Tin tức thì trường

Major US stock indexes ended the session in negative territory, which was due to the fall in quotes of almost all sectors, as well as concerns about a protracted trade war between the United States and China.

US President Donald Trump said Monday that the US is “not ready” to conclude a trade deal with China, but then added that he expects to conclude a trade agreement in the future. He also said that tariffs on imports from China could increase significantly. Trump's statements appeared after comments in the Chinese state newspaper Xinhua made it clear that China would not obey the demands of the United States to change its state economy. Disagreements between the two sides raised concerns that a protracted trade war would lead to a global economic downturn.

Meanwhile, consumer confidence data slightly improved investor sentiment. The Conference Board report showed that the US consumer confidence index improved in May to 134.1 from 129.2 in April. Analysts had expected the index to grow only to 130.0. According to the report, the current situation index, based on consumers ’assessment of current business and labor market conditions, rose from 169.0 to 175.2, while the expectations index, based on short-term consumer forecasts for income, business and labor market conditions, improved from 102.7 to 106.6.

On the other hand, data from the Federal Reserve Bank of Dallas showed that in May the business activity of Texas producers deteriorated sharply, contrary to the forecasted increase. According to the report, the manufacturing index of the Dallas Fed in May fell to -5.3 points from 2.0 points in April. Analysts had expected an increase to 5.8 points. Recall the index value below zero indicates a reduction in business activity.

Most of the components of DOW finished trading in the red (24 out of 30). Intel Corp shares were an outsider. (INTC; -2.32%). The growth leader was the shares of Visa Inc. (V; + 0.73%).

Almost all sectors of the S & P recorded a decline. The largest decline was shown by the health sector (-1.2%). Only the conglomerate sector grew (+ 0.1%).

At the time of closing:

Dow 25,347.77 -237.92 -0.93%

S & P 500 2,802.39 -23.67 -0.84%

Nasdaq 100 7,607.35 -29.66 -0.39%

• But willing to meet other countries reasonable demand

The Conference Board announced on Tuesday its U.S. consumer confidence gauge rose 4.9 points to 134.1 in May from 129.2 in April.

Economists had expected consumer confidence to come in at 130.0.

April’s consumer confidence reading was unrevised at 129.2.

The survey showed that the expectations index increased from 102.7 last month to 106.6 this month, while the present situation index jumped from 169.0 to 175.2.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted, Consumer Confidence posted another gain in May and is now back to levels seen last Fall when the Index was hovering near 18-year highs. The increase in the Present Situation Index was driven primarily by employment gains. Expectations regarding the short-term outlook for business conditions and employment improved, but consumers’ sentiment regarding their income prospects was mixed. Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”

Rabobank analysts note the UK PM Theresa May has said she will resign on 7 June, and her departure makes way for a Tory leadership contest that is likely to put a Brexit hardliner in the PM function with Boris Johnson regarded as the most likely winner.

• The new PM will probably try to renegotiate the EU-UK deal in order to change the Irish backstop, but the EU is expected to stand its ground.
• If the UK government opts for a hard Brexit as a result, it will face firm opposition from the British parliament.
• Such a conflict is likely to eventually lead to an early general election, a process that will need to be accommodated by a third extension of article 50 by the EU.
• All in all, we see a delay of Brexit to 2020 as the most likely outcome, but the odds of a hard Brexit on 31 October are uncomfortably high.
• A second referendum could play an important role in the electoral campaign and may open the door for the UK remaining in the EU in 2020.
• The already elevated degree of uncertainty around Brexit may rise further in the coming months and will continue to weigh on the British economy.

S&P reported on Tuesday its Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan areas, rose 2.7 percent y-o-y in March, following an unrevised 3.0 percent y-o-y increase in February. That was the smallest annual advance in house prices since August 2012.

Economists had expected an advance of 2.8 percent y-o-y.

Las Vegas (+8.2 percent y-o-y), Phoenix (+6.1 percent y-o-y) and Tampa (+5.3 percent y-o-y) recorded the highest y-o-y gains in March.

Meanwhile, the S&P/Case-Shiller U.S. National Home Price Index, which measures all nine U.S. census divisions, was up 3.7 percent y-o-y in March, down from 3.9 percent y-o-y in the previous month.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, noted Given the broader economic picture, housing should be doing better. Mortgage rates are at 4% for a 30-year fixed rate loan, unemployment is close to a 50-year low, low inflation and moderate increases in real incomes would be expected to support a strong housing market. Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases. At the currently lower pace of home price increases, prices are rising almost twice as fast as inflation: in the last 12 months, the S&P Corelogic Case-Shiller National Index is up 3.7%, double the 1.9% inflation rate. Measured in real, inflation-adjusted terms, home prices today are rising at a 1.8% annual rate. This compares to a 1.2% real annual price increases in housing since 1975.”

U.S. stock-index futures traded flat on Tuesday, as investors remained concerned about U.S.-China trade tensions.

Global Stocks:

Editor-in-chief of Chinese and English editions of the Global Times tweeted: "Based on what I know, China is seriously considering restricting rare earth exports to the US. China may also take other countermeasures in the future."

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

Amazon (AMZN) target raised to $2500 from $2400 at Cowen

Johnson & Johnson (JNJ) initiated with a Buy at Goldman

Jane Foley, the senior FX strategist at Rabobank, notes that the EUR rallied yesterday on a relief at the result of the European parliamentary elections as Eurosceptics will be represented in greater numbers having taken around 25% of all MEP seats, which is well below the 33% that some polls had indicated. 

• The EUR’s relief rally of yesterday, however, has failed to extend. Eurosceptic, anti-establishment or hard right parties topped the polls in Italy, the UK, Poland and Hungary. The EUR also remains susceptible to uncertainty about the string of changes that will be made in some of the EU’s key jobs this year. In addition, slack growth and the threat of a step up in trade tensions between the EU and the US also threaten to undermine confidence in the EUR in the months ahead.
• While the politics of Brussels can be expected to remain a diversion for markets for the remainder of the year, the emboldened position of Italy’s populist League in the weekend’s European parliamentary elections also has the capacity to weigh on the EUR.
• Deputy PM Salvini has called for a “fiscal shock” of tax cuts to invigorate Italy’s flagging economy. He plans to move ahead with a pledge to cut incomes taxes to 15% despite threats from Brussels to fine the Italian government for breaching budgetary rules. While some commentators have argued that Salvini’s policies will marginaliяe Italy, the threat for the EUR is that investors will continue to view populism as a disruptive force.
• In our view, EUR/USD is likely to edge towards the 1.10 area on a 3 month with the USD likely benefitting from safe-haven flows on signs of slower world growth.

• Rules should be aimed at cutting unemployment instead
• It's not right that Italian bond yields should be higher than other EU countries
• Current EU rules have failed regarding banks and companies

• Downside growth risks for Europe included Brexit, high national debt, aging populations, weakness of some banks, low productivity
• Aging population is a major challenge for the sustainability of welfare state
  
• Calls for creation of Eurozone-wide stabilization instrument
• To finalize banking union it needs Eurozone-wide deposit insurance scheme

• Sees succession unravelling as Annegret Kramp-Karrenbauer ("AKK") as  CDU head

TD Securities' analysts point out that the May data on consumer confidence will be published by Conference Board in the U.S. session.

• Market consensus is looking for the index to edge higher to 130.0.
• FHFA and Case-Shiller home prices for May will round out the data flow, with the market looking for the former to rose 0.2% while the Case-Shiller Index is expected to rise 0.5%.

• As PM said on Friday, it is now for others to find the way forward on Brexit
• Legal text that was agreed with the EU was that we would not be seeking to reopen the Withdrawal Agreement
  
• May will meet with Tusk later today to update him on her statement last Friday

Bert Colijn, a senior eurozone economist at ING, notes that economic sentiment in the Eurozone climbed from 103.9 in April to 105.1 in May and lending picked up in April. 

• This bounceback in eurozone sentiment comes as a pleasant surprise after a poor reading in April and weak readings for the PMI and IFO. It has to be said that most sectors – except for services - still show weaker readings than in March, so the best way to read this is: it’s not as bad as April data suggested!
• Moderate growth, therefore, seems to be the way forward according to the ESI. The improvements were mainly led by improved optimism about the months ahead for both industry and services. This is not because of improved new orders though, which still declined in May. Industry data was poor in general as the recent production trend dropped significantly and so did employment expectations. This seems in line with a modestly weaker GDP growth rate in Q2 than Q1.
• While most recent data points towards some slowing of growth in the second quarter, there are also green shoots to be found. Today’s lending data shows that loan growth to non-financial corporations has improved from 3.6% to 3.9% YoY in April, with loan growth to households accelerating to 3.4% YoY. Once again, this is a hard data point that performs better than the surveys would suggest, indicating that the dichotomy between the surveys and hard data is something to be wary of.

Two separate Chinese sources told the South China Morning Post (SCMP) that the talks hit a snag because Washington “kept adding new demands in the late stages of the negotiations”. According to them, “some of these would directly affect China’s political and social stability”. Beijing was particularly angered by the additional tariffs and what it saw as the U.S.’ attempt to shift the blame to China.

“The real reason is that the U.S. side keeps changing their demands,” one source said. “There were so many changes that we can’t [keep giving in]. And then they turned around and accused us of backtracking.”

He also said some of the key areas that the two sides could not agree on.

For instance, the U.S. demanded China “completely open its internet” and relax its controls that require foreign cloud computing companies to store all their data in China.

“China can only agree to selectively open some areas. A completely open internet is impossible,” the source said.

The European Commission could impose a 3 billion euro fine on Italy for breaking EU rules due to its rising debt and structural deficit levels, the country's Deputy Prime Minister Matteo Salvini said.

Salvini, whose far-right League party triumphed in European elections on Sunday, said he would use "all my energies" to fight what he said were outdated and unfair European fiscal rules.

Two eurozone officials told on Monday that Brussels was likely to start disciplinary steps against Italy on June 5 over its public finances. A warning letter from the Commission is expected to be sent to Rome this week.

The UK needs a new EU divorce deal and a new negotiating team including prominent Conservative Brexit supporters and the Northern Irish Democratic Unionist Party, Conservative leadership candidate Jeremy Hunt said.

Hunt said the draft withdrawal deal agreed by Prime Minister Theresa May with the EU in November needs to be renegotiated, adding that the Irish backstop could be changed. The EU has refused to reopen the withdrawal agreement.

“What we need to do is to have a new negotiating team. In that team needs to be not just the government, but the DUP, the ERG. I think you should have someone from Scotland and Wales,” Hunt said, referring to the European Research Group (ERG) of Conservative lawmakers who favour a clean break with the EU.

Axel Rudolph, analyst at Commerzbank, suggests that the USD/JPY pair is weighing on the 38.2% Fibonacci retracement at 109.23 and failure there concentrates attention back on the recent May low at 109.02.

“Failure at 109.02 would push the late January low at 108.49 and the 50% retracement at 108.25 to the fore. Further down sits the 107.27 61.8% Fibonacci retracement. Minor resistance comes in at the 110.84 April 10 low and the 111.41 200 day moving average. These guard the 112.33 downtrend. Above the 112.33 downtrend lies the 114.55 October 2018 high.”

According to the report from European Commission, in May 2019, the Economic Sentiment Indicator (ESI) increased in the euro area (by 1.2 points to 105.1) and remained broadly stable in the EU (+0.2 points to 103.8).

The improvement of euro-area sentiment resulted from higher confidence in industry and, to a lesser extent, in services and among consumers, while confidence remained virtually flat in retail trade and cooled down significantly in construction.

Industry confidence booked the first solid improvement (+1.4) in thirteen months, thanks to the sharpest increase in managers’ production expectations in 6 ½ years, as well as more favourable assessments of the stocks of finished products. The current level of overall order books, on the other hand, was assessed more negatively.

Services confidence improved slightly (+0.4), reflecting somewhat better assessments of past and expected demand, while managers’ views on the past business situation remained virtually unchanged. Consumer confidence firmed (+0.8), propelled by households’ brighter expectations about the general economic situation, as well as more upbeat views on their past and future financial situation, which, however, failed to significantly alter their intentions to make major purchases. Retail trade confidence was broadly stable (-0.1), as improved appraisals of the present business situation were counterbalanced by lower assessments of the expected business situation and the adequacy of the volume of stocks. Construction confidence took the strongest hit in some three years (-2.4), as managers’ assessments of the level of order books and, particularly, their employment expectations clouded over. Finally, financial services confidence (not included in the ESI) increased (+2.9) on the back of more positive views on past demand and the past business situation, which were only partially outweighed by grimmer demand expectations.

Low interest rates are justified by the euro zone's current economic conditions and their impact on banks' profitability should not be exaggerated, ECB policymaker Francois Villeroy de Galhau said.

The European Central Bank has said it is considering the need to mitigate the impact of its negative deposit rate on lenders' profits.

"Maintaining a low interest rate environment is completely justified and necessary in light of the economic situation in the euro area. The issue of low rates' impact on banks should neither be ignored nor blown out of proportion," Villeroy said.

"It would be an exaggeration ... to say this is the only reason profits are under pressure: monetary policy also has favourable effects for banks, including a reduction of the cost of risk and an increase in lending volumes," Villeroy said.

Other than low rates, banks - as well as insurers - were facing an "existential challenge" in the form of transforming their businesses to interact with clients digitally while investment banks were losing market share to U.S. rivals due to a lack of critical mass, added Villeroy.

European Central Bank said, the annual growth rate of the broad monetary aggregate M3 stood at 4.7% in April 2019, after 4.6% in March, averaging 4.5% in the three months up to April. Economists had expected a 4.4% increase.

The components of M3 showed the following developments. The annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, stood at 7.4% in April, compared with 7.5% in March. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 0.5% in April from -0.2% in March. The annual growth rate of marketable instruments (M3-M2) was -5.9% in April, compared with -5.7% in March.

Annual growth rate of adjusted loans to households stood at 3.4% in April, compared with 3.3% in March.

Annual growth rate of adjusted loans to non-financial corporations increased to 3.9% in April from 3.6% in March.

• German economy is under pressure, business outlook has deteriorated since start of year

• industrial companies are struggling with slowing world economy

• domestic economy won’t be able to decouple itself from difficult trade environment in the long run

• business sentiment in retailing, construction remains very good, both sectors drive overall growth

• expectations for foreign business hit lowest level in 10 years, "that’s an alarm signal"

Vladimir Miklashevsky, senior economist at Danske Bank, points out that the biggest news for EUR/USD yesterday was that EU is rumoured to prepare to launch EDP against Italy in June.

“It took EUR/USD 10 pips lower, which to us suggests that it would take a significant deterioration around Italy’s fiscal situation to really move EUR/USD – EU retaliatory measures are not a market mover. Looking further ahead to the rest of the week and into next week, the big question for the market is whether the current dovish Fed pricing is justified. To answer, the market needs more data and updated signals from Fed following last Thursday’s weak PMIs. Fed’s Clarida might provide more clarity on Thursday.”

• China remains confident in keeping yuan stable at a reasonable level

• Factors supporting yuan includes lower chance of a Fed rate hike

• Yields spread between 10-year US and China bonds are in a "relatively comfortable range"

• Will improve efficiency and transparency on disposal of defaulted debt

• Reiterates to maintain prudent monetary policy

According to the report from National Institute of Statistics and Economic Studies (Insee), in May 2019, households’ confidence in the economic situation has clearly increased : the synthetic index has gained 3 points. At 99, it almost returns to its long term average (100). Economists had expected an increase to 97.

In May, households’ opinion balance on their future personal situation continued to improve: it has gained 3 points and now stands above its long term average. Households’ opinion balance regarding their past financial situation has improved as well: it has gained 2 points but remains below its long term average.

The share of households considering it is a suitable time to make major purchases has increased again. The corresponding balance has gained 2 points and now stands above its long term average.

In May, households’ opinion balance on their saving capacity has improved slightly. Indeed, the expected saving capacity balance has gained 2 points while the current one has gained 1 point. Both balances now stand above their long term average.

The share of households considering it is a suitable time to save has been virtually stable and remains below its long term average.

Raising tariffs on all Chinese goods that enter American borders will likely hurt U.S. economic growth, which has already shown signs of slowing in recent months, according to Japanese financial firm Nomura.

President Trump has claimed on several occasions that the U.S. has collected billions of dollars in tariffs paid by the Chinese, which partly contributed to the strong American economy. Economics experts say that’s not, in fact, how tariffs work, and Nomura’s chief U.S. economist, Lewis Alexander, said the net impact of the trade fight is likely negative for America.

Alexander said there’s evidence that tariffs collected by the U.S. government are being paid by American firms and consumers, rather than the Chinese.

The continued tariff fight between the U.S. and China come at a time when the American economy is “clearly slowing,” Alexander said. He added that “the biggest thing” that will affect U.S. economic growth and decisions by the Fed is how trade developments affect business confidence and investments in the coming months. Still, the potential hits to the U.S. economy don’t justify a rate cut by the Fed, according to Alexander. He explained that if the U.S. moves ahead to impose 25% tariffs on all Chinese goods, core inflation in America could tick up by 0.5% over the next 12 months.

Axel Rudolph, analyst at Commerzbank, points out that EUR/USD pair’s bounce off the April low at 1.1110 nears the 55 day moving average at 1.1235 and it needs to overcome the 55 day moving average in order to alleviate downside pressure.

“Be advised that as long as the recent lows at 1.1110/06 hold the pattern being traced out is a potential large bullish reversal pattern. Overhead lie the 55- and 100-day moving averages at 1.1235 and 1.1295 as well as the September-to-May resistance line at 1.1307. Further up meanders the 200 day moving average at 1.1385. Support at 1.1110/06 is regarded as the break down point to the 2018-2019 support line at 1.1090 and the 1.0814 78.6% Fibonacci retracement.”

According to the report from Federal Statistical Office, after three months of positive signs, exports in April 2019 saw a seasonally adjusted decline of 2.3 percent (real: - 0.6 percent), but remained at the 19 billion franc mark. Since the low in September 2018, there has been an overall upward trend, which has slowed somewhat towards the end. After two declining monthly results in April, imports posted a plus of 0.8 percent in April (real: + 1.5 percent). The trade balance closed with a surplus of 1.9 billion francs.

The decline in exports hit a wide range of goods; However, the decline in sales of chemical pharmaceutical products (- 427 million Swiss francs, immunological products: - 642 million Swiss francs) was the most significant factor affecting total exports. At 4.8 percent, the watch division suffered a damper in April. Deliveries of machinery and electronics fell just short of the previous month's level and thus tend to decline downwards over the year. A contribution to growth was made by the other product categories, namely exports of vehicles (+ 12.2 percent) and metals (+ 2.0 percent).

Most of the import plus was based on the bijouterie and jewelery sector (+ 508 million Swiss francs, under other product groups), which also set a new monthly record of 1.6 billion Swiss francs. Metals (+ 1.4 percent) and machinery and electronics (+ 0.6 percent) also made a positive contribution. Imports of the largest division, Chemicals and Pharmaceuticals, on the other hand, showed a decline of 3.0% (- 128 million Swiss francs, immunological products: - 466 million Swiss francs), thus confirming the decline recorded in the previous month. Meanwhile, imports of vehicles (- 102 million francs, airplanes) continued their downward trend registered since the beginning of 2018 in April.

According to the report from GfK Group, the mood among consumers appears only slightly changed in May 2019. While income expectations improved slightly, economic outlook and propensity to buy declined somewhat. For June, GfK is predicting a consumer climate value of 10.1 points, following a revised May figure of 10.2 points. Economists had expected an increase to 10.4 points.

The steep downward spiral of the economic outlook has continued in May. However, it has significantly reduced its speed. The indicator fell to 1.7 points following a comparatively small loss of 1.3 points. The economic outlook has therefore lost almost 32 points within a twelve-month period.

Contrary to the weakening economic outlook, income expectations among consumers continue to remain largely stable at an already very high level. The indicator rose by 0.9 points and now stands at 57.7 points. It is also five points higher than at the same time last year. The gap between economic and income expectations has therefore widened again.

In contrast to the economic outlook, propensity to buy has suffered moderate losses in May. Following a decrease of 2.6 points, the indicator currently stands at 50.5 points. It was therefore forced to concede part of the gains it recorded in the previous month. The continuing high level of propensity to buy proves that the mood among consumers remains unchanged. This is very positive news in light of the general economic uncertainty. This optimism is most certainly due in part to the good and stable situation on the job market.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1322 (7127)

$1.1287 (3136)

$1.1262 (1728)

Price at time of writing this review: $1.1182

Support levels (open interest**, contracts):

$1.1164 (7850)

$1.1130 (4095)

$1.1089 (4133)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 7 is 124113 contracts (according to data from May, 24) with the maximum number of contracts with strike price $1,1500 (9016);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2916 (570)

$1.2839 (374)

$1.2785 (609)

Price at time of writing this review: $1.2672

Support levels (open interest**, contracts):

$1.2642 (4002)

$1.2611 (1721)

$1.2574 (2394)

Comments:

- Overall open interest on the CALL options with the expiration date June, 7 is 40434 contracts, with the maximum number of contracts with strike price $1,3450 (3277);

- Overall open interest on the PUT options with the expiration date June, 7 is 40390 contracts, with the maximum number of contracts with strike price $1,2700 (4002);

- The ratio of PUT/CALL was 1.00 versus 1.00 from the previous trading day according to data from May, 24

* - 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.