CFD Markets News and Forecasts — 05-06-2018

Major US stock exchanges closed mixed: the Nasdaq index rose against the backdrop of a rise in price of technology companies, while the S & P500 and Dow closed the session almost unchanged, being under pressure from financial stocks.

Negligible impact on the course of trading was provided by the US. A report from IHS Markit showed that business activity in the US services sector increased sharply in May. Although the growth rate of new orders has slowed slightly, it has remained among the fastest in the last three years. The seasonally adjusted index of activity in the services sector rose to 56.8 in May, compared with 54.6 in April. The latest data signaled the fastest growth since April 2015.

Meanwhile, the index of business activity in the US services sector, calculated by the Institute for Supply Management (ISM), improved to 58.6 points in May from 56.8 in April. Analysts predicted that the figure will increase only to 57.5 points.

In addition, the Job Vacancy and Yield Survey (JOLTS), published by the US Bureau of Labor Statistics, showed that in April the number of vacancies increased to 6.698 million, updating a record high. Meanwhile, the indicator for March was revised upwards to 6.633 million from 6.55 million. Analysts had expected the number of vacancies to drop to 6,101 million. The vacancy rate was 4.3 percent, unchanged from March.

Most DOW components recorded a decline (18 of 30). Outsider were the shares of Merck & Co., Inc. (MRK, -0.98%). The leader of growth was the shares of DowDuPont Inc. (DWDP, + 1.32%).

S & P Sectors completed trades are mixed. The technological sector grew most (+ 0.4%), while the utilities sector showed the greatest decrease (-0.6%).

At closing:

Dow 24,799.98 -13.71 -0.06%

S&P 500 2,748.80 +1.93 +0.07%

Nasdaq 100 7,637.86 +31.40 +0.41%

The number of job openings was little changed at 6.7 million on the last business day of April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate was unchanged at 2.3 percent and the layoffs and discharges rate increased to 1.2 percent. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

The report was issued today by Anthony Nieves, Chair of the Institute for Supply Management (ISM): "The NMI registered 58.6 percent, which is 1.8 percentage points higher than the April reading of 56.8 percent. This represents continued growth in the non-manufacturing sector at a faster rate. The Non-Manufacturing Business Activity Index increased to 61.3 percent, 2.2 percentage points higher than the April reading of 59.1 percent, reflecting growth for the 106th consecutive month, at a faster rate in May. The New Orders Index registered 60.5 percent, 0.5 percentage point higher than the reading of 60 percent in April. The Employment Index increased 0.5 percentage point in May to 54.1 percent from the April reading of 53.6 percent."

Labour productivity of Canadian businesses fell 0.3% in the first quarter, following a 0.2% increase in the fourth quarter of 2017.

In the first quarter, business output decelerated from the previous quarter, while the pace of growth in hours worked accelerated and surpassed output growth.

Growth in the real gross domestic product (GDP) of businesses slowed to 0.2%, after increasing 0.4% in the previous quarter. The growth in output in the first quarter was mainly moderated by the slowdown in service-producing businesses (+0.2%) due to decreases in real estate and retail trade. However, production growth of goods-producing businesses (+0.6%) continued at a similar pace as in the previous quarter.

U.S. stock-index futures were flat on Tuesday, following a two-day rally, which was triggered by the release of stronger-than-expected U.S. labour market data for May that bolstered investor confidence that the U.S. economy remains strong and shifted their focus from trade tensions.

Global Stocks:

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

Twitter (TWTR) target raised to $45 at Cascend Securities

In April 2018 compared with March 2018, the seasonally adjusted volume of retail trade increased by 0.1% in the euro area (EA19) and increased by 0.4% in the EU28, according to estimates from Eurostat. In March, the retail trade volume increased by 0.4% in the euro area and by 0.2% in the EU28. In April 2018 compared with April 2017 the calendar adjusted retail sales index increased by 1.7% both in the euro area and in the EU28.

The 0.1% increase in the volume of retail trade in the euro area in April 2018, compared with March 2018, is due to a rise of 1.7% in non-food products, while "food, drinks and tobacco" fell by 0.7% and automotive fuels by 0.8%. In the EU28, the 0.4% increase in the volume of retail trade is due to increases in non-food products by 1.5%, and in automotive fuel by 0.6%, while "food, drinks and tobacco" fell by 0.5%.

Adjusted for seasonal influences, the IHS Markit/CIPS UK Services PMI Business Activity Index rose to 54.0 in May, up from 52.8 in April and comfortably above the 50.0 no-change value. The latest reading was the highest since February and signalled a solid upturn in overall business activity across the service economy. Service providers cited a catch-up from the snow-related disruption seen in the first quarter of 2018, alongside sustained growth of incoming new work.

The final IHS Markit Eurozone PMI Composite Output Index posted 54.1 in May, unchanged from the earlier flash estimate and its lowest level since November 2016. The headline index has nevertheless signalled expansion in each of the past 59 months. Rates of increase eased in both the manufacturing (18-month low) and service (16- month low) sectors.

Chris Williamson, Chief Business Economist at IHS Markit said: "The pace of eurozone economic growth sank to a one-and-a-half year low in May, and has now slowed continually since January's peak to suggest that the region is on course for its worst quarter since 2016. "The survey signals GDP growth of 0.4-0.5% for the second quarter, but there is much uncertainty as to whether the pace will continue to weaken in coming months."

Germany's service sector experienced a further slowdown in May, with business activity rising at the weakest rate for 20 months. New orders increased only modestly, while the pace of job creation eased to the slowest seen in over two years. Inflationary pressures meanwhile picked up, driven by an acceleration in the rate of input cost inflation in the sector. May saw the seasonally adjusted IHS Markit Germany Services PMI Business Activity Index fall from 53.0 in April to 52.1, its lowest reading since September 2016.

At 54.3 in May, down from 57.4 in April, the headline seasonally adjusted Business Activity Index revealed a marked slowdown in output growth across the service economy. The latest increase in business activity was the weakest since the beginning of 2017. Although service providers commented on a generally favourable demand backdrop, survey respondents noted that more cautious consumer spending patterns had held back growth in May. In some instances, softer business activity expansion was also attributed to transport disruptions in May

The rise in activity was supported by ongoing job creation, with the latest increase in employment among the strongest in the past 11 years.

The headline seasonally adjusted Business Activity Index rose to a three-month high of 56.4 in May, from 55.6 in April. This signalled a sharp monthly increase in activity across the sector, extending the current sequence of growth to 55 months.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1808 (2493)

$1.1770 (2790)

$1.1743 (3408)

Price at time of writing this review: $1.1689

Support levels (open interest**, contracts):

$1.1632 (3115)

$1.1591 (4706)

$1.1545 (2525)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 8 is 166230 contracts (according to data from June, 4) with the maximum number of contracts with strike price $1,1500 (6279);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3459 (1828)

$1.3418 (950)

$1.3384 (391)

Price at time of writing this review: $1.3320

Support levels (open interest**, contracts):

$1.3288 (1444)

$1.3263 (1439)

$1.3230 (1043)

Comments:

- Overall open interest on the CALL options with the expiration date June, 8 is 40670 contracts, with the maximum number of contracts with strike price $1,3600 (2278);

- Overall open interest on the PUT options with the expiration date June, 8 is 42120 contracts, with the maximum number of contracts with strike price $1,3400 (2260);

- The ratio of PUT/CALL was 1.04 versus 1.05 from the previous trading day according to data from June, 4.

* - 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 Caixin China Composite PMI data (which covers both manufacturing and services) indicated that growth of Chinese business activity remained modest in May. The Composite Output Index was unchanged from April's reading of 52.3, to signal a steady and moderate pace of expansion. However, growth remained slower than that recorded at the start of 2018.

Latest data signalled that the upturn in activity was broad-based, with both manufacturers and services companies noting increases in output during May. Manufacturing production rose at a fractionally quicker pace than in April, albeit one that was still modest overall. Meanwhile, the rate of services activity growth was unchanged from the previous month, with the seasonally adjusted Caixin China General Services Business Activity Index holding steady at 52.9. However, rates of expansion remained subdued in both sectors compared to those seen earlier in the year.