News & Analysis
US stocks mixed – GDP beats expectations – Tech flat; Europe ends higher – earnings in focus; USD pulls back – GBP smashed by weaker GDP
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US markets – finished mixed on Friday with small gains and losses. The Dow Jones parring earlier loses after better than expected GDP data supported buyers. The GDP data came in at 2.3% beating 2.0% expectations. Tech shares pulling back weighed on the NASDAQ. Amazon reported strong earnings but failed to hold at record highs. Earnings season has been mostly positive. Of the S&P 500 companies that have reported quarterly results thus far, 79.4 percent have topped analyst expectations, according to FactSet. Microsoft and Intel both reported better than expected earnings and revenue Thursday after the bell, while Chevron and Colgate posted quarterly profits that beat expectations on Friday. “It seems like we’ve reached a peak in momentum,” said Daniel Deming, managing director at KKM Financial. “We cleared Wednesday and Thursday with strong earnings but people are still asking: ‘Now what?'”
A big week could be setting up after Wednesday with key news coming out of the US. On Thursday we have the FOMC funds rate and statement followed by US Employment data on Friday.
The Dow Jones lost 11.15 points. The S&P500 gained 2.97 points and the NASDAQ closed 1.12 points higher.
European markets – finished higher on Friday as earnings continued to support buyer sentiment. Europe’s technology stocks led the gains, up 0.8 percent amid earnings news. Capgemini was the top sectoral performer after it reported upbeat first-quarter figures. Kepler Chevreux then raised its target price for the stock to 116 euros from 112 euros. Capgemini closed over 6.6 percent higher. British GDP made a surprise drop to 0.1% on Friday sinking the GBP. This combined with the lower CPI figure looks to have nailed any type of rate raise idea shut.
The FTSE soared 80.78 points higher. The DAX added 80.40 points and the CAC finished 29.62 points higher.
Oil – ended the week flat, as Iran and the USD continue to influence sentiment. President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran’s nuclear program. The renewed sanctions would likely dampen Iranian oil exports, disrupting global oil supply. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies. Concerns about market tightness have also been driven by the deteriorating political and economic situation in Venezuela. The 1 Hour chart show’s price trading in a range between $68.27 and $67.70
Forex – Friday’s session ended with a pullback by the USD to Japanese Yen and most risk currencies. The AUD and EUR snapping losing streaks to the USD. The AUD finishing close to 30 pips higher. The USDCAD finished 46 pips lower after failing to hold a new weekly high at 1.29002. Gold recovered $7.05. Traders keep an eye on 1316.30 this has set as a short-term low.
The GBP was Friday’s big story, sellers belted the sterling as GDP missed expectations. Combine this with the CPI miss and a possible 70+ billion euro divorce bill and you have things looking very average in a post-Brexit UK, not that the FTSE was worried! On the flip side, a weaker currency does offer some advantages. The cable lost 133 pips, the GBPJPY finished 181 pips lower. The GBPUSD has lost 558 pips since the 17th of April.
Good trading from Eightcap.
Sources; CNBC All times are AEST
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