For the first day in three S&P futures have pulled back modestly from record levels as some investors cautioned that gains had gone too far, too fast, European shares are mixed while Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong.
Following yesterday’s main, and largely disappointing events – the unveiling of the new iPhone(s) – European shares have faltered as a global equity rally showed signs of flagging, with Apple suppliers struggling after the new iPhone release disappointed with a later than expected shipping date. Chipmakers supplying to Apple were among the worst performers, with AMS down 3.9 %, while Dialog Semiconductor slipped 1.7 % and STMicro fell 1.1 %.
Furthermore, geopolitical concerns also remain after North Korea said it will accelerate its plans to acquire a nuclear weapon that can strike the U.S. homeland in its first response to fresh United Nations sanctions. Earlier, Treasury Secretary Steven Mnuchin warned the U.S. may impose additional sanctions on China — potentially cutting off access to the American financial system — if it doesn’t follow through on the new UN restrictions.
With all that, Europe’s Stoxx 600 index headed for the first drop in six days after U.S. benchmarks and the MSCI All-Country World Index closed at all-time highs a day earlier. Miners led the decline as the price of industrial metals including copper and nickel retreated.
In FX, the overnight session was dominated by a sharp reversal in the pound; with U.K. wages coming in weaker than expected underscored the dilemma facing Bank of England policy makers meeting on Thursday to review interest rates. Meanwhile, the theme of inflation uptrend is intact across Europe, with CPI prints in Germany and Spain matching estimates; dollar bulls turn cautious, take some money off the table as market attention turns to U.S. CPI data on Thursday, while Canadian dollar advances as WTI crude rises for the third day.
West Texas Intermediate crude extended an advance after the International Energy Agency said global oil demand will climb this year by the most since 2015. Gold climbed 0.1 % to $1,332.60 an ounce. Copper declined 1.6 % to $2.99 a pound, the lowest in more than three weeks.
Looking at the day ahead, in the US, the PPI for August (2.1% YoY for core expected), monthly budget statement and MBA mortgage applications stats are also due. There is also the Crude Oil Inventories post-Harvey as we might see some actual movement in the Oil Market. Onto other events, the EU Commission President Jean-Claude Juncker will deliver the state of the union address in France.
The overnight session was dominated by reversal of fortunes in the pound, with U.K. wages coming in weaker than forecast; still, the theme of inflation uptrend is intact across Europe, with CPI printing in Germany and Spain matching estimates. Dollar bulls turn cautious as they take some money off the table as market attention turns to US CPI data on Thursday, while the Canadian dollar advances as WTI crude rises for the third day.
GBPUSD – Pound reverses gains made during the Asian and Half of the European session as economic data disappointed forming a shooting star candle on the daily chart which could foreshadow a correction.
USDJPY – The Yen is forming an Inside day as the 55-EMA on the Daily chart seems to be holding the pair from any further upside. The moving average is located at the 110.30
EURUSD – The pair records another day of gains as the drop from the highs of 1.2092 seems to be on its way to be regained and maybe more as the positive momentum on the pair does not seem to be abating.
AUDUSD – Covering yesterday’s loss, the pair seems to be on the upward movement for today as it continues to move higher in hopes of targeting the 0.8100 once again.
USDCAD – The 1.2060 remains to be a “floor” for the market has spent the last 5 days trying to break through and failing. This could signal a rapid correction is brewing or investors are loading up for another drop.
Dow Jones – Definitely an inside day on the Future Index as the “underwhelming” news about the newly launched iPhone X, dubbed iPhone Ten, has failed to impress analysts forcing the Dow Jones to pair some the gains.