Tin tức thì trường

Major US stock indices rose slightly against the background of heightened hopes for an early conclusion of a trade deal between the US and China, but weaker than expected US data on the labor market and activity in the service sector restrained optimism.

According to media reports, US and Chinese officials are close to concluding a trade agreement, as they were able to resolve most of the outstanding issues in their protracted trade dispute. Both countries since last year introduced additional tariffs on each other's goods worth billions of dollars.

According to the Financial Times, representatives of the United States and China still have differences over the mechanisms for implementing the agreement and monitoring its compliance. The Trump administration wants China to agree to coercive measures that ensure the country's commitment to the deal. In addition, there is no agreement on the immediate abolition of duties already imposed by Washington on Chinese goods last year. US Trade Representative Robert Leighthieser and Treasury Secretary Stephen Mnuchin are due to meet with Chinese Vice Premier Liu He later today to continue negotiations.

A report released by ADP and Moody's Analytics showed that private sector employment rose by 129,000 in March, after a jump of 197,000 in February. Economists had expected employment to increase by 170,000 compared with the addition of 183,000 jobs originally reported in February.

Data from the Institute of Supply Management (ISM) showed that the index of business activity in the US service sector fell in March to 56.1 points compared to 59.7 points in February. The latter value was the lowest since August 2017. Analysts predicted that the index will decrease only to 58.0 points.

Most of the components of DOW finished trading in positive territory (18 out of 30). The growth leader was DowDuPont Inc. (DWDP; + 2.27%). The outsider was The Boeing Co. (BA; -1.45%).

Most sectors of the S & P sector recorded a decline. The rest of the conglomerates sector decreased more (-0.9%). The greatest growth was shown by the technology sector (+ 0.6%).

At the time of closing:

Dow 26,218.13 +39.00 +0.15%

S & P 500 2,873.40 +6.16 +0.21%

Nasdaq 100 7,895.55 +46.86 +0.60%

The U.S. Energy Information Administration (EIA) revealed that crude inventories rose by 7.238 million barrels in the week ended March 29. That was the biggest increase since the week ended January 18th. Economists had forecast a decrease of 0.800 million barrels.

At the same time, gasoline stocks fell by 1.781 million barrels, while analysts had expected a drop of 2.500 million barrels. Distillate stocks declined by 1.998 million barrels, while analysts had forecast a decrease of 0.600 million barrels.

Meanwhile, oil production in the U.S. increased by 100,000 barrels a day to 12.200 million barrels a day.

U.S. crude oil imports averaged 6.8 million barrels per day last week, up by 223,000 barrels per day from the previous week.

The Institute for Supply Management (ISM) reported its non-manufacturing index (NMI) came in at 56.1 in March, which was 3.6 percentage points lower than the February reading of 59.7 percent. The March reading pointed to the weakest expansion in the services sector since August of 2017.

Economists forecast the index to decrease to 58.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 16 reported growth last month, the ISM said.

According to the report, the ISM’s non-manufacturing business activity measure dropped to 57.4 percent, 7.3 percentage points lower than the February reading of 64.7 percent. That reflected growth for the 116th consecutive month, at a slower pace in March. The new orders gauge decreased to 59.0 percent, 6.2 percentage points lower than the reading of 65.2 percent in February. Meanwhile, the employment indicator rose 0.7 percentage point in March to 55.9 percent from the February reading of 55.2 percent. The Prices Index climbed 4.3 percentage points from the February reading of 54.4 percent to 58.7 percent, indicating that prices increased in March for the 22nd consecutive month.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for March (56.1 percent) corresponds to a 2.6-percent increase in real gross domestic product (GDP) on an annualized basis.”

The latest report by IHS Markit revealed on Wednesday the seasonally adjusted final IHS Markit U.S. Services Business Activity Index stood at 55.3 in March, down slightly from 56.0 in February (PMI) slightly from 56.0 in February, but up from a flash figure of 54.8. 

The reading signaled a further strong expansion in business activity across the U.S service sector, albeit at a slower pace than in February. Nevertheless, the rate of expansion was broadly in line with the series average and rounded off a strong start to 2019.

Economists had forecast the index to be unrevised at 54.8.

According to the report, the expansion was supported by a solid increase in new orders and a further upturn in new business from abroad. On the prices front, the rate of increase in charges was the slowest since October 2017 and input cost inflation posted below the series trend. Business confidence fell to the lowest level since December 2017.

U.S. stock-index rose on Wednesday, indicating Wall Street would resume its rally following a pause in the previous session, supported by reports about progress in U.S. China trade talks and upbeat surveys for non-manufacturing activity in China and Europe.

Global Stocks:

Wall Street. Stocks before the bell

(company / ticker / price / change ($/%) / volume)

DowDuPont (DWDP) initiated with a Buy at UBS; target $45

Walgreens Boots Alliance (WBA) target lowered to $60 at Pivotal Research Group

Caterpillar (CAT) downgraded to Hold from Buy at Deutsche Bank; target $128

Alcoa (AA) downgraded to Neutral from Buy at BofA/Merrill; target lowered to $31

Walgreens Boots Alliance (WBA) downgraded to Hold from Buy at Loop Capital

The employment report prepared by Automatic Data Processing Inc. (ADP) and Moody's Analytics showed on Wednesday the U.S. private employers added 129,000 jobs in March. That was the lowest monthly jobs gain since September 2017. 

Economists had expected a gain of 170,000. 

The increase for February was unrevised at 183,000. 

“March posted the slowest employment increase in 18 months,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Although some service sectors showed continued strength, we saw weakness in the goods producing sector.”

Meanwhile, Mark Zandi, chief economist of Moody’s Analytics, noted, “The job market is weakening, with employment gains slowing significantly across most industries and company sizes. Businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty, and the lagged impact of Fed tightening. If employment growth weakens much further, unemployment will begin to rise.”

Hao Zhou, analyst at Commerzbank, notes that stellar performance of Chinese PMIs has caught a lot of attention in the market.

• “After both official and private (Caixin) manufacturing PMIs beat the market expectations earlier this week, the private services PMI released this morning again illustrated a notable rebound in March, bringing the Caixin composite PMI to 52.9 in March (February: 50.7), the highest level since Q1 2018. Overall, all these suggest that Chinese easing measures have been working again.”
• “We would like to put particular focus on the PMIs in the private sector as the Chinese authorities vowed to provide specific support to the private firms amid this easing round. At least for now, the data suggest that the targeted policies towards the SMEs have boosted the business confidence.”
• “Certainly, the pronounced rebound of PMIs points to an improving short-term outlook in China. However, strong headwinds remain and medium-term outlook still looks challenging.”
• “Needless to say, the already elevated debt and financial leveraging will continue to weigh on China’s growth outlook over the medium to long run. As such, we think that the outlook for CNY exchange rates is still cloudy.”

• I am ready for serious discussions with PM

The Mortgage Bankers Association (MBA) reported on Wednesday that mortgage application volume climbed 18.6 percent in the week ended March 29, following an 8.9 percent gain in the previous week. It is the biggest rise since the week ended January 4.  Volume was 28 percent higher than a year ago.

According to the report, refinance application increased 38.5 percent, to the highest level since January 2016, and applications to purchase a home advanced 3.4 percent. 

The average fixed 30-year mortgage rate decreased by 9 basis points to 4.36 percent. The rate was 33 basis points higher than a year ago.

• Says there will be customs controls on UK goods if no deal by April 12

The British Retail Consortium (BRC) reported on Wednesday that prices in shops rose by an annual 0.9 percent y-o-y in March compared with +0.7 percent y-o-y in February, recording the highest inflation rate since March 2013.

According to the BRC, the March increase was driven by an acceleration in food prices, which climbed 2.5 percent y-o-y last month compared with a rate of 1.6 percent y-o-y in the previous month.

At the same time, non-food prices unchanged y-o-y, slowing from a 0.2 percent y-o-y advance in February.

The BRC noted that "Global commodity prices and weather events pushed food prices up. Rises in global cereal prices pushed Bread & Cereal prices up. Last year’s bad weather meant that a number of UK crops, such as onions, potatoes, and cabbage, saw much lower yields, and, as a result, these products are seeing now significant price increases."

Germany could enter a recession by the fourth quarter of 2019, but this could prompt a key period in the continent’s economic evolution that could ultimately benefit the region, according to Steen Jakobsen, chief economist and chief investment officer at Denmark’s Saxo Bank.

“It’s gets them back in the game,” Jakobsen told CNBC’s “Squawk Box Europe” on Tuesday. He highlighted that a rise in populist parties at EU elections in May, the impending departure of Angela Merkel as chancellor and a change of presidents at the ECB would all accentuate this dramatic shift.

“We firmly believe that any macro change has to come from a breakdown or a crisis, and as such we see 2019 and 2020 as key years for Europe’s evolution … Germany grew too complacent, and so did the EU as a whole. Now the new reality has to see Berlin expand spending to be of benefit to the rest of Europe. Overall, a new common ground will be found from a more fragmented Europe, ” the Danish investment bank said in its latest quarterly outlook.

Jakobsen believes that the “collapse of German growth” is firmly in the spotlight and said in the research note that there is a risk of recession there by the fourth quarter of 2019, even without a trade spat with the U.S. He added that Germany’s successful economic model — which focuses on manufacturing and exports - would ultimately need to be updated.

“We think the slowdown in Germany - Germany being stuck in the industry 3.0 model - will lead to a Europe that has more desperation, will look more like a basket case during the summer after the European elections,” he told CNBC.

“But that will itself set up a process where Germany becomes part of the solution rather than having this fight of austerity versus loose monetary (policy) from the ECB and fiscal spend from the southern (Eurozone) countries,” he added.

• Says Greece has taken all the post bailout actions required by creditors
• Up to Eurogroup to decide on Greek tranche

Japan is preparing to ease antitrust rules that will enable some regional banks to merge as they struggle to stay profitable amid low interest rates and a declining population.

Prime Minister Shinzo Abe's government wants to allow such mergers to go ahead on a limited basis if the move prevents a regional bank from incurring big losses and if the newly formed bank ensures it will not unfairly raise lending rates.

Current rules block mergers between smaller banks outside of Japan's major cities if the newly formed bank will account for a dominant share of lending in the local community.

An advisory panel discussed the plan on Wednesday and will finalise the details so it can be included in the government's annual economic growth strategy expected sometime in June.

• Swiss economy remains dynamic

• inflation pressures remain very weak

• expansive monetary policy remains necessary

• monetary policy remains based on negative interest rates and readiness to intervene in the currency markets if needed

• SNB willing to intervene if necessary

Karen Jones, analyst at Commerzbank, suggests that the USD/JPY is probing its 200 day ma at 111.48, and continues to remain underpinned by cloud support at 110.30 and its 3 month uptrend at 110.55, it is bid above here.

“It is probable that we have based at 109.70. However rallies face some dense overhead resistance offered by the 200 day ma and downtrend at 111.48/57 and the 112.13 March high. Here we also find the 112.43 55 quarter moving average and the 112.86 2015-2019 downtrend. The 109.70 low guards the 38.2% retracement at 109.06 and there is scope for the 50% retracement at 108.11. The base of the cloud lies at 108.81.”

According to estimates from Eurostat, in February 2019 compared with January 2019, the seasonally adjusted volume of retail trade increased by 0.4% in both the euro area (EA19) and EU28. Economists had expected a 0.2% increase in the euro area. In January, the retail trade volume increased by 0.9% in the euro area and by 1.0% in the EU28. In February 2019 compared with February 2018 the calendar adjusted retail sales index increased by 2.8% in the euro area and by 3.3% in the EU28.

In the euro area in February 2019, compared with January 2019, the volume of retail trade increased by 0.9% for non-food products and by 0.1% for food, drinks and tobacco, while automotive fuel decreased by 0.7%. In the EU28, the retail trade volume increased by 1.0% for non food products, while food, drinks and tobacco decreased by 0.1% and automotive fuel by 0.2%.

• there may be "unpalatable choice" between no Brexit or a soft Brexit

• government will accept what the House votes for to resolve Brexit

• question for talks is least worst option to secure Brexit

• there will be a need to compromise on all sides

• no Brexit would be extremely damaging for democracy

• asked if UK could pass necessary Brexit legislation before european elections, says House of Commons can move fast when it wants

March data from IHS Markit signalled a marginal reduction in business activity across the UK service sector, which ended just over two and-a-half years of sustained expansion. The downturn in service sector output reflected a lack of new work to replace completed projects so far in 2019. Survey respondents noted that corporate clients had opted to delay spending decisions in response to intense political uncertainty. There were also some reports that Brexit concerns and worries about the economic outlook had held back household spending.

At 48.9 in March, down from 51.3 in February, the headline seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index posted below the 50.0 no-change mark for the first time since July 2016. Economists had expected decrease to 50.9. Aside from the brief dip seen after the EU referendum, the latest reading was the joint weakest seen over the past decade (equalling the previous low point recorded in December 2012).

According to the report from IHS Markit, Composite Output Index continued to signal modest growth of the euro area’s private sector economy in March.

After accounting for seasonal factors, the index recorded 51.6, down slightly from 51.9 in the previous month but a little firmer than the earlier flash reading of 51.3. March’s headline PMI Output index belied notably divergent trends in activity across the region’s manufacturing and service sectors. Whereas services activity rose in March at the strongest rate since last November, goods producers recorded the greatest monthly fall in output since April 2013.

The weakness in manufacturing production was closely linked to deteriorating demand conditions, both at home and abroad. New work placed at manufacturing firms fell at the greatest rate since late-2012, which broadly offset solid growth in services. Overall private sector new work was subsequently only slightly higher than in February.

March’s IHS Markit Eurozone PMI Services Business Activity Index rose further above the 50.0 no-change mark, reaching a level of 53.3, from 52.8 in February. The latest reading was the best recorded since last November.

Arne Lohmann Rasmussen, chief analyst at Danske Bank, notes that the EUR/GBP cross moved to the lower end of the 0.85-0.87 range after PM Theresa May’s statement yesterday evening.

“For now, we expect EUR/GBP to stay above 0.85, but if the negotiations are successful and May and Corbyn can find common ground, we could soon see a move below 0.85. However, this is easier said than done. When a deal is agreed upon, we expect EUR/GBP to move down to 0.83. In case of no deal Brexit, we expect a move towards parity. A long extension would also be slightly GBP-positive and we could see EUR/GBP trade in the 0.84-0.86 range.”

According to the report from IHS Markit, Spain's service sector enjoyed its best month in terms of activity growth for over a year during March. Strong domestic demand conditions helped to drive new work higher, whilst another notable increase in employment helped to bolster capacity and allow firms to keep on top of workloads. Business confidence strengthened to its highest level for nine months. Meanwhile, on the price front, rising employment costs meant that average input prices continued to increase at a notable rate. Firms sought to protect margins by raising their own charges.

The headline Business Activity Index improved since February, rising to a level of 56.8, up from 54.5. The latest index reading was the best recorded by the survey since February 2018 and meant the current period of growth in activity now extends to just shy of five-and-a-half years (index readings above 50.0 represent an increase in activity, those below reflect a fall).

British Retail Consortium said, shop prices in Britain recorded the biggest rise in six years in March, mainly due to a sharp increase the cost of non-perishable food.

Prices in shops rose by an annual 0.9% in March compared with 0.7% in February, the highest inflation rate since March 2013. The driving force behind this increase was an acceleration in food prices, which rose 2.5% on the year last month compared with a rate of 1.6% the month before. Non-perishable food prices rose at the highest rate since February 2013, up 3.4% on the year - a sharp increase on February's rate of 1.5%.

With continuing Brexit uncertainty, upward risks to inflation would persist, the BRC's chief executive, Helen Dickinson, said.

Dominick Stephens, chief economist at Westpac, suggests that they are expecting the RBNZ to cut the official cash rate (OCR) at the May MPS as the central bank is particularly concerned about the global economy, and that won’t change by May.

“Cutting the OCR will seem reasonable to the new Monetary Policy Committee, because inflation is struggling to reach two percent. There is a risk of a follow-up cut in June or August. But we expect that improvements in the global and domestic economies will stay the RBNZ’s hand over the remainder of 2019. We have long been concerned about the economic outlook in the early-2020s. We now expect the RBNZ to react to that by cutting the OCR in May 2020, taking the OCR to a new low of 1.25%.”

Latest financial results from Chinese banks show that their net profits continued to be weighed down by the challenging operating environment, despite regulatory effort to support their profitability, Fitch Ratings says.

Fitch expects net profit growth to be in the single digits in the medium term, and this slow profit growth is likely to put Chinese banks' capitalisation under pressure as growth in their risk-weighted-assets (RWA) continues to outpace that of net profit and assets.

Fitch has a negative sector outlook on Chinese banks, reflecting banks' struggles to meet regulatory requirements while sustaining adequate loan expansion to support economic growth. Banks' profit growth in 2018 was also dragged down by higher impairment charges, due to increased efforts to resolve NPLs subsequent to tightened NPL recognition against overdue loans.

Growth remains strong across most of developing Asia but is set to moderate this year and next year against the backdrop of slowing global demand and persistent trade tensions, according to a new Asian Development Bank (ADB) report.

The latest Asian Development Outlook (ADO) 2019, ADB’s flagship economic publication, forecasts that growth in the region will soften to 5.7% in 2019 and 5.6% in 2020. Developing Asia’s growth in 2018 was 5.9%. Excluding the newly industrialized economies of Hong Kong, China; Republic of Korea; Singapore; and Taipei,China, developing Asia is forecast to expand 6.2% in 2019 and a slightly slower 6.1% in 2020. In 2018, growth was 6.4%.

“Growth overall remains solid with domestic consumption strong or expanding in most economies around the region. This is softening the impact of slowing exports,” said ADB Chief Economist Mr. Yasuyuki Sawada. “Uncertainty clouding the outlook remains elevated.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.1353 (2780)

$1.1312 (1232)

$1.1286 (310)

Price at time of writing this review: $1.1221

Support levels (open interest**, contracts):

$1.1195 (4536)

$1.1148 (5495)

$1.1099 (1566)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date April, 5 is 80368 contracts (according to data from April, 2) with the maximum number of contracts with strike price $1,1150 (5495);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3265 (2016)

$1.3219 (440)

$1.3177 (734)

Price at time of writing this review: $1.3140

Support levels (open interest**, contracts):

$1.3098 (796)

$1.3073 (498)

$1.3044 (1338)

Comments:

- Overall open interest on the CALL options with the expiration date April, 5 is 26116 contracts, with the maximum number of contracts with strike price $1,3400 (4312);

- Overall open interest on the PUT options with the expiration date April, 5 is 32957 contracts, with the maximum number of contracts with strike price $1,2500 (5047);

- The ratio of PUT/CALL was 1.26 versus 1.24 from the previous trading day according to data from April, 2

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.