Tin tức thì trường

Major US stock indices rose slightly, receiving support from health and technology sector stocks, while investors were waiting for a key Fed meeting to find out what would happen to interest rates.

Facebook shares (FB) went up by 4.19% amid positive comments from SunTrust regarding the company's plans for its own cryptocurrency. Facebook is expected to publish more detailed information about the project tomorrow in a white paper.

Amazon (AMZN), Apple (AAPL) and Alphabet (GOOG) grew by more than 0.5% each without specific news catalysts.

The Fed plans to begin a two-day monetary policy meeting on Tuesday. Expectations of policy changes at the upcoming meeting are low, but investors will look for clues about possible rate cuts in July and beyond in 2019. Investors are betting on Fed rate cuts in July and September, as well as in December, according to the FedWatch CME Group tool. The market requires lower rates amid signs of slowing economic growth. In theory, lower rates would spur economic growth.

In addition, market participants are preparing for the G20 summit at the end of this month, which may lead to progress in resolving the protracted trade war between the United States and China.

The focus was also on data on manufacturing activity from the Federal Reserve Bank of New York and the confidence of American home builders from the NAHB.

According to a report published by the Federal Reserve Bank of New York, manufacturing activity in New York fell sharply in June, while the sector activity index showed a record monthly decline. The index of activity in the manufacturing sector in New York this month fell to -8.60 from 17.8 in May. This was the first negative index in the past two years. Economists had expected the index to fall to 12.0.

A report from the National Association of Home Builders (NAHB) showed that American homebuilder confidence unexpectedly deteriorated in June. According to the report, the housing market index from NAHB / Wells Fargo fell to 64 in June after a jump to 66 in May. Economists had expected the index to remain at level 67.

Most of the components of DOW finished trading in the red (17 out of 30). Outsider were shares of Dow Inc. (DOW; -3.43%). The growth leader was the shares of The Boeing Co. (BA; + 2.52%).

Almost all sectors of the S & P recorded an increase. The largest growth was shown by the health sector (+ 0.8%). Only the utility sector (-0.3%) and the financial sector (-0.3%) decreased.

At the time of closing:

Dow 26,111.79 +22.18 +0.09%

S & P 500 2,889.61 +2.63 +0.09%

Nasdaq 100 7,845.02 +48.37 +0.62%

The European Commission's Trade and Investment Barriers Report, which was published on Monday, said that 23 non-EU countries had put in place 45 new trade barriers in 2018, bringing the total number to a record high of 425 measures in 59 different countries.

According to the report, China and Russia had the most "problematic" trade measures overall, with 37 and 34 respectively.

In 2018, most barriers were erected in China and Algeria, with five each, followed by the United States and India, both on four, with the greatest impact on the IT sector and precious and non-precious metals.

Overall, the new barriers put in place last year had affected or risked affecting 51.4 billion euros of EU exports.

However, the report also revealed that 123 foreign measures had been eliminated since the start of the current Commission in 2014, leading to 6.1 billion euros of extra EU exports in 2018.

The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) fell two points to 66 in June.

Economists forecast the HMI to stay at 66.

A reading over 50 indicates more builders view conditions as good than poor.

All three HMI components were lower this month. The indicator gauging current sales conditions dropped one point to 71, the measure charting sales expectations in the next six months fell two points to 70 and the component measuring traffic of prospective buyers decreased one point to 48.

NAHB Chairman Greg Ugalde said: “While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues.”

Meanwhile, NAHB Chief Economist Robert Dietz noted: “Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers. And while new home sales picked up in March and April, builders continue to grapple with excessive regulations, a shortage of lots and lack of skilled labor that are hurting affordability and depressing supply.”

• EU-US must urgently start talks on trade deal
• China and Europe are economic partners but also competitors
• German companies need level playing field in China, will raise the issue in talks in Beijing this week
• Europe and China agree that WTO's body for dispute settlement must continue to work despite US block
• Protection of intellectual property and steel overcapacity must also be discussed with China

Deutsche Bank's analysts think the U.S. Fed has a very delicate balancing act to contend with as policy makers have a choice of endorsing current dovish market pricing and keeping things calm, or to suggest it’s gone too far too quickly and give risk assets a sharp jolt.

• “Friday’s strong retail sales data (more later) adds to the complexity. It’s hard not to feel that they are being driven into a corner at the moment as markets are now pricing in virtually a full rate cut at the July meeting and a further 2 cuts over the next 12 months.
• Expectations are much lower for a cut this week, with around an 18% chance. Our US economists recently changed their Fed call and expect 3 cuts of 25bps each at the July, September and December meetings. They also lowered their 2019 growth forecast by 40bps to 1.9%. So all eyes on Wednesday.”

U.S. stock-index futures rose slightly on Monday as investors waited for a crucial meeting of the U.S. Federal Reserve later this week, which could lay the groundwork for interest rate cuts later this year.

Global Stocks:

Analysts at Danske Bank say that sentiment regarding positive news on the U.S.-China trade deal remains sour with the U.S. Commerce Secretary Wilbur Ross repeating that a trade deal is unlikely to emerge after a possible meeting between the U.S. President Donald Trump and Chinese President Xi Jinping at the G20 summit in Osaka later this month.

• “As the US is collecting billions in tariffs, Trump said he is in no rush to reach a deal with China and "it doesn't matter" if Xi agrees to meet him at the G20 summit.
• Meanwhile, trade war escalation continued on other fronts as India imposed higher tariffs on 28 US goods in response to Washington’s withdrawal of key trade privileges for New Delhi. The US goods affected by the newest Indian tariffs are iron and steel products, tube and pipe fittings, etc. The increase also hit food.”

Apple (AAPL) target lowered to $233 from $235 at JP Morgan

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

Deere (DE) upgraded to Outperform from Neutral at Robert W. Baird; target raised to $175

Dow (DOW) downgraded to Market Perform from Outperform at BMO Capital Markets; target lowered to $52

Walt Disney (DIS) downgraded to In-line at Imperial Capital; target $147

The report from the New York Federal Reserve showed on Monday that manufacturing activity in the New York region took a sharp turn downward in June.

According to the survey, NY Fed Empire State manufacturing index came in at -8.60 this month compared to an unrevised 17.8 in May. That marked the first negative reading for the index in more than two years.

Economists had expected the index to come in at 12.0. 

Anything below zero signals contraction. 

According to the report, the new orders index fell twenty-two points to -12.0, indicating a decline in orders, and the shipments index dropped seven points to 9.7, pointing to a modest increase in shipments. Meanwhile, unfilled orders declined, delivery times were somewhat shorter, and inventories moved slightly lower. The index for number of employees went down eight points to -3.5, its first negative value in over two years, pointing to a small decline in employment levels. On the price front, the prices paid index was little changed at 27.8, while the prices received index decrease six points to 6.8.

• World growth forecast for 2020 has been lowered despite our base case that assumes further U.S. tariffs on China are avoided
• Trade war is weighing on investment prospects and has sharply increased downside risks to world economic growth forecasts
• U.S. Fed expected to leave interest rates on hold in 2019
• Central bank responses will not fully compensate for impact of rising trade uncertainties
• For other EM, trade concerns are also impeding benefits of looser global monetary conditions on capital inflows
• On ongoing trade war, says while eurozone looks likely to avoid recession, growth outlook remains weak
• World growth is expected to fall to 2.8% this year from 3.2% in 2018

According to IMM net speculators’ positioning as at June 11, 2019, USD longs moved lower for a second week and by a larger margin, notes the research team at Rabobank. 

• “This has taken net longs to their lowest level since July 2018 as the market prepares for the possibility of a Fed rate this summer.
• The level of net EUR short positions edged a little lower. The previous week they had dropped sharply ahead of last week’s ECB meeting. This suggests that speculators do not expect a significant increase in dovish rhetoric from the ECB just yet.
• Net short GBP positions edged a little lower after the previous week’s surge, though they remain elevated.
• The level of JPY shorts increased modestly following the sharp drop the previous week.
• CHF net shorts dropped sharply.
• CAD net shorts fell back. BoC policy, trade talks and oil prices are in view.
• AUD net shorts held extremely steady last week awaiting further developments on RBA policy and Chinese growth.”

Analysts at Danske Bank note that it’s the beginning of a big central bank week as on Wednesday, we have the FOMC, where they expect Powell to open the door wide for a July rate cut.

• “We also look for September and December cuts.
• On Thursday, the Bank of Japan (BoJ) wraps up a two-day policy meeting. It is one of the small meetings, with no new forecasts on GDP and inflation. We expect the BoJ to keep its ‘QQE with yield curve control’ policy unchanged.
• In Norway, we expect Norges Bank to raise its policy rate by 25bp to 1.25% at Thursday’s rate-setting meeting, as indicated clearly both in its March monetary policy report and even more so at its May meeting.
• On Thursday, the Bank of England meeting is probably not important. In our view, the bank is firmly on hold.”

• If Iran breaches its obligations, the UK would look at all available options
• Expects May to raise Hong Kong protests in the meeting with Chinese Vice Premier later on Monday

• One-off factors that underpinned the first quarter expansion are expiring or being reversed
• German economy to shrink slightly in the second quarter
• Activity in the construction sector was cooling
• But buoyant forces underpinning strong domestic-oriented sectors of the economy remain fundamentally intact

Analysts at TD Securities suggest that the release of the Empire Manufacturing index will grab the attention on Monday as it will give market participants the first look at the performance of the manufacturing sector in June.

• “The index is expected to give back most of its advance in May, declining to 10.5 in June. Despite the expected retreat, the Empire index would suggest manufacturing activities should have improved, on net, over Q1."

• Expects global oil demand growth to exceed 100 million this year
• Will stick to supply constraints to balance the oil market

Germany's HDB construction industry association on Monday raised its forecast for 2019 sales growth to 8.5% year-on-year from its previous estimate of 6% as Europe's largest economy experiences a boom in homebuilding.

Around 300,000 homes are expected to be built in Germany this year, though that is less than the 375,000 the government is aiming for in 2019.

HDB added it expected sales to increase by between 5% and 6% next year.

According to Karen Jones - Head of FICC Technical Analysis at Commerzbank, the AUD/USD pair remains under pressure following the failure at its 55-day ma.

“AUD/USD has sold off to and is attempting to recover from its 78.6% retracement at .6857. We have two 13 counts on the 240-minute chart and we will now exit remaining short positions and reattempt longs. Initial upside target is the 55-day ma at .7008, .7022 the June peak and the April peak at .7069. Further up resistance can be spotted at the .7207 February high. A rise above the .7207 late February high would target the December 2018 high at .7394. IA fall and daily chart close below the .6857 78.6% Fibonacci retracement would signal a further bearish phase and target the .6738 December 2019 low.”

According to the report from Eurostat, the statistical office of the European Union, hourly labour costs rose by 2.4% in the euro area (EA19) and by 2.6% in the EU28 in the first quarter of 2019, compared with the same quarter of the previous year. In the fourth quarter of 2018, hourly labour costs increased by 2.3% and 2.8% respectively.

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, the cost of wages & salaries per hour worked grew by 2.5% and the non-wage component by 2.2% in the first quarter of 2019 compared with the same quarter of the previous year. In the fourth quarter of 2018, the annual changes were +2.3% and +2.4% respectively. In the EU28, the costs of hourly wages & salaries rose by 2.7% and the non-wage component rose by 2.1% in the first quarter of 2019. In the fourth quarter of 2018, annual changes were +3.0% and +2.3% respectively.

President Donald Trump is ready to proceed with tariffs on the remaining $300 billion in Chinese goods in the absence of a trade deal, according to U.S. Commerce Secretary Wilbur Ross.

Ross said enforcement would be the most important element of any potential deal between the world’s two largest economies.

“We will eventually make a deal, but if we don’t, the president is perfectly happy with continuing the tariff movements that we’ve already announced, as well as imposing the new ones that he has temporarily suspended,” Ross said.

Ross played down the prospect of an agreement being reached at the G-20 meeting in Osaka on June 28-29, where Trump and Chinese President Xi Jinping are expected to be in attendance. He said the G-20 was not a place “where you’re going to negotiate a 2,500 page agreement,” adding that “there may be an agreement on the path forward, but that’s about as far as we can expect it to go.”

China’s securities watchdog has told several large non-bank financial institutions to lend more to smaller non-bank institutions in the interbank market to ease a liquidity crunch, sources with direct knowledge of the matter told.

Li Chao, vice chairman of China Securities Regulatory Commission (CSRC), delivered the message during a meeting on Sunday. According to the minutes, Li urged large non-bank institutions not to cut off smaller non-banks as counterparties in the interbank market.

Li also told them to increase their lending quota for short-term bonds and offer more financing tools to support small securities firms and funds, the minutes showed.

Cable’s outlook remains bearish although a break below the key support at 1.2500 the figure looks unlikely in the near term, according to FX Strategists at UOB Group.

Next 1-3 weeks: “After trading sideways and in relatively quiet manner for more than a week, GBP lurched lower and touched 1.2580 last Friday. The low is just above the bottom of our expected 1.2570/1.2770 sideway-trading range that we first indicated on (04 Jun, spot at 1.2665). From here, the ‘sideway-trading phase’ appears to have ended but despite the sharp drop of 0.64% last Friday, downward momentum has not improved by much. However, the underlying tone has clearly weakened and GBP is expected to trade with a downside bias. For now, we do not expect a break of the strong 1.2500 support. Only a move above 1.2680 would indicate that the current mild downward pressure has eased”.

China’s central bank said the second phase of a cut in the reserve requirement ratio (RRR) freed about 100 billion yuan worth of long term funds.

In open market operations, the People’s Bank of China (PBOC) also injected 150 billion yuan via 14-day reverse repos to “keep liquidity level stable at end-June”, the bank said.

The PBOC announced in May that it would implement a reduction of RRRs for some small- and medium-sized banks in three phases, as part of wider efforts to help companies weather a slowdown in the world’s second largest economy.

• Stronger monetary policy reaction would magnify the potential downsides of rates being low for so long

• Question is which instrument or combination of instruments would be best suited to deal with the circumstances

• The cost of using any given instrument might be increasing, which makes the trade-offs more acute.

• Would have to consider a tiering system if needed/necessary

• The eurozone economy is not doing so badly; in fact, services and construction are doing quite well.

• Eurozone’s structural weaknesses, its lingering fragilities, are not going to go away soon.

• Asked whether ECB should review inflation objective, says we have more urgent issues to face right now, but I’m pretty sure that we’ll do it at some point nevertheless.

• We have a clear price stability mandate, and everything we can do to combat climate change has to be assessed against it.

Treasury 10-year yields may drop to 1.75% by year-end if the U.S.-China trade war goes full throttle, says Western Asset Management LLC.

Yields may keep falling even though they have already tumbled to about 2.10% from a seven-year high of 3.26% set in October, according to portfolio manager Mark Lindbloom. The trigger: a cocktail of lower inflation, cooling global growth and a worsening in U.S.-China trade tensions.

“There’s nothing special about 2 percent for 10-year notes,” Lindbloom said. “If we were to go down that path, we would be quick to add duration.”

Fed policy makers will meet Tuesday and Wednesday to set rates, with many economics and bond traders ratcheting up bets they will ease this year to boost the economy.

Downside pressure is expected to lose momentum if Cable regains the 1.2873 level, noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.

“GBP/USD was rejected last week at the 23.6% retracement at 1.2753. It is possible that this is all the correction that we are likely to see and the market is ready to resume its down move. However we have so far held the 2019 uptrend at 1.2570 and we are not quite ready to abandon the correction higher just yet and cannot rule out an extension to the 38.2% retracement at 1.2873, where we suspect it will stall. It will need to regain this on a closing basis in order to alleviate immediate downside pressure and avert further losses to the 1.2444 December 2018 low. Initial support is the 1.2559 end of May low. Minor resistance lies at the 1.2772 February low ahead of the 1.2865 April low”.

The T D Securities (TDS) Analysts offer their expectations on the European Central Bank (ECB) President Draghi’s speech scheduled later today at 1700 GMT.

“ECB President Draghi delivers opening comments at the annual Sintra conference at 6pm BST. This year's conference is likely to be a more academic farewell to Draghi, with less scope for policy hints, as he enters his final months at the ECB. The Fed and BoE are also in blackout mode this week, so won't be able to send any signals to markets on future policy moves.”

According to the data from the property website Rightmove, UK house prices rose slightly in June.

House prices increased 0.3 percent month-on-month in June but remained flat on a yearly basis. Prices had advanced 0.9 percent on month and 0.1 percent annually in May.

At the same time, property prices in London declined 0.4 percent from May and decreased 2 percent on year in June.

The British Chambers of Commerce downgraded its growth outlook for next year as unwinding of historically-high inventory levels amid weak business investment weigh on economic activity.

In the latest economic forecast the growth projection for 2020 was lowered to 1% from 1.3% and that for 2021 to 1.2% from 1.4%. However, the growth outlook for 2019 was lifted marginally to 1.3% from 1.2%, citing the exceptionally rapid stock-building ahead of the original Brexit deadline in March.

Gross domestic product was forecast to remain flat in the second quarter of 2019 after expanding 0.5% in the first quarter.

Business investment was expected to decline 1.3% this year versus prior forecast of 1% drop. Further, the lobby projected 0.4% growth next year, before improving to 1.1% in 2021.

• Warns of bleak indications about the health of the global economy

• Central banks should never ignore market signals

• But also shouldn't follow them blindly either

• Markets are sending a "quite alarming" message at odds with benign data

• Capacity for policymakers to deal with shocks today is less than it was previously

EUR/USD

Resistance levels (open interest**, contracts)

$1.1421 (3782)

$1.1354 (4348)

$1.1314 (596)

Price at time of writing this review: $1.1217

Support levels (open interest**, contracts):

$1.1175 (2986)

$1.1135 (3676)

$1.1092 (2490)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 5 is 62993 contracts (according to data from June, 14) with the maximum number of contracts with strike price $1,1300 (4348);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2821 (1019)

$1.2781 (316)

$1.2746 (364)

Price at time of writing this review: $1.2592

Support levels (open interest**, contracts):

$1.2544 (1256)

$1.2511 (1944)

$1.2474 (2328)

Comments:

- Overall open interest on the CALL options with the expiration date July, 5 is 16827 contracts, with the maximum number of contracts with strike price $1,3000 (3036);

- Overall open interest on the PUT options with the expiration date July, 5 is 15041 contracts, with the maximum number of contracts with strike price $1,2500 (2328);

- The ratio of PUT/CALL was 0.89 versus 0.91 from the previous trading day according to data from June, 14

* - 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.