CFD Markets News and Forecasts — 10-09-2018

Major US stock indices showed mixed dynamics, as the fall in Apple's shares compensated for optimism about plans for further tax cuts.

Republicans in the House of Representatives of the US Congress plan to report a new portion of tax cuts this week, hoping to make a clear distinction between themselves and the Democrats on the eve of the congressional elections scheduled for November 6. The package, called "Tax Reform 2.0", is an addition to the Trump Tax reform of 2017, which is expected to increase the US budget deficit by $ 1.5 trillion within 10 years, due to tax cuts for US companies.

Investors also attracted some attention from the Conference Board, which showed that the August index of employment trends improved to 110.88 points compared to 109.58 points in July (revised from 109.89 points). This change represents an increase in the index by 6.9% compared to the same period in 2017. The Conference Board said that the increase in the index in August was due to the positive contribution of all 8 components.

Most of the components of DOW finished trading in positive territory (16 out of 30). The growth leader was the shares of The Home Depot, Inc. (HD, + 2.21%). Outsider were UnitedHealth Group Incorporated (UNH, -3.17%).

Almost all sectors of S & P recorded a rise. The conglomerate sector grew most (+ 1.9%). Decrease showed only the health sector (-0.1%) and the sector of basic materials (-0.1%).

At closing:

Dow 25,857.07 -59.47 -0.23%

S & P 500 2,877.13 +5.45 +0.19%

Nasdaq 100 7,924.16 +21.62 +0.27%

According to new ONS statistics published this morning, the UK economy expanded by 0.6 per cent in the three months to July compared with the previous three months after growing by 0.4 per cent in the second quarter (three months to June). The outturn was slightly higher than the 0.5 per cent monthly GDP forecast that we published last month for the same period. Building on the official data, our monthly GDP Tracker suggests that the economy is set to maintain the 0.6 per cent pace for the remainder of the third quarter.

The official data for July shows that retail sales responded strongly to recent warm weather and the football World Cup as did construction sector output which has recovered after a lacklustre performance at the start of 2018. Growth for the third quarter as a whole is likely to be driven by the service and construction sectors.

U.S. stock-index futures rose on Monday, as hopes for a new round of tax cuts in the U.S. outweighed concerns over the U.S.-China trade tensions, which raised on Friday after the U.S. president Donald Trump threatened to impose tariffs on an additional $267 billion of Chinese goods.

Global Stocks:

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

UnitedHealth (UNH) downgraded to Neutral from Buy at Citigroup

The 2-year note yield was mostly flat at 2.707%, while the 30-year bond rate was down 0.4 basis point to 3.099%.

In the three months to July 2018, services output increased 0.6% compared with the three months ending April 2018; this is the largest growth since the three months to January 2017.

The wholesale, retail and motor trade sector made the largest contribution to the three-month on three-month growth for the third consecutive month, contributing 0.23 percentage points.

The Index of Services increased by 0.3% between June 2018 and July 2018.

Growth in the professional, scientific and technical activities sector was the main reason behind the monthly growth, with the sector contributing 0.15 percentage points.

In the three months to July 2018, services output increased by 1.5% compared with the three months ending July 2017.

Removing the effect of inflation, the total trade deficit narrowed £2.0 billion to £2.5 billion in the three months to July 2018.

Excluding erratic commodities (including non-monetary gold), the trade deficit narrowed £0.2 billion to £5.2

billion in the three months to July 2018.

The trade in goods deficit narrowed £1.0 billion with countries outside the EU and widened £0.3 billion with EU countries in the three months to July 2018.

Improvements in the balances of both goods and services in the 12 months to July 2018 resulted in the trade deficit narrowing £13.8 billion to £17.0 billion.

• The weakness of the emerging markets, especially in Asia and Latin America, is weighing on economic assessments. But also home-made European problems.

• The US economy is still doing extremely well in an international comparison, but other regions are now suffering considerably from the constant, conflict-enhancing rhetoric of US President Trump, under a strong US dollar and local issues. Latin America is highly exposed.

In the last two months, investors have hoped that the economic downturn will be short-lived. This hope was largely lost at the beginning of September. From the perspective of the more than 1,000 investors surveyed by sentix, the economic sky darkens significantly, especially above all above the emerging markets. And this also has an impact on the developed markets.

Commenting on today's GDP figures, Head of GDP Rob Kent-Smith said:

"Growth in the economy picked up in the three months to July. Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year.

"However, production fell back, with manufacturing again slipping a little while energy generation and supply fell due to reduced demand.

"The dominant service sector again led economic growth in the month of July with engineers, accountants and lawyers all enjoying a busy period, backed up by growth in construction, which hit another record high level."

The fall of 0.5% in total production output for the three months to July 2018, compared with the three months to April 2018, is due primarily to a fall of 4.5% in electricity and gas supply, resulting from less demand due to higher than average temperatures during May to July 2018.

In the three months to July 2018, manufacturing fell by 0.1%, due primarily to a fall in machinery and equipment and metal products.

In July 2018, total production output was estimated to have increased by 0.1% compared with June 2018, due primarily to a rise in mining and quarrying of 3.3%; within oil and gas extraction, there was a return to production, following planned maintenance during June 2018.

The monthly decrease in manufacturing output of 0.2% was due mainly to a fall of 7.5% in basic pharmaceutical products; this was largely offset by widespread strength throughout the rest of the sector, with 8 of the 13 sub-sectors rising.

• Slowdown in Global Growth Due to Trade and Emerging Markets Is a 'Significant Risk'

• U.S. Economy Is Performing Well

• Sees No Need to Slow or Accelerate Current Path of Quarterly Interest-Rate Increases

Japan's Ministry of Finance reported that in July the surplus of the current account increased to Y2, 010 billion from Y1.176 billion recorded in June. This surpassed the forecasts for a surplus of Y1, 852 billion.

Japan's Customs Department announced that Japan's trade balance deficit in July was -Y1.0 billion after a recorded surplus of Y820.5 billion in June. Economists predicted a decline in trade surplus to Y243 billion

In the second quarter of 2018, Japan's economy expanded dramatically compared with the first quarter, the cabinet's data showed.

Japan's gross domestic product increased by 0.7%, as expected, after a decline of -0.2% in the first quarter.

In annual terms, GDP grew by 3.0% after a decline of -0.9% in the first quarter. Economists predicted a less significant increase in the indicator by 2.6%.

The GDP deflator grew by 0.1% compared to the previous year, which was in line with the forecasts and coincided with the previous value.

Nominal GDP grew by 0.7% for the quarter, up from 0.4% recorded in the first quarter, and exceeded growth forecasts (+ 0.6%).

Private consumption increased by 0.7%, which is in line with forecasts and the previous value, while business expenses increased by 3.1% after growth of 1.3% in the first quarter.

Also today, the Bank of Japan announced that the total bank lending in Japan in August rose by 2.2% year on year to Y526.912 trillion. This follows an increase of 2.0% in July.

Excluding trusts, lending also increased by 2.2% year-on-year, to Y458.295 trillion, after rising 2.0% in the previous month.

Lending from trusts increased by 2.2% year-on-year, to Y68.617 trillion, while lending to foreign banks increased by 25.2%, to Y2.533 trillion.

The total volume of manufacturing sales fell 1.2 percent in the June 2018 quarter compared with the March 2018 quarter, when adjusted for seasonal effects. This was the largest fall in five years, partly due to one-off events in the petroleum and chemicals sectors.

The total volume of manufacturing fell in the June 2018 quarter, after a moderate rise in both the March 2018 and December 2017 quarters, up 1.0 percent and 1.6 percent, respectively.

Nine of the 13 industries saw rises in sales volumes in the June 2018 quarter. The largest movements were petrol and coal product manufacturing (down 8.0 percent), and chemical, plastics, and rubber manufacturing (down 7.9 percent).

"The fall in petroleum product manufacturing was a consequence of the maintenance shutdown at the Marsden Point refinery," manufacturing statistics manager Sue Chapman said.

Consumer prices in China were up 2.3 percent on year in August, according to rttnews.

That exceeded expectations for 2.1 percent, which would have been unchanged from the July reading.

The bureau also said that producer prices jumped an annual 4.1 percent. That also topped forecasts for 4.0 percent and was down from 4.6 percent in the previous month.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1725 (996)

$1.1695 (639)

$1.1670 (266)

Price at time of writing this review: $1.1544

Support levels (open interest**, contracts):

$1.1495 (2993)

$1.1458 (2936)

$1.1419 (2332)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 15 is 83458 contracts (according to data from September, 7) with the maximum number of contracts with strike price $1,1900 (4607);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3113 (1754)

$1.3070 (712)

$1.3038 (658)

Price at time of writing this review: $1.2912

Support levels (open interest**, contracts):

$1.2867 (1337)

$1.2810 (1950)

$1.2741 (2349)

Comments:

- Overall open interest on the CALL options with the expiration date October, 15 is 23816 contracts, with the maximum number of contracts with strike price $1,3200 (2612);

- Overall open interest on the PUT options with the expiration date October, 15 is 26200 contracts, with the maximum number of contracts with strike price $1,2800 (2349);

- The ratio of PUT/CALL was 1.10 versus 1.01 from the previous trading day according to data from September, 7.

* - 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.