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CFD Markets News and Forecasts — 29-08-2011
The stock market has been drifting sideways along its session high for the past hour. The effort has stocks on pace for their fifth gain in six sessions, including an incremental gain of less than 0.1%.
Broad, steady strength has almost every name in the S&P 500 is sporting a gain today. Home Depot (HD 33.83, -0.17), Monsanto (MON 69.95, -0.73), and Newmont Mining (NEM 62.10, -0.07) are among the handful of names that have failed to generate a gain.
Gainers
Symb Last Change Chg %
MILL.N 3.34 +1.07 +47.14
VQ.N 11.75 +2.77 +30.85
MTG.N 2.85 +0.39 +15.85
RDN.N 3.38 +0.42 +14.19
WG.N 6.14 +0.76 +14.13
Losers
Symb Last Change Chg %
AUQ.N 11.67 -2.25 -16.16
PPP.N 3.56 -0.66 -15.64
GA.N 7.77 -0.73 -8.59
ARL.N 1.76 -0.09 -4.86
SYSW.N 2.10 -0.10 -4.55
All three major equity averages have extended their gains in recent trade. They are now at their best levels of the day.
Even though stocks are at new session highs, Treasuries have managed to limit their losses. Specifically, the benchmark 10-year Note is down about 3/4 of a point. That keeps the Note's yield at less than 2.30%.
Meanwhile, the dollar is down just 0.1% against a basket of major foreign currencies.
The Swiss franc, yen and dollar dropped against most major counterparts as stocks and commodities climbed on speculation the world will avoid a return to recession, reducing demand for a haven.
Currencies of higher-yielding countries strengthened amid rising investor appetite for riskier assets. The franc was the worst performer, falling to a seven-week low versus the euro, after Federal Reserve Chairman Ben S. Bernanke said last week the U.S. economy hasn’t deteriorated enough to warrant immediate additional stimulus.
“Riskier currencies are doing better because the market is buying riskier today,” said Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal. “We’re seeing broad-based dollar weakness across the board and strength in commodities and commodity currencies.”
The Standard & Poor’s 500 Index rose 2% percent, and the Thomson Reuters/Jefferies CRB Index of raw materials strengthened 0.5 percent. U.S. stock, bond and commodity markets are open as usual today after Manhattan was spared the worst of Hurricane Irene.
“We’re seeing the U.S. dollar get sold, but also the other safe-haven currencies such as the yen and Swiss franc,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “Equity markets around the region are doing pretty well today.”
Bernanke, speaking at an economics conference Aug. 26 in Jackson Hole, Wyoming, sought to reassure investors and the public that U.S. growth is safe in the long run. While he said the Fed still has tools to aid the recovery if needed, he stopped short of indicating that the central bank will move ahead with a third round of government bond-buying.
The greenback remained lower as Commerce Department data showed U.S. consumer spending rose 0.8 percent in July, the biggest gain since February, after a 0.1 percent decline the prior month.
The S&P 500 has managed to move above the 1200 line, which has acted as a line in the sand all session. The move above the mark hasn't been one of great momentum or strength. Rather, the stock market is just a single point above the psychologically significant line. That makes it uncertain whether or not stocks will be able to sustain the move.
Stocks rcently slipped a bit from their morning perch, but were quick to stabilize.
Selling pressure has remained relatively steady against teleocm and utilities stock, though. As a result, the two sectors are at morning lows, both with 0.9% gains. Although the pair remains in positive territory, their relative underperformance comes as participants trade with an improved sense of confidence and show a willingness to re-enter riskier names following the stock market's near 5% climb last week. Amid the market's volatility many investors had looked for stability from the stodgy businesses and relatively high dividend yields offered by the telecom and utilities sectors.
Commodities are mixed today as the energy and ag sectors show gains, while the metals are in the red.
Crude oil futures have been in positive territory all morning and hit session highs of $87.62/barrel around the time equity markets opened. The energy component has since pulled back below the $87 area and is currently up Natural gas, on the other hand, have been in the red all morning, but have been trending higher off its session low of $3.83/MMBtu.
Gold and silver futures sold off just over an hour ago and fell into negative territory. Gold fell as far as $1781.30/oz and currently remains below the $1800 level. Silver hit new session lows of $40.42/oz on the earlier weakness. Currently, gold is down.
"Jul PCE was a strong report, representing a solid start to Q3 for household spending and supporting our view that real consumption will be notably stronger in Q3 than Q2, boosted by a rebound in auto sales and softer consumer price inflation. Our tracking estimates of Q3 real consumption growth and real GDP growth stand at 2.5% and 2.0%, respectively."
EUR/USD: $1.4500, $1.4435, $1.4390, $1.4355
USD/JPY: Y76.00, Y75.00
EUR/JPY: Y112.50, Y110.25
GBP/USD: $1.6600
AUD/USD: $1.0600, $1.0490, $1.0450-45, $1.0430
AUD/JPY: Y81.00
The Swiss franc, yen and dollar dropped against most major counterparts as stocks advanced on speculation the world will avoid a return to recession, reducing demand for a haven.
GBP/USD
Bids $1.6375/65, $1.6350/40, $1.6325/20, $1.6305/00, $1.6285/80, $1.6255/50
EUR/JPY
Offers Y112.50/70, Y112.00/10, Y111.65
Bids Y76.50, Y76.45/40, Y76.30/25,
The pair showed low at $1.4491. Offers remain in place between $1.4550/55, a break of $1.4560 to expose stronger resistance at $1.4580. Support remains into $1.4480.
The dollar is poised for its biggest monthly gain since May, reclaiming its status as a haven while Switzerland and Japan boost efforts to weaken their currencies.
The greenback has appreciated 1.2% in August against a basket of currencies.
Demand for U.S. assets is rising even though the Federal Reserve has pledged to keep its benchmark interest rate near zero through mid-2013 and Standard & Poor’s cut the nation’s credit rating from AAA. The two other currencies considered havens in times of financial and political strife - the Swiss franc and yen - are under siege by their governments and central banks after strengthening to records.
“The dollar is a buy through the end of the third quarter,” Nick Bennenbroek at Wells Fargo & Co.. “The yen and the Swiss franc are very expensive and the dollar is very cheap and it’s the only major central bank that is not standing in the way of a currency advance.”
Meanwhile, slowing growth in the U.S. and the Fed’s pledge to keep its target rate for overnight loans between banks at a record low of 0% to 0.25% until mid-2013 may constrain the greenback.
Citigroup lowered its 2011 U.S. growth estimate to 1.6% from 1.7%.
EUR/USD rose from $1.4464 to $1.4550 before retreated to $1.4513.
GBP/USD rose from $1.6340 following the euro and printed session highs on $1.6410.
USD/JPY holds within the Y76.55/Y76.80 range.
UK financial markets are closed Monday in observance of Summer Bank Holiday.
US data include personal income/spending at 12:30 GMT.
EUR/USD: $1.4500, $1.4435, $1.4390, $1.4355
USD/JPY: Y76.00, Y75.00
EUR/JPY: Y112.50, Y110.25
GBP/USD: $1.6600
AUD/USD: $1.0600, $1.0490, $1.0450-45, $1.0430
AUD/JPY: Y81.00
EUR/USD
Offers: $1.4555/60, $1.4580
Bids: $1.4500, $1.4465/55
GBP/USD
Offers: $1.6450/60, $1.6480
Bids: $1.6350/40, $1.6310/00
USD/JPY
Offers: Y77.00
Bids: Y76.40, Y75.50
EUR/JPY
Offers: Y111.65, Y111.80, Y112.00/10
Bids: Y111.10/00
Tokyo stocks surged to their best performance in two months as investors warmed to an improving earnings outlook for exporters on a weaker yen and optimism over US demand.
The Nikkei 225 Average climbed 1.5% to 8,772.36, a one-week closing high, as Asian markets benefited from an upturn in global sentiment following the better than expected US durable goods orders data.
Region-wide, the FTSE Asia Pacific index advanced 0.6% to 232.14.
Toyota , the carmaker that gets more than a quarter of its sales in North America, rose 1.7% after demand for cars was a strong component of the upbeat US data.
Nissan , which has lost 18% this month, rebounded 7%.
Sony , Panasonic and other Japanese technology companies gained as shares of Apple dropped in New York following Steve Jobs’s resignation as the US company’s chief executive.
Sony gained 2.1% while Panasonic, which dropped to its lowest level since 1980 on Wednesday, climbed 3.8%.
Among the big industrials, Fuji Heavy Industries jumped 7.3% although it remains down 25% for the month.
European stocks rose for the first week in five as Federal Reserve Chairman Ben S. Bernanke indicated the economy isn’t deteriorating enough to warrant any immediate stimulus.
Logitech International SA, the world’s biggest maker of computer mice, led a rally in Swiss shares as the weakening franc boosted the value of exports. Logitech rallied 22%, the most since 2002.
Ageas jumped 15% in Brussels, the largest increase since May 2010, after announcing plans to buy back as much as 250 million euros ($360 million) of stock.
National Bank of Greece SA (ETE) dragged the benchmark ASE Index to a 15-year low as the country’s government bonds tumbled.
The Stoxx 600 Europe Index advanced 1.1% to 225.52 last week. The measure has still fallen 23% from this year’s peak on Feb. 17.
The Stoxx 600 climbed to a one-week high on Aug. 24 after a Commerce Department report showed that U.S. orders for durable goods rose more than forecast in July.
Cie. Financiere Richemont SA advanced 9%, the biggest gain in 15 months, and drugmaker Roche Holding AG climbed 6.6%, the most in two years.
Financial-services companies rose 2.9%, led by IG Group Holdings Plc. (IGG). IG Group climbed 10%.
Man Group Plc (EMG) also surged 10% as HSBC Holdings Plc raised its recommendation on the hedge-fund manager to “overweight” from “underweight’.
Meanwhile, Greek banks tumbled as the nation’s bonds slumped, pushing the 10-year yield up to a euro-era record.
National Bank of Greece slid 25%, the biggest drop since 2008. Alpha Bank SA slid 26% and EFG Eurobank Ergasias SA lost 22%.
Wall Street ended the week more than 4% up, its first weekly rise since mid-July.
Stocks had edged up in anticipation of Federal Reserve chairman Ben Bernanke’s Jackson Hole speech. Bulls expected him to signal a new round of quantitative easing, or at least detail other policy options at his disposal. In the end Mr Bernanke promised only to act “as appropriate”.
The S&P 500 rallied strongly to close 4.5% up for the week at 1,176.79.
Financials were the big gainers last week, with bank stocks in the S&P 500 index up 5.1%. But despite, Warren Buffett’s $5bn investment in Bank of America, Citigroup led the pack, up 11.2%. BofA was up 10.5%.
Tiffany & Co was up 20.0% for the week after a strong quarterly earnings report. Strong demand from the Asia-Pacific region drove quarterly earnings of 86 cents a share, well above expectations of about 71 cents a share. The world’s second-largest luxury jewellery retailer raised its earnings per share forecast for the year ending January 2012 to $3.75 from $3.55.
Homebuilder PulteGroup also rose 13.3% for the week after better-than-expected house price data.
Semiconductor manufacturers endured a mixed week. Shares in Micron Technology slumped more than 6% on Wednesday after the company warned of lower revenue, because of weak demand from computer companies. But Micron shares closed the week up 8.9%.
Applied Materials up only 1.8%.
The dollar was in the spotlight last week as traders awaited guidance on US monetary policy from Ben Bernanke, chairman of the Federal Reserve.
Speculation that Mr Bernanke might use a speech at Jackson Hole, Wyoming, on Friday to signal a further round of US quantitative easing, QE3, weighed on the dollar early in the week.
Bernanke said the central bank still has tools to stimulate the economy without signaling when or whether policy makers might deploy them.
“The key point from the speech was that he didn’t signal any new Federal Reserve easing,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co..
Last year at the conference, Bernanke said the Fed would “do all that it can” to ensure a continuation of the economic recovery and that buying more debt might be warranted if growth slowed. Two months later, policy makers announced a $600 billion second round of asset purchases that ended in June.
Over the week, the dollar rose 0.2% to $1.4363 against the euro and was up 1.3% at $1.6238 against the pound.
The dollar also recovered from the record low of Y75.93 it hit against the yen on August 19, rising 0.6% over the week.
The yen weakened as the Japanese authorities made fresh attempts to rein in their currency, the strength of which threatens to derail Japan’s export-dominated economy.
On Wednesday, Japan’s Ministry of Finance unveiled a $100bn credit line for Japanese companies investing overseas and announced that the government would increase surveillance of speculative trading, which might require proprietary traders at Japanese banks to report daily positions until the end of September.
On Friday the Japan’s Prime Minister Naoto Kan said he was stepping down.
“I feel I’ve done everything I could under these difficult conditions,” Kan told Democratic Party of Japan lawmakers at a nationally televised meeting today.
The pound fell for a fourth day against the euro after a government report showed U.K. economic growth slowed in the second quarter, damping the case for the central bank to raise interest rates.
Sterling slipped for a third session versus the dollar as the Office for National Statistics said gross domestic product cooled to 0.2%, from 0.5% growth in the previous three months.
U.K. consumer confidence dropped to a three-month low in July, Nationwide Building Society said yesterday, fueling concern the economic recovery is faltering.
Bank of England policy maker Martin Weale said while he doesn’t see the need for the central bank to expand its 200-billion-pound bond-purchase plan, he would change his mind should the U.K. economy weaken “substantially,” the Yorkshire Post reported.
Britain’s currency depreciated 1.2% per euro last week, the most since the five days ended July 1. Sterling dropped 1.1% to yen, and was 0.3% weaker versus the dollar.
Resistance 3: Y78.00/10
Resistance 2: Y77.70
Resistance 1: Y77.10
Current price: Y76.63
Support 1:Y76.50
Support 2:Y75.90
Support 3:Y75.50
Resistance 3: Chf0.8400
Resistance 2: Chf0.8270
Resistance 1: Chf0.8160
Current price: Chf0.8107
Support 1: Chf0.8010
Support 2: Chf0.7880
Support 3: Chf0.7810
Comments:Rrate holds higher after some consolidation in Asia. Resistance is around Friday's highs on Chf0.8160, then - at Chf0.8270 (channel line from the mid-Feb). Further rise may extend to Chf0.8400. Support is near Chf0.8000/10 (earlier resistance). Friday's lows come at Chf0.7880/85 with a break under targets Chf0.7810 (Aug 19 lows).
Resistance 3:$1.6620
Resistance 2:$1.6570
Resistance 1: $1.6460
Current price: $1.6380
Support 1: $1.6300
Support 2: $1.6200
Support 3: $1.6160
Comments: Rate holds higher. Strong resistance is around $1.6460 (61.8% Fibo of decline from Aug 19 high). Back above will target $1.6570 (Aug 12 high). Stronger resistance comes at $1.6620 (Aug 19 high). Minor support is near $1.6300 (23.6%), stronger - at $1.6200/10 (Aug 26 lows). Below losses may widen to $1.6160 (Aug 12 lows).
Resistance 3: $1.4700
Resistance 2: $1.4580
Resistance 1: $1.4550
Current price: $1.4536
Support 1: $1.4460
Support 2: $1.4330
Support 3: $1.4260
Comments: Rate looks optimistic, holding a bit lower strong resistance at $1.4550 (session high). Further target comes at Jul 04 high on $1.4580. Stronger resistance is at Jun 07 high on $1.4700. Support is around session lows on $1.4460, stronger - at $1.4330 (Friday's low). Break under opens the way to Aug 19 low on $1.4260.
Nikkei +25.42 (+0.29%) 8,798
Topix +4.25 (+0.57%) 756.07
DAX -46.66 (-0.84%) 5,537
CAC -31.36 (-1.01%) 3,088
FTSE-100 -1.18 (-0.02%) 5,130
Dow +134.72 (+1.21%) 11,285
Nasdaq +60.22 (+2.49%) 2,479.85
S&P500 +17.53 (+1.51%) 1,177
Oil +0.58 (+0.68%) $85.55
10-Years 2.19% -0.03
UK Summer Bank Holiday -
12:00 Germany CPI (August) preliminary - 0.4%
12:00 Germany CPI (August) preliminary Y/Y - 2.4%
12:00 Germany HICP (August) preliminary Y/Y - 2.6%
12:30 USA Personal income (July) 0.4% 0.1%
12:30 USA Personal spending (July) 0.5% -0.2%
12:30 USA PCE price index ex food, energy (July) 0.2% 0.1%
12:30 USA PCE price index ex food, energy (July) Y/Y - 1.3%
23:30 Japan Unemployment (July) 4.6% 4.6%
23:30 Japan Household spending (July) real Y/Y -3.2% -4.2%
23:50 Japan Retail sales (July) Y/Y 1.0% 1.1%
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