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Stocks rally – Apple lifts Dow – BOE – ECB hold rates; CPI miss sends USD lower – Majors soar to the Yen

Sep 14, 2018 | Market Updates

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U.S stocks rallied overnight led higher by Apple shares as they recovered from previous session losses. Investor sentiment was also boosted as fears of rapidly rising inflation were quashed by weaker than expected CPI and Core CPI data. “Add in both yesterday’s muted producer price numbers and the less than enthusiastic appraisal from the Fed, and we now have three separate signals that the economy is not the runaway train some feared,” said Mike Loewengart, vice president of investment strategy at E-Trade. “In fact it suggests inflation is still in the Fed’s sweet spot as we march towards a normalized rate environment.”

Trade jitters remained as markets ticked off highs after President Donald Trump said there was no pressure to strike a trade deal with China. The Dow Jones added 147.07 the S&P500 added 15.26 and the Nasdaq closed 59.48 pts higher as the tech sector continued to strengthen.

European shares had Central Bank data to mull, the BOE and ECB held rates as expected. The Turkish central bank has increased its benchmark rate to 24% from 17.75% to help settle local and global fears regarding the Lira and Turkish monetary conditions.

Automotive was the top performing sector Thursday, jumping 1.04% on the back of hopes that China and the U.S. might reach a compromise over trade. Tech also got a boost during the session. The DAX closed 23 pts higher while the FTSE fell by 31.79and the CAC lost 4.31.

The BoE admitted that since its previous meeting, there have been indications of “greater uncertainty about future developments in the (EU) withdrawal process”, with this being particularly seen in financial markets. The GBP rallied into the London session before seeing some selling post rate hold. with a weaker USD the GBP ended the session 58 pips to the USD and surged by 166 pips to the Yen.

The European Central Bank decided to keep its benchmark interest rates unchanged Thursday, which was widely expected. During the press conference, President Mario Draghi talked about the state of monetary policy and reaffirmed his confidence in the economic state of the eurozone. The ECB chief did, however, warn that global risks, such as financial market volatility and protectionism had gained “prominence.” The euro rose against the dollar in afternoon trade and by Europe’s close. -CNBC. The EUR settled after a slow to start to the London session, closing 65 pips higher to the USD. Buyers stepped up post rate hold, press conference and were boosted further by lower U.S CPI which sent the USD lower. The EUR surged to the Yen adding 151 pips.

Weaker CPI data set the tone for the USD into the NY session, as with other risk currencies the AUD did rally but not as strongly. It added 26 pips. The AUD followed suit to the Yen jumping 72 pips higher closing back above the 80 handle. The USDCAD finished flat, lower oil prices supported price somewhat but it was surprising to see it hold up as well as it did considering the CPI miss. The USDJPY had a strong finish to a very weak Yen, closing  67 pips higher. The Yen continues to be sold this morning, majors are all moving higher at this stage.

Gold failed to take hold of a weaker USD, price fell by $5.70 after testing new weekly highs at 1212.60.

Oil came tumbling down by 2.5% as IEA and Opec comments concerning demand and supply hurt demand. IEA says oil market is “tightening up” – IEA says risks to oil demand include trade war – OPEC warns of economic slowdown, cuts oil demand forecast. USOUSD closed 148 cents lower at 68.59. “Yesterday’s price up surge was an overreaction to the larger-than-expected crude draw per the EIA while we also believe that today’s selloff is an exaggerated response to the IEA release,” Jim Ritterbusch, president of Ritterbusch and Associates said.

This morning shares have started higher, the ASX200 is 21 points higher, the Nikkei is 145 points higher of the back of positive U.S leads.

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Sources; CNBC – All times are AEST

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