Breaking world news

Breaking financial world news from 4 july 2019.

News

Breaking news

US trade deficit of goods and services expands 8.4%

The US trade deficit of goods and services increased 8.4% to USD 55.5 bn, the US Department of Commerce reported on June 3, while analysts, on average projected a USD 54.0 bn deficit. The April reading was revised upward to USD 51.2 bn from USD 50.8 bn. According to the report, imports and exports rose 3.3% and 2.0% in May, the biggest gains since 2015 and in the last 12 months, respectively. Notably, imports totaled USD 266.16 bn. Auto purchases increased 7.5%, to a record high of USD 33.23 bn, while oil purchases expanded by 11% to USD 13.02 bn. Furthermore, consumer and capital goods imports grew. Exports reached USD 210.64 bn on the back of gains in soybeans (41%), capital goods such as aircraft and telecom equipment, and consumer goods. The US trade deficit with China increased 12% m-o-m to USD 30.1 bn in May, while the trade deficit with Mexico reached a record high of USD 9.6 bn due to solid gains in imports.

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US Non-Manufacturing PMI falls to lowest since July 2017

The US Non-Manufacturing PMI came in at 55.1% in June, the Institute of Supply Management (ISM) reported on July 3, the lowest reading since July 2017. This compares with 56.9% in May and 56.0% expected. Three of the four key components of the index declined in June. The employment indicator fell to 55.0% from 58.1% in May, the most in the last 16 months, while the new orders sub-index dipped to 55.8%, the lowest since December 2017, from 58.6% in May. The business activity sub-index decreased to 58.2% from 61.2%. Meanwhile, the prices paid component rose to 58.9% from 55.4% in May, signaling that US inflation may be stabilizing.

Active US oil rigs decline

The number of active oil and gas rigs worldwide increased to 2,221 in June from 2,182 in the previous month, Baker Hughes reported on July 3. Notably, the latest count is 69 units higher than the one for June 2018. However, active US oil rigs declined by 17 m-o-m to 969, the lowest since early 2018. In Canada, the count rose by 44 to 114 rigs. As a result, North America was home to 48.8% of active rigs globally in June vs. 48.4% a month earlier. The count for Africa decreased by 7 to 116 rigs, while the reading for the Asia Pacific Region edged lower by 1 unit to 227. The number of active rigs increased by 3 to 413, the highest since 2015, In the Middle East, by 10 to 189 in Latin America, and by 7 to 193 in Europe. The average monthly number of active oil and gas rigs worldwide grew to 2,211 in 2018, for the second straight year.

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Markets

US: equities end higher before holiday

Key US stock indices showed positive performance on Wednesday, July 3, in a shortened pre-holiday session. The 10-year UST yield narrowed markedly, while defensive names were well bid. Markets saw low-key trading ahead of Independence Day.

Macro data was mixed. Initial jobless claims decreased to 221,000 from 229,000 a week earlier vs. 223,000 expected, while the ADP private-sector employment gauge added 102,000 in June, missing 140,000 projected after 27,000 in May. Furthermore, the ISM Non-Manufacturing Index for June slipped to 55.1%, while the consensus forecast called for 55.9%, following 56.9% in the previous month. Manufacturing orders decreased 0.7% in May vs. -0.8% expected after -1.2% in April.

Recapping the benchmarks, the blue-chip index Dow Jones Industrial Average added 0.67% to 26,966.00, the broad market gauge S&P 500 rose 0.77% to 2,995.82, and the technology-focused Nasdaq Composite firmed 0.75% to 8,170.23.

The list of outperformers included healthcare names. In particular, Johnson & Johnson, UnitedHealth and Merck & Cod picked up 1.5%, 0.5%, and 1.6%, respectively.
Antivirus software developer Symantec spiked 13.6% on media reports that microchip maker Broadcom is in talks to acquire the company. Notably, the latter shed 3.5% on the day.
Electric car maker Tesla surged 4.6% after reporting record-high sales for the last quarter.

In the blue-chip universe, most liquid names landed in the green led by Procter & Gamble (+2.6%), Cisco Systems (+1.8%) and Merck (+1.6%), while only Dow (-0.1%), JPMorgan (-0.2%) and Caterpillar (0,2%) closed lower.

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S&P 500

The daily chart shows that the S&P 500 continues to trade within a rising wedge near the upper line of Bollinger bands, while the Slow Stochastic Oscillator is hovering in overbought territory, with the RSI just about to enter it. As a result, an attempt to break out of the current formation to the downside could be in the offing.

Breaking financial world news from 4 july 2019.

Europe: benchmarks spike higher

Key European stock indices landed in positive territory on Wednesday, July 3, led by Italy’s FTSE MIB, which surged 2.4% on news that the European Commission no longer threatens to take disciplinary action against the country. Notably, Italy’s 10-year government bond yields narrowed to 1.61% yesterday, the lowest since 2016.

Moreover, investors digested yesterday’s macro data releases. Germany’s services PMI came in at 55.8 in June vs. 55.6 expected, flat m-o-m, and the same indicator for the Eurozone increased to 53.6, beating 53.4 projected and flat on the month.

In other news, EU leaders nominated the IMF’s Christine Lagarde for the position of ECB president. Lagarde is known to call for broader accommodative monetary policy. To remind, Mario Draghi’s term of office expires in October.

Recapping the benchmarks, the UK’s FTSE 100 added 0.66%, the French CAC 40 firmed 0.75%, and the German DAX advanced 0.71%. The regional barometer STXE 600 closed 0.85% higher at 392.58. Italian lenders were well bid. In particular, UniCredit, Banca Monte dei Paschi di Siena and Unione di Banche Italiane surged 5.6%, 5.4% and 6.8%, respectively.

In Germany, Deutsche Bank picked up 2.7% despite having guided for losses in the current year due to planned investment business restructuring.

Lighting equipment maker Osram Licht spiked 12% on news that private equity funds Bain Capital and Carlyle Group intend to acquire the company for EUR 3.39 bn.

British supermarket chain J Sainsbury shed 0.5% after reporting weak like-for-like sales in the last quarter. Specifically, like-for-like sales declined 1.6% y-o-y for the three months ended on June 29, while analysts, on average, expected a 1.1-2.0% y-o-y decrease.

DAX

The daily chart shows that the German DAX has repeatedly broken through the upper line of Bollinger bands, while the Slow Stochastic Oscillator is hovering in overbought territory. As a result, the benchmark will likely correct lower in the short term.

Breaking financial world news from 4 july 2019.

Asia: Chinese equities retreat Asian stock indices delivered mostly positive performance on Thursday, July 4, drawing support from expectations that the US Federal Reserve will cut the Fed funds rate at its July meeting. On the other hand, markets remained under pressure from uncertainty about a potential US-China trade deal despite encouraging comments from representatives of both countries. On the macro data front, Japan’s net foreign investment came out, with the weekly inflow at JPY 58.5 bn compared to a JPY 313.3 bn outflow a week earlier. In Australia, retail sales ticked up 0.1% m-o-m in May vs. the 0.2% m-o-m consensus forecast. In other news, Japanese Prime Minister Shinzo Abe said today that the sales tax will rise 10% in October vs. 8% planned earlier. The Japanese Nikkei 225 picked up 0.30%, the Chinese Shanghai Composite eased 0.33%, Hong Kong’s Hang Seng dipped 0.21%, the South Korean KOSPI advanced 0.61%, and the Australian S&P/ASX 200 closed 0.49% higher. On the S&P/ASX 200, Speedcast International and Santos outperformed the broader market, soaring 9.88% and 8.74%, respectively. On the other side of the spectrum, Pilbara Minerals and Bravura Solutions plunged 5.76% and 4.72%.

The Nikkei 225 gainers were led by Kawasaki Kisen Kaisha and Softbank Group, which surged 3.66% and 3.44%, respectively. On the other side of the spectrum, Fast Retailing and Taiheiyo Cement gave up 1.78% and 1.51%. Japanese shipping names stood out among the advancers, tracking the Baltic Dry Index higher. In the upshot, Mitsui OSK Lines and Kawasaki Kisen added over 1.9%. Furniture retailer Nitori Holdings gained 4% after reporting a 6.1% increase in like-for-like sales for March through May. Operating profit for the period totaled JPY 30.4 bn. In the Australian banking sector, Commonwealth Bank, National Bank of Australia, Australia & New Zealand Banking and Westpac landed in negative territory. Australian mining giant Rio Tinto shed over 0.3%. Tech stocks came under pressure, with AAC and Sunny Optical slipping over 1.25%.

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Breaking financial world news from 4 july 2019.

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