CFD Markets News and Forecasts — 03-10-2018

Major US stock indexes rose slightly in the session, helped by the appreciation of financial stocks, as well as favorable US data.

Data from Automatic Data Processing (ADP) showed that the growth rate of employment in the US private sector accelerated in September, stronger than experts' forecasts. According to the report, in September, the number of employed increased by 230 thousand people compared to August, at the level of 168 thousand, which was revised from 163 thousand. Analysts had expected that the number of employees would increase by 185 thousand.

In addition, a separate report showed that the index of business activity in the US service sector, calculated by the Institute for Supply Management (ISM), improved in September to 61.6 points from 58.6 points in August. The latter value was the highest since 1997. Analysts predicted that the index will drop to 58.0 points. The ISM said that the expansion of activity in the services sector has been recorded for the 104th consecutive month.

Most of the components of DOW finished trading in the red (17 out of 30). The outsider was The Procter & Gamble Company (PG, -1.66%). The growth leader was Caterpillar Inc. (CAT, + 2.20%).

Most sectors of the S & P recorded an increase. The financial sector grew the most (+ 0.6%), while the utility sector showed the largest decline (-0.9%)

At the time of closing:

Index

Dow 26,828.39 +54.45 +0.20%

S & P 500 2,925.51 +2.08 +0.07%

Nasdaq 100 8,025.08 +25.54 +0.32%

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.0 million barrels from the previous week. At 404.0 million barrels, U.S. crude oil inventories are at the five year average for this time of year.

Total motor gasoline inventories decreased by 0.5 million barrels last week and are about 7% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week.

Distillate fuel inventories decreased by 1.8 million barrels last week and are about 3% below the five year average for this time of year. Propane/propylene inventories increased by 2.4 million barrels last week and are about 8% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 8.0 million barrels last week

The ISM Non-manufacturing PMI registered 61.6 percent, which is 3.1 percentage points higher than the august reading of 58.5 percent. This represents continued growth in the non-manufacturing sector at a faster rate and is an all-time high for the MNI since the inception of the composite index in 2008.

What respondents are saying:

• "[additional] logistics costs, both inbound and distribution, caused by increased governmental regulation, and a shortage of class-a drivers is leading to a significant increase in [the] cost of goods [sold]." (accommodation & food services)

• "new residential construction market is still strong, with a good backlog of orders. Labor shortages and tariffs on materials continue to negatively weigh on earnings." (construction)

• "economy continues to exhibit strength. New construction, both residential and commercial, abounds. Harvest [is] about over. Overall, results appear promising. Every day is a bit better than the last." (finance & insurance)

• "business activity has been slightly higher than normal, though pharmaceutical costs continue to put pressure on profitability." (health care & social assistance)

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

NIKE (NKE) downgraded to Hold from Buy at HSBC Securities

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"The labor market continues to impress," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Both the goods and services sectors soared. The professional and business services industry and construction served as key engines of growth. They added almost half of all new jobs this month."

Mark Zandi, chief economist of Moody's Analytics, said, "The job market continues to power forward. Employment gains are broad-based across industries and company sizes. At the current pace of job creation, unemployment will fall into the low 3%'s by this time next year."

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In August 2018 compared with July 2018, the seasonally adjusted volume of retail trade decreased by 0.2% in the euro area (EA19) and remained unchanged in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In July, the retail trade volume decreased by 0.6% in the euro area and by 0.2% in the EU28. In August 2018 compared with August 2017, the calendar adjusted retail sales index increased by 1.8% in the euro area and by 2.4% in the EU28.

September data pointed to another solid increase in business activity across the UK service sector, with the rate of growth easing only slightly since August. The latest survey indicated the fastest rise in employment numbers for seven months, which firms attributed to the need to alleviate stretched capacity and meet long-term business expansion plans. Meanwhile, higher fuel prices led to another sharp rise in input costs, but relatively subdued demand conditions meant that output charges rose at the slowest pace since June 2017.

The seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index posted 53.9 in September, down from 54.3 in August. However, the latest reading was still above the 50.0 no-change value and slightly stronger than the average in 2018 so far (53.6).

The euro area economy expanded at its slowest rate for four months during September, according to the final IHS Markit Eurozone PMI Composite Output Index. Posting 54.1, the headline index was down on August's 54.5 and slightly lower than the earlier flash estimate of 54.2. September's increase in activity, which marked the sixty-third successive month of growth, masked divergent trends between the manufacturing and services economies. Whilst there was an upturn in growth in the service sector to a three-month high, manufacturing recorded its slowest rise in output since May 2016.

At 55.9 in September, up from 55.0 in August (but down from the earlier 'flash' estimate of 56.5), the headline seasonally adjusted final IHS Markit Germany Services PMI Business Activity Index was at its highest level since June and signalled the second-strongest rate of growth for more than twoand-a-half years.

Commenting on the final PMI survey data, Phil Smith, Principal Economist at IHS Markit said: "For the first time in almost two years, the service sector grew at a faster rate than manufacturing, confirming a fundamental shift in the growth drivers of the euro area's largest economy. Exports had been a key factor behind growth throughout the two years prior to the recent cooling in global trade flows, but now domestic demand is picking up the slack and has become the principal driver of expansion".

The headline seasonally adjusted IHS Markit France Services Business Activity Index dropped from 55.4 in August to 54.8 in September, which signalled the slowest expansion of service sector output since May. The average reading in the third quarter of 2018 (55.0) was slightly lower than in the prior quarter, but still well above the 50.0 no-change threshold.

Meanwhile, the seasonally adjusted IHS Markit France Composite Output Index, a GDPweighted average of the Manufacturing Output Index and the Services Business Activity Index registered 54.0, down from 54.9 in August and the lowest reading since December 2016.

The headline index from the report, the seasonally adjusted Business Activity Index registered 53.3 in September. That was up from August's 52.6 and meant the current period of growth now extends to 28 months.

Paul Smith, Economics Director at IHS Markit which compiles the Italy Services PMI survey, said: "Italy's service sector recorded a stronger performance during September, with firmer gains recorded in the key macroeconomic health barometers of output and employment. "Whilst encouraging on the one hand, growth rates remain well down on those seen around the turn of the year. Moreover, Italy presently finds itself reliant on the services sector to drive overall economic expansion following the slowdown through 2018 to date and eventual stagnation in September of the manufacturing economy".

Although both activity and new business continued to increase solidly, rates of expansion ticked down from those seen in August. This led companies to reduce the rate at which they took on extra staff. Meanwhile, business confidence was the lowest in over five years.

The headline seasonally adjusted Business Activity Index posted 52.5 in September, down fractionally from 52.7 in August but with growth broadly in line with those seen in the previous two months. That said, the average reading for the third quarter of 2018 was the lowest since Q4 2013.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1708 (3306)

$1.1669 (2584)

$1.1626 (513)

Price at time of writing this review: $1.1590

Support levels (open interest**, contracts):

$1.1536 (4375)

$1.1494 (3328)

$1.1447 (2691)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 15 is 93545 contracts (according to data from October, 2) with the maximum number of contracts with strike price $1,1600 (5296);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3087 (2163)

$1.3064 (1731)

$1.3038 (725)

Price at time of writing this review: $1.3005

Support levels (open interest**, contracts):

$1.2958 (1945)

$1.2924 (2363)

$1.2884 (2358)

Comments:

- Overall open interest on the CALL options with the expiration date October, 15 is 28981 contracts, with the maximum number of contracts with strike price $1,3200 (2819);

- Overall open interest on the PUT options with the expiration date October, 15 is 39421 contracts, with the maximum number of contracts with strike price $1,2950 (2363);

- The ratio of PUT/CALL was 1.36 versus 1.33 from the previous trading day according to data from October, 2.

* - 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.

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The number of dwellings approved in Australia fell by 1.9 per cent in August 2018 in trend terms, according to data released by the Australian Bureau of Statistics (ABS) today.

"The fall was mainly driven by private dwellings excluding houses, which decreased by 2.7 per cent in August," said Justin Lokhorst, Director of Construction Statistics at the ABS. "Private sector houses also fell, by 1.2 per cent."

Among the states and territories, dwelling approvals fell in August in Victoria (5.1 per cent), South Australia (3.6 per cent) and New South Wales (1.6 per cent) in trend terms.

Dwelling approvals rose in trend terms in Western Australia (2.7 per cent), Tasmania (2.3 per cent), Northern Territory (1.5 per cent) and Australian Capital Territory (0.1 per cent). Dwelling approvals were flat in Queensland.

In trend terms, approvals for private sector houses fell 1.2 per cent in August. Private sector house approvals fell in Queensland (3.3 per cent), Victoria (1.4 per cent), New South Wales (1.1 per cent) and South Australia (0.7 per cent), but rose in Western Australia (1.4 per cent).