CFD Markets News and Forecasts — 20-12-2018

Major US stock indexes have declined significantly, as disappointing earnings reports have added negativity after the Federal Reserve has destroyed hopes for a relaxed approach to the path of interest rate hikes.

Meanwhile, the Conference Board data showed that in November, the leading indicators index (LEI) for the USA increased by 0.2%, to 111.8 (2016 = 100), after decreasing by 0.3% in October and increasing by 0, 6% in September. The leading economic index now significantly exceeds the previous peak at 102.4, set in March 2006. "The leading index increased slightly in November, but its overall rate of improvement slowed down over the past two months. Despite the recent volatility in stock prices, the strengths among the leading indicators were widespread. Sustained GDP growth of about 2.8 percent should continue early 2019, but LEI suggests that the economy is likely to continue to slow down in the second half of 2019, ”said Ataman Ozildirim, director and chairman of the global research council of the Conference.

Oil prices fell by more than 4% on Thursday, reaching their lowest level in more than a year due to fears of oversupply and prospects for energy demand, as rising interest rates in the United States triggered a fall in stock markets.

Almost all DOW components recorded a decline (29 of 30). Walgreens Boots Alliance, Inc. was an outsider. (WBA, -5.29%). The top gainers were Johnson & Johnson (JNJ, + 0.38%).

Almost all sectors of the S & P finished trading in the red. The service sector fell the most (-2.3%). Only the utility sector grew (+ 0.1%).

Dow 22,859.60  -464.06 -1.99%

S & P 500 2,467.41 -39.55 -1.58%

Nasdaq 100 6,528.41 -108.42 -1.63%

U.S. stock-index futures rose slightly on Thursday, as market tried to rebound after the previous day’s plunge, which was triggered by the outcomes of the Fed meeting.

Global Stocks:

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

Sales were up in four of seven subsectors, representing about 68% of total wholesale sales.

The machinery, equipment and supplies, and the personal and household goods subsectors contributed the most to the gains in October, while the motor vehicle and parts subsector posted the largest decline.

In volume terms, wholesale sales increased 0.9%.

Manufacturing activity in the region continued to grow but remained subdued, according to results from the December Manufacturing Business Outlook Survey. The survey’s broad indicators were positive, but their movements were mixed this month: The general activity and shipments indicators fell from their readings last month, while the indicators for new orders and employment increased. The firms remained generally optimistic about future growth.

The diffusion index for current general activity decreased from 12.9 in November to 9.4 this month, its lowest reading since August 2016. Over 26 percent of the manufacturers reported increases in overall activity this month, while 17 percent reported decreases.

In the week ending December 15, the advance figure for seasonally adjusted initial claims was 214,000, an increase of 8,000 from the previous week's unrevised level of 206,000. The 4-week moving average was 222,000, a decrease of 2,750 from the previous week's unrevised average of 224,750.

• MPC Voted 9-0 to Maintain Bank Rate at 0.75%

• Says UK Inflation To Slow Below 2% Target in Coming Months

• Brexit Uncertainties Intensifying

• Brexit Uncertainty Visible in Bank Funding Costs, Corp Bond Yields

• Brexit Uncertainity Visible in Inflation Expectations, Stocks

The survey of 90 firms, of which 45 were retailers, also showed that sales are expected to be flat in the year to January. Orders placed with suppliers dropped in the year to December, also at the quickest pace since October 2017, with orders expected to continue to fall next month, but at slightly slower pace.

Sales volumes for the time of year were significantly below average to the greatest degree since November 2011. Sales are expected to remain below average in January.

Within the retail sector, growth in sales and volumes were reported only in the non-store (i.e. internet and mail order) and furniture & carpets sectors. Sales fell elsewhere, with notable declines seen in the non-specialised (i.e. department stores), durable household goods, and other normal goods sub-sectors.  

In the 12-month period to October 2018, the current account recorded a surplus of €345 billion (3.0% of euro area GDP), compared with one of €350 billion (3.1% of euro area GDP) in the 12-month period to October 2017.

In the financial account, euro area residents made net acquisitions of foreign portfolio investment securities of €265 billion in the 12-month period to October 2018 (decreasing from €587 billion in the 12 months to October 2017). Non-residents’ net purchases of euro area portfolio investment securities amounted to €117 billion (down from €275 billion in the 12-month period to October 2017).

In the three months to November 2018, the quantity bought in retail sales showed an increase of 0.4% when compared with the previous three months due to growths in non-food stores and online retailing.

The quantity bought in November 2018 when compared with October 2018 increased by 1.4%, with a strong monthly growth of 5.3% in household goods stores.

Strong growth of 5.3% in household goods stores provided the largest contribution to overall growth within non-food stores.

Retailers reported strong growth on the month due to Black Friday promotions in November, which continues the shifting pattern in consumer spending to sales occurring earlier in the year; the non-seasonally adjusted growth rate in November 2018 was 13.2% in comparison with 8.7% in November 2013.

In November 2018, online sales as a proportion of all retailing exceeded 20% for the first time, with all online retailing accounting for 21.5% of total retailing on a non-seasonally adjusted basis.

• Economy May Not Be As Kind to Fed Forecasts in 2019

• We See Growth Moderating Ahead

• Tighter Financial Conditions, Weaker Global Growth Caused Officials to Markdown Projections

• Monetary Policy Will Be Providing Smaller Boost to Economy in 2019

• Officials Will Watch Economy Closely For Signs Stance of Policy Appropriate to Sustain Expansion

• Median Forecast is Not Consensus Judgment, Does Not Signal Committee Plan

• 2018 Has Been Strongest Year Since the Financial Crisis

• Will Continue to Use Fed-Funds Rate As Primary Policy Tool

• Inflation Ending The Year Bit More Subdued Than Expected

• Strong Economy is Benefiting Many Americans

• Global Growth Moderated Somewhat in 2018

• Market Volatility Has Increased Recently, Financial Conditions Tightened

• Projections Show Modestly Lower Path for Fed-Funds Rate

• Most FOMC Participants Lowered Forecasts Slightly For 2018

• Most Colleagues Expect Economy to Continue to Perform Well Over Next Year

• Fed Will 'Monitor Global Economic and Financial Developments' And Assess Implications for Outlook

• Fed 'Judges That Some Further Gradual Increases' To Interest Rates Will Be Needed

• Labor Market Has Continued to Strengthen

• Economic Activity Has Been Rising at a Strong Rate

• Household Spending Continued to Grow Strongly

• Business Investment Growth Has Moderated from Rapid Pace Earlier in Year

• Job Gains Have Been Strong, on Average

• Jobless Rate Has Remained Low

• Headline, Core Inflation Both Remain Near 2%

• Indicators of Longer-Term Inflation Expectations 'Little Changed'

• Federal Reserve Changes Fed Funds Range to 2.25% to 2.50

• No Fed Officials See Interest Rates Above 3.25% at End of 2019, Down from 5 in Sept

• Fed Officials Raise Long-Run GDP Growth Forecast to 1.9% from 1.8% in Sept

• Officials Lower Long-Run Unemployment Rate Forecast to 4.4% from 4.5% in Sept

• Fed Officials See Fed Funds Rate at a Median of 2.4% at End of 2018

• Fed Funds Rate at a Median of 2.9% at End of 2019

• Fed Funds Rate at a Median of 3.1% at End of 2020

• Fed Funds Rate at a Median of 3.1% at End of 2021

• Officials See Fed Funds Rate at a Median of 2.8% in Longer Run

• Officials Lower 2018 GDP Growth Forecast to 3% from 3.1% in September

• Lower 2019 GDP Growth Forecast to 2.3% from 2.5% in Sept

• Lower 2019 Inflation Forecast to 1.9% from 2% in Sept

Trend estimates:

• Employment  increased 28,800 to 12,694,800. Full-time employment increased 19,300 to 8,692,500 and part-time employment increased 9,500 to 4,002,300.

• Unemployment decreased 3,000 to 684,400. Male unemployment decreased 500 persons and female unemployment decreased 2,500 persons.

• Unemployment rate decreased less than 0.1 pts to 5.1%, the lowest since early 2012.

• Participation rate increased less than 0.1 pts to 65.7%, the highest trend participation rate ever.

• Monthly hours worked in all jobs increased 2.7 million hours to 1762.2 million hours.

Seasonally adjusted estimates:

• Employment increased 37,000 to 12,694,300. Full-time employment decreased 6,400 to 8,684,600 and part-time employment increased 43,400 to 4,009,600.

• Unemployment increased 12,500 to 683,100. Male unemployment increased 11,500 persons and female unemployment increased 1,000 persons.

• Unemployment rate increased 0.1 pts to 5.1%.

• Participation rate increased 0.2 pts to 65.7%.

• Monthly hours worked in all jobs decreased 3.3 million hours  to 1,759.5 million hours.

November 2018 monthly values are actual and compared with November 2017:

Goods exports rose $326 million (7.1 percent) to $4.9 billion.

Goods imports were little changed, down 0.6 percent to $5.8 billion, the seventh consecutive month with values over $5 billion, and the fourth-highest total on record.

The monthly trade balance was a deficit of $861 million (17 percent of exports).

The leading contributor was exports of aluminium and aluminium articles, up $59 million (142 percent). This movement was partly due to unusually low values and quantities of aluminium exports in November 2017. This month’s value ($101 million) was close to the average monthly value over the last 24 months ($99 million).

Economic activity, as measured by gross domestic product (GDP), was up 0.3 percent in the September 2018 quarter. Growth eased after a 1.0 percent increase in the June 2018 quarter.

GDP grew 3.0 percent over the year ended September 2018.

Primary industries had the largest growth this quarter, up 2.2 percent. Growth in the service industries eased to 0.5 percent, following broad-based 1.0 percent growth in the June 2018 quarter. Goods-producing industries dropped 1.0 percent.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1498 (864)

$1.1475 (258)

$1.1467 (138)

Price at time of writing this review: $1.1415

Support levels (open interest**, contracts):

$1.1366 (2880)

$1.1330 (6865)

$1.1288 (5096)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 7 is 68006 contracts (according to data from December, 19) with the maximum number of contracts with strike price $1,1350 (6865);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2795 (1438)

$1.2766 (545)

$1.2712 (188)

Price at time of writing this review: $1.2646

Support levels (open interest**, contracts):

$1.2590 (1973)

$1.2558 (1689)

$1.2521 (1460)

Comments:

- Overall open interest on the CALL options with the expiration date January, 7 is 34996 contracts, with the maximum number of contracts with strike price $1,3400 (3834);

- Overall open interest on the PUT options with the expiration date January, 7 is 31830 contracts, with the maximum number of contracts with strike price $1,2450 (2892);

- The ratio of PUT/CALL was 0.91 versus 0.91 from the previous trading day according to data from December, 19

* - 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.