Tin tức thì trường

Major US stock indexes rose moderately, helped by the outcome of the Fed meeting. Support to the market also continued to provide expectations of progress in the trade dispute between the United States and China.

Beijing hinted at the possibility of a positive outcome in negotiations with Washington after the two largest economies in the world agreed to resume their turbulent discussions at the G20 meeting this month. Meanwhile, US President Donald Trump said preparations began for his meeting with Chinese President Xi Jinping next week at the G20 summit in Osaka, Japan. Trump has repeatedly threatened to introduce additional tariffs on Chinese goods.

As for the Fed meeting, the heads of the Central Bank decided to leave the interest rate on federal funds in the range of 2.25% -2.50%. However, they signaled that they would lower it in the coming months if the outlook for the economy deteriorated. FOMC expected growth to continue, but "uncertainty about its prospects has increased." "Given this uncertainty and restrained inflationary pressure, the committee will closely monitor what the incoming information means for the prospects of the economy, and will act accordingly to support economic growth," the Fed said. The forecasts for interest rates showed that 17 executives are expecting that the Central Bank will have to lower the rate this year, while seven of them predict two rate reductions of a quarter percentage point each. Only one manager believes that the Fed will have to raise the rate in this year. do, with the remaining eight executives believe that the rate will remain unchanged. The majority of managers expect that the rate will be lower than the current level by the end of 2020.

Most of the components of DOW finished trading in positive territory (22 out of 30). The growth leader was UnitedHealth Group Inc. (UNH; + 2.04%). Outsider were shares of Dow Inc. (DOW; -2.06%)

Almost all sectors of the S & P recorded an increase. The utilities sector (+ 1.0%) and the health sector (+ 1.0%) grew the most. The decline showed only the conglomerates sector (-0.1%).

At the time of closing:

Dow 26,504.00 +38.46 +0.15%

S & P 500 2,926.46 +8.71 +0.30%

Nasdaq 100 7,987.32 +33.44 +0.42%

The U.S. Energy Information Administration (EIA) revealed on Wednesday that crude inventories declined by 3.106 million barrels in the week ended June 14. Economists had forecast a decrease of 1.250 million barrels.

At the same time, gasoline stocks decreased by 1.692 million barrels, while analysts had expected an increase of 0.477 million barrels. Distillate stocks fell by 0.551 million barrels, while analysts had forecast an advance of 0.377 million barrels.

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

U.S. crude oil imports averaged 7.5 million barrels per day last week, down by 144,000 barrels per day from the previous week.

Josh Nye, the senior economist at Royal Bank of Canada, notes that the Canadian headline inflation was stronger than expected, increasing to 2.4% in May, while BoC core measures averaged 2.1%.

“Today’s stronger-than-expected inflation data will still be overshadowed by this afternoon’s Fed meeting. The US central bank is under increasing pressure from the president and financial markets to lower interest rates over the second half of this year. That’s not the case north of the border, where markets are pricing in much less easing from the BoC (now less than 50% odds of a cut by end of year) than from the Fed (~50 bps of cuts by October).

Inflation numbers like today’s—with core measures creeping higher in May but remaining around the 2% target—are one reason the BoC faces less pressure to reverse course and begin easing monetary policy.

For now, stable to slightly higher inflation readings and generally improving domestic data allow the BoC to remain patient and monitor the impact of external developments.”

• Unclear when U.S.-China negotiations will restart
• Expects to meet with Chinese vice-premier ahead of G20
• It's in the interest of both the US and China to have a successful trade agreement

Analysts at TD Securities said that Canada’s May CPI surprised sharply to the upside, with headline inflation firming to 2.4% y/y as prices rose by 0.4% on the month.

• “Core CPI also improved from April, with the average of the Bank of Canada's preferred measures rising from 1.90% to 2.07% y/y.
• This should provide the Bank some comfort with its current policy stance and allow them to push back against market pricing for cuts. However, any potential rate hikes are still a long ways off, with a number of obstacles to clear beforehand.
• FX: CAD caught a bid and will fuel speculation that better days remain ahead. However, we require much-improved activity data to confirm. In the short-term, however, CAD may enjoy a better bid on the crosses (like EUR and AUD) than against the USD, where it trades a touch rich.”

U.S. stock-index futures were flat on Wednesday as investors were cautious ahead of the Fed's policy statement, which could open the door to future interest rate cuts.

Global Stocks:

Analysts at TD Securities are expecting New Zealand's Q1 GDP to be a strong in GDP (E) terms.

• “Retail sales was +0.7% q/q, dwelling construction was +4.3% q/q and non-residential construction a blockbuster +9% q/q. There tends to seasonal weakness in public spending (we pencil in -0.3%pts) and we look for +0.4%pts for the trade sector.
• Overall, GDP is set to post at least 1% q/q with our (E) tracking literally twice that. Our GDP(P) measure is more modest at +1.1% q/q, although well above consensus +0.6%, which lifts annual growth from 2.3% to 2.9%.”

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

American Express (AXP) resumed with a Buy at BofA/Merrill; target $145

Statistics Canada reported on Wednesday the country’s consumer price index (CPI) rose 0.4 percent m-o-m in May, the same pace as in the previous month.

On the y-o-y basis, Canada’s inflation rate increased 2.4 percent last month after a 2.0 percent gain in April. That was the highest inflation rate since October 2018.

Economists had predicted inflation would increase 0.2 percent m-o-m and 2.1 percent y-o-y in May.

According to the report, prices went up in all eight major components in the 12 months to May, with six components growing at faster rates and two components increasing at the same pace compared with April. The prices for food (+3.5 percent y-o-y) and transportation (+3.1 percent y-o-y) contributed the most to the May gain in the headline CPI.

Meanwhile, the closely watched the Bank of Canada's core index increased 2.1 percent y-o-y in May after gaining 1.6 percent y-o-y in the previous month. Economists had forecast an advance of 1.2 percent y-o-y.

• We are in talks with Russia and China on a settlement mechanism in the event talks with the EU fail

Analysts at TD Securities are expecting the U.S. Fed to signal readiness to ease policy but to stop short of committing to a near term cut at Wednesday's FOMC meeting.

• “Chair Powell will likely look to put markets more at ease by reiterating his comments a few weeks ago that the Fed is ready to act if conditions warrant it. The Fed will likely stress that they are monitoring risks on the economy and taking appropriate action to sustain the expansion.
• In terms of projections, we expect the Fed to deliver only modest downgrades to growth and inflation forecasts despite some recent weakness in data. We expect the median 2019 dot to remain unchanged (reflecting a Fed on hold) and the median 2020 dot to decline.”

Jane Foley, a senior FX strategist at Rabobank, says that given the BoJ’s struggles to boost inflation, it is possible that the BoJ could tomorrow reinforce its dovish policy position. 

• “Given that the JPY is inclined to be tuned to international events and geopolitics rather than the domestic economy, this may not be sufficient to push USD/JPY significantly higher.
• A Reuters’ poll conducted between June 5 and 17 indicates that 20 out of 39 forecasters now expect that the next policy move from the BoJ will bring more stimulus. There is no strong consensus as to what form this will take.  Options such as increased buying of ETFs and Japanese real estate investment trusts are thought to be on the table in addition to a further lowering of interest rates.
• Although it is a majority view that the next BoJ move will result in more policy accommodation, the Reuters survey suggests that there remains a significant minority that view the next move as a hike.  This may seem out of kilter with about-face guidance of the Fed and the ECB in recent months.  It is possible that commentators see little space for the BoJ to ease further given the enormity of its current QQE programme and the difficulties the banking sector has experienced in recent years from the flatness of the yield curve.
• On the margin, dovish policy statements from the BoJ tomorrow should undermine the outlook for the BoJ. However, due to the JPY’s function as a safe haven, its performance tends to be more influenced by the general tone of risk appetite. As a consequence, the outlook for USD/JPY is likely to be more heavily bias by whether or not the market see the potential for some sort of resolution in the trade wars between the US and China and potentially by news surrounding Iran.  In view of the current geopolitical risks in addition to slowing world growth we see risk of USD/JPY edging towards the 108.00 level on a 3-month view.”

James Smith, a developed markets economist at ING, suggests that the fact the UK core inflation has now been below the BoE’s 2% target since last September appears to offer little reason to tighten policy further. However, he sees a few key reasons why policymakers will remain a little more hawkish on the outlook for inflation over the coming months.

• "Firstly, the latest dip in core CPI to 1.7% in May was largely down to airfares - a volatile component of the inflation basket, which fell back after Easter by around 5%.
• Secondly, and more broadly, the modest downtrend in core inflation over recent months also reflects the lagged impact of sterling’s post-Brexit plunge filtering out of the numbers. 
• Even so, it’s fair to say that underlying consumer inflation has still been fairly unexciting. Another measure of so-called domestically-generated inflation, the core services index, has slipped back since 2017.
• Most importantly though, policymakers continue to put greater emphasis on wage growth, which is still performing fairly solidly. The BoE expects wage pressures to continue building as skill shortages bite.
• In other words, we expect the Bank to stick to its reasonably hawkish mantra at tomorrow’s meeting. Policymakers have been keen to highlight that they believe market expectations of interest rates are too low, and it’s possible we see more explicit references to this in either tomorrow’s statement or accompanying minutes."

The Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application volume in the U.S. fell 3.4 percent in the week ended June 14, following a 26.8 percent climb in the previous week.

According to the report, both refinance applications and applications to purchase a home dropped 3.5 percent.

Meanwhile, the average fixed 30-year mortgage rate increased to 4.14 percent from 4.12 percent.

“After seeing a six-week streak, mortgage rates for 30-year loans increased slightly, which led to a pullback in overall refinance activity,” said MBA economist Joel Kan. “Strong demand from first-time buyers and low unemployment continue to push this year’s purchase activity above a year ago,” Kan noted.

Analysts at TD Securities, suggest that, with economic data mixed and Brexit/politics muddling the outlook, the BoE’s MPC is likely to vote unanimously to leave policy on hold.

• “Increasingly hawkish comments set against a more worrisome global backdrop set the stage for surprise this week.
• FX: Our base case suggests a muted reaction in sterling overall. Directional risks in GBP remain more a function of the UK's political backdrop and global risk environment.
• Tonight’s FOMC keeps market risks fluid ahead of the meeting. We will update levels and views as necessary.”

• Says that risks are tilted to the downside; if they start to materialize, ECB will act accordingly
• Says ECB could opt for a “combination of actions” to restore inflation
• "We have a wide range of instruments available: We have forward guidance, we have TLTRO (targeted longer-term refinancing operations), we have the reinvestment of the maturities of our balance sheets — so there is an ample, you know, range of instruments that we could use, and QE (quantitative easing) is part of them"
• Says if ECB sees that inflation expectations start to de-anchor, it will act

The latest survey by the Confederation of British Industry (CBI) showed on Wednesday the UK manufacturers’ order books declined in June.

According to the report, the CBI's monthly factory order book balance dropped to -15 in June from -10 in the previous month. That was the lowest reading since October 2016. Economists had expected the reading to edge down to -11.

According to the report, stocks of finished goods were reported as more than adequate (+12), but to a lesser degree to last month (+25), while export orders (-12) improved slightly on April (-16).

Four decades of dealings between China and the United States show that positive outcomes were always possible, China's foreign ministry said, after their presidents agreed to rekindle trade talks at a G20 meeting this month.

The world's two largest economies are in the middle of a costly trade dispute that has pressured financial markets and damaged the global economy.

Speaking at a daily news briefing, Foreign Ministry spokesman Lu Kang said it was important to find a solution that is acceptable to both sides. "I'm not getting ahead of myself, but communication over four decades shows it is possible to achieve positive outcomes," he said.

Lu said he could not give an exact agenda for the meeting. "The two leaders will talk about whatever they want," he said. "A deal is not only in the interests of the two peoples but meets the aspirations of the whole world."

According to analysts at TD Securities, Canada’s CPI is projected to firm to 2.2% y/y in May, with prices up 0.2% on the month.

“Energy will make a muted contribution after a stabilization in gasoline prices, which are coming off consecutive 10% m/m gains, leaving core goods and services to drive the headline print. Elsewhere, a rebound in rental prices following their first pullback in several decades should make a positive contribution to shelter cost inflation. Core inflation should hold at 1.9% on average although we should see some divergence across the individual measures. CPI-trim is poised to push above 2.0% y/y due to base-effects but we do not expect this to be replicated across CPI-median or CPI-common, with downside risks to the latter on the heels of two consecutive quarters of <0.5% GDP growth.”

According to first estimates from Eurostat, in April 2019 compared with March 2019, seasonally adjusted production in the construction sector decreased by 0.8% in the euro area (EA19) and by 0.6% in the EU28. In March 2019, production in construction decreased by 0.4% in the euro area and by 0.7% in the EU28.

In April 2019 compared with April 2018, production in construction increased by 3.9% in the euro area and by 4.5% in the EU28.

In the euro area in April 2019, compared with March 2019, civil engineering fell by 2.5% and building construction by 0.5%. In the EU28, civil engineering fell by 2.3% and building construction by 0.4%.

In the euro area in April 2019, compared with April 2018, building construction increased by 4.0% and civil engineering by 3.4%. In the EU28, civil engineering rose by 5.8% and building construction by 4.1%.

According to the report from Office for National Statistics (ONS), the Consumer Prices Index (CPI) 12-month rate was 2.0% in May 2019, down from 2.1% in April 2019.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.9% in May 2019, down from 2.0% in April 2019. Falling fares for transport services, particularly air fares influenced by the timing of Easter in April, and falling car prices produced the largest downward contributions to the change in the rate between April and May 2019. Partially offsetting upward contributions came from rising prices for a range of games, toys and hobbies, furniture and furnishings, and accommodation services.

ONS said the headline rate of output inflation for goods leaving the factory gate was 1.8% on the year to May, down from 2.1% in April 2019. The growth rate of prices for materials and fuels used in the manufacturing process was 1.3% on the year to May 2019, down from 4.5% in April 2019. Petroleum provided the largest downward contribution to the change in the annual rate of output inflation.

The annual rate of input inflation fell 3.2 percentage points in May 2019, driven by a large downward contribution to the change in the rate from crude oil.

According to the report from European Central Bank (ECB), the current account of the euro area recorded a surplus of €21 billion in April 2019, a decrease of €4 billion from the previous month. Surpluses were recorded for goods (€22 billion), services (€6 billion) and primary income (€4 billion). These were partly offset by a deficit for secondary income (€12 billion).

In the 12 months to April 2019, the current account recorded a surplus of €315 billion (2.7% of euro area GDP), compared with a surplus of €391 billion (3.4% of euro area GDP) in the 12 months to April 2018. This decline was driven mainly by smaller surpluses for goods (down from €324 billion to €274 billion) and services (down from €111 billion to €98 billion), and by a larger deficit for secondary income (up from €138 billion to €156 billion). These developments were partly offset by a larger surplus for primary income (up from €93 billion to €98 billion).

Daniel Brødsgaard, analyst at Danske Bank, notes that EUR/USD pair dropped yesterday as ECB finally acknowledged the market’s call for monetary easing.

“We see a case for the euphoria calming down again as the market recalls how it was left disappointed when ECB last announced rate cuts and QE in December 2015 and March 2016, i.e. we are not bound for a bigger move lower in EUR/USD after ECB’s dovish shift. Rather we see a case for EUR/USD to rebound today on a dovish Fed signalling it is ready to cut rates from July. In the end, we look for the Fed to ease more aggressively than the ECB and push EUR/USD higher. We forecast 1.15 in 3M.”

Commerzbank said that it has now bought forward its expectations for an interest rate cut from the European Central Bank to July from the fourth quarter of this year.

The change in forecast follows comments by ECB chief Mario Draghi on Tuesday that the central bank will ease policy again if inflation fails to accelerate.

“Yesterday’s speech in Sintra may well be remembered as opening the door for the next round of large-scale stimulus, similar to his Jackson Hole speech in 2014,” analysts at Commerzbank said.

“In essence, the ECB could no longer tolerate the adverse mix of collapsing inflation break-evens and rising real yields since the meeting two weeks ago.”

• There are various uncertainties surrounding the economy

• Inflation likely to gradually accelerate towards 2%

• But uncertainties do exist on this forecast

• Central bank will continue to take appropriate policy steps

• Japan's financial system is maintaining stability

According to analysts at Danske Bank, following ECB President Mario Draghi's hint at future easing yesterday, it is today the Fed's turn to turn more dovish.

“At the FOMC meeting tonight we look for the Fed to open the door for a rate cut in July and a total of 75bp cuts in H2. Lower inflation expectations, trade war uncertainty and signs of a manufacturing recession point to the need for a lower Fed funds rate. Comparing the current Fed funds rate with measures of the neutral rate also suggests that monetary policy is not too tight. The Fed meeting will include new projections (dot plot). On the data front we get UK inflation data where consensus looks for a further decline in the core inflation rate to 1.7% y/y in May from 1.8% y/y in April. Core inflation has been trending lower since the peak at 2.7% in early 2018.”

Substantial discussions on trade, including reform of the World Trade Organization, will likely take place at a summit of Group of 20 major economies next week in Osaka, a senior Japanese finance ministry official said.

Japan, which chairs this year's G20 gatherings, will take a neutral stance in the U.S.-China trade row and urge countries to resolve tensions with a multilateral framework, said Masatsugu Asakawa, vice finance minister for international affairs.

"With regard to differences (on trade) between the United States and China, Japan of course won't take sides. We will also not take any steps that go against WTO rules. Japan will continue to take a multilateral approach in promoting free trade," Asakawa told.

More "concrete" discussions on trade policy will take place at the G20 Osaka summit, he added.

Asakawa rebuffed the view the Bank of Japan's massive stimulus programme could provoke the ire of Trump. He also said the G20 shared an understanding that members would accept any exchange-rate moves driven by ultra-easy monetary policies as long as the measures are not directly aimed at manipulating currencies.

According to the report from Federal Statistical Office (Destatis), in May 2019 the index of producer prices for industrial products rose by 1.9% compared with the corresponding month of the preceding year. Economists had expected a 2.1% increase. In April 2019 the annual rate of change all over had been 2.5%.

Compared with the preceding month April 2019 the overall index decreased by 0.1% in May 2019 (+0.5% in April 2019). Economists had expected a 0.2% increase.

In May 2019 the price indices of all main industrial groups increased compared with May 2018. Energy prices, the development of which had the greatest impact on the growth of the overall index, rose by 4.5% (-0.6% compared to April 2019). The overall index disregarding energy was 1.1% up on May 2018 and unchanged compared to April 2019.

Prices of capital goods increased by 1.6% (+0.1% compared to April 2019). Prices of non-durable consumer goods increased by 1.8% compared to May 2018 (+0.4% on April 2019). Food prices were up 2.3%. Prices of intermediate goods increased by 0.5% (-0.3% compared to April 2019). Prices of durable consumer goods were up 1.4% (unchanged from April to May 2019).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1414 (3896)

$1.1341 (4440)

$1.1298 (597)

Price at time of writing this review: $1.1190

Support levels (open interest**, contracts):

$1.1137 (3785)

$1.1093 (2441)

$1.1046 (2565)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 5 is 65649 contracts (according to data from June, 18) with the maximum number of contracts with strike price $1,1300 (4440);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2816 (1017)

$1.2774 (321)

$1.2736 (377)

Price at time of writing this review: $1.2557

Support levels (open interest**, contracts):

$1.2504 (1944)

$1.2469 (2267)

$1.2430 (1018)

Comments:

- Overall open interest on the CALL options with the expiration date July, 5 is 16951 contracts, with the maximum number of contracts with strike price $1,3000 (3035);

- Overall open interest on the PUT options with the expiration date July, 5 is 15264 contracts, with the maximum number of contracts with strike price $1,2500 (2267);

- The ratio of PUT/CALL was 0.90 versus 0.90 from the previous trading day according to data from June, 18

* - 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.