CFD Markets News and Forecasts — 04-04-2018

The main US stock indexes rose strongly on Wednesday, despite news of China's plans to introduce retaliatory measures to introduce duties from the US.

On the eve of the US published a list of goods imported from China worth about $ 50 billion, which are planned to introduce 25% duty. The list, in particular, includes such goods of Chinese manufacture as cars, motorcycles, railway transport, machine tools, medical and other equipment, aviation spare parts, satellites - only 1300 names.

In addition, the focus was on the US. As it became known, the index of business activity in the US services sector, calculated by the Institute for Supply Management (ISM), deteriorated in March to 58.8 points compared to 59.5 points in February. Analysts predicted that the figure will drop only to 59.2 points. However, the current value of the index is only 1.1 points below the maximum of this year, 59.9 points, which was set in January.

At the same time, the seasonally adjusted final index of business activity in the US services sector from IHS Markit reached 54.0 in March, compared with 55.9 in February. Moreover, the average value of the index for the first three months of 2018 was generally in line with the rate of expansion that was observed in 2017 as a whole. The survey participants largely linked the growth of business activity with diversification and more favorable conditions for demand.

Most components of the DOW index finished trading in positive territory (26 out of 30). The leader of growth was the shares of International Business Machines Corporation (IBM, + 2.93%). Outsider were shares of The Boeing Company (BA, -1.22%).

All sectors of the S & P index recorded an increase. The conglomerate sector grew most (+ 1.6%).

At closing:

Dow 24,264.16 +230.80 +0.96%

S&P 500 2,644.70 +30.25 +1.16%

Nasdaq 100 7,042.11 +100.82 +1.45%

The report was issued today by Anthony Nieves, Chair of the Institute for Supply Management (ISM):

"The NMI registered 58.8 percent, which is 0.7 percentage point lower than the February reading of 59.5 percent. This represents continued growth in the non-manufacturing sector at a slightly slower rate. The Non-Manufacturing Business Activity Index decreased to 60.6 percent, 2.2 percentage points lower than the February reading of 62.8 percent, reflecting growth for the 104th consecutive month, at a slower rate in March. The New Orders Index registered 59.5 percent, 5.3 percentage points lower than the reading of 64.8 percent in February. The Employment Index increased 1.6 percentage points in March to 56.6 percent from the February reading of 55 percent".

New orders for manufactured durable goods in February increased $7.4 billion or 3.1 percent to $247.7 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 3.5 percent January decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 2.5 percent. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.1 percent to $83.5 billion.

Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.7 billion. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.8 percent to $33.4 billion.

• U.S. GDP growth looks uncertain for q1

• Inflation remains low but is expected to move somewhat higher during 2018

• Yield curve inversion later this year remains a possibility

U.S. stock-index futures tumbled on Wednesday as China announced plans to impose a 25 percent tariff on 106 products imported from the U.S., including planes, cars, beef, chemicals, etc. The move is a response to the U.S. tariffs on Chinese imports.

Global Stocks:

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

DowDuPont (DWDP) upgraded to Buy from Hold at HSBC Securities

Private sector employment increased by 241,000 jobs from February to March according to the March ADP National Employment Report.

"We saw impressive momentum in the first quarter of 2018 with more jobs added per month on average than in 2017," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Midsized businesses added nearly half of all jobs this month, the best growth this segment has seen since the fall of 2014. The manufacturing industry also performed well, with its strongest increase in more than three years." Mark Zandi, chief economist of Moody's Analytics, said, "The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten."

We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue! @realDonaldTrump

The euro area (EA19) seasonally-adjusted unemployment rate was 8.5% in February 2018, down from 8.6% in January 2018 and from 9.5% in February 2017. This is the lowest rate recorded in the euro area since December 2008. The EU28 unemployment rate was 7.1% in February 2018, down from 7.2% in January 2018 and from 8.0% in February 2017. This is the lowest rate recorded in the EU28 since September 2008. These figures are published by Eurostat, the statistical office of the European Union.

Eurostat estimates that 17.632 million men and women in the EU28, of whom 13.916 million in the euro area, were unemployed in February 2018. Compared with January 2018, the number of persons unemployed decreased by 201 000 in the EU28 and by 141 000 in the euro area. Compared with February 2017, unemployment fell by 1.968 million in the EU28 and by 1.436 million in the euro area.

Euro area annual inflation is expected to be 1.4% in March 2018, up from 1.1% in February, according to a flash estimate from Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, food, alcohol & tobacco is expected to have the highest annual rate in March (2.2%, compared with 1.0% in February), followed by energy (2.0%, compared with 2.1% in February), services (1.5%, compared with 1.3% in February) and non-energy industrial goods (0.2%, compared with 0.6% in February).

In February 2018, 23.055 million persons were employed, +0.1% over January 2018. Unemployed were 2.835 million, -1.7% over the previous month.

Employment rate was 58.0%, unchanged over the previous month, unemployment rate was 10.9%, -0.2 percentage points over January 2018 and inactivity rate was 34.7%, +0.1 percentage points in a month. Youth unemployment rate (aged 15-24) was 32.8%, +0.3 percentage points over the previous month and youth unemployment ratio in the same age group was 8.6%, unchanged over January 2018.

• Include other products such as whisky, cigars, some types of beef

• Include corn, other agricultural products

EUR/USD

Resistance levels (open interest**, contracts)

$1.2380 (2198)

$1.2357 (3752)

$1.2335 (1335)

Price at time of writing this review: $1.2271

Support levels (open interest**, contracts):

$1.2240 (3635)

$1.2195 (4416)

$1.2148 (6543)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date April, 6 is 110356 contracts (according to data from April, 3) with the maximum number of contracts with strike price $1,2150 (6543);

GBP/USD

Resistance levels (open interest**, contracts)

$1.4174 (2340)

$1.4144 (1853)

$1.4112 (2488)

Price at time of writing this review: $1.4069

Support levels (open interest**, contracts):

$1.4025 (1052)

$1.3987 (1184)

$1.3943 (1239)

Comments:

- Overall open interest on the CALL options with the expiration date April, 6 is 30094 contracts, with the maximum number of contracts with strike price $1,4200 (2852);

- Overall open interest on the PUT options with the expiration date April, 6 is 34341 contracts, with the maximum number of contracts with strike price $1,3800 (3570);

- The ratio of PUT/CALL was 1.14 versus 1.11 from the previous trading day according to data from April, 3

* - 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.

• The trend estimate rose 0.4% in February 2018. This follows a rise of 0.3% in January 2018 and a rise of 0.3% in December 2017.

• The seasonally adjusted estimate rose 0.6% in February 2018. This follows a rise of 0.2% in January 2018 and a fall of 0.5% in December 2017.

• In trend terms, Australian turnover rose 2.7% in February 2018 compared with February 2017.

• The following industries rose in trend terms in February 2018: Food retailing (0.3%), Household goods retailing (0.6%), Other retailing (0.4%), Cafes, restaurants and takeaway food services (0.4%), and Clothing, footwear and personal accessory retailing (0.4%). Department stores (-0.2%) fell in trend terms in February 2018.

• Risks to U.S. financial system 'moderate' though Fed monitoring effects of fiscal stimulus

• May need to raise banks capital buffer if cyclical pressures build, vulnerabilities grow

• Financial asset valuations stretched, cyclical pressures building

• Chamber of Commerce for machinery and electronics says U.S. investigation has no factual basis, supports Beijing's measures on U.S. products

The Caixin China Composite PMI data (which covers both manufacturing and services) indicated that total Chinese business activity expanded at the slowest pace for four months at the end of the first quarter. Notably, the Composite Output Index fell from 53.3 in February to 51.8 in March, to signal only a modest pace of expansion. The dip in the headline index was driven by weaker increases in output across both the manufacturing and service sectors during March. Furthermore, rates of growth slipped to four-month lows in both sectors.

At 52.3 in March, the seasonally adjusted Caixin China General Services Business Activity Index fell further from January's multi-year peak, having slipped from 54.2 in February.