News & Analysis
US Stocks close in the green – DAX continues run eyeing return to 13K; Oil falters after Trump comments; USD run continues; Big day news wise; Australian Budget, Powell and Trump speaking
Upcoming high impact news:
11:30 AUD Retail Sales
Tent CNY Trade Balance
13:00 NZD Inflation Expectations
17:15 USD Fed Chair Powell Speaks
19:30 AUD Annual Budget Release
04:00 USD President Trump Speaks
US markets – finished higher on Monday but trimmed gain post-Presidents Trump’s comments regarding Iran and reimposing sanctions. Trump who has railed against the U.S.-Iran nuclear deal signed in 2015 sent his tweet about the Iran decision at 2:44 p.m. ET. The deal lifts sanctions on Iran in exchange for the Middle Eastern nation curbing its nuclear program. His tweet “I will be announcing my decision on the Iran Deal tomorrow from the White House at 2:00 pm.” This sent uncertainty through stocks and energy markets. Gains were trimmed as traders moved out of energy stocks. In other corporate news, Nestle agreed to pay $7.15 billion to Starbucks to for the rights to sell the coffee chain’s products globally. Starbucks price increase but ended the session 0.4% lower. The Dow Jones +94.81 The S&P500 +9.12 The NASDAQ +55.60
European markets – closed higher on Monday, energy sector seeing new capital after oil returned above $70 a barrel. Food and beverage among the best performing sectors, Nestle jumped by 1.3% on the news will pay $7.15 billion to Starbucks to market the products of the U.S. coffee firm around the world. Tech stocks continued to rally, Austria Microsystems, up by 3 percent. The company is one of the suppliers of Apple. Air France sank to the bottom of the index, down by around 10 percent. This was after comments from Bruno Le Maire, the finance minister of France, stating that the government would not bail out the airline. The DAX +128.54 The CAC +15.37
Oil – spent most of the day on the buy side of the ledger. Traders in the Asian session took price back above $70. Seeing a high of 70.72 into the New York session. Analysts said a crisis in Venezuela, a major oil exporter, underpinned prices U.S. oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA’s declining oil production and exports. “Venezuela seemed to get support over the last year from Russia and China. So now there’s the question of what kind of deal will they have to make in order to get even more support?” McGillian said.
Price fell from session highs after president’s comments regarding Iran. The widespread expectation that U.S. President Donald Trump will withdraw from the Iranian nuclear pact has supported oil prices lately. “The extraterritorial nature of U.S. sanctions, which cover energy, shipbuilding, finance, trade, insurance, etc., means that … Iran’s oil exports could credibly be curtailed by 200,000-300,000 bpd,” RBC Capital Markets analyst Helima Croft said in a note. President Trump will be announcing his decision on the Iran Deal tomorrow from the White House at 2:00 pm DC local time. Oil finished the session at 69.88.
Forex – the USD finished higher to risk and flat to the Japanese Yen. The USD hit new highs for 2018. The EUR and AUD finished lower while the GBP added 24 pips. Speculators trimmed their bets on a falling dollar to the lowest in seven weeks last week, based on data from the Commodity Futures Trading Commission released on Friday. A disappointing U.S. payrolls report did not alter traders’ outlook for further rate increases from the Federal Reserve. “Nevertheless, the data was still expansionary, showing tepid but positive growth,” Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, said of the April jobs data. “In contrast, today news from the eurozone only added to the sense of dread in the region as consumer spending slowed materially,” he added. The EURUSD continued south losing 30 pips to the USD and 39 pips to the JPY.
Today and tonight could provide a few cure balls with Fed Chair Powell speaking in Zurich, the Australian Federal budget release and President Trump speaking early tomorrow morning at 4:00 am AEST. Trump should have an influence on oil’s price regardless. Powell could also get the USD moving. Traders should keep these upcoming events in mind and incorporate into their risk plans.
Good trading from Eightcap.
Sources; CNBC All times are AEST
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