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Stocks mainly higher Dow slips; Oil surges after falling stockpiles; USDCAD jumps – BOC holds rates – policy statement disappoints. UK CPI sinks pound.

Apr 19, 2018 | Daily Market Outlook

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US markets – traded mainly higher on Wednesday, the Dow Jones slipped as IBM left investors disappointed with the company’s forward-looking guidance. The company’s earnings and revenue topped analyst expectations. Shares of IBM fell 7.5 percent and had their worst day since Oct. 24, 2014. Earnings season has gotten off to a strong start. According to Thomson Reuters I/B/E/S, 79 percent of the S&P 500 companies that had reported through Wednesday morning surpassed earnings expectations. Meanwhile, 83 percent of those companies topped sales estimates. United Airlines also posted better-than-expected results for the first quarter, sending its stock higher by nearly 5 percent. Morgan Stanley reported a record profit and revenue for the first quarter, as its trading business did better than expected. “Beating on the top and bottom line … just won’t cut it for the market,” said Tom Essaye, founder of The Sevens Report. “The business metrics need to be strong” and guidance cannot be disappointing.

The Federal Reserve said in the latest Beige Book the U.S. economic outlook remains positive but noted that steel prices are rising due to tariffs.

The Dow Jones lost 38.56, the S&P500 closed 2.25 higher and the NASDAQ closed 14.14 points higher.

European markets – finished higher driven by higher commodities and earnings. Basic resources stocks soared on Wednesday finishing trade up 4.37 percent higher. Polymetal International flew to the top of the European benchmark, jumping 12 percent, after reporting a 19 percent rise in year-on-year revenue for the first-quarter. Vopak surged 6.85 percent after the Dutch oil and chemical storage firm said it was well-placed to significantly improve its core earnings in 2019.

International Monetary Fund said Tuesday that medium-term risks were tilted towards the downside.

The FTSE jumped by 91.29 – the DAX added 5.26 and the CAC closed 26.63 pts higher.

Oil – jumped last night surging to new 2018 and 3-year highs hitting $68.71. Weaker than expected stockpile figures and continued global risks sent prices soaring. U.S. crude touched a fresh high going back to December 2014. EIA figures showed a drop to -1.1M barrels much lower than the expected -0.5M. “Oil prices are holding near three-year highs (reached earlier in April) for the time being, and with inventories back in line with normal levels, the supply glut of the last few years appears to be over,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Forex – not a traditional night based on looking at the daily closes. The EUR, GLD and AUD increased to the USD. The USDCAD also gained. Data and central bank statement the main drivers last night. Starting it all off, UK CPI missed expectations sending the pound crashing to weekly lows. CPI figure came in at 2.5% The EUR CPI hit came in at 1.3% just under expectations. The EUR traded in a choppy session finishing just in the black. The AUD was supported by higher commodity prices closing 20 pips higher. The Bank of Canada held rates at 1.25% as expected. This gave the USDCAD support, its policy statement was not as hawkish as some traders had expected with talk of future rate rises. This drove the USDCAD to new weekly highs, price closing 77 pips higher. Apart from the GBP, majors gained to the Yen last night. Since the trade war fears have died down the JPY continues to struggle. Gold continues to trade in a medium-term range, price tested lower yesterday before buyers pared losses and posted a two dollar gain.

Oil – smashes back into 3-years highs as lower stockpiles fuel buyers. $70 oil starting to look like a possibility again?

Good trading from Eightcap.

Sources; CNBC. All times are AEST

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