European equity markets largely finished in the red yesterday as dealers booked some profit. The FTSE 100 was dragged lower by commodity related stocks, but it is worth remembering the wider trend is still positive. The DAX outperformed in Europe on account of positive corporate stories for SAP and Wirecard. The UK banking sector will be in focus this morning as Barclays (LON:BARC) will release their first-quarter figures today.
Reporting season continues to be the main attraction in the US and the major indices finished slightly in the red, but a number of the major companies reporting their latest numbers yesterday, posted their quarterly updates after the closing bell. Microsoft (NASDAQ:MSFT) and Facebook (NASDAQ:FB) shares rallied after the companies announced their results, while Tesla’s stock traded lower. By-and-large, yesterday, was an upbeat day for earnings.
The Asian session was mixed as Chinese stocks lost ground over concerns the Beijing administration will focus more on structural reform, and be less forthcoming with fiscal stimulus. Japanese stocks traded higher after the Bank of Japan confirmed they intend to keep monetary policy very loose in the near-term.
Oil has enjoyed a positive run this week on the back of supply concerns. The eight countries that were previously allowed to import oil from Iran without fear of sanction might be in the firing line, should President Trump fulfil his pledge to remove the exemptions. Yesterday, the Energy Information Administration report showed that US oil stockpiles jumped by more-than-expected to 5.47 million barrels, while US gasoline stockpiles dropped by 2.1 million barrels. The announcement prompted a little profit taking on the oil market.
Gold managed to recoup some of the ground it lost on Tuesday – when it dropped to its lowest level in nearly four months. The strength of the greenback is weighing on the metal, and investor’s willingness to buy riskier assets like stocks is also playing a role too.
The euro continues to grind lower as traders continue to dump the single currency, on account of the region’s economic malaise. In recent weeks and months, the region has posted underwhelming economic indicators, the European Central Bank has pledged to launch another targeted liquidity scheme in September, and given the way things are going, it will be need to be an aggressive programme.
The Spanish unemployment rate will be released at 8am (UK time), and the rate is tipped to be 14.38%, and keep in mind the previous report was 14.45%.
At 11am (UK time) the UK Confederation of British Industry industrial orders expectations report, and dealers are expecting a reading of 3, which would be a slight increase from the March reading of 1.
At 1.30pm (UK time), the US durable goods will be announced at 0.8% and the consensus estimate is 0.8%, which would be a big improvement on the -1.6% decline registered in February. At the same time, the initial jobless claims report will be revealed and traders an anticipating 200,000, and it is worth noting that last week’s reading of 192,000 was 50-year low.
EUR/USD – has been broadly pushing lower since early January, and if the negative move continues it might retest the 1.1176 area. Resistance might be found at 1.1448.
GBP/USD – has been driving higher since early December, but has recently slipped below the 200-day moving average at 1.2968, and if it holds below that metric, it might retest the 1.2775 region. A rally might target the 1.3380 area.
EUR/GBP – while its holds below the 200-day moving average at 0.8822, its outlook is likely to be negative. 0.8471 might act as support. A rally might encounter resistance at 0.8800.
USD/JPY – has been largely been pushing higher throughout 2019, and a break above the 112.00 area, might bring 113.70 into play. 111.23 – 50-day moving average, might provide support.
FTSE 100 is expected to open 11 points higher at 7,482
DAX is expected to open 4 points higher at 12,317
CAC 40 is expected to open 2 points higher at 5,578
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