News & Analysis

Stocks continue run – USD reverses after permits miss; Oil adds 1% Gasoline demand increases

Jul 19, 2018 | Market Updates

Upcoming high impact news:

11:30 AUD Employment ChangeUnemployment Rate
18:30 GBP Retail Sales
23:00 USD FOMC Member Quarles Speaks

U.S stocks continued their run overnight, led higher by strong quarterly results from Morgan Stanley and CSX. While the Dow Jones (+79.40) and S&P500 (+6.07) gained the NASDAQ settled slightly lower (-0.67).

Morgan Stanley shares rose 1.8 % after the company reported better-than-expected earnings and revenue for the previous quarter. CSX also posted stronger-than-forecast profits and sales, sending its shares higher by 7.1 %.

“After what appeared to be a slow start for the bank earnings, it does appear that they are building back on the momentum they had when rates were starting to break out,” said Dan Deming, managing director at KKM Financial.

Housing stats lost 12% in Jue falling to a 9-month low. It was the largest percentage drop seen since November 2016 and the biggest miss to market expectations since January 2007. Homebuilding shares declined on the back of the data. KB Home losing 2.2%.

Larry Kudlow, President Donald Trump’s top economic advisor, said Wednesday at CNBC’s Delivering Alpha conference that economic growth could reach 4% “for a quarter or two.”

Europe closed higher continuing a solid week. The DAX added 104.40, the FTSE added 49.95 and the EURO STOXX 50 gained 27.28. Traders focus continues to follow corporate earnings. Swedish Orphan Biovitrum topped the European benchmark, up 13.89% after reporting a quarterly increase in earnings before interest, tax and amortization of 94%. Tele2 B was among the best-performing stocks, up by 13.43%, on better than expected earnings. –CNBC

The EU slapped Google with biggest ever antitrust fine – 5 billion dollars after the union ruled that its Android operating system had abused the mobile software dominance in the industry. Alphabets share price dipped slightly after the news. Google has advised it will appeal the decision.

Local shares are steady in this mornings trade the ASX200 trading 12.10 pts higher. Asian indexes are trading mixed. Nikkei 80 pts higher while Hang Seng is trading 64.26 pts lower.

Oil bounced back by 1% overnight on strong gasoline demand signals. Preliminary data from the American Petroleum Institute showed an unexpected rise of over 600,000 barrels in U.S. crude inventories. “Even though the overall crude number was bearish, the gasoline numbers and distillate numbers were pretty bullish,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “We’re back to worrying about a tight market.”

Currencies faced mixed data overnight, the USD started the London session on a high-risk trading lower. UK CPI missed expectations coming in at 2.4% The GBPUSD briefly made new 8-month lows hitting 1.3009. The AUD and EUR also hit new weekly lows to the USD before parring loses. Much weaker than expected building permit numbers sent the USD lower, this counteracts the positive comments seen from the Fed earlier in the week. Risk reversed losses to close higher to the USD, excluding the GBPUSD which settled 49 pips lower.

The JPY started stronger into the London session but lost tractions. The AUDJPY traded 54 pips lower at one stage before fighting back to finish the session higher. This morning risk is higher to the USD and mixed to the JPY. The USDCAD failed to break 1.3210 again overnight continuing to show resistance at this point.

Bitcoin continues to hold above 7000 hitting a high of 7517 last night. Sellers have been active, with buyer numbers dropping off from 7500. This morning price is trading slightly lower, short-term 4H support seen at 7255.

This morning traders will be keeping an eye on Australia’s Employment data.

Good trading from Eightcap.

Sources; CNBC – All times are AEST

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