U.S. stocks end mixed ahead of Feds latest rate decision – Binary Options Daily Review

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Markets Report

Wednesday 13th June 2018
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

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Market Index Closing Level Move on day Intraday Market Range
CAC 5,453.37 – 20.54 5,448.70 – 5,496.47
DAX 12,842.30 – 0.61

12,816.10 – 12,948.50

Dow Jones 25,320.73 + 5.78 25,247.04 – 25,364.37
FTSE 7,703.81 – 33.62 7,701.33 – 7,762.77
IBEX 9,914.40 + 16.10 9,901.60 – 9,961.60

Closing Markets Summary

Dow Jones

U.S. stock indexes ended mostly higher on Tuesday, though the Dow closed slightly lower. Investors were cautious with trading action largely subdued ahead of a key policy decision expected by the Federal Reserve Wednesday afternoon. Action on Tuesday followed a historic and closely watched meeting between President Donald Trump and North Korean leader Kim Jong Un in Singapore, which yielded a pact on the denuclearization of North Korea but which was criticized for a lack of specificity. Focus on that meeting gave way to concerns about the outcome of coming central bank meetings including the Federal Reserve which concludes on Wednesday and is expected to result in a quarter-point rate hike, leaving benchmark rates at a range of 1.75% and 2%. The European Central Bank’s gathering is set for Thursday. Economic data showed that an index of small-business optimism soared to 107.8 in May. The three-point gain took the index to the second-highest level in its 45-year history. The consumer-price index for May rose 0.2%, the fastest pace in six years, reflecting a strong U.S. economy and ultra-tight labour market that’s stoking inflation. Companies that featured included Twitter Inc. which rose 5% after J.P. Morgan boosted his price target to $50. Weight Watchers International Inc. rose 5.6% to a record high after a bullish call from J.P. Morgan, which said it was time to “stop watching from the sidelines.” Lands’ End Inc. jumped 27% after the retailer said its first-quarter sales got a 12% boost from sales of uniforms to Delta Air Lines Inc. Tesla Inc. gained 3.2% after Chief Executive Elon Musk announced on Twitter that the company will let go of about 9% of its workforce. Sage Therapeutics Inc. surged 20% on news that the company plans to expedite development of its depression drug. The Dow Jones closed down 1.58 points at 25,320.73.The S&P 500 closed up 4.85 points at 2,786.85. The Nasdaq Composite closed up 43.87 points at 7,703.79.

Europe

European equity markets closed slightly lower after giving up early gains on Tuesday following a closely watched summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore. Trump and Kim had signed a joint document pledging to work toward the complete denuclearization of the Korean Peninsula, but the statement was criticized for a dearth of detail on the process of verifying Pyongyang’s compliance. The pan-European Stoxx Europe 600 Index closed down 0.1% at 387.53, after rising as much as 0.4% early in the session. Italy’s FTSE MIB index rose 0.2% extending Monday’s 3.4% leap, seen after Italy’s economy minister said the country’s new coalition government is committed to euro zone membership. The Brexit issue returned to the front as U.K. lawmakers in the House of Commons debated amendments by the House of Lords to the bill that takes the U.K. out of the European Union. The 15 amendments include a measure to keep the country in the EU’s customs union. Prime Minister Theresa May’s Conservative government runs the risk of losing its bid to overturn some of the amendments if enough Conservative lawmakers decide to vote alongside opposition parties. Justice Minister Phillip Lee resigned Tuesday, citing the government’s handling of the U.K.’s pending exit from the EU. Economic data showed that German economic sentiment in June dropped to minus 16.1 points, the lowest level since September 2012, forecasts were for a reading of minus 13.0 points. Companies that featured included French retailer Casino Guichard-Perrachon SA which rose 1.8%, but pared bigger gains, after it revealed plans to sell noncore assets worth about 1.5 billion euros to accelerate its debt-reduction efforts in France. Home builder Barratt Developments PLC fell 3.1%, falling alongside other U.K. home builders, after Crest Nicholson Holdings PLC said its margins were hurt in the first half of the year by house prices that were flat and rising building-cost inflation. On regional markets the French CAC closed down 20.54 points at 5,453.37, the German DAX closed down 0.61 of a points at 12,842.30 and the Spanish IBEX closed up 16.10 points at 9,914.40.

FTSE

The FTSE 100 closed lower on Tuesday after a historic meeting between U.S. President Donald Trump and North Korean leader Kim Jong Un resulted in an agreement that critics said was too broad in nature when it comes to denuclearization in the Korean Peninsula. The pound moved lower as investors monitored the Brexit debate among British lawmakers and a data showed that British wage-growth figures fell slightly short of forecasts. On the FTSE 100 basic materials and oil and gas groups lost ground and consumer goods sectors moved higher. U.K. stocks turned lower as the broader European equity market pared early gains as the summit between U.S. and North Korea was wrapping up in Singapore. The meeting was unprecedented as it was the first between a U.S. sitting president and a North Korean leader. Trump and Kim signed a joint document pledging to work toward the complete denuclearization of the Korean Peninsula, but the statement was criticized as lacking detail on the verification of the process. The document does not use the words “irreversible” and “verifiable” to describe the denuclearization process, two things the U.S. has long pursued. The pound moved lower as the Brexit issue returned to the fore, with Lawmakers in the House of Commons debating amendments from the House of Lords to the bill that takes the U.K. out of the European Union. The 15 amendments include a measure to keep the country in the EU’s customs union. Prime Minister Theresa May’s Conservative government runs the risk of losing its bid to overturn some of the amendments if enough Conservative lawmakers decide to vote alongside opposition parties. Justice Minister Phillip Lee resigned Tuesday, citing the government’s handling of the U.K.’s pending exit from the EU. Economic data showed that basic wages in the U.K. rose 2.8% in the three months to April, forecasts were for a 2.9% rise in wages excluding bonuses. The unemployment rate remained at 4.2%, meeting expectations. Companies that featured included home builders which moved lower after Crest Nicholson Holdings PLC said its margins were hurt in the first half of the year by house prices that were flat and rising building-cost inflation. Crest Nicholson shares dropped 3.4%, Barratt Developments PLC fell 2.7%, while rival home builders Persimmon PLC fell 2.4% and Taylor Wimpey PLC fell 2.0%. Centrica PLC rose 3.7%, topping the FTSE 100, after Jefferies upgraded the parent company of British Gas to buy from hold. The FTSE 100 closed down 33.62 points at 7,703.81.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
IEA Monthly Report June     Medium
MBA 30 Year Mortgage Rate June   4.75% Low
MBA Mortage Applications June   4.1% Low
PPI May 0.3% m/m; 2.8% y/y 0.1% m/m; 2.6% y/y High
Core PPI May 0.2% m/m; 2.3% y/y 0.2% m/m; 2.3% y/y Medium
Crude Oil Inventories June -2.900M 2.072M High
FOMC Economic Projections June     High
FOMC Statement June     High
Fed Interest Rate Decision June 2.00% 1.75% High
FOMC Press Conference June     High

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Non-Farm Payrolls (France) Q1 0.3% q/q 0.3% q/q Medium
CPI (Spain) May 0.9% m/m; 2.0% y/y 0.8% m/m; 1.1% y/y Medium
Employment Change (euro zone) Q1 0.3% q/q 0.3% q/q; 1.6% y/y Low
Industrial Production (euro zone) April -0.5% m/m; 2.8% y/y 0.5% m/m; 3.0% y/y Medium
Eurogroup Meetings June     Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
CPI May 0.4% m/m; 2.5% y/y 0.4% m/m; 2.4% y/y Medium
Core CPI May 2.1% y/y 2.1% y/y Low
PPI Output May 0.3% m/m; 2.9% y/y 0.3% m/m; 2.4% y/y Low
Core PPI Output May 0.2% m/m; 2.5% y/y 0.1% m/m; 2.4% y/y Low
PPI Input May 1.6% m/m; 7.6% y/y 0.4% m/m; 5.3% y/y Medium

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Westpac Consumer Sentiment (Australia) June   -0.6% Medium
RBA Governor Lowe Speaks (Australia) June     Medium
Industrial Orders Q1   19.6% Low
PPI (Switzerland) May 0.3% m/m; 3.2% y/y 0.4% m/m; 2.7% y/y Medium

Economic News Round Up MarketsWorld Bars

U.S. inflation accelerated more than forecast in May, the Labor Department reported that consumer price inflation rose by an annualized 2.8% in May, up from 2.5% in the previous month. The forecast was for a reading of 2.7%. Month-on-month, CPI rose 0.2% in May, matching the previous month’s increase and in line with the forecasts. Core CPI increased by 0.2% from a month earlier, above the consensus forecast for growth of 0.1%. In the 12 months through June, core CPI rose 2.2%, compared to 2.1% a month earlier. Forecasts were for a gain of 2.2%.

The mood among German investors dropped to its lowest in nearly six years, weighed down by a festering trade dispute with the United States and concerns about Italy’s commitment to the euro zone. The ZEW research institute’s indicator fell to -16.1 in June from -8.2 in May, the lowest level since September 2012 and missed forecasts for a reading of -14.0.

Unemployment in the UK remained steady and wage growth slowed slightly in the three months to April, the Office for National Statistics reported that the number of people in employment in the UK rose by 146,000 in the three months to May, compared to forecasts for an increase of 124,000. The claimant count, which measures the change in the number of people claiming unemployment benefits fell by 7,700 over the period from 28,200 previously. The unemployment rate remained unchanged at a 42-year low of 4.2%, in line with forecasts. Average earnings, excluding bonuses, rose by an annual 2.8% in the three months to April, from 2.9% previously. That was still higher than inflation which fell to a one-year low of 2.4% in April. Including bonuses, pay growth slowed to 2.5% from 2.6% previously.

Forex Round Up MarketsWorld Bars

The U.S. dollar and the euro were little changed on Tuesday as investors turned their attention to central bank meetings in the U.S. and Europe this week as the U.S. and North Korea summit ended with the signing of a joint statement. U.S. President Donald Trump and North Korean leader Kim Jong Un pledged to work towards denuclearization on the Korean peninsula after the historic summit in Singapore, but few details emerged on how the goals set by both sides would be achieved. The USD/JPY was up 0.14% to 110.20, easing back from an overnight high of 110.48. The euro was little changed against the dollar, with EUR/USD last at 1.1785. The pound was lower against the dollar with the GBP/USD down 0.21% at 1.3352 as prospects faded for a rate hike by the Bank of England in the coming months after the latest UK jobs report showed that wage growth slowed last month. The U.S. dollar index was almost unchanged up 0.05% at 93.61.

 
Commodity Round Up MarketsWorld Bars

Gold was weaker on Tuesday, falling back below $1,300 an ounce to log their lowest finish in just over a week. An agreement between the U.S. and North Korea over the denuclearization of the Korean Peninsula dulled demand for the safe haven metal, as investors looked ahead to an expected interest-rate hike by the Federal Reserve. August gold fell $3.80 to settle at $1,299.40 an ounce. July silver was down 2.2 cents at $16.93.

Crude oil prices settled mixed on Tuesday after a monthly report showed the Organization of the Petroleum Exporting Countries increased output last month. West Texas Intermediate crude futures for July delivery rose 0.39% to settle at $66.36 a barrel. Brent crude fell 0.89% to settle at $75.78 a barrel.

The MarketsWorld Overview MarketsWorld Bars

The Federal Reserve is expected to raise the interest rate for the second time this year, meeting the expectations it had previously stated. The market will then be looking for how many more rises to expect this year? The current dot-plot stands at only one more hike and this dot-plot is likely to remain unchanged, with the fed signalling that the next rate increase will come in December. An upgrade to two additional rate increases could boost the dollar.

 

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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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