CFD Markets News and Forecasts — 03-01-2019

Major US stock indexes have declined significantly, as the key indicator of enterprise activity recorded the biggest drop in the last ten years, which caused dissatisfaction with investors who were already frightened by the Apple warning (AAPL) about the decline in profits.

Apple CEO Tim Cook on Thursday published a letter to investors in which he lowered the forecast for technology giant revenues in the first quarter to $ 84 billion from $ 89- $ 93 billion previously expected. The company also reduced gross margin expectations to about 38%, compared to 38% -38.5% previously predicted. Apple blamed a number of factors for lowering forecasts, including the weakness of the Chinese economy and disappointing iPhone revenues. This news has reinforced concerns about a downturn in global growth, as well as the impact of trade tensions between the United States and China on corporate earnings.

Meanwhile, a report published by the Institute for Supply Management (ISM) showed that in December, activity in the US manufacturing sector sharply decreased, and turned out to be lower than economists' forecasts. The manufacturing PMI fell in December to 54.1 points from 59.3 points in November. The index reached a minimum since August 2016 and recorded the largest decline since 2008. Analysts had expected this figure to drop to 57.8 points.

Almost all the components of DOW finished trading in the red (29 out of 30). Apple Inc.’s shares turned out to be an outsider. (AAPL, -9.75%). Only shares of Verizon Communications Inc. rose in price. (VZ, + 0.39%).

Most sectors of the S & P recorded a decline. The technology sector fell the most (-2.8%). The largest growth was shown by the conglomerate sector (+ 0.9%).

At the time of closing:

Dow 22,684.73 -661.51 -2.83%

S & P 500 2,447.85 -62.18 -2.48%

Nasdaq 100 6,463.50 -202.43 -3.04%

The December PMI registered 54.1 percent, a decrease of 5.2 percentage points from the November reading of 59.3 percent. The New Orders Index registered 51.1 percent, a decrease of 11 percentage points from the November reading of 62.1 percent. The Production Index registered 54.3 percent, 6.3-percentage point decrease compared to the November reading of 60.6 percent. The Employment Index registered 56.2 percent, a decrease of 2.2 percentage points from the November reading of 58.4 percent.

“Comments from the panel reflect continued expanding business strength, but at much lower levels. Demand softened, with the New Orders Index retreating to recent low levels, the Customers’ Inventories Index remaining too low — a positive heading into the first quarter of 2019 — and the Backlog of Orders declining to a zero-expansion level. Consumption continued to strengthen, with production and employment still expanding, but at much lower levels compared to prior periods. Inputs — expressed as supplier deliveries, inventories and imports — softened as well, with suppliers improving delivery performance, and inventories and imports declining”.

U.S. stock-index futures tumbled on Thursday, as a cut in sales outlook by Apple Inc. (AAPL; -8.6%) added to global growth concerns.

Global Stocks:

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

In the week ending December 29, the advance figure for seasonally adjusted initial claims was 231,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up by 5,000 from 216,000 to 221,000. The 4-week moving average was 218,750, a decrease of 500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 218,000 to 219,250.

Apple (AAPL) downgraded to Neutral from Outperform at Macquarie

Apple (AAPL) downgraded to Hold from Buy at Loop Capital

Apple (AAPL) downgraded to Hold from Buy at Jefferies

“We wrapped up 2018 with another month of significant growth in the labor market,“ said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although there were increases in most sectors, the busy holiday season greatly impacted both trade and leisure and hospitality. Small businesses also experienced their strongest month of job growth all year.” Mark Zandi, chief economist of Moody’s Analytics, said, “Businesses continue to add aggressively to their payrolls despite the stock market slump and the trade war. Favorable December weather also helped lift the job market. At the current pace of job growth, low unemployment will get even lower.”

Apple (AAPL) upgraded to Neutral from Reduce at New Street Research

Honeywell (HON) upgraded to Outperform from Neutral at Credit Suisse

Major crude producers, including the U.S. and Russia, continued to ramp up output in the second half of 2018, a factor which helped spark the downtrend in oil prices seen since October. The U.S. Energy Information Administration forecasts American output will rise to 12.1 million barrels a day in 2019, up 1.2 million barrels a day from the previous year. "News of record production by Russia and the U.S. along with Iraqi exports surging weighed on prices," said consulting firm Global Risk Management in a note.

UK construction firms indicated a disappointing end to 2018 as business activity growth eased to a three-month low and new orders expanded at a relatively subdued pace. The main bright spot was a sustained rebound in civil engineering activity, which rose at the fastest pace since May 2017.

At 52.8 in December, down from 53.4 in November, the headline seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index posted above the crucial 50.0 no-change value for the ninth consecutive month. However, the latest reading signalled only a modest rate of expansion that was the slowest seen since September.

The annual growth rate of the broad monetary aggregate M3 decreased to 3.7% in November 2018 from 3.9% in October, averaging 3.7% in the three months up to November. The components of M3 showed the following developments.

The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, stood at 6.7% in November, compared with 6.8% in October. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) stood at -1.0% in November, unchanged from the previous month. The annual growth rate of marketable instruments (M3-M2) was -6.0% in November, compared with -4.6% in October.

The number of unemployed registered in the offices of the Public Employment Services has decreased by 210,484 in the last twelve months, with a year-on-year reduction rate of 6.17%. Thus, the total number of unemployed stands at 3,202,297.

Registered unemployment continues at its lowest levels in the last 9 years. In seasonally adjusted terms, unemployment has decreased by 8,746 people. The number of unemployed has been reduced in December by 50,570 people compared to the previous month, 1.55%. Male unemployment stood at 1,337,244 people, down by 5,697 (-0.42%)

EUR/USD

Resistance levels (open interest**, contracts)

$1.1539 (1860)

$1.1513 (395)

$1.1474 (528)

Price at time of writing this review: $1.1371

Support levels (open interest**, contracts):

$1.1301 (2089)

$1.1272 (6619)

$1.1240 (2370)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 8 is 52032 contracts (according to data from January, 2) with the maximum number of contracts with strike price $1,1350 (6619);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2844 (53)

$1.2803 (52)

$1.2770 (31)

Price at time of writing this review: $1.2545

Support levels (open interest**, contracts):

$1.2487 (1190)

$1.2439 (371)

$1.2412 (773)

Comments:

- Overall open interest on the CALL options with the expiration date February, 8 is 13943 contracts, with the maximum number of contracts with strike price $1,4800 (1356);

- Overall open interest on the PUT options with the expiration date February, 8 is 14288 contracts, with the maximum number of contracts with strike price $1,2450 (1325);

- The ratio of PUT/CALL was 1.02 versus 0.98 from the previous trading day according to data from January, 2

* - 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.

A negative start to trading is expected on the stock markets of Europe. This is mainly due to the sentiment seen today in Asian stocks and US stock futures.