News & Analysis

S&P500 slips back below 2800; Oil hit hard by supply worries; Risk continues run to JPY; Bitcoin back above 6700

Jul 17, 2018 | Market Updates

Upcoming high impact news:

11:30 AUD Monetary Policy Meeting Minutes
18:00 GBP BOE Gov Carney Speaks
18:30 GBP Average Earnings Index
00:00 USD Fed Chair Powell Testifies

Mixed session on Wall St, the Dow Jones rallied 44.95 pts while the S&P500 and NASDAQ both finished the session lower.

Bank of America jumped by 4.31% and posted its best day since March 26. Bank of America rallied after the company reported better-than-expected earnings and revenue. The bank’s performance lifted the banking sector, financials rose 1.8%. A decline in energy stocks led the S&P500 back below 2800. So far, just 5.7% of S&P 500 companies have reported second-quarter results. Overall, 86% of those companies have posted better-than-expected earnings, with profits growing by 20.1 percent, FactSet data shows.

“A lot of people are expecting a beat on earnings growth for the quarter,” said Robert Pavlik, chief investment strategist at SlateStone Wealth. “But I think there are some questions about growth moving forward.” Retail sales data came in slightly above expectations at 0.5%.

Europe ended mixed – the Euro Stoxx 50 -2.16 – the DAX added 20.29 while the FTSE lost 61.42. The eurozone narrowed its trade surplus in May for the third month in a row. Indivior rocketed after obtaining a preliminary injunction against Dr Reddy’s Laboratories for selling copycat versions of its drugs. President Donald Trump and Russian President Vladimir Putin met for their first summit in Helsinki, Finland.

Local markets have started Tuesday mixed, the Nikkei is up 44 to start the week. Chinese markets are mainly lower apart from the Hang Seng +14.22. The ASX200 is 14.5 pts lower with the monetary policy meeting minutes to be released at 11:30 am.

Oil was thumped overnight, USOUSD losing $2.35 closing below $67.50. Concerns about supply disruptions eased and Libyan ports reopened. Global supply remained tight with investors wary over the impact of production losses in several exporting countries. Russia and other oil producers may raise output by 1 million barrels per day (bpd) or more if shortages hit the market, Russian Energy Minister Alexander Novak said.

Currencies traded in another see-saw with risk rallying to the USD through the European session but losing steam in the U.S. session. Risk finished higher to the Yen. Retail sales data did give the USD a boost. “While a trade war is unlikely to produce any winners, the U.S. economic and monetary policy cycles are likely less sensitive to risks around trade than the eurozone, UK, and Asian economies,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Outstanding U.S. dollar bets are at their highest levels since March 2017, with the latest weekly data showing yet another increase in positions. Speculators were net long dollars for a fourth consecutive week, after being net short for 48 straight weeks.

This morning we’re seeing continued demand for risk to the USD and Japanese Yen. Risk making its biggest gains again to the Yen. Gold failed to hold gains overnight and is trading flat this morning. Buyers unable to hold above 1245.40, sellers yet to land a breakout blow either with 1240 sticking as support for now.

Bitcoin held is solid day adding 328, this morning price is 106 higher back above 6700. 6790 is a longer-term resistance level. How things play out from here is going to be interesting traders.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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