Weak U.S. inflation coud delay next rate rise – Binary Options Daily Review

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Markets Report

Global Markets

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Monday 16th October 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 5,351.74 – 9.07 5,344.96 – 5,371.65
DAX 12,991.87 + 8.98 12,964.35 – 13,036.74
Dow Jones 22,871.72 + 30.71 22,855.93 – 22,905.33
FTSE 7,535.44 – 20.80 7,521.09 – 7,556.24
IBEX 10,258.00 – 17.90 10,231.50 – 10,299.70

Closing Markets Summary

Dow Jones

Stocks in the U.S. closed higher on Friday after a batch of mixed economic data which showed weaker than forecast inflation but stronger than forecast retail sales numbers and as President Donald Trump delivered a speech decertifying a nuclear agreement with Iran. Investor sentiment was helped by upbeat earnings reports from banks and the highest consumer-sentiment reading in 13 years supported modest buying. The Trump administration said it won’t certify Iran’s compliance with a 2015 nuclear agreement, declaring Tehran a regime that continues to sponsor terrorism and alleging that Iran “intimidated international expectations” sent to inspect it from building up nuclear armaments. Trump laid out a new strategy to deal with Iran and warned that he could cancel U.S. participation in the nuclear pact at any time. The strategy includes placing additional sanctions on the Iran regime to block its “financing of terror,” said Trump. The president also ended billions of dollars in subsidies to insurers under the Affordable Care Act program. The White House said the government can’t lawfully make the payments as there is no appropriation for them. Economic data showed that the consumer-price index rose 0.5% in September, the second increase in a row and the largest in eight months. However, this was slightly below the 0.6% that had been forecast. Retail sales showed a rise of 1.6% in September, reflecting the largest increase in 2½ years, coming in line with forecasts. The University of Michigan’s preliminary reading of the consumer-sentiment index for October came in at 101.1, the highest level since 2004. Companies that featured included Bank of America Corp. which fell 1.5% after the lender posted a rise in third-quarter profit. Wells Fargo & Co. fell 2.8% after reporting third-quarter earnings that were weaker than forecast, with a profit of $4.6 billion, or 84 cents a share, including a charge of $1 billion to settle a mortgage-linked probe, compared with profit of $5.6 billion at the same period last year. Applied Optoelectronics Inc. fell 20% after the fiber-optic networking company warned investors about lower than forecast third-quarter profit and revenue late Thursday. Antares Pharma Inc. fell 38%, after the company’s announcement Thursday that the U.S. Food and Drug Administration had found deficiencies in the drug Xyosted (testosterone enanthate) during its review process. Monsanto Co. rose 2% higher after Bayer AG said it has reached a $7 billion deal to sell parts of its crop-science business to rival BASF SE. The Dow Jones closed up 30.71 points at 22,871.72, for a gain on the week of 0.4%. The S&P 500 closed up 2.24 points at 2,553.17, for a gain of a 0.2% on the week. The Nasdaq Composite closed up 14.29 points at 6,605.80, for a gain of 0.2% on the week.

Europe

European equity markets closed slightly higher on Friday helped by gains in commodities following upbeat data out of China. The pan-European Stoxx 600 closed up 0.29 percent at 391.42, bouncing back from a dip during afternoon trade. On the week, the Stoxx 600 index was up 0.5 percent. Sectors finished mainly in positive territory, with the exception of autos, banks and health care. Europe’s basic resources index meanwhile moved up 2.68 percent, on the back of strong imports data in China and a price rise in nickel. In September, China exports rose 8.1 percent in dollar terms compared to a year ago, while imports rose 18.7 percent. The imports figure was ahead of forecasts. The world’s largest steelmaker, ArcelorMittal topped the European sector, soaring 7.37 percent. Oil prices rose nearly 1.5 percent by Europe’s close, boosted by the China data and tensions rising in the Middle East. Companies that featured included oil related Tullow oil which rose 3.2% and OMV which rose 7.17%. Provident was the top performer on the European benchmark with a rise of 12.4% as the beleaguered British subprime lender announced a recovery plan for its home credit unit. The firm is currently struggling with a staff shortage and remains on course to post a loss of up to £120 million in 2017. The world’s third-largest maker of crop chemicals, BASF, announced that it had agreed to buy Bayer’s seed and herbicide business for 5.9 billion euros. Bayer has been attempting to persuade competition authorities to approve its planned $66 billion acquisition of Monsanto. On regional markets the French CAC closed down 9.07 points at 5,351.74, the German DAX closed up 8.98 points at 12,991.87 and the Spanish IBEX closed down 17.90 points at 10,258.00.

FTSE

The FTSE 100 closed lower on Friday but will of the lows of the day, the index opened sharply as the pound climbed on rumours about the Brexit negotiations. Sterling was extending its bounce from the start of the week, apart from a few moves lower, after reports that the European Union might discuss offering the U.K. a two-year extension of its single market membership following Brexit. The EU’s chief Brexit negotiator, Michel Barnier, was intending to table this proposal at a meeting of EU ambassadors on Friday. Recovering from a low of just over 1.30 at the end of last week, the pound was up 0.33% against the U.S. dollar to 1.3305 and 0.21% higher versus the euro at 1.1234. Companies that featured included miners, which were higher following Chinese trade numbers which showed a pick-up in export growth from a 6.9% year-on-year clip in August to 9.0% for September, ahead of the 10.9% that was forecast. Import demand was stronger than anticipated, rising by 19.5% on the year versus forecasts of 16.5%. Anglo American, Rio Tinto, Glencore and Rio Tinto, were among the top performers. Financial stocks were also performing well as upbeat trading news helped the gains. GKN fell nearly 10% as it warned that full-year profits before tax will be only slightly higher on the prior year’s as a result of two significant “commercially sensitive” external claims, together with continuing headwinds at its North American aerospace arm that are expected to drag on the group’s trading margin. Aviva was lower even after it agreed to sell its entire 49% shareholding in its joint venture in Taiwan, First Aviva Life, though the transaction had a “negligible impact” on Aviva’s IFRS net assets, Solvency II capital position and IFRS operating profit. The FTSE 100 closed down 20.80 points at 7,535.44.

Economic News Expected Today

 USA

Type Period Forecast Previous Importance
NY Empire State Manufacturing Index Oct 20.75 24.40 Medium

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
Trade Balance (euro zone) August   23.2B 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
CPI (China) Sept 0.4% m/m; 1.6% y/y 0.4% m/m; 1.8% y/y Medium
PPI (China) Sept 6.3% y/y 6.3% y/y Medium
Capcity Utilization (Japan) August   -1.8% m/m Low
Industrial Production (Japan) August   2.1% m/m Medium

Economic News Round Up MarketsWorld Bars

U.S. consumer price inflation rose less than forecast in September, the U.S. Commerce Department reported that consumer prices rose 0.5% in September, compared to forecasts for an increase of 0.6%. Year-over-year, consumer prices increased 2.2% last month, below forecasts for a 2.3% increase. Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.1% last month, below forecasts for an uptick of 0.2%. Core CPI increased at an annualized rate of 1.7% in September, in line with the previous month’s increase but below forecasts for a 1.8% rise. Retail sales rose in September, the U.S. Commerce Department reported that retail sales rose 1.6% from the prior month, just missing forecasts for a gain of 1.7%. Retail sales in August fell 0.1%, which was revised from a negative 0.2%. Core retail sales, which exclude automobile sales, rose by a seasonally adjusted 1.0% in September, ahead of forecasts for a 0.3% advance. U.S. consumer sentiment increased more than forecast in October, the preliminary publication of the data for September from the University of Michigan’s Consumer Survey Center showed that consumer sentiment rose to 101.1 from 95.1 in the previous month. Forecasts were for the reading to fall to 95.0. U.S. business inventories recorded their biggest increase in nine months in August, the Commerce Department reported that business inventories increased 0.7 percent after rising 0.3 percent in July.

China’s import and export growth accelerated in September, the data also suggested further improvement in the global economy, with business activity and demand having picked up markedly this year in Europe and the United States. Imports grew 18.7 percent in September from a year earlier, beating forecasts for a 13.5 percent expansion and accelerating from 13.3 percent in August. Exports rose 8.1 percent, below forecasts of 8.8 percent but the most in three months and beating August’s 5.5 percent.

Forex Round Up MarketsWorld Bars

The U.S. dollar was lower against other major counterparts on Friday, but was off the days lows after a strong reading on U.S. consumer sentiment data, although a disappointing report on U.S. inflation released earlier in the day continued to weigh. The University of Michigan reported in a preliminary report that its consumer sentiment index climbed to its highest level since 2004 this month. The U.S. Commerce Department reported that retail sales recorded their biggest increase in two-and-a-half years in September. However, a separate report showed that U.S. consumer prices rose less than forecast in September, both on a monthly and annual basis. Some investors now think that a lower than expected increase in U.S. inflation could prevent the Federal Reserve from raising interest rates in December. The EUR/USD was up 0.16% at 1.1850, not far from Thursday’s two-week peak of 1.1880. The GBP/USD was up 0.36% at a fresh two-week high of 1.3309. The pound remained supported by a report published on Thursday by German newspaper Handelsblatt indicating that the U.K. could stay in the European Union for another two years. According to the report, the EU’s offer is tied to the U.K. meeting all of its obligations as a member country, but giving up its voting rights. The USD/JPY was down 0.35% to 111.90, while USD/CHF was down 0.21% at 0.9734. The Australian dollar was little changed with the AUD/USD at 0.7889 and the NZD/USD was up 0.88% at 0.7189. The Canadian dollar was steady, with the USD/CAD at 1.2482. The U.S. dollar index was down 0.18% at 92, just off a more than two-week low of 92.59 hit earlier in the session.

 
Commodity Round Up MarketsWorld Bars

Gold futures rose on Friday and pushed above the key $1,300 level after a reading on U.S. inflation came in cooler than forecast, raising uncertainty about the pace of U.S. interest-rate hikes by the Federal Reserve. December gold rose $8.10 to settle at $1,304.60 an ounce, for a gain of 2.3% for the week. Silver for December delivery rose 14.5 cents to settle at $17.411 an ounce, for a gain of 3.7% on the week.

Oil prices rose on Friday to settle at their highest level in two weeks on Friday as uncertainty surrounds Iran’s nuclear deal and amid strong Chinese crude imports. November West Texas Intermediate crude rose 85 cents to settle at $51.45 a barrel, on the week the price rose around 4.4%. December Brent crude rose 63 cents to settle at $56.88 a barrel, for a gain of 2.8% on the week.

The MarketsWorld Overview MarketsWorld Bars

Before markets open for a new trading week the Chair of the Federal Reserve will address a forum of the G-30 and may provide some hints about the next moves coming from the central bank. She will also have an opportunity to respond to the latest inflation figures which were released on Friday which could influence the Feds decision.

 

 

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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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