CFD Markets News and Forecasts — 18-07-2018

The main US stock indexes finished trading mostly in positive territory, while the S & P 500 reached a 5-month high, which was supported by the growth of financial stocks on the background of positive quarterly results.

The focus was also on the United States. As it became known, in June, the bookmarks of new homes in the US fell to a 9-month low, and construction permits fell for the third month in a row, striking at the housing market, which is struggling with an acute shortage of real estate available for sale. In June, the bookmarks of new homes fell 12.3% to a seasonally adjusted annual level of 1.173 million units. This was the lowest level since September 2017.

Meanwhile, in the Fed's beige book, which is a report on the economic situation in the regions, it was reported that producers in the US expressed concern about the introduction of new import duties, and many of them noted the increased costs and interruptions in supplies. In 10 out of 12 regions of the United States, moderate or modest economic growth was noted, judging from the information that was reported in the report, collected before 9 July. Many companies reported uncertainty related to the situation in foreign trade. Nevertheless, the Fed's report showed that the consequences of import duties have not yet fully manifested, in addition to worsening the mood of some companies. Meanwhile, the growth rate of employment in most regions ranged from modest to moderate, the Beige Book said, and the price increase in all regions over the reporting period was on average moderate to moderate.

Most of the components of DOW finished trading in the red (16 of 30). The leader of growth was UnitedHealth Group Incorporated (UNH, + 2.04%). Outsider were the shares of Johnson & Johnson (JNJ, -1.14%).

Most sectors of the S & P recorded a rise. The financial sector grew most (+ 1.1%). The largest decline was in the consumer goods sector (-0.5%).

At closing:

Index

Dow 25.199.29 +79.40 +0.32%

S&P 500 2,815.62 +6.07 +0.22%

Nasdaq 100 7,854.4 -0.67 -0.01%

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.8 million barrels from the previous week. At 411.1 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.

Total motor gasoline inventories decreased by 3.2 million barrels last week and are about 5% above the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week.

Distillate fuel inventories decreased by 0.4 million barrels last week and are about 13% below the five year average for this time of year. Propane/propylene inventories increased by 1.7 million barrels last week and are about 10% below the five year average for this time of year. Total commercial petroleum inventories increased by 6.0 million barrels last week.

U.S. stock-index futures were little changed on Wednesday, hovering near five-month highs, as market participants digested a slew of earnings while awaiting the release of the Fed's Beige Book, as well as the second part of Powell's Congressional hearing.

Global Stocks:

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

Twitter (TWTR) downgraded to Neutral from Outperform at Macquarie

Building permits in June were at a seasonally adjusted annual rate of 1,273,000. This is 2.2 percent below the revised May rate of 1,301,000 and is 3.0 percent (±1.1 percent) below the June 2017 rate of 1,312,000. Single-family authorizations in June were at a rate of 850,000; this is 0.8 percent above the revised May figure of 843,000. Authorizations of units in buildings with five units or more were at a rate of 387,000 in June.

Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,173,000. This is 12.3 percentbelow the revised May estimate of 1,337,000 and is 4.2 percent below the June 2017 rate of 1,225,000. Single-family housing starts in June were at a rate of 858,000; this is 9.1 percent below the revised May figure of 944,000. The June rate for units in buildings with five units or more was 304,000.

Morgan Stanley (MS) reported Q2 FY 2018 earnings of $1.30 per share (versus $0.87 in Q2 FY 2017), beating analysts' consensus estimate of $1.10.

The company's quarterly revenues amounted to $10.610 bln (+11.6% y/y), beating analysts' consensus estimate of $10.052 bln.

The company also declared an increase in quarterly dividend to $0.30 per share (from $0.25 per share) and a share repurchase of up to $4.7 bln of common stock beginning in the third quarter of 2018 through the end of the second quarter of 2019.

MS rose to $50.60 (+2.89%) in pre-market trading.

"While the NATO meeting in Brussels was an acknowledged triumph, with billions of dollars more being put up by member countries at a faster pace, the meeting with Russia may prove to be, in the long run, an even greater success. Many positive things will come out of that meeting.."

• EU Sets Tariff-Rate Quotas Based on Average Imports Over Last Three Years

• EU Exempts Norway, Iceland, Liechtenstein

Euro area annual inflation rate was 2.0% in June 2018, up from 1.9% in May 2018. A year earlier, the rate was 1.3%. European Union annual inflation was 2.0% in June 2018, stable compared with May 2018. A year earlier, the rate was 1.5%. These figures are published by Eurostat, the statistical office of the European Union. The lowest annual rates were registered in Ireland (0.7%), Greece (1.0%) and Denmark (1.1%). The highest annual rates were recorded in Romania (4.7%), Estonia (3.9%) and Hungary (3.2%). Compared with May 2018, annual inflation fell in three Member States, remained stable in two and rose in twenty-two. In June 2018, the highest contribution to the annual euro area inflation rate came from energy (+0.76 percentage points, pp), followed by services (+0.57 pp), food, alcohol & tobacco (+0.53 pp) and non-energy industrial goods (+0.10 pp).

The headline rate of inflation for goods leaving the factory gate (output prices) was 3.1% on the year to June 2018, up from 3.0% in May 2018.

Prices for materials and fuels (input prices) rose 10.2% on the year to June 2018, up from 9.6% in May 2018.

All product groups provided upward contributions to output annual inflation; the largest contribution was made by petroleum products.

Input annual inflation increased to its highest rate since May 2017; crude oil continued to provide the largest upward contribution, despite falling on the month.

UK house prices rose by 3.0% in the year to May 2018, down from 3.5% in the year to April 2018. This is the lowest UK annual rate since August 2013 when it was also 3.0%

Looking at the demand for housing, the Royal Institution of Chartered Surveyors' (RICS) UK Residential Market Survey for May 2018 revealed their new buyer enquiries series continued its downward trend.

On the supply side, RICS reported their new instructions series showed a positive balance for the first time in 27 months. Average stock levels for estate agents remain near a record low. Sales expectations are flat in the short term but slightly more optimistic in the long term. Price expectations point to a marginal decline in the near term, though this is mainly driven by a negative outlook in the south of England. The longer-term outlook for prices is positive.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) 12-month inflation rate was 2.3% in June 2018, unchanged from May 2018.

Rising prices for motor fuels and domestic gas and electricity produced the largest upward contributions to change in the rate between May and June 2018.

Falling prices for clothing and games, toys and hobbies provided the largest downward effects.

The Consumer Prices Index (CPI) 12-month rate was 2.4% in June 2018, unchanged from May 2018.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1802 (2759)

$1.1777 (2663)

$1.1735 (155)

Price at time of writing this review: $1.1632

Support levels (open interest**, contracts):

$1.1572 (3898)

$1.1531 (2559)

$1.1487 (4376)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date August, 13 is 86392 contracts (according to data from July, 17) with the maximum number of contracts with strike price $1,1850 (5129);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3272 (664)

$1.3226 (666)

$1.3186 (105)

Price at time of writing this review: $1.3094

Support levels (open interest**, contracts):

$1.3060 (1719)

$1.3030 (2146)

$1.2997 (1918)

Comments:

- Overall open interest on the CALL options with the expiration date August, 13 is 22740 contracts, with the maximum number of contracts with strike price $1,3600 (3217);

- Overall open interest on the PUT options with the expiration date August, 13 is 26356 contracts, with the maximum number of contracts with strike price $1,2950 (2167);

- The ratio of PUT/CALL was 1.16 versus 1.15 from the previous trading day according to data from July, 17.

* - 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.

• Important To Look At More Than Just Yield Curve

• It's Possible Yield Curve Message Has Changed From Past

• Yield Curve Inversions Have Been Good Predictor Of Recessions

House of Commons votes 307 to 301 to reject NC18 of the TradeBill. This clause would have required the UK Government to make it a negotiating objective to establish a free trade area for goods with the EU or otherwise to enable the UK's participation in a customs union with the EU.