DJIA reaches intraday high of 22,000 courtesy of Apple rising 5%, euro, sterling and oil rise, gold ends the day flat

Aug 3 • Morning Roll Call • 1417 Views • Comments Off on DJIA reaches intraday high of 22,000 courtesy of Apple rising 5%, euro, sterling and oil rise, gold ends the day flat

As predicted it wasn’t so much “if”, but rather “when” the DJIA would finally breach the 22,000 handle. And on mainstream media TV channels on Wednesday, there were many images of middle aged men wearing jackets, emblazoned with the name of investment banks, or trading firms on their backs, rejoicing from their (supposed) trading floors, that this mythical level had finally been breached.

However, Joe public might like to know that circa 80% of trading “on Wall Street” doesn’t actually happen on Wall Street, at least not in the fashion most would perceive, given that A.I. is now responsible for that 80% of equity trading. American Joe Public might also want to scratch his head and contemplate that the DJIA has risen by circa 10% in 2017, whilst the dollar has lost a similar value, versus its main peers during the same period, so unless he’s heavily invested in the markets he’s actually got poorer. Or perhaps it’s best for the USA general public en masse to remain unaware of the realities, whilst Donald Trump continues to “make America great again”.

The DJIA ended the day up 0.24%, holding the 22,000 level at 22,016. SPX closed up 0.05% and the NASDAQ was flat. Once again, the main index reached a high, despite a backdrop of unconvincing USA economic data; weekly mortgage applications fell by -2.8% last week, the ADP employment change for July missed the forecast of 195k, coming in at 178k and crude oil inventories didn’t fall as expected. All three events providing more evidence that the USA economy appears to be topping out and is potentially at a tipping point.

EUR/USD rose by circa 0.4% to 1.1859, receding from breaching R3 and an intraday high of 1.1910, GBP/USD rose by 0.3% to 1.3228, and having the touched R2 early in the New York session USD/JPY slipped back to 110.59, up approx. 0.3%. WTI oil closed the day out at circa $49.63 per barrel, at one stage closing in on the $50 handle sited at R2. Gold reached an intraday New York session high of $1273 per ounce, before slipping back to close out at approx. $1268, up circa 0.1% and resting just above the daily pivot point.

European data was thin on the ground; the UK’s Markit PMI for construction missed the forecast of 54 by some distance, coming in at 51.9, once once again raising doubts as to the security of the UK economy, once Brexit takes place in 2019. From the Eurozone the producer price index was right on cue at a 2.5% increase annually. Swiss retail sales rose by 1.5% YoY and the SVME PMI came in at a healthy 60.9. The Swissie was, however, possibly the worst performer amongst the major currencies on Wednesday; EUR/CHF and GBP/CHF gaining circa 1% on the day. European indices gave back some of the significant gains made on Tuesday, STOXX 50 closing down 0.42%, DAX down 0.57%, CAC down 0.39% and the FTSE down 0.16%.

Economic calendar events for August 3rd, all times quoted are London (GMT) time

08:00, currency impacted EUR. ECB Publishes Economic Bulletin. The bulletin will outline the broad remit of the ECB’s monetary policy.

08:30, currency impacted GBP. Markit/CIPS UK Services PMI (JUL). The forecast is for a minor improvement to 53.6, from 53.4 in June.

08:30, currency impacted GBP. Markit/CIPS UK Composite PMI (JUL). The forecast is for an identical figure of 53.8 from June, to be registered in July.

09:00, currency impacted EUR. Euro-Zone Retail Sales (YoY) (JUN). Sales are predicted to fall to 2.5%, from the 2.6% recorded in May.

11:00, currency impacted GBP. Bank of England Rate Decision (AUG 03). The expectation is for the base interest rate to be maintained at 0.25%.

12:30, currency impacted USD. Initial Jobless Claims (JUL 29). Weekly claims are expected to fall modestly to 243k, from 244k recorded last week.

12:30, currency impacted USD. Continuing Claims (JUL 22). Continuing claims are forecast to fall to 1958k, from 1964k recorded last week.

14:00, currency impacted USD. ISM Services/Non-Manufacturing Composite. The expectation is for a modest fall to 56.9, from the 57.4 reading recorded in June.

14:00, currency impacted USD Factory Orders (JUN). The prediction is for a significant rise to 3%, from the -0.8% recorded in May.

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