Major US stock indexes rose moderately amid rising quotes for the industrial goods sector, as well as reports by Dow Jones about the possibility of canceling Chinese tariffs, which were soon refuted by the US Treasury.

In addition, market participants analyzed data on the US labor market. As the report of the Ministry of Labor showed, the number of Americans applying for unemployment benefits unexpectedly declined last week, indicating a steady strength of the labor market, which should continue to support the economy. According to the data, the number of initial claims for unemployment benefits fell by 3,000, taking into account seasonal fluctuations to 213,000 for the week ending January 12. The data for the previous week has not been revised. Economists had expected an increase in the number of calls by 220,000 last week.

Oil prices fell slightly on Thursday after oil production in the United States approached an unprecedented 12 million barrels per day, as well as increased concerns about weakening demand, especially in light of the trade dispute between the United States and China.

Most of the components of DOW recorded an increase (24 of 30). The growth leader was DowDuPont Inc. (DWDP, + 2.96%). Outsider were The Home Depot, Inc. (HD, -1.23%).

All sectors of the S & P finished trading in positive territory. The largest growth was shown by the industrial goods sector (+ 1.5%).

At the time of closing:

Dow 24,370.10 +162.94 +0.67%

S & P 500 2,635.96 +19.86 +0.76%

Nasdaq 100 7,084.46 +49.77 +0.71%

Manufacturing activity in the region continued to grow, according to results from the January Manufacturing Business Outlook Survey. The survey’s broad indicators remained positive, although their movements were mixed again this month: The general activity and new orders indicators increased from their readings last month, while the indicators for shipments and employment decreased.

The firms reported growth in the underlying demand for their products and are generally optimistic about future growth and employment.

The index for current manufacturing activity in the region increased from a revised reading of 9.1 in December to 17.0 this month. Over 30 percent of the manufacturers reported increases in overall activity, while 13 percent reported decreases. The new orders index increased 8 points to 21.3, its highest reading in six months. The current shipments index, however, decreased 1 point to 11.4.

In the week ending January 12, the advance figure for seasonally adjusted initial claims was 213,000, a decrease of 3,000 from the previous week's unrevised level of 216,000. The 4-week moving average was 220,750, a decrease of 1,000 from the previous week's unrevised average of 221,750.  

U.S. stock-index futures fell on Thursday, weighed down by Morgan Stanley’s (MS) disappointing results and renewed concerns over the progress of trade talks between the U.S. and China.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Morgan Stanley (MS) reported Q4 FY 2018 earnings of $0.80 per share (versus $0.84 in Q4 FY 2017), missing analysts’ consensus estimate of $0.89.

The company’s quarterly revenues amounted to $8.548 bln (-10.0% y/y), missing analysts’ consensus estimate of $9.316 bln.

MS fell to $42.73 (-3.96%) in pre-market trading.

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Alcoa Corp. (AA) reported Q4 FY 2018 earnings of $0.66 per share (versus $1.04 in Q4 FY 2017), beating analysts’ consensus estimate of $0.50.

The company’s quarterly revenues amounted to $3.344 bln (+5.4% y/y), generally in line with analysts’ consensus estimate of $3.313 bln.

AA fell to $28.88 (-0.35 %) in pre-market trading.

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A year earlier, the rate was 1.4%. European Union annual inflation was 1.7% in December 2018, down from 2.0% in November. A year earlier, the rate was 1.7%.

The lowest annual rates were registered in Greece and Portugal (both 0.6%) and Denmark (0.7%). The highest annual rates were recorded in Estonia (3.3%), Romania (3.0%) and Hungary (2.8%). Compared with November 2018, annual inflation fell in twenty-two Member States, remained stable in three and rose in three.

In December 2018, the highest contribution to the annual euro area inflation rate came from services (+0.58 percentage points, pp), followed by energy (+0.53 pp), food, alcohol & tobacco (+0.34 pp) and non-energy industrial goods (+0.12 pp).

In November 2018 seasonally-adjusted data, compared to October 2018, decreased both for outgoing flows (-0.4%) and for incoming flows (-2.2%). Exports drop for EU countries (-1.3%) and rose for non EU countries (+0.6%). Imports fell both EU countries and non EU countries (-2.8% and -1.3% respectively).

Over the last three months, seasonally-adjusted data, compared to the three months earlier, showed a decrease for exports (-0.5%) and an increase for imports (+1.0%).

In November 2018, compared with the same month of the previous year, exports and imports raised (+1.0% and +3.4% respectively). Outgoing flows increased by 1.4 for EU countries and by 0.4% for non EU countries. Incoming flows rose by 10.1% for non EU area and declined by 0.7% for EU area. The trade balance in November amounted to +3,843 million Euros (+3,330 million Euros for non EU area and +513 million Euros for EU countries).

• Lenders reported that the availability of secured credit to households had decreased in the three months to end-November 2018 (Q4) and was expected to increase slightly over the next three months to end-February 2019 (Q1).

• The availability of unsecured credit to households was reported to have decreased in Q4 and was expected to decrease slightly in Q1 (Chart 1). Credit scoring criteria for total unsecured loan applications were reported to have tightened slightly in Q4, although the proportion of applications approved was unchanged.

• The overall availability of credit to the corporate sector was reported to have been unchanged in Q4. Within this, the availability of credit provided to medium businesses was reported to have fallen slightly in Q4, and was unchanged for small and large businesses. The overall availability of credit to the corporate sector was expected to remain unchanged in Q1.

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• Prices Rose at Modest to Moderate Pace in Majority of Districts

• Majority of Fed Districts Reported Moderate Wage Gains

• Many Businesses Less Optimistic Due to Stock Market Volatility, Rising Interest Rates

• Several Districts Noted Home Sales Restrained By Rising Prices, Low Inventory

• All Fed Districts Noted Labor Markets Tight

• Majority of Fed Districts Reported Moderate Wage Gains

• Prices Rose at Modest to Moderate Pace in Majority of Districts

• Companies' Outlooks Generally Positive

• Many Businesses Less Optimistic Due to Stock Market Volatility, Rising Interest Rates

• Several Districts Noted Home Sales Restrained By Rising Prices, Low Inventory

November 2018 compared with October 2018:

• The trend estimate for the total value of dwelling finance commitments excluding alterations and additions fell 1.1%. Owner occupied housing commitments fell 1.0% and investment housing commitments fell 1.5%.

• In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 2.5%.

November 2018 compared with October 2018:

• In trend terms, the number of commitments for owner occupied housing finance fell 0.2% in November 2018.

• In trend terms, the number of commitments for the construction of dwellings fell 0.9%, the number of commitments for the purchase of new dwellings fell 0.6% and the number of commitments for the purchase of established dwellings fell 0.1%.

• In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 18.3% in November 2018 from 18.1% in October 2018.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1530 (2092)

$1.1509 (476)

$1.1480 (547)

Price at time of writing this review: $1.1386

Support levels (open interest**, contracts):

$1.1347 (4024)

$1.1314 (5007)

$1.1276 (2633)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 8 is 70835 contracts (according to data from January, 16) with the maximum number of contracts with strike price $1,1600 (5533);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3063 (590)

$1.3020 (1250)

$1.2987 (546)

Price at time of writing this review: $1.2868

Support levels (open interest**, contracts):

$1.2795 (555)

$1.2773 (205)

$1.2748 (367)

Comments:

- Overall open interest on the CALL options with the expiration date February, 8 is 22996 contracts, with the maximum number of contracts with strike price $1,3000 (1929);

- Overall open interest on the PUT options with the expiration date February, 8 is 25846 contracts, with the maximum number of contracts with strike price $1,2550 (1904);

- The ratio of PUT/CALL was 1.12 versus 1.14 from the previous trading day according to data from January, 16

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

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