TradeTheNews.com Weekly
Market Update: Investors risk appetite unfettered by G7 sparring or key events
next week
Fri, 08 Jun 2018 16:03 PM EST
US stock markets pushed higher this week, easily scaling a wall of worry
heading into the G7 meeting this weekend. Both President Trump and his counterparts
steadily escalated rhetoric heading into what are expected to be contentious
trade talks between allies. Investors also had to contend with the run-up to
the US/North Korea summit and Brexit negotiations that seem to be heading
nowhere fast. US data, though, remained at robust levels, with manufacturing
and services PMIs topping expectations, potentially giving the Trump
Administration further ammunition to play hardball in trade negotiations. Major
US indices broke out to the best levels since March in some cases, while the
Russell 2000 and the NASDAQ continued to touch fresh all-time highs. For the
week the DJIA gained 2.8%, the S&P500 rose 1.6%, and the Nasdaq added 1.2%.
US Treasury yields moved up, helped by the release of solid growth figures and
receding pessimism around rising yields in Southern Europe. The US dollar
continued to retreat modestly in what some viewed as positioning ahead of key
central bank meetings next week. The Euro surpassed 1.18 briefly as many expect
the ECB to announce an exit to QE next week. Emerging market currencies stayed
in focus, with central banks in Turkey and Brazil taking aggressive actions to
fight declining exchange rates. Copper prices edged higher for six straight
sessions, helped by Chilean supply concerns and data that showed Chinese
imports jumped to an 18-month high in May.
In corporate news this week, Microsoft announced a $7.5B acquisition of cloud
source code repository GitHub, a move that signals a further warming by the
software giant towards open source. AthenaHealth initiated a process to explore
strategic alternatives and also announced its CEO would step down amid the
company’s fight against a takeover offer from activist Elliott Management.
Reports emerged that the EU is set to announce in July a fine against Google as
part of its market dominance probe into Android’s mobile OS platform. Apple
shares dropped after Nikkei reported that the tech giant has warned suppliers
of 20% fewer component orders for iPhones debuting in the latter half of 2018.
Twitter lifted on news that its stock would be added to the S&P 500 index,
and the company subsequently announced a $1B convertible notes offering. Tesla
CEO Musk affirmed at a shareholder meeting that the auto manufacturer would
reach its Model 3 production target of five thousand units/week this month.
Starbucks Chairman Schultz announced he was stepping down from his post,
igniting speculation that the politically minded executive may initiate a
presidential run in the near future.
SUN JUNE 3
(CN) 3rd round of trade talks between China and US end without a deal: China
comments: two sides have made "concrete progress"; any move by the US
to impose punitive tariffs would derail the negotiations
MON JUNE 4
(EU) EURO ZONE JUN SENTIX INVESTOR CONFIDENCE: 9.3 V 18.5E
BHP.AU Escondida mine workers reportedly have not ruled out strike
action at start of wage talks - press
TUES JUNE 5
(UK) MAY SERVICES PMI: 54.0 V 53.0E (22nd month of expansion)
HDS Reports Q1 $0.70 v $0.63e, Rev $1.39B v $1.35Be; May daily net sales
tracking ~ +19% y/y
*(US) MAY ISM NON-MANUFACTURING COMPOSITE: 58.6 V 57.6E
WED JUNE 6
*(IN) INDIA CENTRAL BANK (RBI) RAISES REPURCHASE RATE BY 25BPS TO 6.25%; NOT
EXPECTED (1st rate hike since Jan 2014)
FAST Reports May Net Sales $431.4M, +12.5% y/y
*(US) Q1 FINAL NONFARM PRODUCTIVITY: 0.4% V 0.6%E; UNIT LABOR COSTS: 2.9% V
2.8%E
(US) APR TRADE BALANCE: -$46.2B V -$49.0BE
ATHN Initiates process to explore strategic alternatives; CEO Bush steps down,
effective immediately; Jeff Immelt appointed executive chairman
(US) Association of American Railroads weekly rail traffic report for week
ending June 2nd: 509.7K, +3.2% y/y
GOOGL EU reportedly set to release negative finding in its Google investigation
- FT
(JP) Japan Investors Net Buying of Foreign Bonds: -¥1.67T v -¥700.2B prior week
(largest net sales in over 1-year); Foreign Net Buying of Japan Stocks:
-¥527.6B v -¥380.0B prior week
COST Reports May SSS (ex-gas) 8.0%; US SSS (ex-gas) 8.7% v 5.6%e
THURS JUNE 7
*(EU) EURO ZONE Q1 FINAL GDP Q/Q: 0.4% V 0.4%E; Y/Y: 2.5% V 2.5%E
(IE) UK Govt publishes backstop proposal (as anticipated): Expects future trade
deal in place by Dec 2021; range of options on how time limit would be done on
Irish backstop
*(US) INITIAL JOBLESS CLAIMS: 222K V 220KE; CONTINUING CLAIMS: 1.741M V 1.74ME
(US) Fed Reports Q1 Financial Accounts: Household Change in Net Worth: $1.028T
v $2.076T prior
*(US) APR CONSUMER CREDIT: $9.3B V $14.0BE (smallest in seven months)
(CN) China 2018 trade surplus may narrow by about 10% (implies surplus of about
$380.3B*) - China Securities Journal
(AR) Argentina signed 36-month stand-by agreement with the IMF, provides for
preliminary financing amount of $50B (above the $40B credit line that was
speculated)
(JP) JAPAN Q1 FINAL GDP Q/Q: -0.2% V -0.1%E; ANNUALIZED Q/Q: -0.6% V -0.4%E
ANT.IPO Series C equity funding round said to close; co. said to raise ~$14.0B
(above expectations, world's largest ever fundraising) - US financial press
FRI JUNE 8
AAPL Reportedly warns suppliers of 20% fewer component orders for iPhones
debuting in the latter half of 2018 - Japan press
DPW.DE Cuts FY18 EBIT €3.2B (prior €4.18B), FCF >€1.0B (prior >€1.5B),
Affirms FY20 Adj EBIT >€5B; Announces restructuring to PeP division
(CH) Swiss referendum on Sunday, Jun 10th that could abolish traditional bank
lending and allow only money created by the SNB
(CA) CANADA MAY NET CHANGE IN EMPLOYMENT: -7.5K V +23.5KE (2nd straight
decline); UNEMPLOYMENT RATE: 5.8% V 5.8%E
(SA) Saudi Arabia reportedly has increased oil production by 100K bpd in June
ahead of implementation of Iran sanctions - press
