NASDAQ Reaches New Record High

Daily Analysis - 10/05/2017

Upbeat Earnings Lift Technology-Heavy Equity Benchmark

The NASDAQ carved out a fresh record high on Tuesday following a spate of better than anticipated quarterly corporate earnings results which pushed equity momentum higher while the CBOE VIX volatility index ebbed near the lowest point since the early 1990s as risk factors fade.

Apple Valuation Tops $800 Billion

Apple shares gained 0.60% in the prior session to claim the title of the first company in the world to top an $800 billion market capitalization. Tesla Motors was another notable outperformer, surging 4.60% while shares of Valeant Pharmaceuticals, Office Depot and Marriott International were all trading higher after posting better-than-expected quarterly results.

Valeant shares zoomed 24.00% after the drug maker’s first-quarter profit beat expectations, although sales came in just short of estimates. Hotel operator Marriott International’s quarterly earnings also topped Wall Street EPS forecasts, however, both the Dow Jones Industrial Average and the S&P 500 finished near session’s lows, weighed down by energy stocks. Nasdaq futures were last trading around 5670 ahead of significant resistance sitting at 5690 and 5700, a breakout above which could take the index all the way to 5750.

US Dollar Dips After Trump Fires Comey

The US dollar fell on Wednesday against a basket of major currencies after President Donald Trump fired FBI Director James Comey in a move that caught financial markets off guard. Comey was leading an investigation into alleged Russian interference in the 2016 US Presidential campaign and possible collaboration with the Trump election team.

Any rise in US political uncertainty weighs on the dollar, as investors fear a divided Congress could put brakes on Trump's proposed tax reforms and stimulus measures. The greenback was also hurt by lower US yields, with the benchmark 10-year US Treasury yield slipping to 2.397% in early Asian trade. The safe-haven Japanese Yen has been rallying against the dollar since the decision to sack Comey, with the pair last seen around 114.000.

Chinese Inflation Edges Higher

According to the National Bureau of Statistics, China's consumer inflation rose in April, as higher non-food prices more than offset the continued decline in food prices. Official data released during the Asian session showed that the annualized headline consumer price index edged 1.20% higher in April from a year ago, compared to a 0.90% increase back in March. On a monthly basis the April CPI figure came in modestly higher, growing by 0.10%. The key inflation figure was above the consensus forecast of 1.10%, but managed to remain well within the People’s Bank of China’s comfort zone.

Meanwhile, the producer price index decelerated for a second straight month in April to 6.40%, compared to market expectations of a 6.90% rise. USDCNH has since reversed from a one month high in early Wednesday trade, with the pair last seen around 6.9130.

Germany Reports Positive Economic Data

German factory output fell by less than forecast in March, while imports and exports both hit record-highs during the period, suggesting Europe's biggest economy has gathered substantial economic momentum in the first quarter. Data from the Economy Ministry released on Tuesday showed that Industrial production fell by -0.40% on a month-over-month basis in March, topping the consensus projection for a drop of -0.60%.

Separately, the Federal Statistics Office reported seasonally adjusted exports climbed by 0.40% on the month to touch a record high of €105.4 billion. Imports soared by 2.40% to also reach the highest recorded value of €85.8 billion. Quarterly economic growth numbers are scheduled for release on Friday, with the first quarter GDP likely to have expanded by 0.60%. DAX futures are largely range-bound early on Wednesday, trending around the 12725-mark.