News & Analysis

Stocks mixed; US higher as Syrian fears ease – earnings; Europe lower due to political worries & WPP; Oil retreats after 67.60 test; GBP continues to charge

Apr 17, 2018 | Daily Market Outlook

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US markets – rallied on Monday as fears of escalating conflict in Syria eased for the moment, while some of the biggest U.S. companies reported strong quarterly results. Earnings season continued to show strong momentum as J.B. Hunt and Bank of America reported better than expected results. “This represents a high bar for stocks to get over and [the] pattern of the past 20 years is that stocks have tended to struggle when upside earnings surprises have slowed,” said Bruce Bittles, chief investment strategist at Baird. “Elevated earnings expectations are coming with stock market valuations stretched.” In overnight data, core retail sales hit 0.2% as expected and retail sales beat expectations coming in at 0.6%

The Dow Jones added 212.90, the S&P500 added 21.54 and the NASDAQ closed 49.63 pts higher.

European markets – failed to follow the US lead trading in the red for the session. Europe’s food and beverages stocks were some of the worst performers amid earnings news. WPP shares which have already fallen around 30 percent this year fell by a further fell 6.5 percent by Monday after its CEO Martin Sorrell quit due to allegations of personal misconduct.

The FTSE lost 66.36, the DAX lost 50.99 and the CAC closed 2.06 pts lower.

Oil – fell as tensions in Syria eased combined with profit taking after some very strong gains last week. Price snapped a 5-day winning streak last night. Last week price rallied over five dollars. $67.60 remains current 2018 high for buyers to retest. Currently, Fund managers hold more Brent futures and options than at any time since records began in 2011, data from the InterContinental Exchange showed.

Forex – choppy night with the USD starting the London session with a pulse, this was short lived as sellers moved back in and risk picked up renewed interest. Better than expected retail sales data failed to give the USD a lift. The EUR and the GBP were the best performing currencies last night. The GBP continued its hot April run adding 101 pips to the USD and 58 pips to the JPY. This morning the cable has touched new 2018 highs hitting 1.4336. Pairs were mixed to the Japanese Yen, the USD and AUD fell while the EUR and GBP closed higher. Despite a weaker oil price the USDCAD fell, that show’s you the level of interest in the USD during last nights NY session. The USDCAD finished 28 pips lower closing around the 1.2560 range low. Gold had a choppy session with mixed influences, this morning the market has had more direction. Price is trading 2.80 higher, traders 1348.80 is the current 4H resistance high to watch.

GBPUSD – hit new 2018 highs this morning, has price started to overextend? If we see a pullback there’s a good chance 1.4252 could come in as support.

Good trading from Eightcap.

Sources; CNBC. All times are AEST

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