Daily Market View
Thursday, October 25, 2018
| U.S Stock Market
The sell-off in U.S. stocks accelerated, wiping out gains for the year in both the S&P 500 Index and the Dow Jones Industrial Average, as mixed corporate earnings and weak housing data fueled anxiety that rising prices will crimp economic growth. A slew of results this week is expected to throw spotlight on the risk of a slowdown in China, the world’s No. 2 economy, spilling beyond its borders and eating into U.S corporate profits. Chipmakers, already struggling with oversupply and reliant on China for a significant portion of profit, dropped after Texas Instruments forecast weak current quarter and STMicroelectronics signaled slowing demand in China. The Dow was down 251.89 points, or 2.41 percent, the S&P 500 .SPX was down 32.76points, or 3.09 percent and the NASDAQ was down 119.68 points, or 4.43 percent yesterday. While earnings from S&P 500 companies are expected to have increased about 22 percent in the third quarter, 2018 is seen as a peak for the profit cycle.
|Major Economic Releases for Today|
|German GfK Consumer Confidence||06:00||10.5||10.6|
|German IFO Business Climate||08:00||103.1||103.7|
|European Central Bank Rate Decision||11:45||0.00%||0.00%|
|ECB Marginal Lending Facility||11:45||0.25%||0.25%|
|U.S Advance Goods Trade Balance||12:30||-$75.1b||-$75.8b|
|U.S Durable Goods Orders||12:30||-1.5%||4.4%|
|U.S Initial Jobless Claims||12:30||213k||210k|
|U.S Continuing Claims||12:30||1660k||1640k|
|U.S Pending Home Sales (YoY)||14:00||-2.5%|
|Dow Jones Industrial Average
The Dow Jones Industrial Average fell 2.41% to hit a new 3-months low. The best performers of the session were Procter & Gamble Company, which rose 2.64% or 2.30 points to trade at 89.46 at the close. Meanwhile, Boeing Co added 1.31% or 4.60 points to end at 354.65 and Coca-Cola Company was up 0.80% or 0.37 points to 46.73 in late trade. The worst performers of the session were United Technologies Corporation, which fell 6.11% or 7.95 points to trade at 122.07 at the close. Caterpillar Inc. declined 5.58% or 6.64 points to end at 112.34 and Microsoft Corporation was down 5.35% or 5.78 points to 102.32.
The NASDAQ index declined 4.43%. The top performers on the NASDAQ were National American University which rose 115.69%, Clementia Pharmaceuticals Inc. which was up 40.23% to settle at 14.50 and XpresSpa Group Inc. which gained 28.90% to close at 0.199. The worst performers were Ameri Holdings Inc. which was down 60.69% to 0.41 in late trade, Travelzoo Inc. which lost 31.33% to settle at 8.00 and Yulong Eco-Materials Ltd which was down 28.42% to 4.610 at the close.
Oil prices yesterday clawed back some of their hefty losses from the day before as the looming U.S. sanctions against Iran came back into focus. U.S crude futures were at $66.58 a barrel, up 15 cents, or 0.2 percent, from their last settlement. Saudi Energy Minister Khalid al-Falih said on Tuesday that despite expected supply disruptions from U.S sanctions against Iran that kick in from Nov. 4, Saudi Arabia would step up to meet any demand that materializes to ensure customers are satisfied. In China, Iran’s biggest oil buyer, the Bank of Kunlun is set to stop handling payments from the Islamic Republic next month, appearing to bow to U.S pressure. Kunlun is controlled by the financial arm of state-owned China National Petroleum Corp and is the main official channel for money flows between China and Iran. With financial ties between the two countries effectively severed from November, Chinese oil firms will need to find alternatives to Iran’s crude. China took in 800,000 barrels per day from Iran in August.
|Precious and Base Metals
Gold eased yesterday as the dollar firmed and speculators locked in profits from a more than three-month peak hit in the previous session. Losses were modest, however, as gold got support from investors looking for insurance from potential further downside in stock markets after five days in the red. Spot gold was down 0.2 percent at $1,228.06 an ounce. U.S gold futures were down 0.4 percent at $1,231.50 an ounce. On Tuesday, the precious metal touched its highest since July 17 at $1,239.68 as investors took cover from a stock selloff. The dollar index versus a basket of currencies rebounded 0.4 percent and hit its highest since Aug. 17 at 96.53. The most important reason is a little bit of a rebound in the U.S. dollar, which has a negative effect on gold. On top of that, following a strong performance we had in gold in the past few days, this may be a little bit of profit taking, although this should not be the end of the recovery in gold. Gold prices have gained more than 6 percent after falling to $1,159.96 an ounce in mid-August, their lowest since January last year. After reaching a three-month high, gold is taking a breath but the environment remains positive for bullion, with growing investor interest for the precious metal among those betting on further corrections of stock markets increases. World stocks steadied after falling for five straight days, pressured by earnings disappointment, concerns over Italy’s budget and worries that world economic growth is losing steam. Gold is focusing on the risk aversion creeping into the market, especially reflected in the weakness seen in global stock markets. Dollar-denominated gold is often used as an alternative investment during times of political and financial uncertainty. If there is a correction, then $1,210 is a good support zone; breaching this support may lead gold to fall further towards $1,195, which is less likely in the current scenario. Silver was down 0.5 percent at $14.66 an ounce, while platinum slid 0.9 percent to $823 an ounce.
Wheat futures fell 2 percent yesterday, dropping below $5 a bushel for the first time in nearly six weeks as analysts cited technical selling mixed with worries about U.S export prospects.
|Futures Settlement Price Wednesday, October 24, 2018|
|S & P 500||SPM18||2745||2749.75||2652.25||2665||-81.25|
|Daily Swings (The Pivot Levels)|
Source: – News & Quotes (Courtesy: Reuters)
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