Major US stock indices predominantly increased as the fall in the conglomerate sector was offset by the growth in the utility sector.

Alphabet (GOOG) shares plummeted by 7.58% after the company showed quarterly revenue of $ 36.34 billion against an expected $ 37.33 billion. According to the company, the reason for lower revenue was a slowdown in Google advertising sales.

The negative dynamics of GOOG shares provoked the fall of most other shares of the popular FAANG group: Facebook (FB), Amazon (AMZN) and Apple (AAPL). It is also worth noting that Apple will publish its quarterly report today after the close of the trading session.

Investors also analyzed the latest news about the US-China trade negotiations. White House Chief of Staff Mick Mulvaney said Tuesday that the situation with the Trump administration’s trade negotiations with China will be resolved over the next two weeks.

In addition, the focus of market participants was data on consumer confidence and pending home sales in the US. As reported in the Conference Board, their consumer confidence index improved markedly in April after it recorded a decline in March. According to the organization’s report, the index now stands at 129.2 (1985 = 100), compared with 124.2 in January (revised from 124.1). Analysts had expected the index to grow only to 126.0. At the same time, the current situation index - based on consumers' assessment of current business and labor market conditions - increased from 163.0 to 168.3, and the expectations index - based on short-term consumer forecasts for income, business and labor market conditions - improved from 98.3 to 103.0.

At the same time, a report published by the National Association of Realtors (NAR) showed that pending home sales in the US jumped in March much more than expected. According to the report, the index of pending home sales rose by 3.8% in March to 105.8, after falling by 1% to 101.9 in February. Economists had expected the index to increase by 1.1%. Despite the monthly rebound, in annual terms, the index still shows a decline of 1.2%. It is worth emphasizing, the annual decline is fixed for the 15th consecutive month.

Most of the components of DOW finished trading in positive territory (19 out of 30). The growth leader was Pfizer Inc. (PFE; + 2.86%). Outsider were UnitedHealth Group Incorporated (UNH; -1.83%)

Most sectors of the S & P recorded a decline. The largest decline was shown by the conglomerate sector (-3.2%). The utility sector grew the most (+ 1.3%).

At the time of closing:

Dow 26,592.91 +38.52 +0.15%

S & P 500 2,945.83 +2.80 +0.10%

Nasdaq 100 8,107.77 -54.09 -0.66%

The National Association of Realtors (NAR) announced on Thursday its seasonally adjusted pending home sales index (PHSI) surged 3.8 percent m-o-m to 105.8 in in March, up from 101.9 in February.

Economists had expected pending home sales to rise 1.1 percent m-o-m in March. 

On y-o-y basis, the index dropped 1.2 percent. That was the 15th consecutive month of annual declines. 

According to the report, the pending home sales rose in three of the four regions in m-o-m terms but fell in most regions compared to March 2018. Pending home sales in the South climbed 4.4 percent m-o-m to an index of 127.2 in March, which is 0.7 percent higher than last March. Meanwhile, the index in the West ascended 8.7 percent m-o-m last month to 95.1 and declined only 1.6 percent below a year ago. The PHSI in the Northeast dropped 1.7 percent m-o-m to 90.5 in March and is now 0.4 percent below a year ago. In the Midwest, the index increased 2.3 percent m-o-m to 95.3 in March, 5.0 percent lower than in the corresponding period of 2018.

The Conference Board announced on Tuesday its U.S. consumer confidence gauge rose 5.0 points to 129.2 in April from 124.2 in March. 

Economists had expected consumer confidence to come in at 126.0. 

March’s consumer confidence reading was revised up from originally estimated 124.1. 

The survey showed that the expectations index increased from 98.3 last month to 103.0 this month, while the present situation index rose from 163.0 to 168.3.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted, “Consumer Confidence partially rebounded in April, following March’s decline, but still remains below levels seen last Fall. The Present Situation Index, which had decreased sharply last month, improved in April, as did consumers’ short-term outlook. Overall, consumers expect the economy to continue growing at a solid pace into the summer months. These strong confidence levels should continue to support consumer spending in the near-term.”

MNI Indicators’ report revealed on Tuesday that the expansion of business activity in Chicago slowed this month.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 52.6 in April, down from an unrevised 58.7 in March. That was the lowest reading since October 2016.

Economists had forecast the index to increase to 59.

A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.

According to the report, four of the five Barometer components declined in April, with the new orders falling for the second consecutive month. The production dropped significantly to a level not seen since May 2016, while the employment indicator softened to the lowest level since October 2017 and the factory gate prices saw the biggest monthly fall since December 2008. Meanwhile, the order backlogs component was the sole gainer.

“This was a disappointing start to the second quarter, with more firms cutting back on both production and employment against a backdrop of softer domestic demand and the global slowdown,” said Shaily Mittal, Senior Economist at MNI. “Most Barometer components have dived below their respective 12-month averages, pointing towards greater business uncertainty among firms,” she added.

S&P reported on Tuesday its Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan areas, rose 3.0 percent y-o-y in February, following a revised 3.5 percent y-o-y increase in January (originally a 3.6 percent y-o-y gain). That was the smallest annual advance in house prices since September 2012.

Economists had expected an advance of 3.2 percent y-o-y.

Las Vegas (+9.7 percent y-o-y), Phoenix (+6.7 percent y-o-y) and Tampa (+5.4 percent y-o-y) recorded the highest y-o-y gains in February.

Meanwhile, the S&P/Case-Shiller U.S. National Home Price Index, which measures all nine U.S. census divisions, was up 4.0 percent y-o-y in February, down from 4.2 percent y-o-y in the previous month.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, noted, “The pace of increases for home prices continues to slow. Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits. Subsequently, increases slowed until now when the National Index is up 4% in the last 12 months. Sales of existing single-family homes have recovered since 2010 and reached their peak one year ago in February 2018. Home sales drifted down over the last year except for a one-month pop in February 2019. Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year. Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.”

U.S. stock-index futuresеs traded mixed on Tuesday, as investors digested the latest batch of earnings and weak data from China.

Global Stocks:

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

Bank of America (BAC) downgraded to Neutral from Overweight at Atlantic Equities

Alphabet (GOOG/GOOGL) downgraded to Hold from Buy at Stifel; target $1287

Facebook (FB) upgraded to Buy from Hold at DZ Bank

Statistics Canada announced on Tuesday that the country’s gross domestic product (GDP) decreased a seasonally adjusted 0.1 percent m-o-m in February, following a 0.3 m-o-m advance in January. 

That was below economists’ forecast for a flat reading. 

In y-o-y terms, the Canadian GDP rose 1.1 percent in February. 

According to the report, both goods-producing (-0.2 percent m-o-m) and services-producing (-0.1 percent m-o-m) industries declined, with the 20 industrial sectors being nearly evenly split between gains and losses.

The mining, quarrying and oil and gas extraction (-1.6 percent m-o-m) and transportation and warehousing (-1.6 percent m-o-m) recorded the largest declines in February, while utilities (+1.5 percent m-o-m) posted the biggest gain due to record-setting cold weather in Western Canada.

General Motors (GM) reported Q1 FY 2019 earnings of $1.41 per share (versus $1.43 in Q1 FY 2018), beating analysts’ consensus of $1.12.

The company’s quarterly revenues amounted to $34.878 bln (-3.4% y/y), missing analysts’ consensus estimate of $35.556 bln.

The company also reaffirmed guidance for FY 2019, projecting EPS of $6.50-7.00 versus analysts’ consensus estimate of $6.50.

GM fell to $39.26 (-1.87%) in pre-market trading.

MasterCard (MA) reported Q1 FY 2019 earnings of $1.78 per share (versus $1.50 in Q1 FY 2018), beating analysts’ consensus of $1.66.

The company’s quarterly revenues amounted to $3.889 bln (+8.6% y/y), generally in line with analysts’ consensus estimate of $3.857 bln.

MA rose to $250.01 (+1.17%) in pre-market trading.

McDonald's (MCD) reported Q1 FY 2019 earnings of $1.78 per share (versus $1.79 in Q1 FY 2018), beating analysts’ consensus of $1.76.

The company’s quarterly revenues amounted to $4.956 bln (-3.6% y/y), generally in line with analysts’ consensus estimate of $4.943 bln.

MCD rose to $204.00 (+3.49%) in pre-market trading.

Analysts at TD Securities expect Canada’s February GDP to be flat due to weakness in the goods-producing sector, which was foreshadowed by a sharp pullback in real exports and while energy production caps were raised by 75k in February, preliminary crude output was still lower on the month.

• Services will provide an offset although cold weather will weigh on the sector. Factory prices for March will be released alongside GDP while Parliamentary testimony from Governor Poloz rounds out the calendar. Poloz and Wilkins will appear before the House of Commons Finance Committee at 11:00 ET, ahead of Wednesday's testimony to the Senate.

Pfizer (PFE) reported Q1 FY 2019 earnings of $0.85 per share (versus $0.77 in Q1 FY 2018), beating analysts’ consensus of $0.75.

The company’s quarterly revenues amounted to $13.118 bln (+1.6% y/y), generally in line with analysts’ consensus estimate of $13.012 bln.

The company also raised FY 2019 EPS guidance to $2.83-2.93 from $2.82-2.92 (versus analysts’ consensus estimate of $2.89) and reaffirmed FY 2019 revenues guidance of $52.0-54.0 bln (versus analysts’ consensus estimate of $53.43 bln).

PFE rose to $40.00 (+1.04%) in pre-market trading.

• Talks with Labour Party have been serious and constructive
• Further talks have been scheduled with Labour to bring the process to a conclusion 
• Not giving a firm end date for talks with Labour 

Merck (MRK) reported Q1 FY 2019 earnings of $1.22 per share (versus $1.05 in Q1 FY 2018), beating analysts’ consensus of $1.05.

The company’s quarterly revenues amounted to $10.816 bln (+7.8% y/y), beating analysts’ consensus estimate of $10.452 bln.

The company also issued guidance for FY 2019, projecting EPS of $4.67-4.79 (versus its prior estimate of $4.57-4.72 and analysts’ consensus estimate of $4.68) and revenues of $43.9-45.1 bln (versus its prior estimate of $43.2-44.7 bln and analysts’ consensus estimate of $44.5 bln).

MRK rose to $78.00 (+1.59%) in pre-market trading.

General Electric (GE) reported Q1 FY 2019 earnings of $0.14 per share (versus $0.16 in Q1 FY 2018), beating analysts’ consensus of $0.09.

The company’s quarterly revenues amounted to $27.286 bln (-1.8% y/y), generally in line with analysts’ consensus estimate of $27.307 bln.

GE rose to $10.27 (+5.55%) in pre-market trading.

Alphabet (GOOG) reported Q1 FY 2019 earnings of $9.50 per share, including $1.7 bln fine from the EU (EPS $11.90 ex-fine), which may not be comparable to analysts’ consensus of $10.44.

The company’s quarterly revenues amounted to $36.339 bln (+16.7% y/y), missing analysts’ consensus estimate of $37.359 bln.

GOOG fell to $1,190.00 (-7.58%) in pre-market trading.

Analysts at ING note that, with the economic cycle already in a late stage, the fact the Eurozone's GDP flash estimate shows a decent 0.4% growth rate in the first quarter is probably as good as it gets. 

• Paraphrasing Mark Twain who said reports of his death were greatly exaggerated, we can say that calls for a eurozone recession were certainly premature. Declining unemployment and gradually rising wages are supporting household consumption, while easy financing conditions remain in place. At the same time, the recovery is getting old and no one should expect from a greybeard that he will continue to run at the pace he could achieve in his youth. And indeed, the elderly are also more vulnerable to shocks. While there are still a number of risks (think of trade tensions, higher oil prices and the Brexit uncertainty) the improving international picture is likely to support eurozone exports in the coming months. In a number of eurozone countries, fiscal policy is also somewhat looser which is likely to underpin household consumption. In that regard, GDP growth should hover around 0.3% in the remainder of the year. Not great, but probably the best we can expect in the current stage of the cycle.
• Today’s figures probably haven’t made the European Central Bank any wiser. The economy remains solid enough not to need extra stimulus. But at the same time not much has to go wrong to bring GDP growth to a standstill. In that regard, wait-and-see remains the most likely ECB monetary policy stance. More news in June, when the conditions for the first TLTRO are likely to be announced.

Istat reported on Tuesday its preliminary estimates showed Italy’s gross domestic product (GDP) rose by 0.2 percent q-o-q and by 0.1 percent y-o-y in the first quarter of 2019.

Economists had forecasted the Italian economy to grow by 0.1 percent q-o-q and to fall by 0.1 percent y-o-y in the first quarter.

In the fourth quarter of 2018, Italy’s GDP declined by 0.1 percent q-o-q, but was flat y-o-y.

According to the report, the q-o-q advance was the result of an increase of value added in the agriculture, in the industrial sector, and in services. From the demand side, there was a negative contribution of the domestic component (gross of change in inventories) and a positive one of the net exports.

TD Securities analysts are expecting that the New Zealand’s jobs growth is likely to soften, but due to a lack of suitable labour rather than a collapse in activity.

“As the labour market is tight we also expect a pick up in wages growth (0.6% vs mkt 0.5% q/q). The update feeds into the RBNZ's Monetary Policy Statement, which is ‘live’ despite being the first with a Board. The RBNZ expects a drop in the u-rate to 4.2% (TD 4.2%) well within the estimates of maximum sustainable employment. We look for the 0.4% q/q rise in jobs to lower the u-rate with a pip lower participation rate of 70.8% (mkt 70.9%).”

China has started letting the yuan weaken slightly in a pointed “snub” to U.S. President Donald Trump, Dutch bank ING said in a report.

ING said the yuan has been moving much more narrowly in the past two months as the People’s Bank of China, the central bank, has emphasized “stability” in currency policy.

But the Chinese currency, also known as the renminbi, weakened against the dollar by 0.2 percent in March, and by 0.3 percent so far in April, ING said in the report. That compares with the yuan strengthening by 2.45 percent in first two months of the year, it added.

“We believe the change in direction, albeit small in substance, is a way for China to show that its yuan policy is independent from the influence of other countries,” Iris Pang, ING’s economist for Greater China, said in the report.

“We think this is a snub to the Trump administration who said that the yuan cannot depreciate if there is a U.S.-China trade deal.”

Eurostat, the statistical office of the European Union, said, the euro area (EA19) seasonally-adjusted unemployment rate was 7.7% in March 2019, down from 7.8% in February 2019 and from 8.5% in March 2018. This is the lowest rate recorded in the euro area since September 2008. Unemployment was expected to remain at 7.8%.

The EU28 unemployment rate was 6.4% in March 2019, down from 6.5% in February 2019 and from 7.0% in March 2018. This is the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000.

Eurostat estimates that 15.907 million men and women in the EU28, of whom 12.630 million in the euro area, were unemployed in March 2019. Compared with February 2019, the number of persons unemployed decreased by 172 000 in the EU28 and by 174 000 in the euro area. Compared with March 2018, unemployment fell by 1.430 million in the EU28 and by 1.172 million in the euro area.

According to a preliminary flash estimate published by Eurostat, seasonally adjusted GDP rose by 0.4% in the euro area (EA19) and by 0.5% in the EU28 during the first quarter of 2019, compared with the previous quarter. Economists had expected a 1.1% increase in the euro area. In the fourth quarter of 2018, GDP had grown by 0.2% in the euro area and by 0.3% in the EU28.

Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.2% in the euro area and by 1.5% in the EU28 in the first quarter of 2019, as in the previous quarter. Economists had expected a 0.3% increase in the euro area

U.S. Treasury Secretary Steven Mnuchin said that he hopes to make "substantial progress" with Chinese negotiators in the next two rounds of trade talks, as the world's two largest economies look for ways to end their bruising trade war.

Mnuchin and U.S. Trade Representative Robert Lighthizer are in Beijing this week for the latest negotiations in what could be the talks' end game. Chinese Vice Premier Liu He will go to Washington for another round of talks scheduled for next week.

"We've a meeting here, and then the vice premier and team will be coming back to Washington D.C., and we hope to make substantial progress in these two meetings," Mnuchin told.

"I'm not going to comment on specific issues of the discussions," Mnuchin said. "They've been quite broad as I've said before. We've made a lot of progress. We look forward to the meetings here."

According to the report from Istat, in March 2019, the number of employed people increased compared with February (+0.3%, +60 thousand); the employment rate rose to 58.9% (+0.2 percentage points). The increase of employment involved men and women and people aged 15-34 years (+69 thousand); rather stable the 35-49 years, while over 50 declined (-14 thousand).

The number of unemployed persons fell by 3.5% (-96 thousand); the decline involved men and women and all age classes. The unemployment rate dropped to 10.2% (-0.4 percentage points), the youth rate decreased to 30.2% (-1.6 percentage points).

In the period from January to March 2019, employment rose compared with the previous quarter (+0.2%, +46 thousand), even by gender. In the last quarter, the rise of employment was accompanied by the drop of unemployed persons (-1.8%, -50 thousand) and inactive people aged 15-64 years (-0.1%, -18 thousand).

On a yearly basis, the growth of employment was accompanied by the fall of unemployed persons (-7.3%, -208 thousand) and inactive people aged 15-64 (-0.3%, -35 thousand).

According to the report from the Federal Employment Office, in the wake of the spring upturn, unemployment fell by 72,000 from March to April to 2,229,000. Adjusted for the seasonal influences, a fall of 12,000 is calculated for April compared to the previous month. Compared to the previous year, 155,000 fewer people were registered as unemployed. The unemployment rate fell by 0.2 percentage points to 4.9 percent. Compared to April of last year, it has decreased by 0.4 percentage points. The unemployment rate calculated by the Federal Statistical Office according to the ILO employment concept was 3.5 percent in March.

Underemployment, which also includes people in relieving labor market policies and short-term incapacity for work, rose by 5,000 in seasonally adjusted terms compared to the previous month. Overall, underemployment in April 2019 was 3,198,000. That was 154,000 less than a year ago.

Karen Jones, analyst at Commerzbank, explains that the EUR/USD pair has continued to rebound from 1.1110, the May 2017 low.

“The rebound has so far been tepid but we would allow for a test of the 20 day ma at 1.1233. Intraday Elliott wave counts are negative. Support at 1.1110 is regarded as the break down point to 2019-2019 support line (connects the lows) at 1.1059, the 1.0963 TD support and the 1.0814/78.6% retracement. Initial resistance is the 100 day ma at 1.1334 and the resistance line at 1.1365 ahead of the 200 day ma at 1.1420. Only above the 200 day ma would this imply reversal.”

According to analysts at TD Securities, it's a bumper day for euro area data, with the release of April flash inflation data for France, Spain, Italy, and Germany, the unemployment rates for Germany (April) and the euro area (March), and 19Q1 GDP growth for France, Spain, Italy, and the euro area.

“Market focus is likely to be on the German inflation data and euro area GDP print. We look for rises in annual headline HICP inflation rates from March to April across all four countries on the back of stronger travel-related prices (owing to the later Easter holiday vs 2018) and higher energy prices. In Germany, we expect headline HICP inflation to rise to 1.6% y/y (mkt: 1.7%, though more forecasters expect 1.6% than 1.7%). For euro area GDP, we are in line with the market looking for a pickup in the pace of growth in 19Q1 to 0.3% q/q--still below potential but an improvement over growth rates in the second half of 2018.”

According to the report from Insee, over a year, the Consumer Price Index (CPI) should hardly accelerate in April 2019 (+1.2% after +1.1% in March), according to the provisional estimate made at the end of the month. This slight rise in inflation over a year should result from a moderate acceleration in the prices of services as well as a smaller decline in the prices of manufactured goods. Contrariwise, energy prices should slow down. Food prices should rise generally as the same pace as in the previous month.

Over one month, consumer prices should be slower (+0,2% after +0,8% in march). This sharp slowdown is due to the seasonal slowdown of manufactured goods and the less dynamic energy prices this month. Prices for food and services, on the other hand, should rise slightly in April.

Year on year, the Harmonised Index of Consumer Prices should hardly accelerate (+1.4% after +1.3% in March). Over one month, it should slow down sharply by +0.3%, after +0.9% in the previous month.

German consumer sentiment is set to stabilize in May following two successive declines, despite economic headwinds, market research group GfK said.

GfK's forward-looking consumer sentiment index is set to come in at 10.4 points in May, unchanged from April, it said. The outcome is slightly above economists' forecast of 10.3 points.

The downward trend in consumers' economic expectations that has persisted for more than a year continued in April, following a brief intermission in the previous month, GfK said. The economic expectations sub-index fell to 6.1 points in April from 11.2 in March, GfK said. Income expectations rose to 58.4 points in April from 55.9 points in March, while the propensity to buy rose to 54.8 points from 50.2 points.

According to the report from Insee, in Q1 2019, GDP in volume terms grew at the same pace as in Q3: +0.3%.

Household consumption expenditures bounced back (+0.4% after +0.0%), while total gross fixed capital formation decelerated slightly (GFCF: +0.3% after +0.4%). Overall, final domestic demand excluding inventory changes accelerated slightly: it contributed 0.3 points to GDP growth, after 0.2 points in the previous quarter.

Imports slowed down in Q1 (+0.9% after +1,2%) and exports halted (+0,1% after +2.2%). All in all, foreign trade balance contributed negatively to GDP growth: −0.3 points, after +0.3 points in the previous quarter. Conversely, changes in inventories contributed positively to GDP growth (+0.3 points after −0.1 points).

EUR/USD

Resistance levels (open interest**, contracts)

$1.1274 (2857)

$1.1261 (1028)

$1.1239 (206)

Price at time of writing this review: $1.1188

Support levels (open interest**, contracts):

$1.1160 (1890)

$1.1140 (3369)

$1.1119 (1035)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date May, 3 is 95185 contracts (according to data from April, 29) with the maximum number of contracts with strike price $1,1350 (6878);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3063 (336)

$1.3027 (1070)

$1.3000 (214)

Price at time of writing this review: $1.2941

Support levels (open interest**, contracts):

$1.2884 (2077)

$1.2843 (1409)

$1.2797 (1754)

Comments:

- Overall open interest on the CALL options with the expiration date May, 3 is 25554 contracts, with the maximum number of contracts with strike price $1,3500 (2424);

- Overall open interest on the PUT options with the expiration date May, 3 is 23395 contracts, with the maximum number of contracts with strike price $1,2750 (2380);

- The ratio of PUT/CALL was 0.92 versus 0.92 from the previous trading day according to data from April, 29

* - 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.