CFD Markets News and Forecasts — 02-10-2018

Major US stock indexes ended the session mixed: a surge in Intel shares allowed the Dow index to update a record high, while the S & P 500 and Nasdaq showed a fall, as stocks were still under pressure because of Italy's problems.

Italian politicians set the ratio of deficit to GDP in 2019 at a preferred level, which was much higher than the reasonable target proposed by the country's finance minister. The budget law for 2019, which Parliament will be asked to approve in the coming months, is likely to lead to an even higher government deficit.

Oil quotes have stabilized near their high since November 2014, as markets prepare for tougher deliveries as soon as US sanctions against Iran come into force next month.

Most of the components of DOW finished trading in positive territory (24 out of 30). The growth leader was shares of Intel Corporation (INTC, + 3.91%). Outsiders were NIKE, Inc. shares. (NKE, -2.00%).

Most S & P sectors recorded a decline. The utility sector grew the most (+ 1.2%). The largest decline was shown by the service sector (-0.8%).

At closing:

Dow 26,774.35 +123.14 +0.46%

S & P 500 2,923.43 -1.16 -0.04%

Nasdaq 100 7,999.55 -37.76 -0.47%

U.S. stock-index futures fell on Tuesday, as optimism over the U.S.-Canada trade deal faded, while Italy concerns weighed on market sentiment.

Global Stocks:

Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)

General Electric (GE) upgraded to Outperform from Peer Perform at Wolfe Research

General Electric (GE) upgraded to Outperform from Sector Perform at RBC Capital Mkts

Chevron (CVX) added to Conviction Buy List at Goldman

In August 2018, compared with July 2018, industrial producer prices rose by 0.3% in both the euro area (EA19) and the EU28, according to estimates from Eurostat, the statistical office of the European Union. In July 2018, prices increased by 0.7% in the euro area and by 0.5% in EU28. In August 2018, compared with August 2017, industrial producer prices rose by 4.2% in the euro area and by 4.7% in the EU28.

Industrial producer prices in the euro area in August 2018, compared with July 2018, rose by 0.9% in the energy sector, by 0.2% for durable consumer goods and by 0.1% for intermediate goods and non-durable consumer goods. Prices in total industry excluding energy remained stable. In the EU28, industrial producer prices rose by 1.0% in the energy sector and by 0.1% for intermediate goods and durable consumer goods, while prices remained stable for capital goods and non-durable consumer goods. Prices in total industry excluding energy rose by 0.1%. Industrial producer prices increased in all Member States for which data are available. The highest increases were observed in Latvia (+2.1%), Romania (+1.0), Denmark (+0.8%), Belgium and Hungary (both +0.6%).

UK construction companies indicated a sustained increase in business activity during September, but the rate of expansion slowed for the second month running. At 52.1 in September, down from 52.9 in August, the seasonally adjusted IHS Markit/CIPS UK Construction Purchasing Managers' Index signalled the weakest upturn in output for six months.

Civil engineering was the worst performing subcategory of construction work, with activity declining at a slightly quicker rate in September. House building and commercial construction continued to increase at a solid pace, although the latest survey indicated weaker growth than in August. A number of firms suggested that subdued economic conditions so far in 2018 remained a factor holding back business activity growth

EUR/USD

Resistance levels (open interest**, contracts)

$1.1718 (3246)

$1.1687 (2176)

$1.1645 (264)

Price at time of writing this review: $1.1541

Support levels (open interest**, contracts):

$1.1495 (3265)

$1.1447 (2749)

$1.1399 (2964)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 15 is 92090 contracts (according to data from October, 1) with the maximum number of contracts with strike price $1,1600 (5325);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3149 (2660)

$1.3126 (2210)

$1.3093 (722)

Price at time of writing this review: $1.3007

Support levels (open interest**, contracts):

$1.2932 (2097)

$1.2889 (2242)

$1.2843 (1940)

Comments:

- Overall open interest on the CALL options with the expiration date October, 15 is 29125 contracts, with the maximum number of contracts with strike price $1,3200 (2821);

- Overall open interest on the PUT options with the expiration date October, 15 is 38819 contracts, with the maximum number of contracts with strike price $1,2800 (2279);

- The ratio of PUT/CALL was 1.33 versus 1.29 from the previous trading day according to data from October, 1.

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

Preliminary estimates for September indicate that the index decreased by 0.1 per cent (on a monthly average basis) in SDR terms, after being unchanged in August (revised). The non-rural subindex increased in the month, while the rural and base metals indices decreased. In Australian dollar terms, the index increased by 2.0 per cent in September.

Over the past year, the index has increased by 4.8 per cent in SDR terms, led by higher LNG, alumina and thermal coal prices. The index has increased by 14.4 per cent in Australian dollar terms.

Consistent with previous releases, preliminary estimates for iron ore, coking coal, thermal coal and LNG export prices are being used for the most recent months, based on market information. Using spot prices for the bulk commodities, the index increased by 2.0 per cent in September in SDR terms, to be 6.7 per cent higher over the past year.

The budget law for 2019, which Parliament will be asked to approve in the coming months, could lead to an even higher government deficit.

President Donald Trump on Monday welcomed the new trade deal with Canada and Mexico as a win for American workers, while investors sighed with relief that the key pillars of NAFTA had survived his tough strategy to change global trade.

Washington and Ottawa reached an agreement on Sunday after several weeks of intense bilateral negotiations to renew the Free Trade Agreement, which was concluded in 1994. In August, the United States made a separate trade deal with Mexico, the third member of NAFTA.

The new agreement, called the United States, Mexico and Canada Agreement (USMCA), aims to attract more jobs to the United States, with Canada and Mexico accepting more restrictive trade with their main export customer.

"These measures will support the many hundreds of thousands of American workers," said Trump at the White House, describing the bargain as the most important deal that the United States has ever done.

"This deal will add much more jobs and these are quality jobs," he said.

Previously, Trump repeatedly called NAFTA a terrible deal for the United States.

The latest NZIER Quarterly Survey of Business Opinion (QSBO) shows a further deterioration in business confidence. A net 28 percent of businesses expect economic conditions to worsen - the lowest level since March 2009.

Firms' own domestic trading activity is a better indicator of GDP growth than business confidence. Firms' own activity for the September quarter and expectations for the next quarter both fell, indicating a slowing in economic growth over the second half of 2018.

A net 0.4 percent of firms reported higher demand over the September quarter - the lowest level since September 2012.

• Unemployment is expected to decline over the next two years.

• Household debt and low wages remain a source of uncertainty

• GDP growth in 2018 and 2019 on average will be slightly above 3%

• US trade policy is a source of uncertainty

• The rates correspond to the target level of inflation and economic growth.
  

• Further progress is expected in reducing unemployment and increasing inflation.

• Inflation is expected to be gradual.

• Loan conditions are tougher than they have been for a while.

• Mortgage rates remain low, there is strong competition between banks

• The demand for loans from investors who invest in housing has weakened noticeably

• In 2019 and 2020, inflation will be higher than now

• Labor market outlook remains positive

• UK annual house price growth steady at 2%

• Prices up 0.3% during the month, after taking account of seasonal factors

• North was the weakest performing region in Q3, with prices down 1.7% year on year

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: "Annual house price growth was stable in September at 2%. "Indeed, annual house price growth has been confined to a fairly narrow range of c2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market. "Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates".