General Market Comment: 01.08.18

General Market Comment

US indices closed mixed on Wednesday. Shares in the Automobiles & Components (-1.91%), Capital Goods (-1.56%) and Energy (-1.33%) sectors closed lower while shares in the Technology Hardware & Equipment (+3.74%), Real Estate (+0.69%) and Commercial & Professional Services (+0.67%) sectors gained traction. On the economic data front, MBA mortgage applications decreased by 2.6% in the week ending July 27 from -0.2% previously. In addition, the ADP national employment report showed U.S. companies added 219K jobs in July (estimated +186K) from a revised +181K in the prior month. Markit manufacturing PMI decreased at a final estimate of 55.3 in July (estimated 55.5) from 55.4 in June. Moreover, construction spending MoM decreased by 1.1% in June (expected +0.3%) from a revised +1.3% in May while ISM manufacturing PMI decreased to 58.1 in July (estimated 59.4) from 60.2 in June. Finally, the Fed released the FOMC statement stating that it decided to maintain the target range for the federal funds rate at 1.75% – 2%. The Fed added that the economy is growing at a “strong rate” and continues to expect further gradual rate increases. The S&P 500 (2,813.36) remains above both its 20d moving average (2,802.00 – positive slope) and 50d moving average (2,766.94 – positive slope).

European markets are expected to open on a negative note.

Foreign Exchange

The US dollar was mixed against its major pairs on Wednesday. On the economic data front, MBA mortgage applications decreased by 2.6% in the week ending July 27 from -0.2% previously. In addition, the ADP national employment report showed U.S. companies added 219K jobs in July (estimated +186K) from a revised +181K in the prior month. Markit manufacturing PMI decreased at a final estimate of 55.3 in July (estimated 55.5) from 55.4 in June. Moreover, construction spending MoM decreased by 1.1% in June (expected +0.3%) from a revised +1.3% in May while ISM manufacturing PMI decreased to 58.1 in July (estimated 59.4) from 60.2 in June. Finally, the Fed released the FOMC statement stating that it decided to maintain the target range for the federal funds rate at 1.75% – 2%. The Fed added that the economy is growing at a “strong rate” and continues to expect further gradual rate increases.

The Euro was bearish against its major pairs with exception of the NZD and the AUD. In Europe, euro-zone PMI manufacturing index was 55.1 in July in the final estimation, as in the first one and vs 54.9 a month earlier. UK PMI manufacturing index fell to 54 in July from 54.3 in June (revised from 54.5). It was anticipated at 54.2.

The Australian dollar was bearish against its major pairs with exception of the NZD.

Commodities

After the close of Wall Street, WTI Crude Future (SEP 18) was down $1 to $67.79. The contract was below its 20D MA (@ $69.2) and below its 50D MA (@ $68.14). The US Department of Energy reported that, for the week ended 27 July, crude oil inventories increased 3803k barrels compared to the previous week.

Gold was down $7.7 to $1216.6. The precious metal was below its 20D MA (@ $1235) and below its 50D MA (@ $1263).

Copper Future (SEP 18) on Comex was down 9.2c to 273.9c/lb. The contract was below its 20D MA (@ 278.58c) and below its 50D MA (@ 298.47c). In Europe, the London Metal Exchange reported its copper inventories decreased 2475 tons to 251950 tons.