Daily Market View
Wednesday, December 12, 2018
| U.S Stock Market
U.S stocks recouped losses to trade higher yesterday in a volatile session as investors weighted mounting political tension in the nation’s capital against renewed optimism over U.S-China trade talks. The Dow Jones Industrial Average rose 25 points, or 0.1%, while the S&P 500 index gained 5 points, or 0.2% and the NASDAQ climbed 20 points, or 0.3%. A contentious meeting between President Donald Trump and Democratic leaders Chuck Schumer and Nancy Pelosi over border security, with Trump threatening to shut down government, battered already fragile sentiment, sending stocks lower at midday. Equities subsequently moved back into positive territory. Stocks had charged higher at the opening bell after the U.S. and China launched formal trade talks with a phone call. The initial conversation included Treasury Secretary Steven Mnuchin, U.S Trade Representative Robert Lighthizer and Chinese vice Premier Liu He, where they discussed changes to fundamental Chinese economic policies.
|Major Economic Releases for Today|
|Japan Tertiary Industry Index (MoM)||04:30||0.8%||-1.1%|
|Euro-Zone Industrial Production w.d.a. (YoY)||10:00||0.8%||0.9%|
|U.S MBA Mortgage Applications||12:00||2.0%|
|U.S Consumer Price Index (YoY)||13:30||2.2%||2.5%|
|U.S Consumer Price Index Ex Food and Energy (YoY)||13:30||2.2%||2.1%|
|U.S Real Avg Weekly Earnings (YoY)||13:30||0.9%|
|U.S Real Avg Hourly Earnings (YoY)||13:30||0.7%|
|DOE U.S. Crude Oil Inventories||15:30||-7323k|
|U.S Monthly Budget Statement||19:00||-$197.0b||-$100.5b|
|Dow Jones Industrial Average
The Dow Jones fell 0.22%. The best performers of the session were Nike Inc., which rose 1.46% or 1.06 points to trade at 73.57 at the close. Meanwhile, Verizon Communications Inc. added 1.00% or 0.58 points to end at 58.85 and Procter & Gamble Company was up 0.95% or 0.88 points to 93.91 in late trade. The worst performers of the session were The Travelers Companies Inc., which fell 1.65% or 2.03 points to trade at 120.97 at the close. Boeing Co declined 1.32% or 4.32 points to end at 322.03 and Goldman Sachs Group Inc. was down 1.14% or 2.03 points to 176.80.
The NASDAQ index added 0.16%. The top performers were Draper Oakwood Technology Acquisition Inc. which rose 60.09% to 10.23, Myos Rens Technology Inc. which was up 58.88% and Corcept Therapeutics Incorporated which gained 32.28% to close at 17.170. The worst performers were Destination Maternity Corporation which was down 24.94% to 3.01 in late trade, SeaChange International Inc. which lost 22.47% to settle at 1.38 and Ocean Power Technologies Inc. which was down 21.57% to 0.320 at the close.
Oil prices rose yesterday, recovering some of the previous session’s losses with the help of a slightly weaker dollar and an outage hurting Libyan production. Yesterday’s recovery in global equities eased some pressure on oil, but the U.S stock market turned negative around midday. Crude futures pared gains as stocks fell. U.S crude futures rose 65 cents, or 1.3 percent, to $51.65 a barrel, after earlier rising more than 2 percent to $52.43. Global stocks have fallen by more than 5 percent so far this month on worries about the impact of a U.S trade dispute with China on economic growth. Any slowdown would hurt oil demand. Yesterday’s dip in the U.S Dollar offered some respite. A weaker dollar makes crude cheaper for holders of other currencies. A further boost came from a shutdown in production in Libya, where the National Oil Company (NOC) declared force majeure on Monday on exports from the El Sharara oilfield, the country’s biggest, which was seized last weekend by a militia group.
|Precious and Base Metals
Gold firmed yesterday as expectations that the U.S Federal Reserve may slow its interest rate hike trajectory next year weighed on the dollar and stoked interest in bullion, which as a non-yielding asset tends to suffer from rising rates. Spot gold was up 0.3 percent at $1,247.68 per ounce. It touched its highest since July 11 at $1,250.55 in the prior session. U.S. gold futures were 0.3 percent higher at $1,253.10 per ounce. Fed funds futures pricing has been reducing the market expectations for hikes over the next 18 months and that has been coming through in a slightly softer dollar and a stronger gold price. As real interest rates in the U.S. approach a neutral level, we think the Fed is going to get incrementally cautious and won’t be hiking rates in such a metronomic fashion. In light of that, we think prices could rally back into the high $1,200s. The U.S Federal Reserve is widely expected to raise rates at its Dec. 18-19 meeting, but the market is focusing on how much further it might lift rates next year. Based on prices of Fed fund futures, traders now see a 73 percent chance of a rate hike next week, and just a 49 percent chance of a further hike by the end of next year. Investors also kept a close eye on developments surrounding Britain’s departure from the European Union after the country’s prime minister postponed a vote on her deal. Postponing the vote – probably until mid-January – means that the UK government has even less time for the entire Brexit procedure. Most importantly, it means continued uncertainty, which should keep demand for gold at a high level. Meanwhile, hedge funds and money managers trimmed their net short positions in Comex gold contracts in the week to Dec. 4, data showed on Monday. There remains significant scope for the market to further increase long positions and to further reduce short positions. A weaker dollar, driven by moderating Fed policy, could provide the market with the necessary impetus.
Soybean futures turned higher yesterday as traders’ anticipated potential Chinese purchases of U.S agricultural products, and shrugged off a bearish monthly global soy inventories report from the U.S Department of Agriculture.
|Futures Settlement Price Tuesday, December 11, 2018|
|S & P 500||SPM18||2643.75||2677.75||2621||2640.5||-2.5|
|Daily Swings (The Pivot Levels)|
Source: – News & Quotes (Courtesy: Reuters)
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