Blue-Chips Drive Dow to Fresh Record High

Daily Analysis - 25/10/2017

Benchmark Clocks Biggest Jump in Over a Month

blue-chips


Sizable quarterly earnings beats from Dow Jones components 3M and Caterpillar fuelled large rallies in both the stocks, catapulting the benchmark index to a new record close on Tuesday. The two stocks contributed almost 140 points to the Dow’s 170-point surge, marking the biggest intraday percentage gain in more than a month.

US Earnings Calendar in the Spotlight


This is the busiest week of the third quarter earnings season, with almost a third of the S&P 500 scheduled to report by Friday. Helping spur optimism was the 6.00% jump in 3M shares after the company reported third quarter earnings of $2.33 per share, beating analyst projections of per share profit of $2.21 on $7.93 billion of sales. Adding to the Dow’s gains was Caterpillar’s 5.00% rally after the earth-moving machine fabricator recorded EPS of $1.95 on sales of $11.41 billion, beating bottom line estimates of $1.27 per share and top line forecasts of $10.65 billion.

On the economic data front, the flash US Composite PMI rose to a nine-month high of 55.7 in October while the Richmond Fed manufacturing survey indicated a slowdown in activity. Dow futures are marginally lower around 23,380 in early Wednesday trade after briefly surpassing 23,400 on Tuesday.

popup_close
dow-dec17daily10252017

Euro Holds Ground as PMIs Leave Tapering Expectations Intact


The manufacturing and service sectors in the Euro Area continued to experience robust growth in October, forcing Euro-bulls to hold their ground ahead of Thursday’s decision due from the European Central Bank’s Governing Council.  The Central Bank is widely-expected to announce a reduction in the current asset purchase program. The Markit Flash Manufacturing PMI climbed to 58.6 in October from 58.1 in September, topping market projections of 58.2.

The reading marked the strongest pace of manufacturing expansion since February of 2011. Meanwhile, the Euro Area Services PMI fell to 54.9 this month from September's 55.8, missing estimates of 55.6. While services output growth eased, new orders increased at a faster pace and employment grew the most in seven months. EURGBP touched a high of 0.8975 in Tuesday trading before pulling back to hover just above 0.8950.

popup_close
eurgbpdaily10252017

Australian Rate Hike Looks More Distant


Consumer prices in Australia were surprisingly soft last quarter as inflation remained below the Central Bank’s target for nearly a second full year, prompting investors to further cut expectations of the already slim likelihood of a rate increase in coming months. Figures from the Australian Bureau of Statistics showed the consumer price index edged 1.80% higher for the year to September, below the consensus market forecasts of 2.00%. Core inflation, which strips away the more volatile price components, averaged around 1.85%, also trailing estimates.

This was the seventh consecutive quarter when underlying inflation undershot the Reserve Bank of Australia’s long-term target band of 2.00% to 3.00%, bolstering the case for letting interest rates remain at a record low of 1.50%.  The Australian dollar shed -0.70% to send the AUDUSD pair to 0.7715, its lowest level since the middle of July.

popup_close
audusddaily10252017

Chinese Growth Hopes Propel Copper to 1-Week High


Encouraging prospects for economic growth in top copper consumer China lifted the metal to a one-week high on Tuesday. According to a recently conducted Reuters poll of economists, expectations are for the Chinese economy to grow at around 6.80% in 2017, surpassing the government’s target and accelerating for the first time in seven years.

Investor sentiment was also buoyed following a report from the International Copper Study Group, which forecast that the metals market could see a deficit of 151,000 tonnes in 2017 and a deficit of 104,000 tonnes next year. Copper futures for November delivery rallied to $3.2260 a pound on Tuesday. Prices have since retraced the move in Wednesday Asian trade on a strengthening US dollar.  Helping fuel dollar gains was the emergence of support from a group of Republican Senators interested in nominating Stanford University economist John Taylor to be the next Federal Reserve chief.

popup_close
copp-oct17daily10252017

Upcoming Events

  • Time
  • Currency
  • Event
  • Forecast
  • Previous
  • 8:30 GMT
  • GBP
  • Preliminary GDP QoQ (Q3)
  • 1.40%
  • 1.50%
  • 8:30 GMT
  • GBP
  • Preliminary GDP YoY (Q3)
  • 0.30%
  • 0.30%
  • 9:00 GMT
  • EUR
  • German Ifo Business Climate Index (October)
  • 115.2
  • 115.2
  • 12:30 GMT
  • USD
  • Core Durable Goods Orders MoM (September)
  • 0.50%
  • 0.50%
  • 12:30 GMT
  • USD
  • Durable Goods Orders MoM (September)
  • 1.00%
  • 2.00%
  • 14:00 GMT
  • USD
  • New Home Sales (September)
  • 555K
  • 560K
  • 14:00 GMT
  • CAD
  • Bank of Canada Interest Rate Decision
  • 1.00%
  • 1.00%
  • 14:00 GMT
  • CAD
  • Bank of Canada Monetary Policy Report
  • 14:30 GMT
  • USD
  • Crude Oil Inventories
  • -2.500M
  • -5.731M
  • 15:15 GMT
  • CAD
  • Bank of Canada Governor Stephen Poloz Speaks

Please note that CFDs are a leveraged product and may result in the loss of your entire capital. Please ensure that you fully understand the risks involved.