S&P 500 Nears Record High

Daily Analysis - 08/08/2018

Bullish Investor Sentiment Remains Intact Despite Trade Jitters


US equities climbed on Tuesday, with the S&P 500 inching closer to a record reached earlier this year, buoyed by strong corporate earnings that more than offset worries surrounding global trade. September futures of the benchmark rose 0.30% to end the previous session at 2,860.50, just 0.50% shy of the all-time high of 2,875.75, set on January 26th. Google parent Alphabet and Microsoft lead the rally in the index, surging 1.50% and 0.70% respectively. With second-quarter earnings more than 80.00% reported, the outlook is helping keep market momentum intact.  Third and fourth-quarter guidance has not deteriorated significantly, reassuring investors that almost a decade of gains on Wall Street might not necessarily be nearing its end.

Japanese Yen Gains Ahead of GDP Figures

The Japanese Yen has trended higher against the US Dollar in Wednesday morning trade ahead of the release of second quarter GDP numbers on Friday. According to a latest Reuters survey of sixteen analysts, the Japanese economy is expected to have expanded at an annualized pace of 1.40% during the second quarter. In other economic news, the country’s balance of payments on the current account stood at JPY 1156.70 billion ($10.56 billion) for June, below the JPY 1222.20 billion Yen that investors were expecting. However, the trade balance component rose to JPY 826.80 billion, compared to a shortfall of JPY 303.80 billion recorded a month prior.


Canadian Dollar Retreats Amid Saudi Dispute

The Canadian Dollar pulled back from a nearly eight-week high against its US counterpart on Tuesday as a diplomatic standoff between Canada and Saudi Arabia worsened. Weakness in the Loonie arrived as financial markets in Canada reopened following a civic holiday on Monday. Saudi Arabia froze new trade and investment with Canada and expelled the country’s ambassador from Riyadh in retaliation to Ottawa's call for freeing arrested Saudi civil society campaigners, including a prominent women’s rights activist. The Loonie had displayed strength over the past few sessions following data that showed stronger than expected growth in the Canadian economy.


Oil Prices Firm Up After API Report and Iranian Sanctions Restoration

US crude oil futures remained steady in early Wednesday trade, supported by data that forecast rising crude stockpiles in the country as well as the reintroduction of sanctions against Iran. Investor sentiment saw a boost after the US Energy Information Administration’s monthly report projected output to increase 1.31 million barrels per day (bpd) in 2018 to 10.68 million bpd, lower than last month’s estimate of a rise of 1.44 million bpd to 10.79 million bpd. Meanwhile, renewed US sanctions against OPEC’s third-largest producer Iran officially went into effect on Tuesday, targeting Iran’s US Dollar purchases, metals trading and coal. Sanctions on the all-important oil and gas sector are scheduled to be re-imposed after a 180-day “wind-down period” scheduled to conclude on November 4th.


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