Hopes rise for a Greek debt deal – Binary Options Daily Review

Markets Report

Thursday 4th June 2015

Prepared by MarketsWorld Binary Options Analyst

Global Markets

Market Index Closing Level Move on day Intraday Market Range
CAC 5,034.17 + 29.71 4,991.27 – 5,088.14
DAX 11,419.62 + 90.82 11,300.36 – 11,515.21
Dow Jones 18,076.27 + 64.33 18,010.42 – 18,168.09
FTSE 6,950.46 + 22.19 6,901.79 – 6,985.69
IBEX 11,267.60 – 3.80 11,201.10 – 11,361.80


Closing Markets Summary

Dow Jones

Stocks in the US edged higher on Wednesday, as investors digested a series of economic reports. The US labour market performed as expected in May, with America’s private sector generating 201,000 jobs in May, slightly above the 200,000 that was forecast. The US trade deficit fell 19.2% in April after reaching a seven-year high in the previous month to reach -$40.9 billion, down from the prior month’s reading of -$44 billion, The ISM services index declined 2.1% month-on-month to 55.7% in May, falling short of the 57% reading forecast. Meanwhile, the employment index dropped 1.4% from April to 55.3%. The Federal Reserve’s Beige Book, which contains an assessment of economic conditions from the 12 Federal Reserve districts through May 22, reported that economic growth was “modest to moderate” across most regions. In company news, Delta Air Lines gained 0.09%, despite guiding lower for second quarter earnings, as it blamed lower than expected revenue from domestic business customers. Restaurant chain Wendy’s Company gained 3.33% after the company announced a $1.4 billion buyback programme and confirmed it had completed the sale of its bakery operations. Discount voucher company Groupon rose nearly 2.0% despite revealing its chief financial officer was leaving the company and that it added $200m to stock repurchase programme. Women’s accessories designer and producer Vera Bradley dropped 14% after swinging to a first quarter loss and cutting its outlook for the remainder of the year. The Dow Jones closed up 64.33 points at 18,076.27, the Nasdaq closed up 22.71 points at 5,099.23 and the S&P 500 closed up 4.47 points at 2,114.07.

Europe European markets were little changed on Wednesday as concerns on Greece missing its latest debt repayment were offset by better-than-forecast Eurozone data. Greece’s international creditors indicated that they were ready to compromise to avert a debt default, as Athens threatened to miss a loan repayment to the IMF due on Friday. French president Francois Hollande told a conference organised by the Paris-based OECD that Greece was a “few days or hours away from a possible deal” with creditors to unlock further aid. In contrast German finance minister Wolfgang Schaeuble said an initial look at Greece’s reform proposals suggested that a deal will take time. European Central Bank president Mario Draghi said he was unsure how long it would take for a deal but stressed that Greece needs to have a solid agreement with the right set of policies in place. The European Central Bank kept monetary policy unchanged, Draghi said the monetary authority expects the harmonised index of consumer prices to rise 0.3% in 2015, 1.4% in 2016 in and 1.8% in 2017. Compared with the European Central Bank’s estimates in March, the inflation projections have been revised upwards for 2015 from a flat reading and remain unchanged for 2016 and 2017. On economic growth in the Eurozone, the central bank sees real gross domestic product rising 1.5% in 2015, unchanged from March’s projections. The European Central Bank expects GDP to rise 1.9% in 2016 and 2.0% in 2017. In economic data retail sales in the Eurozone rose 0.7% in April compared to a month ago, slightly above the forecasts for a 0.6% increase. The Eurozone services PMI was revised higher to 53.8 in May from an earlier estimate of 53.4. In company news Syngenta and Monsanto were higher amid press reports that Monsanto is quietly working with Syngenta to iron out regulatory concerns that could thwart its proposed takeover of the Swiss company. Spanish travel booking technology Amadeus was lower after German airline Lufthansa said it will levy a €16 surcharge on tickets not booked on their website. Credit Suisse Group AG moved higher as RBC Capital Markets upgraded its rating on the lender to the equivalent of ‘buy’, citing possible strategic changes when former Prudential boss Tidjane Thiam takes over as chief executive next month. On regional markets the CAC closed up 29.71 points at 5,034.17, the DAX closed up 90.82 points at 11,419.62 and the IBEX closed down 3.80 points at 11,267.60.

The FTSE ended the day higher despite the release of some mixed data stateside, as investors became more optimistic on the outlook for a deal between Greece and its creditors. The European Central Bank’s governing council kept its main interest rates unchanged, while reiterating that it would fully carry-out its sovereign bond purchase programme, as planned. The monetary authority also revised its inflation forecast for this year modestly higher to a 0.3% year-on-year rate of change, while maintaining its GDP projections intact. Economic data in the UK showed that UK service sector activity expanded at the slowest rate in five months in May, Markit reported that its seasonally adjusted Markit/CIPS Services PMI declined to 56.5 last month from a reading of 59.5 in April. In company news, Lloyds Banking Group said it was “disappointed” with a High Court ruling blocking its attempt to buy back its high-interest enhanced capital notes the judge ruled that the bank was not entitled to redeem the bonds, which are held by 123,000 investors, early at face value. Wm Morrison was all set to be kicked out of the FTSE, but thanks to strong sales growth data from Kantar Worldwide, which helped the shares to firm on Tuesday, it looks as though it will be able to hold on to its spot in London’s top-flight index. According to the Kantar data, Britain’s fourth-largest supermarket operator, increased its quarterly sales for the first time since December 2013, outperforming its rivals. Following a strong fourth quarter Dixons Carphone said its full-year profits are likely to reach the top end of market forecasts. Group like-for-like revenue in the last 17 weeks of the year to 2 May rose 9%, with further market share gains made across electricals and mobile in the UK & Ireland, the Nordics and Greece. Royal Mail announced that it has appointed Peter Long as non-executive director and chairman designate. Long, who is currently joint chief executive of TUI AG, will replace Donald Brydon, who announced in January that he would step down this year. Broker JP Morgan Cazenove has lowered its estimates and price target on grocery giant Tesco following the latest grocery market share figures from Kantar Worldpanel. Analyst Borja Olcese lowered his target price on the firm’s shares to 175p from 185p previously, while reiterating his recommendation to ‘underweight’. The FTSE ended the session up 22.19 points at 6,950.46.


Economic News Expected Today


Type Period Forecast Previous Importance
Unemployment Claims May 277K 282K High
Continuing Claims May 2222K Medium
Revised nonfarm Productivity Q1 -2.8% q/q -1.9% q/q Medium


Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
No Data


Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
Bank of England Interest Rate Decision June 0.50% 0.50% High
Asset Purchase Facility June £375 billion £375 billion High
MPC Rate Statement June High


Other Global Economic Data Expected

Type Period Forecast Previous Importance
BOJ Governor Haruhiko Kuroda Speaks (Japan) June High
Retail Sales (Australia) April 0.3% m/m 0.3% m/m; 4.5% y/y High
IVEY Purchasing Managers Index (Canada) May 58.2; 55.7 High


Economic News Round Up MarketsWorld Bars
US nonfarm private employment rose in line with forecasts in May, payroll processing firm ADP reported that nonfarm private employment rose by a seasonally adjusted 201,000 last month, just above forecast for an increase of 200,000. The economy created 165,000 jobs in April, whose figure was downwardly revised from a previously reported increase of 169,000. The US trade deficit narrowed in April as exports of services hit a record high and imports fell, the US Commerce Department reported that the US trade gap shrunk to $40.9 billion, down from March’s revised deficit of $50.6 billion. The 26.6% drop in the April trade deficit was the largest decrease since early 2009. The forecast was for the trade deficit falling to $44 billion. Imports fell 3.3 percent to $230.8 billion as West Coast ports, exports increased 1.0 percent to $189.9 billion in April. Service sector activity in the US grew in May but at the slowest pace in more than a year, the Institute of Supply Management reported that its non-manufacturing PMI fell to 55.7 last month, below forecasts for a reading of 57.0.
The European Central Bank held its benchmark interest rate at a record low 0.05%, as policymakers continue to monitor growth prospects and inflationary pressures in the region, the central bank also held its marginal lending at 0.30% and left its deposit facility rate unchanged at -0.20%. Retail sales in the Eurozone rose broadly in line with market expectations in April, Eurostat reported that retail sales increased by a seasonally adjusted 0.7% in April, meeting forecasts. Retail sales fell by 0.6% in March, whose figure was revised from a previously reported drop of 0.8%. Year-over-year, retail sales in the Eurozone increased at an annualized rate of 2.2% in April from a year earlier, above forecasts for a gain of 2.0%. Eurozone service sector activity rose unexpectedly in the last quarter, Markit reported that the Eurozone Services PMI rose to 53.8, from 53.3 in the previous quarter. Eurozone services PMI was forecast to remain unchanged at 53.3 in the last quarter. The Eurozone’s unemployment rate fell to the lowest level since March 2012 in April, Eurostat reported that the Eurozone’s unemployment rate fell to a seasonally adjusted 11.1% in April from 11.2%. The jobless rate was forecast to hold steady at 11.2%. German service sector activity rose last month, Markit reported that German Services PMI rose to 53.0, from 52.9 in the previous month. German Services PMI was forecast to remain unchanged at 52.9 last month.

French service sector activity rose last month, Markit reported that French Services PMI rose to a seasonally adjusted 52.8, from 51.6 in the previous month. French Services PMI was forecast to remain unchanged at 51.6 last month.

Spanish service sector activity fell last month, Markit reported that the Spanish services PMI fell to a seasonally adjusted 58.4, from 60.3 in the preceding month. Spanish services PMI was forecast to fall to 59.3 last month.

UK service sector activity expanded at the slowest rate in five months in May, Markit reported that its seasonally adjusted Markit/CIPS Services PMI declined to 56.5 last month from a reading of 59.5 in April. The index was forecast to fall to 59.2 in May.

The Canadian trade deficit narrowed less than expected in April, Statistics Canada reported that the Canadian trade deficit was CAD$2.97 billion in April, compared to a deficit of CAD$3.85 billion in March, whose figure was revised from a previously reported deficit of CAD$3.02 billion. Forecasts were for a trade deficit of CAD$2.1 billion in April.



Forex Round Up MarketsWorld Bars
The US Dollar turned lower against a basket of other major currencies on Wednesday, after the release of mixed US economic reports and as positive remarks by European Central Bank President Mario Draghi boosted demand for the single currency. The Institute of Supply Management reported that its non-PMI fell to a 13-month low of 55.7 last month, below forecasts for a reading of 57.0 and down from 57.8 in April. Payroll processing firm ADP reported nonfarm private employment rose by 201,000 last month, just above forecasts for an increase of 200,000. The US trade deficit narrowed to $40.88 billion in April from a revised deficit of $50.57 billion in March. Forecasts were for the US trade deficit to narrow to $44.0 billion in April. The EUR/USD gained 0.84% to a two-week high of $1.1246 after European Central Bank President Mario Draghi said the bank’s asset purchase programs will continue until the end of September 2016 and “until the path of inflation is consistent with our aim of achieving inflation rates below, but close to, 2%”.Sterling came under pressure after the Markit services PMI slowed to 56.5 last month from 59.5 in April, the lowest level since December. The GBP/USD was down 0.09% at $1.5329. The Yen and the Swiss franc were lower with the USD/JPY down 0.09% to ¥124.24, and the USD/CHF was up 0.20% to Fr0.9348.The Australian dollar was stronger with the AUD/USD up 0.43% to $0.7805, while the NZD/USD edged down 0.10% to $0.7175. The USD/CAD rose 0.30% to trade at CAD$1.2439 after data showed that Canada’s trade deficit narrowed less than expected to CAD$2.97 billion in April from a revised deficit of CAD$3.85 billion the previous month. The US Dollar Index was down 0.55% at 95.47.


Commodities News
Commodity Round Up MarketsWorld Bars
Gold prices ended moderately lower and hit a four-week low on Wednesday despite a lower US Dollar Index. August gold was down $10.30 at $1,184.10 per ounce. July silver was last down $0.329 at $16.47 per ounce.Oil prices settled back below $60 per barrel on Wednesday as traders worry that the OPEC meeting this week the decision will be taken to leave its production targets unchanged in the face of ample crude supplies from the US and concerns Iran is about to boost production. Data from a US government report, meanwhile, showed a fifth straight weekly decrease in crude supplies, but production levels failed to fall despite weekly declines in the number of US rigs actively drilling for oil. July West Texas Intermediate crude fell $1.62 to settle at $59.64 per barrel. Brent crude for July delivery lost $1.69 to $63.80 per barrel.


The MarketsWorld Overview MarketsWorld Bars
Members of the Bank of England policy committee chose to maintain interest rates at a record low of 0.50% in a policy which was introduced more than six years ago. The Bank of England’s quantitative easing remained at £375 billion. The Bank of England is expected to raise inflation towards its target level of 2%, however, the rate stood at 0% in both February and March. Officials stated that inflation could also turn negative at some point in the coming months because of the fall in oil prices. The Bank expects rates to remain on hold until at least the first quarter of next year. Forecasts are for the Bank of England to keep its monetary policy unchanged. For Binary Options Trading, monitor the Pound.




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