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U.S North Korea summit starts today; Stocks continue to gain; Oil – Gold reverse losses; Majors jump to the Yen

Jun 12, 2018 | Daily Market Outlook

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U.S markets continued gains, despite being minor. Investors looked past turbulent weekend G7 meetings. There will be focus on this mornings Summit between President Trump and North Korean leader Kim Jong Un’s meeting in Singapore.

Gains in UnitedHealth, Home Depot, and Boeing offsetting losses in McDonald’s and 3M. Those gains helped lift the Dow to 5.78 higher close. Telecommunications and consumer staples lifted the S&P500, it finished 2.97 pts higher. The Nasdaq closed 14.41 points higher after a 1.29 percent rise from Facebook and a 0.72 percent gain in Google-parent Alphabet.

While no major results are expected to come out of this initial meeting, investors hope the meeting will reinforce relations between the isolated state of North Korea and the rest of the world.

Traders are also eagerly awaiting this weeks Fed meeting, Fed Chair Jerome Powell and his colleagues are expected to announce a quarter-point increase in interest rates as it seeks to normalize monetary policy with the economy showing signs of health.

European shares closed higher on Monday. The start of trade saw falls but buyers returned late in the session. The DAX closed 76.36 points higher, the FTSE added 56.36 despite weaker manufacturing production data that badly missed expectations. The Italian index was the top performing market in Europe, rising during afternoon trade to close up 3.5 percent. This was another supporting influence for the European session. Italian Finance Minister Giovanni Tria confirmed commitment to the Euro. Banking stocks led the way closing 1.9 percent higher.

Automakers were the only sector to close negatively, down 0.3 percent. Daimler closed 0.9 percent lower, trimming losses made earlier in the session. This followed a German newspaper report which said that up to 1 million vehicles contain an emissions cheating device.

Oil and Gold reversed European session losses. Oil fought back from 65 cent decline as OPEC output increases become less certain. Iraq’s oil minister said on Monday that producers should not be influenced by pressure to pump more oil. The comments come after Reuters reported the U.S. unofficially asked Saudi Arabia and other producers to raise output before Washington imposed sanctions on Iran.

On the US supply side, which could be looked at in a longer-term view, “Non-OPEC supply is expected to rise sharply in 2019, led by U.S. shale growth, along with Russia, Brazil, Canada and Kazakhstan,” U.S. bank JPMorgan said. The number of new rigs drilling for oil in the United States rose by one last week to 862, its highest since March 2015, data from energy services company Baker Hughes showed. That suggests U.S. crude output, already at a record 10.8 million bpd, will climb further.

Gold reversed losses as traders looked to hedge for today’s Summit. After trading over five dollars lower into last night’s European session buyers returned to set a 60 cent higher close. Gold still remains range bound stuck below solid resistance from 1301.

Yesterday’s flight out of the Japanese Yen for the main story, the majors all jumped some hitting triple figure gains. The GBP lost traction after manufacturing production data came in much worse than expected. This data derailed the GBPs night sending it sharply lower to the majors. Commitment to the Euro from Italy kept the Euros rally supported on the short term. The USD was mainly lower to the majors but it saw good gains to the Yen closing 75 pips higher. Buyers are back at it this morning price trading back above the 110 handle.

This week things are going to pick up for most majors. ECB press conference, FED meeting and Bank of Japan to come.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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