 19-20 to decide whether there has been enough progress in Brexit talks to move onto the next phase in the divorce proceedings, including the all-important trade deals. European Council President Donald Tusk has already said there hasn’t been “sufficient progress” to move discussions along. Companies that featured included Mondi PLC which fell 7.8% after the packaging and paper group said underlying performance for the year is expected to be modestly below market expectations. Smith & Nephew PLC rose 3.1% after reports that hedge fund Elliott Management Corp. has built a stake in the British medical equipment company. The FTSE 100 closed down 4.46 points at 7,533.82, just 0.2% below the record close set on May 26.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Continuing Jobless Claims Oct 1,935K 1,938K Medium
Initial Jobless Claims Oct 251K 260K Medium
PPI Sept 0.4% m/m; 2.5% y/y 0.2% m/m; 2.4% y/y High
Core PPI Sept 0.2% m/m; 2.0% y/y 0.1% m/m; 2.0% y/y Medium
Bloomberg Consumer Confidence Oct   49.9 Low
FOMC Member Brainard Speaks Oct     Medium
FOMC Memeber Powell Speaks Oct     Medium
Crude Oil Inventories Oct -1.800M -6.023M High
Federal Budget Balance Sept 6.0B -108.0B Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
CPI (France) Sept -0.1% m/m -0.1% m/m Medium
Industrial Production (euro zone) August 0.5% m/m; 2.6% y/y 0.1% m/m: 3.2% y/y Medium
ECB President Draghi Speaks Oct     Medium
ECB’s Praet Speaks Oct     Medium
ECB’s Coeure Speaks Oct     Medium
ECB’S Lautenschlaeger Speaks Oct     Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
RICS House Price Balance Sept 4% 6% Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
PPI (Japan) Sept 0.2% m/m; 3.0% y/y 0.0% m/m; 2.9% y/y Low
New Housing Price Index (Canada) August 0.3% m/m 0.4% m/m Medium

Economic News Round Up MarketsWorld Bars

Japan’s core machinery orders rose for a second straight month in August, Cabinet Office data showed that core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 3.4 percent on-month in August. Forecasts were for a rise of 1.1 percent.

Forex Round Up MarketsWorld Bars

The U.S. dollar was lower on Wednesday and close to a one-week low against other major counterparts as markets awaited the minutes of the Federal Reserve’s latest policy meeting and as doubts over a potential U.S. tax overhaul continued to weigh. The EUR/USD gained 0.29% to 1.1843, its highest since September 26, as Spanish political tensions temporarily eased. Catalan President Carles Puigdemont on Tuesday signed a document proclaiming the region’s independence from Spain, but he also suspended the move for the coming weeks to allow for talks with the Spanish government, averting an immediate crisis. The Spanish government was scheduled to convene in Madrid to shore up its response to the Catalan independence movement. The GBP/USD was down 0.14% at 1.3185. The yen and the Swiss franc were both higher with the USD/JPY down 0.16% at 112.26 and the USD/CHF was down 0.24% at 0.9724. The Australian and New Zealand dollars were steady, with the AUD/USD at 0.7778 and the NZD/USD was at 0.7070. The USD/CAD was almost unchanged at 1.2509. The U.S. dollar index was down 0.18% at 92.92.

 
Commodity Round Up MarketsWorld Bars

Gold futures settled lower on Wednesday for the first time in four sessions, then recovered some lost ground in electronic trading. Minutes from the Federal Reserve’s September meeting, released after gold futures settled, showed some policy makers questioning the need for an interest-rate hike in December. In electronic trading December gold was at $1,292.20 an ounce, up from the settlement of $1,288.90 an ounce. Prices had fallen $4.90 during the session. Silver for December delivery fell 7.4 cents to settle at $17.133 an ounce.

Oil prices settled higher for the third straight session as OPEC raised its forecast for crude demand but said output by member countries rose in September despite a deal to limit production. November West Texas Intermediate crude rose 38 cents to settle at $51.30 a barrel. Brent crude for December delivery rose 33 cents to settle at $56.94 a barrel.

The MarketsWorld Overview MarketsWorld Bars

The President of the ECB Mario Draghi is due to talk in a panel in Washington and it is possible that he will shed some more light on the upcoming decision to reduce its bond-buying scheme. He may also express his concern about the exchange rate, but the EUR/USD has weakened since he voiced his complaints.

 

 

 

 

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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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