TradeTheNews.com Weekly
Market Update: Risk-On Sentiment Rules Amid Tentative Progress on Trade Issues
Fri, 31 Aug 2018 16:09 PM EST
The S&P opened the week at record levels while the Nasdaq topped 8,000 and
the Dow rose above 26,000 for the first time since February, as positive
sentiment over strong corporate earnings was augmented by some apparent
progress on trade. News of a trade agreement between the US and Mexico buoyed
optimism about a trilateral deal being reached, but Canada was not convinced by
Friday afternoon, leaving the US to press ahead with a Mexico deal with more
US/Canada talks next week. Amazon pushed closer to a $1 trillion market cap and
Apple surged again to new all-time highs as large cap tech led the way higher
yet again. Sentiment waned into the back half of week as emerging market
volatility and potential contagion fears resurfaced around fresh plunges in the
Argentine peso and Turkish Lira along with notable weakness in other EM
exchange rates forced central banks to respond. That consternation remained
prevalent in bond trading too as Treasury yields moved lower after rising
earlier in the week. The composition of the curve continued to flash warning
signals to many observers including to some within the Federal Reserve. The
2-10 yield spread tested below 20 basis points several times after last week’s
Jackson Hole commentary. The S&P500 ended the week up 0.9%, while the DJIA
gained 0.7%, and the Nasdaq surged 2.1%.
In corporate news this week, Salesforce shares slipped on conservative Q3
guidance and a miss on billings revenue. Under Armour dropped after Dick’s
Sporting Goods noted it saw “continued significant declines in Under Armour
sales” due to their decision to expand distribution. Best Buy lost some ground
after its Q3 outlook disappointed. Lululemon surged after another beat and
guidance raise. Electronic Arts shares fell after it cut its bookings outlook
and announced a delayed launch for ‘Battlefield V’. Coca Cola acquired UK
coffeehouse chain Costa Ltd for £3.9B in a move to compete with Starbucks and
other coffee brands in Europe.
MONDAY 8/27
(DE) GERMANY AUG IFO BUSINESS CLIMATE: 103.8 V 101.8E; CURRENT ASSESSMENT:
106.4 V 105.3E
(US) AUG DALLAS FED MANUFACTURING ACTIVITY: 30.9 V 30.0E
(US) US and Mexico reach trade deal to replace NAFTA - press
(US) President Trump: There will be US-Mexico trade agreement; will call this
US-Mexico trade agreement, dropping NAFTA name
TUESDAY 8/28
3988.HK Reports H1 (CNY) Net 109.1B v 103.7B y/y, Op Income 251.5B v 248.4B y/y
TIF Reports Q2 $1.17 v $1.00e, Rev $1.08B v $1.04Be
BBY Reports Q2 $0.91 v $0.83e, Enterprise Rev $9.38B v $9.25Be
WEDNESDAY 8/29
(IT) Italy govt reportedly seen reaching out to ECB for a new round of QE -
press
(FR) FRANCE Q2 PRELIMINARY GDP Q/Q: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) Q2 PRELIMINARY GDP ANNUALIZED (2ND READING) Q/Q: 4.2% V 4.0%E (highest
since 2014); PERSONAL CONSUMPTION: 3.8% V 3.9%E
(UK) EU Chief Brexit Negotiator Barnier: We're prepared to offer Britain a
partnership unlike with any other country
(US) JULY PENDING HOME SALES M/M: -0.7% V 0.3%E; Y/Y: -0.5% V -2.5%E
(US) DOE CRUDE: -2.6M V -1ME; GASOLINE: -1.6M V 0ME; DISTILLATE: -0.8M V +2ME
(RU) Sec of State Pompeo reportedly asks for meeting with Russia Foreign Min
Lavrov to ease tensions ahead of new planned sanctions - Wash Post
(DE) Germany Foreign Ministry: there will be no special rules for a post-Brexit
UK
CRM Reports Q2 $0.71 v $0.47e, Rev $3.28B v $3.23Be; raises FY19 outlook
THURSDAY 8/30
(DE) GERMANY AUG UNEMPLOYMENT CHANGE: -8K V -8KE; UNEMPLOYMENT CLAIMS RATE:
5.2% V 5.2%E
(HK) Macau July Hotel Occupancy Rate: 89.9%, -0.9ppts y/y
*(EU) EURO ZONE AUG BUSINESS CLIMATE INDICATOR: 1.22 V 1.26E; CONSUMER
CONFIDENCE (FINAL): -1.9 V -1.9E
(EU) EU said would agree with zero tariffs on industrial goods (including cars)
if US agree - financial press
(CN) China Cabinet reportedly adopting new measures to support the real
economy; to improve national medicines system - press
(AR) Argentina Central Bank said to be meeting before local market open on
Thursday - financial press
*(DE) GERMANY JULY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 2.0% V 2.0%E
*(CA) CANADA JUN GDP M/M: 0.0% V 0.1%E; Y/Y: 2.4% V 2.3%E
(AR) Argentina Central Bank (BCRA) raises LELIQ Rate by 1500bps to 60.00% (from
45.00%) (intra-policy decision)
(US) Atlanta Fed cuts Q3 GDP forecast to 4.1% from 4.6% prior
(CN) President Trump reportedly tells aides he is ready to implement the
proposed $200B in new China tariffs as soon as next week, though final decision
is still pending - press
(US) President Trump: will withdraw from WTO if it doesn't 'shape up'; don't
regret naming Powell as Fed Chair - press interview
(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.50%; AS EXPECTED
*(CN) CHINA AUG OFFICIAL GOVT MANUFACTURING PMI: 51.3 V 51.0E
USD/IDR Rupiah (IDR) currency extends decline, trades at lowest level since
1998; Indonesia 10-year bond yield trades above 8.02% (highest since Dec 2016)
FRIDAY 8/31
WTB.UK To divest Costa Ltd to Coca-Cola for £3.9B
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(DE) GERMANY JULY RETAIL SALES M/M: -0.4% V -0.2%E; Y/Y: 0.8% V 1.3%E
(CA) Canada govt officials said to doubt having a NAFTA deal by today (Friday,
Aug 31st) – press
*(US) CANADA-US NAFTA TALKS END WITH NO AGREEMENT; TRUMP TO NOTIFY CONGRESS OF
PLANS TO PROCEED WITH MEXICO-ONLY DEAL TO REPLACE NAFTA
(CA) USTR Lighthizer confirms US/Canada talks will resume on Wed (Sept 5); plan
to sign a trade deal with Mexico, and with Canada if they are willing
