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Daily Markets Update, 3 August

 

 

  • Euro madness: EUR/USD briefly broke above the 1.19
  • Pound Drops on Growth Outlook.
  • Dow Jones halted its stardom new hights.
  • Wages and Inflation to be watched, will set Fed´s pace

 

A rally in global stocks stalled Thursday while the British pound came under pressure after the Bank of England said it would leave interest rates unchanged.

Sterling headed for the biggest drop since June and U.K. bond yields fell as the central bank cut its forecasts for both economic growth and wages and kept its borrowing costs on hold.

pound

 

Corporate results have been largely dominating sentiment this week, although Friday´s Job report may signal an inflexion point. Investors are looking for clues on the strength of the world’s largest economy and the Federal Reserve’s next policy move, not least to see if the dollar will get any respite.

 

Key upcoming events:

  • U.S. jobs data on Friday will probably show employers added about 180,000 workers in July.

Here are the main moves in markets from Bloomberg:

Stocks

  • The Stoxx Europe 600 Index was flat at 8:40 a.m. in New York after swinging between a loss of 0.4 percent and a gain of 0.2 percent.
  • S&P Index Futures edged less than 0.1 percent lower.
  • The MSCI All-Country World Index declined 0.1 percent,
  • The U.K.’s FTSE 100 Index advanced 0.7 percent to the highest in two weeks.

Currencies

  • The euro gained less than 0.1 percent to $1.1863.
  • The Bloomberg Dollar Spot Index was unchanged at 1,155.3.
  • The British pound declined 0.8 percent to $1.3124, the biggest drop in six weeks.

Bonds

  • The yield on 10-year Treasuries declined three basis points to 2.24 percent.
  • U.K. 10-year yields slipped seven basis points to 1.17 percent.
  • Germany’s 10-year yield fell two basis points to 0.47 percent.

Commodities

  • West Texas Intermediate crude gained 0.4 percent to $49.83 a barrel.
  • Gold rose less than 0.1 percent to $1,267.21 an ounce.

Asia

  • The Kospi index fell as much as 2.2 percent, the most since Nov. 9. Samsung Electronics Co., which has the largest weighting on the index, dropped 2.5 percent.
  • Japan’s Topix index closed little changed near a two-year high as investors parse through recent earnings results.
  • Australia’s S&P/ASX 200 Index lost 0.2 percent as Rio Tinto shares tracked their London stock lower.
  • Hong Kong’s Hang Seng Index was down 0.3 percent and the Shanghai Composite Index fell 0.4 percent.

 

 

Depending on Friday´s report: EURUSD can reach 1.20 on Friday:

It is not purely about the USD weakness as USD is in fact up against non-European G10 currencies. Sentiment and technical seem to be the prime drivers.

The euro rally resumed on Wednesday. This trend may result in tighter financial conditions in the Eurozone, potentially dampening growth.

. There is still quite a bit of labor slack in the Eurozone, specially in Spain:

 

All the key measures of inflation in the US show a substantial slowdown in consumer price increases. Will the recent dollar weakness halt these declines?

 

The Goldman Sachs wage tracker, which takes into account various earnings indicators, shows a meaningful slowdown as well.

 

Wednesday’s Key Earnings

AIG (NYSE:AIG+1.1% AH following an earnings beat.
Fitbit (NYSE:FIT+3% AH with smaller than expected loss.
Groupon (NASDAQ:GRPN+9.3% on “growing marketplace strength.”
Mondelez (NASDAQ:MDLZ+1.1% appointing a new CEO.
Southern Co. (NYSE:SO+2.6% beating estimates.
Square (NYSE:SQ-1.4% AH despite raising guidance.
Tesla (TSLA+6.4% AH with Model 3 seen on track.

 

Today’s Markets 

In Asia, Japan -0.3%. Hong Kong -0.3%. China -0.4%. India -0.7%.
In Europe, at midday, London +0.3%. Paris +0.5%. Frankfurt -0.2%.
Futures at 6:20, Dow flat. S&P -0.1%. Nasdaq flat. Crude +0.3% to $49.76. Gold -0.7% to $1269.10.
Ten-year Treasury Yield flat at 2.26%

 

Stocks News

Tesla reported a narrower than expected loss in Q2, while revenues climbed to $2.8B, up from $1.3B a year ago. Speaking on the conference call, CEO Elon Musk said Tesla (NASDAQ:TSLA) was on track to achieve a “10-thousand unit production week” by the end of 2018, sending shares up 7% AH. Executives also discussed a Model 3 ramp up and talked down any indications of Model S and Model X cannibalization.

Over 5M German diesel cars are getting new software. Automakers including BMW (OTCPK:BAMXF), Daimler (OTCPK:DDAIF) and Volkswagen (OTCPK:VLKAF) have agreed with the government to upgrade technology, which will filter out harmful emissions. Daimler chairman Dieter Zetsche said the move was needed to restore faith in the industry.

Amazon has put down roots in Australia, unveiling the location of its first local warehouse – outside Melbourne – and started hiring “hundreds” of new staff to get it up and running. In April, Amazon (NASDAQ:AMZN) confirmed plans to start operations Down Under, without saying when it would begin the service or where it would locate its fulfillment centers.

From mobile to AI… Microsoft’s (NASDAQ:MSFT) latest SEC filing indicates that “mobile-first” is no longer an important part of the software giant’s outlook. “Our strategic vision is to compete and grow by building best-in-class platforms… for an intelligent cloud and an intelligent edge infused with AI.” It also included six references to AI, up from zero in the previous annual report.

Bitcoin derivatives? CBOE Holdings (NASDAQ:CBOE) and Gemini Trust, the Winklevoss brothers’ digital currency exchange, have agreed to use the latter’s market data to create bitcoin trading products. Pending review from the CFTC, the CBOE Futures Exchange plans to offer cash-settled bitcoin futures in the fourth quarter of this year or sometime in early 2018.

Any legal decision on whether MetLife (NYSE:MET) should be labeled “too big to fail” will probably come after the Trump administration defines its stance on the designation. A U.S. appeals court said on Wednesday that a government appeal of a ruling last year – stating the label was wrongly applied to the U.S. life insurer – would remain in abeyance until further court order.

Toshiba will invest in a new memory chip production line without joint venture partner Western Digital (NYSE:WDC), in a counter-punch against the U.S. firm which has opposed a planned auction of the business. Toshiba (OTCPK:TOSYY) said earlier it would go ahead with a $1.8B investment to build the Fab 6 equipment by itself after the two failed to reach an agreement.

Apple is looking to hire a bunch of map tech experts. More than 70 job listings went live in the past month on the company’s site relating to its maps team, or requiring skills around things like: “geospatial information services,” “navigational aids” and “fleet management.” The new hires could help Apple (AAPL) deliver on two big promises: becoming an important player in augmented reality and “autonomous systems.”

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