U.S. equities closed yesterday’s session mixed after choppy trading. Apple underperformed the rest of the market as the tech giant posted earnings that disappointed. The Dow ended the session in green territory, putting an end to its three-day decline. The U.S. benchmark index advanced 58.73 points, or 0.47%, to end at 12,676.05, pulled higher by Boeing and AT&T. The S&P 500 slipped 0.42 points, or 0.03%, to end at 1,337.89. The tech-heavy NASDAQ dipped 8.75 points, or 0.31%, to finish the session at 2,854.24. The CBOE Volatility Index, considered by many as the best indicator of fear in the market, closed below 20. Among the key S&P sectors, telecoms closed in green territory, while techs weighed. Apple bounced back from the lows for the day, but still erased more than 3% after the tech giant missed quarterly results by a significant amount, while, at the same time, the company handed guidance for the current quarter that disappointed investors. To make the matters worse, at least six brokerages decreased their price targets for the company. On the economic front, new home sales declined 8.4% in June to a seasonally adjusted 350,000-unit annual rate. The percent drop was the highest in more than a year. Weekly mortgage applications rose last week as record-low interest rates sparked a new wave of refinancing. Treasuries traded flat after the government auctioned $35 billion worth of five-year notes at a relatively high yield of 0.584% and bid-to-cover of 2.71.
Asian stocks edged higher on Thursday, rebounding from the lows they posted in the last couple of trading days as investors grew increasingly confident that we will see more stimulus measures coming from the U.S. and that Europe will undertake policy measures, which will be aimed at handling the debt problems in the region. The FTSE CNBC Asia 100 Index, which tracks the performance of markets across Asia, advanced 0.4%. Japan’s Nikkei share average rebounded from its lowest level in seven weeks as U.S. markets climbed, although concerns about the strength of the global economy continue to mount. The Japanese benchmark added 0.3% to 8,389.38, after trading very close to the lows we touched on June 4th. The broader Topix gained 0.4% to 709.47 after the index declined in 13 of its last 14. South Korean stocks rallied in the early hours of the day, recovering from the seven-month low they marked in the previous session, but advances will probably be limited as debt crisis in the Eurozone continues to weigh on the markets and as global growth remains slow. On the economic front, South Korea’s gross domestic product rose 0.4% in the April-June, which was just below the number market participants were expecting. The Korea Composite Stock Price Index (KOSPI) added 0.3% to 1,775.11 points. Australian equities advanced 0.3% on Thursday, propelled higher by advances in top gold producer Newcrest Mining and Qantas Airways, and by modest gains in banks. The benchmark S&P/ASX 200 index rose 13 points at 4,137.3, after slipping 0.2% on Wednesday. Hong Kong stocks dropped, with strong demand for financials partially offsetting weakness in Sands China, which dropped after its parent company Las Vegas Sands announced worse-than-expected second-quarter results. New Zealand’s benchmark NZX 50 index climbed 0.8% to 3,485.2 after the central bank decided to retain its official cash rate at its current level of 2.50% and gave no indication that it intends to lower the rate any time soon. The Hang Seng Index slipped 0.05% to 18,887.5. The China Enterprises Index of the largest Chinese companies in Hong Kong edged 0.01% higher. In the mainland, the Shanghai Composite added 0.2% to 2,140.5. In Southeast Asia, the Singapore’s Straits Times Index rallied 0.6%, while Malaysia’s benchmark KL Composite lost 0.4%.
European equities moved into negative territory on Thursday after choppy first minutes, as some market participants sold stocks on the disappointing corporate earnings and others bought stocks on hopes for further U.S. stimulus measures. The FTSEurofirst 300 traded 0.1% lower, at 1,017.14, with energy giants Royal Dutch Shell and BG Group declining 2.3% and 1.9% respectively, after missing earnings projections. The Stoxx Europe 600 index also inched slightly lower to trade at 250.27. Unilever NV was one of the top performers, gaining 3.6% after posting a decrease in profits, but an increase in sales. The FTSE 100 index was almost unchanged at 5,494.67. The German DAX 30 index slipped 0.5% to 6,375.10, pulled lower by the 3.4% drop in the heavyweight Siemens AG. The company posted disappointing results and issued a negative outlook for the following quarter. The French CAC 40 index was almost unchanged at 3,082.17. The Spain IBEX 35 index dipped 0.3% to 5,985.70, pulled lower by a 4.6% drop for Telefonica SA as the company suspended its dividend in the previous day and announced share buybacks on the worse-than-expected earnings released ahead of schedule. Banco Santander SA gained 1%. The bank announced its net profit dropped 93% as it took a large provision to protect against possible losses on Spanish real estate.
As we mentioned above the Dow moved higher yesterday, starting at the lows for the session and finishing at 12,676.05. The index traded as high as 12,731.48 at one point during the day, but the benchmark met with some serious resistance at the 200-period moving average and as a result it pared some of its gains towards the end of the session. Today we have a lot of economic data hitting the wires, which are likely to have some effect on U.S. stocks. At the same time earnings for companies such as Facebook, ExxonMobil, 3M, Amgen, Dow Chemicals will be released. Technically speaking, short-term support in the Dow is provided by the 12,600 level, while resistance stands at the 200-period moving average. Oscillators are in mid-range with the relative strength index at 44 and the stochastic at 33. The MACD has just pushed below the key 0 level, but it is not issuing any buy signals yet.
Gold started yesterday’s session slightly above its 25-period moving average and moved higher all day long. The bullion pushed both beyond its 50-period and its 200-period moving averages to trade at prices above 1600 for the first time since early July. The precious metal hit highs of 1610.35, but closed slightly off of them – at 1603.22. Today we are having a choppy session so far as the bulls are trying to hold to yesterday’s gains. We tried pushing above yesterday’s highs and failed, but we are still trading in positive territory with gold currently changing hands at 1604.44 dollars per troy ounce. Support in the bullion is provided by the 200-period moving average around 1591.60, while resistance, on the other hand, stands at the highs of early July, around 1620. Oscillators are all trending higher with the relative strength index very close to the upper band of its range and the stochastic already in overbought territory, standing at 87. The MACD pushed above the key 0 level, but still remains close to it. The 25-perios and the 50-period moving averages have just entered in a golden cross formation, which technicians believe to be a trend reversal signal.
The currency pair resumed the rangy movement it exhibited in the middle of the month. The bears continue to be strong, but the bulls are also holding their grounds, trying desperately to hold the USD/JPY above the key 78.00 level. Yesterday we started slightly above 78.00, pushed to highs of 78.28 for the session and then retracted to the same levels we started at. Today we are having a choppy session, which does not differ significantly from the one we had yesterday. For a brief moment we were trading close to the 25-period moving average, but, after we failed to penetrate above it, we moved lower once again. Support in the USD/JPY is provided by the key 78.00 level, while resistance, on the other hand, stands at the 25-period moving average, around 78.23. Oscillators are in mid-range with the relative strength index at 39 and the stochastic at 34. The MACD is trending slightly higher, but still remains below the key 0 level.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.