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Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
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Non-Farm Payroll look-ahead - Video Update
31 Aug 2017
Tech stocks lead market recovery - AM Briefing
31 Aug 2017
Fall-out from Jackson Hole - Video Update
30 Aug 2017
Investors shrug off North Korean missile launch - AM Briefing
30 Aug 2017
Gold breaks through $1,300 - PM Bulletin
29 Aug 2017
Equities slide after North Korean missile launch - AM Briefing
29 Aug 2017
Yellen and Draghi in focus - AM Briefing
25 Aug 2017
Jackson Hole look-ahead to key speeches - Video Update
23 Aug 2017
Wall Street surges on tax reform hopes - AM Briefing
23 Aug 2017
Euro slips, but range-bound ahead of Jackson Hole - PM Bulletin
22 Aug 2017
Equities recover in early trade - AM Briefing
22 Aug 2017
Equities under pressure as Trump struggles - AM Briefing
21 Aug 2017
Equities fall as investors find reasons to sell - AM Briefing
18 Aug 2017
ECB and FOMC minutes lead to FX volatility
17 Aug 2017
FOMC minutes viewed as dovish - AM Briefing
17 Aug 2017
FOMC minutes in focus - Video Update
16 Aug 2017
Fed minutes in focus - AM Briefing
16 Aug 2017
Sterling slips as inflation steadies - PM Bulletin
15 Aug 2017
Equities continue to recover - AM Briefing
15 Aug 2017
Gold: triple top or third time lucky? - PM Bulletin
14 Aug 2017
Stocks bounce as geopolitical risk eases - AM Briefing
14 Aug 2017
Bank of England rate decision in focus - AM Briefing
03 Aug 2017
Crude breaks above resistance - PM Bulletin
02 Aug 2017
Apple rallies 6% on strong report - AM Briefing
02 Aug 2017
Cable breaks above 1.32000 - PM Bulletin
01 Aug 2017
Apple to report after the close - AM Briefing
01 Aug 2017
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Early moves

·         Investors react positively to earnings

·         Apple reports after the bell

European stock indices were marked sharply higher ahead of today’s open helped along by big upward moves in US stock index futures. Investors continue to buy into the slightest of pull-backs, bulled up by an earnings season which has been broadly positive.

We have a raft of economic data releases due out today with Manufacturing PMIs from across the Euro zone, the UK and US. We also have the release of the US Federal Reserve’s preferred inflation measure, the Core PCE Price Index. Bear in mind that Fed Chair Janet Yellen went to great lengths last month to assert that the US central bank is paying very close attention to inflation, or the lack of it. This led to a sharp reassessment by investors of the Fed’s intentions concerning tightening monetary policy over the rest of this year. Many believe the Fed is set to be less hawkish going forward and this is weighing on the dollar.

Apple reports after the close tonight. Analysts are looking for earnings to come in around $1.57 per share on revenues of $44.98 billion. Traders will also be keeping an ear open for forward guidance, specifically where the iPhone 8 is concerned.

Stock Index Update

·         Mixed session on Wall Street

·         But investors upbeat on earnings

It was a mixed session for US stock indices yesterday. The Dow stormed out of the starting blocks to hit a fresh record intra-day high early in the session. Home Depot was the biggest contributor to the move closely followed by Boeing. The latter was up over 1.5% at one stage after the company announced that it expects a record number of aircraft orders from India. However, the S&P500 was little-changed for most of yesterday’s session while the tech-heavy NASDAQ slipped into negative territory, thanks to losses for Facebook and Alphabet (Google’s parent company).

We had some mixed US data released yesterday afternoon. Pending Home Sales rose 1.5% in June which was a solid bounce-back from last month’s fall of 0.7% and better than the +0.9% expected. But the Chicago PMI slipped to 58.9 - well below the previous reading of 65.7 and the consensus forecast of 60.8. But the main focus for the week data-wise is Friday’s Non-Farm Payroll number.

European equities rallied sharply in early trade yesterday morning after a mixed open. Shares in HSBC were up over 3% early on after the banking giant reported better-than-expected earnings and announced that it was launching a $2 billion share buy-back. Pre-tax profits for the first six months of the year came in at $10.24 billion, comfortably above the $9.5 billion expected. There were also strong gains for mining giants Anglo American, Billiton and Rio Tinto. These stocks rallied after the Shanghai Composite and Hang Seng indices closed higher. This was despite Chinese Manufacturing and Non-Manufacturing PMIs drifting lower from the previous month, and heightened tensions on the Korean Peninsula.

Commodities Update

·         WTI tops $50

·         Gold and silver hold on to recent gains

WTI broke and closed above $50 yesterday for the first time since late May. This followed news that OPEC was arranging a meeting for next week to discuss why some producers are failing to follow through on their pledges to cut output. The latest get-together is expected to take place in Abu Dhabi on 7th and 8th August and comes hot on the heels of last week’s meeting between six major oil producers in St Petersburg. The latter resulted in a promise by Saudi Arabia to cut exports by 1 million barrels per day, a pledge from  a number of OPEC and non-OPEC oil ministers to extend the current 1.8 million bpd production cut beyond March 2018 and a promise from Nigeria to cap output at 1.8 million bpd. In addition we saw the continued sharp drawdowns in US inventories while three major US shale oil producers (Anadarko, Hess and Whiting Petroleum) said they were slashing their capital expenditures. This points to a future slowdown in US shale production which could lead to further gains in crude. On top of this Venezuela’s President Nicolas Maduro is claiming victory in a vote which took place over the weekend. He says that the poll win gives him a mandate to rewrite the constitution. But a number of countries, including the US, Argentina, Brazil, Canada, Colombia, Peru along with the European Union have refused to recognise the result of the vote and there’s a strong likelihood that the US will issue sanctions against the country. This is helping to keep oil prices elevated.  

Gold and silver made solid progress over the last two thirds of July. Both metals have shot higher since 10th July when gold fell to a four month low and threatened to break below $1,200. Since then it has managed to rally around 5% and briefly broke above $1,270 in Asian Pacific trade on Sunday morning. Meanwhile, silver has surged 11% over the past three weeks after it came close to breaking below $15 per ounce to hit its lowest level in 15 months. Both precious metals had come under heavy selling pressure as the US Federal Reserve signalled their determination to tighten monetary policy even in the face of declining inflation. This is a terrible environment for non-yielding assets such as gold and silver. But the hawkish-to-dovish pivot which has taken place since early in July has helped to turn things around. The two precious metals are back in favour with investors - for now.

Forex Update

·         EURUSD cracks above 1.1800

·         Solid data lifts single currency

The US dollar was a touch firmer first thing yesterday. Investors bought back dollars and appeared to be trimming their overall exposure to the euro.  However, the euro perked up following some data releases. German Retail Sales posted a 1.1% gain in June, well above the +0.2% expected and May’s reading of +0.5%. Later on the Euro zone Flash CPI was released. The core number (which excludes food and energy) came in at +1.2% annualised, just above the +1.1% expected. Headline CPI rose 1.3% over the same period last year. This was unchanged from last month as also in line with the consensus forecast. Overall the news was euro-positive as the data helped confirm the view of ECB governing council member Ewald Nowotny. Last week he said there was no longer a deflation risk in the Euro zone. Yesterday’s release strengthened the argument in favour of the European Central Bank tapering its €60 per month bond purchase programme.

Upcoming events

Today’s significant events and economic data releases include Spanish, Italian, French, German, Euro zone, UK and US Manufacturing PMIS. We also have a first look at second quarter Euro zone GDP. From the US we also have the Fed’s preferred inflation measure, Core PCE, Personal Spending, Personal Income, Construction Spending and Total Vehicle Sales. 


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Posted by David Morrison

Category: AM Bulletin

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