Sterling slides after Bank of England cuts growth outlook – Binary Options Daily Review

Published by Print

Global Markets

trade
Click here to view this mail in your web browser

   
Markets Report

Friday 11th May 2018
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,545.95 + 11.32 5,522.91 – 5,547.20
DAX 13,022.87 + 79.81

12,928.50 – 13,034.20

Dow Jones 24,739.53 + 196.99 24,575.91 – 24,794.99
FTSE 7,700.97 + 38.45 7,631.58- 7,706.87
IBEX 10,246.60 + 25.40 10,191.10 – 10,257.10

Closing Markets Summary

Dow Jones

U.S. stock indexes closed solidly higher on Thursday, with stocks advancing in a broad rally that gave the Dow Jones Industrial Average its longest winning streak since February. Technology stocks led the day’s gains to extend this month’s winning trend. But Wall Street was also supported by the latest economic data, which suggested the economy was healthy, but not growing so quickly that it was at risk of overheating. Better than forecast economic data helped boost the positive sentiment on Wall Street. The consumer-price index rose 0.2% in April, while core CPI, which strips out food and energy, rose 0.1%. The data eased concerns that inflation was returning to markets in a big way. The number of people who applied for first-time U.S. unemployment benefits in early May stood at 211,000 for the second straight week, holding near a 49-year low. A rise in confidence among investors could be seen from the steady decline in implied volatility, as measured by the Cboe Volatility Index, Wall Street’s so-called “fear gauge” which has been falling for the past five sessions and is now trading near 12.97, touching its lowest level since late January. Companies that featured included technology companies which were among the day’s biggest gainers. Apple Inc. was up 1.4% and hit a record. The iPhone maker notched its ninth straight daily gain. Facebook Inc. rose 1.6%. Roku Inc. fell 1.7% a day after it reported forecast-beating earnings and issued a better-than-expected second-quarter guidance. L Brands, Inc. fell 7.2% after the parents of Victoria’s Secret issued a profit warning. U.S.-listed shares of Royal Bank of Scotland Group PLC rose 3.9% after it agreed to pay $4.9 billion in a settlement with the U.S. Department of Justice over its role in the mis-selling of toxic mortgage-backed securities between 2005 and 2007. The settlement was smaller than feared and is seen as clearing the way for the U.K. government to sell its 71% stake it still holds in the lender. AMC Entertainment Holding Inc. rose 2.5% after profit and revenue rose well above forecasts. The Dow Jones closed up 196.99 points at 24,739.53. The S&P 500 closed up 25.28 points at 2,723.07. The Nasdaq Composite closed up 65.07 points at 7,404.98.

Europe

European equity markets broke a four-day winning streak on Thursday, with Italian shares dragging the benchmark index lower as euroskeptic parties moved closer to form a coalition government. The pan-European Stoxx Europe 600 index closed down 0.1% at 391.97. Italian stocks saw the biggest losses, with the FTSE MIB index I945 closing down 1% at 24,033.90. The yield on 10-year Italian government bonds rose 6 basis points to 1.934%. Italian stocks underperformed the rest of Europe as leaders of Italy’s far-right League party and populist 5 Star Movement moved closer to forming a new government, potentially ending more than two months of political gridlock. Such a coalition would create one of Europe’s biggest euroskeptic alliances, feared to muddle Italy’s relationship with the European Union and throw the Italian economy into disarray. The euro was firmer against the dollar with the EUR/USD at 1.1894, up from 1.1853 late Wednesday in New York. Companies that featured included Royal Bank of Scotland Group PLC which rose 3.8% after news it will pay $4.9 billion in a settlement with the U.S. Department of Justice over its role in the miss-selling of toxic mortgage-backed securities between 2005 and 2007. The settlement was smaller than feared and is seen as clearing the way for the U.K. government to sell its 71% stake it still holds in the lender. BT Group PLC fell 7.4% after the telecommunications company said it would cut 13,000 jobs over the next three years and issued a profit warning for fiscal 2019. Randgold Resources Ltd. fell 7% after the precious metals miner said pre-tax profit fell 27% in the first quarter due lower gold sales and higher production costs. UniCredit SpA rose 1.8% after the Italian lender said net profit jumped 23% in the first quarter. On regional markets the French CAC closed up 11.32 points at 5,545.95, the German DAX closed up 79.81 points at 13,022.87 and the Spanish IBEX closed up 25.40 points at 10,246.60.

FTSE

The FTSE 100 closed higher on Thursday, extending gains as the pound fell after the Bank of England cut its outlook for British inflation and economic growth. The Bank of England, as was widely expected, left its key interest rate at 0.5%. The Monetary Policy Committee voted 7-2 to leave the rate unchanged. In its Quarterly Inflation Report, the bank cut its 2018 second-quarter inflation forecast to 2.4% from 2.7%, and its forecast for 2018 gross domestic product to 1.4% from 1.8%. The pound fell against the dollar with the GBP/USD at 1.3486 versus 1.3547 late Wednesday in New York, falling after the Bank of England released its monetary policy decision. The pound hit an intraday low of $1.3460 just after the bank’s update. Against the euro, GBP/EUR was at 1.1338 compared with 1.1430 in the prior session. Bank of England Gov. Mark Carney, in a news conference, said economic activity in the first quarter was hurt by poor weather conditions, but that growth likely has been better than reflected in recent data. If the economy strengthens in line with the central bank’s forecasts, interest rates are likely to rise over the next three years, he said. Economic data released showed that British manufacturing output fell 0.1% in March, a second straight monthly decline, dragged down by weaker electrical equipment and pharmaceutical production, the Office for National Statistics said Thursday. The U.K.’s visible trade deficit widened to £12.28 billion in March, forecasts of £11.2 billion and wider than February’s deficit print of £10.4 billion. Stocks that featured included Royal Bank of Scotland which rose 3.8% after agreeing a nearly $5 billion settlement with the U.S. Department of Justice over risky loans in the run-up to the financial crisis. BT Group PLC fell 7.4% after the telecommunications company cut its forecast for fiscal 2019 adjusted earnings and revenue and also said its cutting 13,000 jobs over the next three years as it steps up its restructuring efforts. Next PLC jumped 6.1%, topping the FTSE 100, after the retailer raised its full-year pre-tax profit guidance to £717 million. Randgold Resources Ltd. fell 7% as the gold miner said its first-quarter pre-tax profit fell 27% because of lower gold sales and higher production costs. The FTSE 100 closed up 38.45 points at 7,700.97.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
Export Price Index April 0.3% m/m; 3.6% y/y 0.3% m/m; 3.4% y/y Medium
FOMC Member Bullard Speaks May     Medium
Import Price Index April 0.5% m/m; 3.9% y/y 0.0% m/m; 3.6% y/y Medium
Michigan Consumer Sentiment May 98.4 98.8 Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
CPI (Spain) April 0.8% m/m; 1.1% y/y 0.1% m/m; 1.2% y/y Medium
ECB President Draghi Speaks (euro zone) May     High

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
No Data        

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Employment Change (Canada) April 17.4K 32.3K High
Full Employment Change (Canada) April   68.3K Low
Participation Rate (Canada) April 65.5% 65.5% Medium
Unemployment Rate (Canada) April 5.8% 5.8% Medium
BoC Gov Council Member Wilkins Speaks (Canada) May     Medium

Economic News Round Up MarketsWorld Bars

U.S. annual headline inflation rose in line with forecasts in April, while underlying inflation rose less than forecast. The Labor department reported that consumer price inflation rose by an annualized 2.5% last month, from 2.4% in the previous month. Core CPI rose 2.1% year-on-year. Forecasts were for a gain of 2.2%. Month-on-month, CPI rose 0.2%, against forecasts for a reading of 0.3%, while core CPI rose 0.1% from a month earlier.
The number of people who filed for unemployment assistance in the U.S. last week rose less than forecast. The Labor Department reported that the number of individuals filing for initial jobless benefits was unchanged from 211,000 in the previous week, forecasts were for claims to rise to 219,000 last week. The four-week moving average fell by 5,500 to 216,000 last week. Continuing jobless claims came in at 1,790,000 in the previous week. Continuing claims are reported with a one week lag. Forecast were for a reading of 1,778,000. The previous week’s reading was revised up to 1,760,000 from an initial reading of 1,756,000.

The Bank of England kept interest rates on hold and said weak growth during the snowy start to 2018 was likely to be only temporary, but it wanted to see a pick-up in the next few months before raising borrowing costs. In a sharp contrast to widespread expectations of a rate rise just a few weeks ago, the BoE said its nine rate-setters voted 7-2 to keep rates at 0.5 percent.

Output in the UK manufacturing sector fell 0.1% in March, forecasts had been for a decline of 0.2%. On an annualized basis, manufacturing production rose 2.9% in March. That was in line with forecasts. Industrial production rose 0.1% in March, compared with the previous month, in line with forecasts. Year-on-year, industrial production rose 2.9% in March. Forecasts were for a 3.1% advance. The reading came after a 2.1% rise in February that was revised down from initial growth of 2.2%.

Forex Round Up MarketsWorld Bars

The U.S. dollar was lower for a second session against a currency basket on Thursday, pulling further away from four-and-a-half month highs after tame U.S. inflation data indicated that the Federal Reserve will stick to plans for a gradual pace of rate hikes. The dollar weakened after the Labor Department reported that annual inflation rose 2.5% in April, in line with forecasts, but monthly inflation rose by a smaller-than-forecast 0.2%. Core, or underlying inflation rose 2.1% year-on-year last month and was up 0.1% from a month earlier. The dollar reversed early gains against the yen, with the USD/JPY down 0.15% at 109.56. The euro pushed higher, with the EUR/USD up 0.39% at 1.1897, rebounding from the four-month low of 1.1821 reached in the previous session. Sterling came under pressure after the Bank of England left interest rates on hold earlier Thursday and said that any future rate increases are likely to be gradual and limited in their extent. The GBP/USD was down 0.41% at 1.3493, not far from Tuesday’s four month lows of 1.3483. The U.S. dollar index was down 0.22% at 92.73, pulling away from Wednesday’s four-and-a-half month high of 93.26.

 
Commodity Round Up MarketsWorld Bars

Gold and silver prices were moderately higher on Thursday on support from an element of safe-haven demand, a lower U.S. dollar index, a tame U.S. inflation report, and some short covering in the futures markets. June gold futures moved up $9.30 an ounce at $1,322.30. July silver was up 19.5 at $16.77 an ounce.

Oil prices settled with a modest gain, rallying after a weak opening as calmer heads prevailed in the wake of the U.S. decision to exit the Iran nuclear pact. Various news reports Thursday said Iranian Oil Minister Bijan Zanganeh told state television nothing noteworthy will happen to oil exports after the Iran sanctions. A sign of a further rise in U.S. crude stockpiles and a “wind-down” period ahead of the start to sanctions on Iran also helped calm worries about the risks to the flow of crude in the Middle East. June West Texas Intermediate crude oil rose 22 cents to settle at $71.36 a barrel after a low at $70.56. July Brent crude rose 26 cents to settle at $77.47 a barrel.

The MarketsWorld Overview MarketsWorld Bars

Mario Draghi the President of the European Central Bank will be speaking in Florence today, in his last press conference in late April, Draghi described the Q1 slowdown as a moderation that is due to temporary factors. Since making that speech data has shown that growth was indeed weaker and also inflation decelerated. Will he express further concern about the situation or does he still see it as temporary? Any reference to the economy and inflation will be watched closely and is likely to move markets.

 

Facebook Twitter Google +
graph

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.

You have been sent this email as you have signed up to a Binary Options account with Marketsworld.com Click Here to Unsubscribe

 

Copyright 2011 – 2017 MarketsWorld
 

MarketsWorld

trade forex


Categorised in: Uncategorized

Written by Barry Jenkins

Comments are closed here.