Daily Market View
Thursday, August 09, 2018
| U.S Stock Market
Stocks were little changed yesterday as China unveiled new tariffs on U.S. goods, while a in Disney shares also kept the broader market’s gains in check. The Dow Jones Industrial Average slipped 31 points, with Disney as the biggest laggard. The S&P 500 rose 0.1 percent as financials underperformed. The NASDAQ traded marginally lower. The Chinese Ministry of Commerce announced a 25 percent charge on $16 billion worth of U.S goods. The goods being targeted by China include vehicles such as large passenger cars and motorcycles. Various fuels are on the list, as well as fiber optical cables. China’s announcement comes after the U.S Trade Representative’s office released a finalized list of $16 billion worth in Chinese goods that will be hit with tariffs. The U.S charges will take effect on Aug. 23. The latest U.S. list brings the total worth of Chinese goods facing a 25 percent tariff to $50 billion. Shares of big exporters Caterpillar and Boeing fell 1.7 percent and 0.8 percent, respectively.
|Major Economic Releases for Today|
|China Producer Price Index (YoY)||01:30||4.5%||4.7%|
|China Consumer Price Index (YoY)||01:30||2.0%||1.9%|
|Switzerland Unemployment Rate||05:45||2.4%||2.4%|
|Japan Machine Tool Orders (YoY)||06:00||11.4%|
|ECB Publishes Economic Bulletin||08:00|
|Canada Housing Starts||12:15||219.5k||248.1k|
|U.S Initial Jobless Claims||12:30||220k|
|U.S Producer Price Index Final Demand (YoY)||12:30||3.4%||3.4%|
|Japan Gross Domestic Product Annualized s.a. (QoQ)||23:50||1.4%||-0.6%|
|Dow Jones Industrial Average
The Dow Jones Industrial Average lost 0.18%. The best performers of the session on the Dow Jones Industrial Average were McDonald’s Corporation, which rose 1.85% or 2.88 points to trade at 158.92 at the close. Meanwhile, Pfizer Inc. added 1.40% or 0.57 points to end at 41.41 and American Express Company was up 0.79% or 0.81 points to 102.78 in late trade. The worst performers of the session were Walt Disney Company, which fell 2.21% or 2.58 points to trade at 113.98 at the close. Caterpillar Inc. declined 1.88% or 2.67 points to end at 139.71 and Chevron Corp was down 1.04% or 1.30 points to 123.88.
The NASDAQ index gained 0.06%. The top performers on the NASDAQ Composite were Ability Inc. which rose 124.49% to 6.60, China Bak Battery Inc. which was up 40.98% to settle at 0.719 and Strongbridge Biopharma plc which gained 31.11% to close at 5.9000. The worst performers were ReShape Lifesciences Inc. which was down 79.89% to 0.0661 in late trade, Extreme Networks Inc. which lost 32.03% to settle at 6.090 and Egalet Corp which was down 29.84% to 0.41 at the close.
Oil prices fell sharply yesterday, hammered by an escalating trade dispute between the United States and China, weak Chinese import data and a smaller-than-anticipated drop in American crude stockpiles. U.S. West Texas Intermediate (WTI) crude futures ended Wednesday’s session at a seven-week low, dropping $2.23, or 3.2 percent, to $66.94. WTI has now failed to break through $70 a barrel several times this week and fell through a recent low near $67 yesterday. China yesterday threatened to slap a 25 percent tariff on $16 billion of U.S. goods. The move came in response to the Trump administration’s plan to slap the same tariff on an equal amount of Chinese imports in the coming weeks. The mounting trade tension has raised concerns that global economic growth will slow, lowering demand for crude oil in the process. Weekly data on U.S crude stockpiles showed inventories fell by 1.4 million barrels in the week through Aug. 3.
|Precious and Base Metals
Gold prices edged higher as the Dollar gave up early gains yesterday, but the precious metal is expected to remain weak on rising U.S interest rates and strong demand for U.S. Treasury bonds as a safe haven from global trade tensions. The Dollar, which hit a three-week high on Monday, lost ground versus a basket of currencies after hitting a key level of resistance. The Treasuries came off a bit and sent the dollar near unchanged for the day. Spot gold gained 0.2 percent at $1,213.14 per ounce, near $1,204 hit last week, its lowest since March 2017. U.S. gold futures settled up $2.70, or 0.2 percent, at $1,221 per ounce. Prices are down more than 10 percent since April. A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies, subduing demand. This relationship is used by funds to generate buy and sell signals from numerical models. The Fed is going to raise rates further this year, that will push up the dollar, a negative for gold. The U.S. Federal Reserve is expected to tighten credit twice more this year and three times in 2019. The next policy meeting is in September. Higher interest rates raise the opportunity cost of holding gold, which earns nothing and costs money to store and insure. An escalation in global trade tensions would trigger further moves into U.S. Treasuries, commonly regarded as the ultimate safe haven, said Fertig, noting that dollars are needed to buy Treasuries. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, are at their lowest since August 2017. Silver rose 0.6 percent to $15.42 an ounce, platinum gained 0.7 percent at $831.70. Palladium declined 0.6 percent to $900.90 per ounce.
Soybeans extended gains yesterday as lower than expected crop ratings raised doubts about U.S. harvest yields while expectations China will resume large-scale imports of U.S soybeans tempered worries about trade tensions. Wheat resumed a recent rally as the prospect of weather damage in major exporting zones such as Europe and Australia kept supply concerns in focus. Corn was also firm as weather problems in the wheat market raised the prospect that livestock producers could turn more to corn in feed rations.
|Futures Settlement Price Wednesday, August 08, 2018|
|S & P 500||SPM18||2860.25||2862.25||2853||2855.5||-4|
|Daily Swings (The Pivot Levels)|
Source: – News & Quotes (Courtesy: Reuters)
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