Sterling falls on renewed Brexit worries – Binary Options Daily Review

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Tuesday 10th January 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 4,887.57 – 22.27 4,867.83 – 4,915.60
DAX 11,563.99 – 35.02 11,522.30 – 11,606.90
Dow Jones 19,887.38 – 76.42 19,887.40 – 19,943.80
FTSE 7,237.77 + 23.72 7,207.40 – 7,243.76
IBEX 9,492.80 – 23.10 9,446.20 – 9,536.90

Closing Markets Summary

Dow Jones

Stocks in the US closed mixed on Monday with the Dow Jones and the S&P 500 closing lower and the Nasdaq Composite closing at a new record high. The broader market was led lower by falls in energy stocks as oil prices fell sharply. Defensive stocks such as utilities, telecoms and consumer staples all fell more than 1%, as investors continued to rotate out of defensive and into cyclical sectors. Health care and technology stocks outperformed which helped the Nasdaq Composite. Economic data showed that consumer credit rose at a seasonally adjusted annual rate of 7.9%, or $24.6 billion, in November. Revolving credit like credit cards jumped 13.5% while non-revolving credit such as car and student loans climbed 5.9%. There were a couple of Speeches from Federal Reserve members, Boston Fed President Eric Rosengren forecast “somewhat more regular” increases in interest rates, citing changes in economic conditions. In December, the Fed indicated it may raise rates three times in 2017, compared with just once in 2016. Atlanta Fed President Dennis Lockhart said in a speech at the Rotary Club of Atlanta that the economy is likely to grow at a moderate pace of 2% but that expectations of significantly higher growth are unrealistic. More central bank officials are due to speak during the week, including Fed Chairwoman Janet Yellen, who is set to appear at a town-hall meeting in Washington on Thursday. Companies that featured included Merrimack Pharmaceuticals Inc. rose 2.0% after the company said Sunday it will sell its oncology assets, including its pancreatic cancer drug, to French drugmaker Ipsen SA in a deal worth up to $1.025 billion. McDonald’s Corp. was lower after news the company signed a deal to sell a controlling stake in its China unit to an investor group let by one of China’s biggest state-owned companies, Citic Ltd. General Motors Co. Chief Executive Mary Barra told reporters Sunday that the company won’t move small-car production to the US from Mexico. Trump has criticized GM for importing some Chevrolet Cruze compact cars from a Mexico plant. The Nasdaq Composite closed up 10.76 points at 5,531.82. The Dow Jones closed down 76.42 points at 19,887.38 and the S&P 500 fell 8.08 points to close at 2,268.92.

Europe

European equity markets closed lower on Monday despite the release of better than forecast unemployment figures out of the single currency area. The Pan European Stoxx 600 index closed down 0.5% at 363.75. Oil prices were lower with West Texas Intermediate down 3.13% at $52.35 and Brent crude was down 3.11% at $55.38. Economic data showed that unemployment across the euro area remained unchanged at its seven-year low of 9.8% in November, which was as expected forecast. German industrial production rose less than forecast in November, but exports surged. Industrial production was up 0.4% from the previous month, missing forecasts for a 0.7% increase. However, exports grew 3.9% in November from October, with imports up 3.5%. The country’s adjusted trade surplus rose to €21.7bn during the same month from a revised €20.7bn in October, beating expectations of €20bn. Companies that featured included Schweizerische National bank which was lower as it reported strong profits for 2016, offsetting the sharp drop in the previous year as the stable Swiss franc increased the value of stocks, bonds and other assets. Volkswagen AG moved up after it recorded a 2.8% rise in worldwide sales last year despite the emissions scandal, prompting the car maker to express its optimism for this year. Continental AG was lower after the German automotive supplier said it was targeting higher sales growth but a narrower profit margin in 2017 following as growth in sales and the profit margin in the final quarter helped the company to exceed previously lowered full-year targets. Lufthansa was lower after it said late on Friday that fuel costs will rise this year and failed to provide earnings forecast for 2017. On regional markets the CAC closed down 22.27 points at 4,887.57, the DAX closed down 35.02 points at 11,563.99 and the IBEX closed down 23.10 points at 9,492.80.

FTSE

The FTSE closed higher on Monday to log the eighth consecutive record high as the pound dropped in response to renewed Brexit fears sparked by remarks from Prime Minister Theresa May. Sterling was down 0.96% against the US dollar at $1.2171 and dropped 1.25% against the euro to €1.1518 after May’s comments over the weekend were seen to imply that Britain will lose its access to the single market. In an interview with Sky News, May said Britain could not hang on to “bits of EU membership” but said the government was working to get the best possible deal. The Prime Minister Theresa May reiterated on Monday that the government was targeting an ‘ambitious, good and best possible deal’ with the rest of the EU. Ultimately no new information has been revealed on the UK’s negotiating stance. Economic data released by the Halifax showed that UK house prices rose 1.7% in December, ahead of forecasts of 0.3% and following the previous month’s 0.2% increase. In the three months to December prices jumped 6.5% year-on-year, compared to estimates for 5.8% growth and the previous month’s 6% gain. Companies that featured included Glencore was a top gainer as Barclays reinstated its coverage on the stock at ‘overweight’ and said it was its top-pick in the European mining sector. Babcock International moved lower after Deutsche Bank downgraded the stock to ‘hold’ from ‘buy’ and cut the price target to 1,020p from 1,100p. Banking stocks in general were lower, including Barclays, Royal Bank of Scotland and Lloyds Banking Group. Barclays was lower despite an upgraded to ‘buy’ from ‘hold’ by DB, which said the bank is well placed for 2017. Lloyds Banking Group edged down as the UK government announced that its stake in the bank has fallen below 6% after it sold 700m shares late on Friday. The FTSE closed up 23.72 points at 7,237.77, matching the longest record-setting run in 33 years.

Economic News Expected Today

 USA

Type Period Forecast   Importance
NFIB Small Business Optimism Dec 99.6 98.4 Low
Redbook Jan   1.0% m/m; 2.2% y/y Low
JOLT’s Job Opening Nov 5.590M 5.534M High
Wholesale Inventories Nov 0.9% m/m 0.9% m/m Low

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Industrial Production (France) Nov 0.6% m/m -0.2% m/m Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
BRC Retail Sales Monitor Dec   0.6% y/y Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Retail Sales (Australia) Nov 0.4% m/m 0.5% m/m High
CPI (China) Dec 0.3% m/m; 2.3% y/y 0.1% m/m; 2.3% y/y High
PPI (China) Dec 4.5% y/y 3.3% y/y Medium
Household Confidence (Japan) Dec 41.3 40.9 Low
Unemployment Rate (Switzerland) Dec 3.3% 3.3% Medium
Housing Starts (Canada) Dec 195.0K 184.0K Medium
Building Permits (Canada) Dec 2.4% m/m 8.7% m/m Medium

Economic News Round Up MarketsWorld Bars

The unemployment rate in the Eurozone remained unchanged last month, Eurostat reported that the rate of unemployment remained unchanged at a seasonally adjusted 9.8%, from 9.8% in the previous month. The unemployment rate was forecast to remain unchanged at 9.8% last month. Investor sentiment in the Eurozone improved in January to its highest level since August The Sentix research group reported that its Eurozone index rose to 18.2 points from 10.0 points in December. Forecast were for a reading of 12.5.

German industrial production rose less than forecast last month, Destatis reported that German industrial production rose to a seasonally adjusted annual rate of 0.4%, from 0.5% in the previous month whose figure was revised up from 0.3%. Industrial production was forecast to rise 0.6% last month. Germany’s trade balance rose to €21.7B, from €20.6B in the previous month whose figure was revised up from €20.5B. The trade balance was forecast to rise to €21.2B last month.

Italy’s monthly unemployment rate rose in the last quarter, Istat reported that the Italian monthly unemployment rate rose to 11.9%, from 11.8% in the previous quarter whose figure was revised up from 11.6%. The monthly unemployment rate was forecast to remain unchanged at 11.6% in the last quarter.

Retail sales in Switzerland rose more than forecast last month, the Federal Statistics Bureau reported that retail sales rose to a seasonally adjusted annual rate of 0.9%, from -0.7% in the previous month whose figure was revised down from -0.5%. Retail sales were forecast to rise to 0.4% last month.

The UK.’s Halifax house price index rose more than forecast last month, HBOS reported that the UK Halifax HPI rose to a seasonally adjusted 1.7%, from 0.6% in the previous month whose figure was revised up from 0.2%. Forecasts were for a rise to 0.2% last month.

 
Forex Round Up MarketsWorld Bars

The Dollar edged lower against a basket of the other major currencies on Monday as Friday’s US jobs report still supported the case for rate hikes this year, while sterling was sharply lower as fears over prospects for a ‘hard Brexit’ weighed. The Federal Reserve raised interest rates in December and has indicated that it expects to raise rates three more times in 2017. Boston Fed President Eric Rosengren called for the US central bank to step up the pace of interest rate increases, warning that inflation could overshoot its target if it does not. The dollar was lower against the yen, with the USD/JPY down 0.45% at ¥116.48, down from an intra-day high of ¥117.53.

The Euro pushed higher, with EUR/USD up 0.2% at $1.0554. The Pound was sharply lower against the Dollar and the Euro, with GBP/USD touching lows of $1.2125, the lowest level since October 31, before pulling back to $1.2144. The EUR/GBP hit highs of £0.8690, the strongest level since November 15 and was last at £0.8688, up 1.33% for the day.

Sterling was weaker after British Prime Minister Teresa May on Sunday said that the country would not be keeping “bits” of European Union membership. The remarks were seen as an indication that the UK won’t try to negotiate continued full access to the European single market when it leaves the EU. Sterling failed to find support after May said on Monday it was wrong to say a “hard Brexit” was inevitable. The AUD/USD was up 0.59% at $0.734, the USD/CAD was 0.16% at CAD$1.3216. The US Dollar Index was down 0.17% at 102.00.

 
Commodity Round Up MarketsWorld Bars

Gold prices ended with good gains on Monday, with futures closing at a four-week high. The price was helped by a weaker US dollar index. February gold was up $10.30 per ounce at $1,183.70. March silver was up $0.171 at $16.69 per ounce.

Crude Oil futures settled lower on Monday and at lowest level since mid-December as a 10th straight weekly rise in the number of active US oil rigs hinted at further gains in crude production. February West Texas Intermediate crude fell $2.03 to settle at $51.96 per barrel. Prices touched new session lows minutes before Monday’s settlement to mark their lowest finish since Dec. 16th. March Brent crude fell $2.16 to settle at a two-and-a-half-week low of $54.94 per barrel.

The MarketsWorld Overview MarketsWorld Bars

Canadian housing Starts dropped to 183,000 in November, below forecasts forecast for a reading of 191,000. The forecast for December stands at 187,000. Building Permits which tend to show strong monthly fluctuation, making accurate estimates difficult. In October, the indicator rebounded with a strong gain of 8.7%, well above forecasts for a gain of 1.6%. The forecast for November stands at 2.4%. Monitor the Canadian dollar 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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