Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Nikkei Flat; Europe Open Lower

Published 21/02/2018, 07:05
Updated 03/08/2021, 16:15

US stocks finished lower last night after their long weekend as Monday was Presidents Day. The worse-than-expected earnings per share from Wal-Mart (NYSE:WMT) weighed particularly heavy on the Dow Jones. Components of the S&P 500 such as Kraft Heinz (NASDAQ:KHC) and Kroger (NYSE:KR) were dragged lower too. Wal-Mart fell into the old trap of offering generous promotions in order to entice customers, and try and fend off competition from Amazon (NASDAQ:AMZN). Same-store-sales rose at the retailer, but that margins were hit, and that is what did the damage to the share price today. In the UK were have seen stiff competition between supermarkets, and it is the consumers who wins, and not the shareholders.

The nudge higher in the VIX suggested that there was still some fear doing the rounds. The rally in the US dollar wasn’t helping the situation either, and neither was the increase in US government bond yields.

Traders will be keeping an eye on the UK unemployment and wage figures at 9.30am (UK time). The consensus is for unemployment to hold steady at 4.3%, and for average monthly earnings to remain at 2.4% and for 3 month average earnings on an annual basis to remain at 2.5%. The earnings figures will be the ones to watch as job creation in the UK has greatly outpaced wage increases. Average earnings have been slow to pick up, and should we see it tick up it could trigger another leg higher in the pound.

The most recent Bank of England (BoE) update showed us they are little on the hawkish side, and they signalled interest rates could rise sooner that some traders thought. If Britons see a respectable jump in wages, then we are more likely to see a rise in consumer spending. Dealers are preparing themselves for the possibility of a rate hike in May and the average earnings could be the catalyst.

The minutes from Federal Reserve meeting last month will be released at 7pm (UK time). It was the last meeting of the US central bank that had Janet Yellen at the helm. The policy was kept unchanged as expected, but the statement pointed out that there were some signs that costs were creeping up. The minutes will give us a better idea as to what the US central bank are thinking. It is important to remember the impressive US average earnings was a part of the US jobs data, and were released after the Fed meeting so they will not be mentioned.

EUR/USD – has been pushing higher since November and if the positive run continues it could target 1.2600 or 1.2700. Moves lower may find support at 1.2330 or 1.2200.

GBP/USD – is still in the upward trend that it has been in since March, and resistance may be encountered at 1.4400. Pullbacks might find support at 1.3900.

EUR/GBP – has been range bound since December, with 0.8929 being the top end of the range, and with 0.8689 at the bottom of the range. 0.8800 is a region of consolidation any deviation from the area, could see it target either end of the range.

USD/JPY – has been in decline since November, but we have seen a bounce back, and if the upward move continues it could target 108.00 or 109.78. If the wider downward trend continues, it could target 105.53 or 104.00.

FTSE 100 is expected to open 22 points lower at 7224.

DAX is expected to open 75 points lower at 12412.

CAC 40 is expected to open 31 points lower at 5258.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.