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Major US stocks rose moderately as Apple's AAPL boost pushed the tech sector higher while the broader market rebounded after falling last week after the White House denied reports that it was considering limiting US investment in China.

Apple Inc stocks jumped 2.34% after Tim Cook, CEO of German company Bild, announced a solid start to iPhone sales, and JP Morgan analysts improved their forecasts for iPhone sales, which allowed them to increase the target price of AAPL shares to $ 265 / share.

Market participants also continued to closely monitor developments around US-China trade relations ahead of the October meeting of US and PRC trade representatives. Monica Crowley, a spokeswoman for the US Treasury Department, said over the weekend that the Trump administration “is not considering banning Chinese companies from listing on the US stock exchanges at this time.” A statement was made after Bloomberg reported Friday that this is one of the options the White House is considering limiting US investment flows to China. In addition, Peter Navarro, director of the White House’s Trade and Production Policy Directorate, told CNBC today that Bloomberg’s message is “fake news”.

Most of the DOW components completed trading in positive territory (22 of 30). The biggest gainers were Apple Inc. (AAPL; + 2.34%). Outsiders were shares of Exxon Mobil Corporation (XOM; -1.05%).

Almost all S&P sectors recorded an increase. The consumer goods sector grew the most (+ 0.8%). Only the basic materials sector decreased (-0.1%).

At the time of closing:

Dow 26,916.76 +96.51 +0.36%

S&P 500 2,976.73 +14.94 +0.50%

Nasdaq 100 7,999.34 +59.71 +0.75%

• Sees oil prices stable around $60 per barrel

• We have to follow through on the Brexit vote
• I've tasked the Treasury with preparing a comprehensive economic response to support the economy
• We are leaving the EU in 31 days
• Deal or no deal, we will be ready
• Says wants to set a new target for minimum wage at £10.50 and to bring down age rules to cover everyone over 21

MNI Indicators’ report revealed on Monday that business activity in Chicago contracted this month.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 47.1 in September, down from an unrevised 50.4 in August. Economists had forecast the index to decrease to 49.9.

A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.

According to the report, only two of the five components of the headline indicator saw a monthly advance: the Supplier Deliveries rose to 54.8 and the Employment grew to 45.6. At the same time, the Production saw the largest drop, tumbling by 7.6 points, to 40.4, the lowest since May 2009. The Order Backlogs decreased to 46.8 and the Inventories slipped to 41.7, its forty-month low. On the price front, prices at the factory gate saw a modest monthly drop.

Carsten Brzeski, the chief economist at ING, notes that just-released first estimate reveales the German headline inflation dropped to 0.9% year-on-year in September, from 1.0% YoY in August, and the national inflation measure dropped to 1.2% YoY from 1.4% YoY in August. 

• "Judging from the available regional data, headline inflation weakened on the back of lower food and energy prices. Where available, core inflation measures remained relatively stable.
• Earlier today, the German labour market sent a sign of relief. In September, the number of unemployed dropped to 2.234 million. In seasonally-adjusted terms, the number of unemployed dropped by 10,000, the first decline since April this year. The unemployment rate remained unchanged at 5.0%. The improvement was the best September performance since 2016. Also, German retail sales increased in August, by 0.5% month-on-month, from -0.8% in July.
• All of this means that, at least for the time being, the feared growing contagion from the manufacturing meltdown to the rest of the German economy is not (yet) materialising. Even better, private consumption should benefit from lower inflation rates in the coming months because, in the words of Mario Draghi, “with low inflation, you can buy more stuff”. It’s hard to see Germans listening to Draghi these days but if they do, they would definitely temper growing recession fears."

U.S. stock-index futures rose slightly on Monday, rebounding from last week's drop, after the White House denied Bloomberg’s Friday report that it was considering restricting U.S. investment into China.

Global Stocks:

According to CFTC’s Commitment of Traders Report, USD net longs surged to their strongest levels since April 2017 in the previous set of data and crept a little higher last week, note analysts at Rabobank.

• “Net EUR short positions gave up some ground last week.
• Net short GBP positions dropped back for a second consecutive week.
• JPY net positions have been back in positive ground for eight straight weeks on safe haven demand, but they have fallen back for the past two.
• Latest data show CHF net shorts climbing for a second week. Despite its safe-haven status, signs that the SNB has recently intervened in the FX market have distorted demand for the CHF.
• CAD net long positions dropped back sharply last week. The fall back in oil prices since the middle of the month have weighed on the CAD.
• AUD net shorts recovered some ground last week.”

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

UnitedHealth (UNH) downgraded to Market Perform from Outperform at BMO Capital Markets; target lowered to $249

Apple (AAPL) target raised to $265 from $243 at J.P. Morgan

Analysts at National Bank Financial (NBF) note that, in the U.S., the most important piece of news this week will be September’s non-farm payrolls as jobless claims continued to hover near 50-year lows in the month, hinting at a very subdued rate of layoffs.

• “Hiring in the private sector, meanwhile, may have eased somewhat judging from Markit’s flash composite PMI report which showed employment advancing at the weakest pace since early 2015. However, this deceleration may have been offset by the hiring of temporary workers at the Federal government to help carry out the 2020 census.
• All told, we’re calling for a slight acceleration in job creation to 160K, a level still sufficient to absorb new entrants to the labour market and keep the unemployment rate steady over the long term (approx. 110K/month). The unemployment rate, for its part, may stay unchanged at 3.7% if, as we believe, the household survey shows just a small decline in employment following August’s outsized gain.”

“That story, which appeared in Bloomberg: I’ve read it far more carefully than it was written,” Navarro told CNBC. “Over half of it was highly inaccurate or simply flat-out false.”

Germany's Federal Statistical Office reported on Monday the country’s consumer price index (CPI) is expected to remain unchanged m-o-m in September, following a 0.2 percent m-o-m decline in the previous month.

On the y-o-y basis, Germany’s inflation rate is seen to rise 1.2 percent this month after a 1.4 percent gain in August. That was the lowest reading since February 2018.

Economists had predicted inflation would increase 0.1 percent m-o-m and 1.3 percent y-o-y in September.

According to the report, food price growth decelerated to 1.3 percent y-o-y in September from 2.7 percent y-o-y in August, while energy prices fell 1.1 percent y-o-y after an advance of 0.6 percent y-o-y in the previous month. Services costs rose 1.4 percent y-o-y in September, following a 1.3 percent y-o-y climb in the previous month.

Meanwhile, the harmonized index of consumer prices for Germany (HICP), which is calculated for European purposes, is expected to fall 0.1 percent m-o-m and to increase 0.9 percent y-o-y.

Analysts at the Royal Bank of Scotland (RBS) note the Eurozone's economy is stalling as the region’s "flash" composite PMI for September fell to 50.4, a whisker above the magic 50-mark, below which signals a recession.

• “The decline in the manufacturing sector is already deepening. Its PMI dropped to 45.6, the lowest since 2012. That was the year the ECB’s President Draghi made his legendary promise “to do whatever it takes” to save the euro. With German manufacturing seeing the steepest drop since 2009, it’s no surprise the ECB is again on the offensive.”

Analysts at TD Securities are expecting the Chicago PMI to let off some steam in September in the upcoming U.S. session, dropping modestly to 50.0 following the strong 6-point jump to 50.4 in August.

• “This would suggest some stabilization in manufacturing activities for the region, supporting our view for a better ISM manufacturing figure in September (TD: 50.8).”

• Says Monday's Cabinet meeting will discuss updated budget forecasts
• Government  will avoid VAT tax increase
• Would like to halve the sales tax on energy bills to 5% from 10% at present
• Goal is to increase workers net salary

Analysts at TD Securities note that Germany's inflation has been incredibly volatile for the last 6 months, making it much more difficult to forecast.

• “We look for HICP to fall from 1.0% y/y in August to 0.8% y/y in September (mkt: 1.0%), its lowest level since November 2016. Underlying that, we look for core inflation to edge a tenth higher, though leaving it below 1.0% y/y for the third month in a row, but for slightly lower contributions from food and energy prices. This morning's regional German CPI data is consistent with our downside call.”

Bert Colijn, a senior eurozone economist at ING, suggests that the unemployment rate provides some relief to the short-term outlook for the eurozone economy as the rate drops to 7.4%.

• "As one of the main drivers of service sector growth, the labour market has taken center stage in predictions about a looming recession. If unemployment continues to come down at a decent pace, this will boost household incomes and in turn fuel domestic demand. In July, the drop of just 24 thousand unemployed people was worrying but in August, the number of unemployed fell by 115 thousand which was the sharpest decline since March. This comes as a relief and gives time to the service sector to continue to grow even though the decline in manufacturing production is worsening. 
• Even though the first few accounts of layoffs in manufacturing have been noted, the eurozone labour market continues to see quite significant pressures, despite the material slowdown in GDP growth over the past quarters. Vacancy rates have plateaued, but remain at the highest levels since the start of the series in 2009 and while fewer businesses are reporting that labour is hindering production in comparison to last year, the amount of businesses reporting this is still at historically high levels. This has resulted in modest upward pressure on wages, helping the consumer spending outlook."

The Bank of England (BoE) reported on Monday that British households' borrowing fell in August as consumer confidence was impacted by uncertainties surrounding Brexit.

According to the report, the number of mortgage approvals for house purchase declined to 65,500 in August from 67,000 in July. That was below the forecast of 66,400.

Meanwhile, borrowing for house purchases dropped to GBP 3.9 billion last month from GBP 4.5 billion in July.

Consumer credit growth slowed to 5.4 percent in August, which was the lowest since February 2014. At the same time, lending to businesses increased to GBP 2.4 billion in August from GBP 2.3 billion in July.

Inga Fechner, Economist, Germany, Austria at ING Bank, expresses her take on the preliminary official results of Sunday’s Austrian elections.

“According to preliminary official results of Sunday’s parliamentary elections, Sebastian Kurz and his ÖVP party once again emerged as the winners of the 2019 snap election with 38.4% of the votes. Coalition talks will start soon and the ÖVP has the free choice with whom to govern for (possibly) the next five years. The ÖVP’s former junior coalition partner, however, took a larger hit than what was expected from polls, getting around 17%, meaning that the party will probably lose some 20 seats. Also, the SPÖ, the former government partner of the ÖVP, could not benefit from the fall of the government and lost voters' support, getting roughly one-fifth of all votes, the worst result in the party's history. Later today and on Thursday, postal votes, as well as ballot cards submitted in other districts than their voting districts, will be counted.“

Analysts at TD Securities offer key insights on how to trade the October Reserve Bank of Australia’s (RBA) interest rate decision due on Tuesday at 0430 GMT.

“Oct OIS is pricing ~ a 75% chance to a 25bps RBA cut tomorrow and TD along with the bulk of the analyst community (BBG: 19/25, Reuters: 25/36) expect the RBA to ease. We're received Oct'19 OIS. Q2’19 GDP at +0.5%/q missed the RBA’s +0.75%/q f/c and the RBA Gov noted in his Armidale address “we did not expect this slowdown, so it has come as a bit of a surprise”. The RBA's Sep Minutes removed reference to "the accumulation of additional evidence" for it to cut that had appeared in the Aug Minutes. With the RBA playing catch-up to achieve its late 19/20 GDP f/c's (that assume a 25bps Nov cut is delivered) and the rise in spare capacity supporting the Gov's claim that "wages growth looks to have stalled recently", why should the RBA wait to cut?”

• China's stable outlook reflects its view that China will maintain above-average headline GDP growth.

• Expect China's real GDP per capita growth to remain above 5% annually in the next three years.

• China's stable outlook also reflects its view that China will see improved fiscal performance over the next three to four years.

• The Chinese economy is also likely to face elevated uncertainties owing to US-China tensions.

• May raise its ratings on China if credit growth slows further and is sustained below nominal income growth.

• China's economic growth is likely to slow further in the next few years.

According to the report from Eurostat, the euro area (EA19) seasonally-adjusted unemployment rate was 7.4% in August 2019, down from 7.5% in July 2019 and from 8.0% in August 2018. This is the lowest rate recorded in the euro area since May 2008. The EU28 unemployment rate was 6.2% in August 2019, down from 6.3% in July 2019 and from 6.7% in August 2018. This is the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000.

Eurostat estimates that 15.432 million men and women in the EU28, of whom 12.169 million in the euro area, were unemployed in August 2019. Compared with July 2019, the number of persons unemployed decreased by 111 000 in the EU28 and by 115 000 in the euro area. Compared with August 2018, unemployment fell by 1.189 million in the EU28 and by 960 000 in the euro area.

In August 2019, 3.138 million young persons (under 25) were unemployed in the EU28, of whom 2.202 million were in the euro area. Compared with August 2018, youth unemployment decreased by 239 000 in the EU28 and by 205 000 in the euro area. In August 2019, the youth unemployment rate was 14.2% in the EU28 and 15.4% in the euro area, compared with 15.1% and 16.8% respectively in August 2018.

Office for National Statistics said, UK gross domestic product (GDP) in volume terms was estimated to have fallen by 0.2% in Quarter 2 (Apr to June) 2019, unrevised from the previous estimate.

When compared with the same quarter a year ago, UK GDP increased by 1.3% to Quarter 2 2019; down from 2.1% to Quarter 1 (Jan to Mar) 2019. Economists had expected a 1.2% increase.

Services provided the only positive contribution to growth in the output approach to GDP, with growth slowing to 0.1% in the latest quarter.

Private consumption, government consumption and net trade contributed positively, while gross capital formation contributed negatively to GDP growth in Quarter 2 2019.

GDP was estimated to have increased by 1.4% between 2017 and 2018, unrevised from previous estimates; this was lower than the upwardly revised 1.9% growth seen between 2016 and 2017.

Data in this bulletin are consistent with our annual UK National Accounts, The Blue Book 2019 publication to be published on 31 October 2019; estimates therefore incorporate new data and methods throughout the time series.

A separate report from the ONS showed that business investment, in volume terms, was estimated to have fallen by 0.4% to £49.2 billion between Quarter 1 (Jan to Mar) 2019 and Quarter 2 (Apr to June) 2019; this follows a 0.8% increase in Quarter 1 2019, the first quarter-on-quarter increase in business investment since Quarter 4 (Oct to Dec) 2017. Gross fixed capital formation (GFCF), in volume terms, was estimated to have fallen by 0.9% to £87.2 billion between Quarter 1 2019 and Quarter 2 2019. Between Quarter 2 2018 and Quarter 2 2019, business investment was estimated to have fallen by 1.4% from £49.9 billion; GFCF was estimated to have increased by 0.3% in the same period from £87.0 billion.

Federal Statistical Office said, with the usual autumn revival, unemployment fell by 85,000 to 2,234,000 from August to September and the unemployment rate fell by 0.2 percentage points to 4.9 per cent. Adjusted for seasonal influences, a minus of 10,000 unemployed persons is calculated for September compared with the previous month. Economists had expected a 5 000 increase. This decline is solely due to the development of basic security. In the economy-oriented unemployment insurance, there were once again seasonally-adjusted increases. Compared with the previous year, a total of 22,000 people were less unemployed and the unemployment rate has decreased by 0.1 percentage points. The unemployment rate determined by the Federal Statistical Office according to the ILO acquisition concept was 3.2 percent in July.

Underemployment, which also takes into account changes in labour market policy and short-term incapacity for work, has also fallen slightly by 4,000 in seasonally adjusted terms compared with the previous month. Overall, the underemployment in September 2019 amounted to 3,152,000 persons. That was 19,000 less than a year ago.

"The economic downturn is also reflected in the labour market in September. All in all, however, the labour market remains in a robust state. Unemployment and underemployment declined in September. Employment growth is continuing, but is losing momentum, and companies ' demand for new employees has repeatedly declined at a high level."said the chairman of the board of the federal employment agency (BA), Detlef Scheele, today at the monthly press conference in Nuremberg.

The TD Securities Analysts offer a sneak-peek into Monday’s economic events from the German docket.

“German inflation has been incredibly volatile for the last 6 months, making it much more difficult to forecast. That being said, we look for HICP to fall from 1.0% y/y in August to 0.8% y/y in September (mkt: 1.0%), its lowest level since November 2016. Underlying that, we look for core inflation to edge a tenth higher, though leaving it below 1.0% y/y for the third month in a row, but for slightly lower contributions from food and energy prices. We also have German unemployment today, where markets are looking for the unemployment rate to hold steady at 5.0%.”

According to the report from KOF Economic Research Agency, in September, Economic Barometer falls to its lowest level since 2015. It now stands at 93.2 points, 2.3 points lower than in August (revised from 97.0 to 95.5 points). The downward tendency that has been evident since the beginning of the year is now continuing. The economic outlook for Switzerland remains gloomy towards the end of 2019.

The lower level of the KOF Economic Barometer in September is primarily due to declining developments in the manufacturing industry. The indicator bundle for the service industry and the accommodation and food service industry slightly reinforce this decline. By contrast, private consumption, foreign demand and the construction industry remain stable relative to the previous month.

In the goods producing sector (manufacturing and construction), indicators used to assess the order backlogs, the development of production and the overall business situation are mainly responsible for its negative development. By contrast, the assessment of the competitive position and export prospects remains virtually unchanged compared to the previous month.

Beijing called Washington’s potential restrictions on U.S. investments in China “the latest attempt at a decoupling,” in a Global Times piece published on Sunday.

The Chinese state-owned media said that even news of measures like delisting Chinese companies from American stock exchanges “is expected to have significant repercussions for the Chinese and US economies, as well as their companies, in the future.”

The White House has discussed some curbs on U.S. investments in China, a source familiar with the matter told CNBC last Friday.

But U.S. Treasury assistant secretary for public affairs, Monica Crowley, said in a statement over the weekend that “the administration is not contemplating blocking Chinese companies from listing shares on U.S. stock exchanges at this time. We welcome investment in the United States.”

Still, the Chinese propaganda arm criticized the move by the U.S. politicians, saying that they “seem to believe that a decoupling from China will be simple” and “won’t significantly impact its economy.”

TD Research discusses EUR/USD tactical outlook and thinks that a break lower should attract additional follow-through selling pressure. 

"The USD remains the best house in a bad G10 neighborhood. At the same time, we think funding pressures in some markets may also be contributing to dollar strength despite recent policy efforts to provide liquidity," TD notes. 

"We note EURUSD currently stands only pips above major support around 1.0925. We think a break lower should attract additional follow-through selling pressure. The next key attractor, in our view, comes in at the 1.0820/40 zone," TD adds.

According to provisional data from Destatis, turnover in retail trade in August 2019 was in real terms 3.2% and in nominal terms 3.8% larger than in August 2018. Economists had expected a 3.3% increase in real terms. The number of days open for sale was 27 in August 2019 and in August 2018.

Retail trade in food, beverages and tobacco grew by 1.7% in real terms and 3.1% in nominal terms in August 2019 compared with August 2018, with sales in supermarkets, hypermarkets and consumer markets up by 2.1% in real terms and 3.4% in nominal terms over the same month of the previous year.  In real terms, food retailing was 1.2% less than in August 2018 and 1.0% more in nominal terms. 

In the retail trade of non-food products, sales rose by 4.1% in real terms and by 4.4% in nominal terms in August 2019 compared with the same month of the previous year. Internet and mail order trading recorded the largest increase in sales, with 5.9% in real terms and 5.8% in nominal terms.

Compared with the previous year, turnover in retail trade was in the first eight months of 2019 in real terms 3.0% and in nominal terms 3.7% higher than in the corresponding period of the previous year.

When adjusted for calendar and seasonal variations, the August turnover was in real terms 0.5% and in nominal terms 0.3% higher than in July 2019. Economists had expected a 0.6% increase in real terms.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1105 (2788)

$1.1063 (1184)

$1.1033 (1784)

Price at time of writing this review: $1.0936

Support levels (open interest**, contracts):

$1.0894 (2239)

$1.0847 (916)

$1.0799 (512)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 4 is 92002 contracts (according to data from September, 27) with the maximum number of contracts with strike price $1,1050 (7093);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2464 (1138)

$1.2424 (797)

$1.2392 (656)

Price at time of writing this review: $1.2296

Support levels (open interest**, contracts):

$1.2223 (935)

$1.2183 (1194)

$1.2140 (1190)

Comments:

- Overall open interest on the CALL options with the expiration date October, 4 is 17507 contracts, with the maximum number of contracts with strike price $1,2500 (1758);

- Overall open interest on the PUT options with the expiration date October, 4 is 19547 contracts, with the maximum number of contracts with strike price $1,1900 (1315);

- The ratio of PUT/CALL was 1.12 versus 1.16 from the previous trading day according to data from September, 27

* - 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.