Market Talk- August 2, 2017

Asia found renewed support from the surprise Apple result with a beat of both numbers and units. A worth note here was the size of options traded upon the results – looks like market-makers were running short into the release! This released just after the US close yesterday but is a great way to start August, a traditionally poor month. All Asian markets loved the news, moving into positive territory from the opening. However, it wasn’t too long before the August doldrums’ set in again and we started to see selling pressures especially affecting Shanghai and the Australian indices. The Nikkei did manage to add to recent gains as it has closed above the psychological 20k level, adding +0.5% today. The currency continues to play mid 110 even which is having an effect on exporters but is within manageable levels for the moment. Sensex closed down -0.3% on the day.

Europe has had a difficult time following result releases from large mining, industrials (Glencore -1.2%, ThyssenKrupp -3.5%) and financials. The energy sector has not been a great performer recently and so played heavier than you would have guessed but it was the financials that dominated most of the talk today. Standard Charter reported early and the results were poor on many measurers as the stock closed down 6% on the day. In the CAC (-0.4%) it was Society General that lost -4% that dominated market talk, after profits dropped almost 30% the past quarter. Deutsche Bank lost -1.1% and Commerzbank -1.6% both pushed the DAX to close down -0.6% and Banco Santander -0.8% pressured IBEX to close -0.7%.  The currency benefited as stocks lost with the Euro (last +0.6% on the day) up around 2yr highs. This move has helped GBP up +0.3% on the day at 1.323 last seen. Later in the week we will hear from Bank of England but still many see Fridays NFP ‘s in the US as the key focal point for the week; with an expectation of headline number around 200k.

US indices opened well having seen the Apple result late Tuesday evening. The DOW made record news finally breaching the 22k level but looked around and was the lone runner. The broader S+P and NASDAQ failed to follow the momentum and by lunchtime saw themselves down around -0.35%. Afternoon trading saw the DOW recover most of the mornings retreat, recovering the 22k mark and moving ahead. This time we saw the NASDAQ and S+P moving with the DOW managing to close positive on the day. Apple closed the day +5.5% and up 36% YTD. Interesting that the DOW has gained 250 points in the past four days whilst the S+P lost two points. Also of interest we saw the DOW Transport index bounce once again off of the 200 day MA (moving average); YTD the index is up around 1%. Late trade Tesla results beat expectation and sees the stock trading +3%.

2’s closed 1.36% (+2bp), 10’s 2.27% (+2bp), 30’s 2.86% (u/c), Bunds 0.49% (u/c) closing the US/Germany spread at +178bp (+2bp). France 0.74% (u/c), Italy 2% (u/c), Greece 5.35% (u/c), Turkey 10.31% (+2bp), Portugal 2.78% (+2bp) and Gilts 1.23% (+2bp)