Sterling remains under pressure as Brexit deadlock continues – Binary Option Daily Review

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Markets Report

Global Markets

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Wednesday 6th December 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,375.53 – 13.76 5,349.79 – 5,392.48
DAX 13,048.54 – 10.01 12,960.60 – 13,094.40
Dow Jones 24,180.64 – 109.41 24,155.28 – 24,349.74
FTSE 7,327.50 – 11.47 7,326.57 – 7,373.90
IBEX 10,211.30 + 2.70 10,162.30 – 10,246.10

Closing Markets Summary

Dow Jones

Stock Indexes in the U.S. closed lower on Tuesday with the S&P 500 and the Nasdaq Composite closing lower for a third straight day as broad weakness weighed on stocks. The tech sector, which had seen heavy losses over the past week, held on to a small daily gain, but all other main S&P 500 sectors ended lower. Economic data showed that the U.S. trade deficit in October jumped 8.6% to a ninth-month high of $48.7 billion from $44.9 billion. Forecast were for a $47.6 billion gap. The Institute for Supply Management’s index of service-oriented companies such as banks and retailers fell to 57.4% in November from a 12-year high of 60.1% in October. Companies that featured included home builders which were among the worst-hit stocks after disappointing earnings from Toll Brothers Inc. whose shares fell 7.4%. Competitors PulteGroup Inc. fell 1.3%, while Lennar Corp. dropped 0.9%. Mastercard Inc.’s stock rose 1.2% after the payments company announced a new $4 billion stock buyback program, along with a dividend hike. Regal Entertainment Group’s stock rose 9.4% after British counterpart Cineworld Group PLC agreed to buy it for $3.6 billion, creating the world’s second-largest operator of movie theatres. Regal confirmed last week that it was in buyout talks with Cineworld. Amazon.com Inc. rose 0.7% as the e-commerce giant launched its full offering in Australia, but analysts said it was a “patchy” initial effort. The foray has been expected to provide an important new beachhead for the online retailer’s global distribution network. Car-parts seller AutoZone Inc. rose 0.4% and clothing manufacturer G-III Apparel Group Ltd. rallied 14% as the companies posted better than forecast quarterly earnings. The S&P 500 closed down 9.87 points at 2,629.57. The Dow Jones closed down 109.41 points at 24,180.64. The Nasdaq Composite closed down 13.15 points at 6,762.21.

Europe

European equity markets closed lower on Tuesday, suffering their third loss in four sessions, with falls for Provident Financial PLC and tech shares weighing on the region’s main benchmark. The pan-European Stoxx Europe 600 index closed down 0.19% at 386.74, giving back part of Monday’s rise of 0.9%. The euro was down 0.38% against the dollar 1.1813, down from 1.1865 late Monday in New York. The tech sector was in focus after the group was sharply lower in Monday’s U.S. trading session. The selloff in techs stretched into the Asian trading session and into European dealings. The moves came on the heels of this weekend’s passage in the U.S. Senate of the Republican-sponsored proposal for an overhaul in the tax code. Investors were seen to booking profits in the stocks which are seen to benefit the least Investors were also keeping tabs on the Brexit process, with reports U.K. Prime Minister Theresa May will return to Brussels to continue talking with European Union officials. On Monday, May and European Commission President Jean-Claude Juncker said they hadn’t been able to reach an agreement on some Brexit issues. Companies that featured included stocks in the tech sector, with software maker Temenos Group AG down 1.5% and chip maker AMS AG lost 0.4%. Logitech International SA managed to close 0.3% higher after falling by more than 2% intraday. Provident Financial PLC shares fell 10% as the company said the U.K. Financial Conduct Authority has launched an investigation into its car-financing unit, Moneybarn. Tesco PLC rose 3% after Goldman Sachs raised its rating on the supermarket chain to buy from sell. Gerber and Häagen-Dazs parent Nestlé S.A. rose 0.4% higher following reports it might buy Atrium Innovations Inc., a Canadian vitamin maker, in a deal valued at $2.3 billion. Nestlé confirmed after the European market’s close that it plans to make that acquisition. On regional markets the French CAC closed down 13.76 points at 5,375.53, the German DAX closed down 10.01 points at 13,048.54 and the Spanish IBEX closed up 2.70 points at 10,211.30.

FTSE

The FTSE 100 closed lower on Tuesday, with mining shares struggling and as investors assessed downbeat British services data, on the upside supermarkets were the main winners. Brexit concerns helped send the pound lower against the dollar, the pound fell 0.20% against the dollar to 1.3448, from 1.3478 late Monday in New York. Against the euro, sterling was up 0.18% to 1.1379, up slightly from 1.1360 on Monday. Investors were keeping a close eye out for developments in the Brexit talks after U.K. Prime Minister Theresa May and European Commission President Jean-Claude Juncker said Monday the two sides had failed to reach a deal that would move negotiations on to the second stage. That failure jolted the pound. Reports said Northern Ireland’s Democratic Unionist Party, which is propping up May’s Conservative government, had scuttled a proposed agreement by shooting down a plan to avoid a post-Brexit “hard” border between the province and Ireland. British officials have been working to settle some issues before EU leaders meet at a summit on Dec. 14-15. Economic data showed that the U.K. services sector, which makes up roughly 80% of the British economy, missed forecasts by a wide mark. The IHS Markit’s November services PMI fell to 53.8, below the 55.0 that had been forecast. Demand for new cars in the U.K. fell for an eighth straight month in November, according to the Society of Motor Manufacturers and Traders. Companies that featured included Mining shares which were lower even as data showed activity in China’s services sector expanded in November, Anglo American PLC fell 2.5%, Glencore PLC fell 2.3%. Antofagasta PLC fell by 1.7%, Randgold Resources PLC fell 0.6%, and silver and gold producer Fresnillo PLC fell 1%. Tesco PLC closed 3% higher after Goldman Sachs raised its rating on the supermarket chain to buy from sell. Shares of rival J Sainsbury PLC rose 2.8%, and shares of Wm. Morrison Supermarkets PLC rose 2.2%. The FTSE 100 closed down 11.47 points at 7,327.50.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
MBA 30 Year Mortgage Rate Dec   4.20% Low
MBA Mortgage Applications Dec   -3.1% w/w Low
ADP Nonfarm Employment Change Nov 185K 235K High
Nonfarm Productivity Q3 3.3% q/q 3.0% q/q Medium
Unit Labour Costs Q3 0.2% q/q 0.5% q/q Medium
Crude Oil Inventories Dec -3.507M -3.429M High

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Factory Orders (Germany) Oct -0.3% m/m 1.0% m/m Medium
Retail PMI (euro zone) Nov   51.1 Low
ECB’s Mersch Speaks (euro zone) Dec     Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
No Data        

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
GDP (Australia) Q3 0.7% q/q; 3.0% y/y 0.8% q/q; 1.8% y/y High
CPI (Switzerland) Nov 0.2% m/m; 0.9% y/y 0.1% m/m; 0.7% y/y Medium
Labour Productivity (Canada) Q3 0.2% q/q 0.5% q/q Medium
BoC Rate Statement (Canada) Dec     Medium
BoC Interest Rate Decision (Canada) Dec 1.00% 1.00% High

Economic News Round Up MarketsWorld Bars

The U.S. trade deficit increased more than forecast in October, hitting a nine-month high as rising oil prices helped to boost the import bill. The Commerce Department reported that the trade gap widened 8.6 percent to $48.7 billion. That was the highest level since January and followed an upwardly revised $44.9 billion shortfall in September. Forecasts were for the trade deficit widening to $47.5 billion in October after a previously reported $43.5 billion deficit the prior month. When adjusted for inflation, the trade deficit increased to $65.3 billion, also the largest since January, from $62.2 billion in September. The so-called real trade deficit in October was above the third-quarter average of $62.0 billion. Service sector activity in the U.S. fell more than forecast in November. The Institute of Supply Management reported that its non-manufacturing PMI decreased to 57.4 in November from the prior month’s reading of 60.1. Forecasts were or the index to drop to only 59.0 last month. The Non-Manufacturing Business Activity Index decreased to 61.4 last month, 0.8 points below October’s reading of 62.2 and also below the forecast for 61.5. The New Orders Index registered 58.7 in November, 4.1 points lower than the reading of 62.8 in the previous month. The Employment Index fell 2.2 points to 55.3 last month from October’s reading of 57.5. The Prices Index decreased 2.0 points to 60.7 in November from the prior month’s reading of 62.7.

German services sector growth slowed to a three-month low in November, as a political impasse following Chancellor Angela Merkel’s failure to form a new three-way coalition clouded the outlook for business. IHS Markit reported that its final Purchasing Managers’ Index for services fell to 54.3 from 54.7 in October. The reading came in weaker than a flash estimate of 54.9, which had shown a slight pickup in momentum.

Growth in France’s service sector exceeded preliminary forecasts in November as strong demand led firms to step up hiring to the fastest pace in 16 years. IHS Markit reported that its purchasing managers’ index for services rose to 60.4 from 57.3 in October, the highest reading since May 2011. The result was better than a preliminary reading of 60.2.

Activity in the UK service sector dropped more than forecast in November, IHS Markit reported that the seasonally adjusted IHS Markit/CIPS services purchasing managers’ index decreased to 53.8 last month from a reading of 55.6 in October. Forecasts were for the index to slip to just 55.0.

Canada’s trade deficit in October narrowed to C$1.47 billion as exports increased after four consecutive monthly declines. Imports fell on motor vehicles and parts, while exports were led by basic and industrial chemical, plastic and rubber products.

The Reserve Bank of Australia held its cash rate at a record low 1.50% as expected.
Growth in China’s services sector activity rose to a three-month high in November.

The Caixin/Markit services purchasing managers’ index rose to 51.9 in November, up from 51.2 in October and the highest reading since August.

Forex Round Up MarketsWorld Bars

The U.S. dollar was modestly higher against the other major currencies on Tuesday, underpinned by hopes for major tax cuts in the U.S., while sterling fell as talks on the UK’s exit from the European Union remained deadlocked. Demand for the dollar continued to be supported by expectations that tax cuts for corporations will stimulate the U.S. economy, and also drive Treasury yields higher, as the government becomes more dependent on debt due to reduced tax income. Some investors also believe the boost to the economy will prompt the Federal Reserve to raise interest rates at a faster pace. Republicans are aiming to send a final tax bill to the White House before Christmas, with the House and Senate working to reconcile separate versions of the plan. The dollar was higher against the yen, with the USD/JPY up 0.19% at 112.61. The euro was lower, with the EUR/USD down 0.17% at 1.1845. Sterling pared back losses but remained lower on the day, with the GBP/USD last at 1.3433 after an attempt to reach an agreement with the EU on the Irish border failed. Sterling found some support following report that British Prime Minister Theresa May could return to Brussels before the end of the week in the hope of reaching an agreement. But the pound remained under pressure after data showing that the UK service sector lost some momentum in November, while inflation pressures continued to increase. The pound remained lower against the euro, with the EUR/GBP up 0.19% at 0.8818, off an earlier high of 0.8867. The U.S. dollar index was up 0.25% at 93.30.

 
Commodity Round Up MarketsWorld Bars

Gold and silver prices both ended solidly lower on Tuesday with the gold price hitting a four-month low, while silver prices dropped to a nearly five-month low. Keener risk appetite in the world marketplace recently is distracting buyers of precious metals. February gold was down $11.50 an ounce at $1,266.20. March silver was down 30.3 cents at $16.07 an ounce.

Crude oil futures settled higher on Tuesday as market participants continued to expect that ongoing strong OPEC compliance with the production-cut deal will continue to support oil prices. OPEC oil output fell in November by 300,000 barrels per day to its lowest since May as the oil cartel maintained strong compliance with the deal to curb output. West Texas Intermediate crude futures for January delivery rose 15 cents to settle at $57.62 a barrel. Brent crude gained 45 cents to settle at $62.90 a barrel.

The MarketsWorld Overview MarketsWorld Bars

ADP’s private sector jobs report is not always correlated with the official report on Friday, but it always moves markets. ADP reported a gain of 235K jobs in October, better than forecast and in line with the private sector section of the official NFP. A more moderate gain of 185K jobs is forecasts in this reading.

 

 

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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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