Wed 30 Aug 2017


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In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks rose on Wednesday after stronger-than-expected U.S. economic growth outweighed concerns about escalating tensions between the United States and North Korea and uncertainty in the aftermath of Hurricane Harvey.

Gross domestic product was revised higher to show a 3.0% annual growth rate in the second quarter, due partly to robust consumer spending as well as strong business investment. Adding to the positive sentiment, U.S. private-sector employers beat economists’ expectations as they hired 237,000 workers in Aug 2017, marking the biggest monthly increase in 5 months.

  • the S&P 500 gained 11.29 points, or 0.46%, to 2,457.59
  • The Dow Jones Industrial Average rose 27.06 points, or 0.12%, to end at 21,892.43
  • The Nasdaq Composite added 66.42 points, or 1.05%, to 6,368.31. The Nasdaq closed within 1 percent of its record closing high of 6,422.75 set 26 Jul 2017.
  • Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored advancers.
  • Some 376 U.S.-traded issues posted new 52-week highs and there were 245 new lows. Highs were well below their average over the past year while lows were slightly above theirs.
  • About 5.12 billion shares changed hands in U.S. exchanges, below the 5.84 billion daily average over the last 20 sessions.

“I have doubts how sustainable the macro economy is, but perceived fundamentals are still okay. GDP confirmed that,” said John Velis, macro strategist at State Street Global Markets in Boston. “You can come up with plenty excuses to remain (invested) in the market.”

President Donald Trump said he wants to see the U.S. corporate tax rate drop to 15 percent but the White House offered no new tax plan, leaving the proposal in the hands of Congress. Tax reform was one of Trump’s main talking points during his campaign and expectations for its passage have been a main driver of stock gains since he won the presidency.

Tensions between the United States and North Korea seemed to escalate after Trump dismissed any diplomatic negotiations via a tweet, saying “talking is not the answer,” a day after Pyongyang fired a ballistic missile that flew over Japan.

However, Defense Secretary Jim Mattis later said the United States still has diplomatic options.Reuters

Market indices

market_20170830

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,457.59 +0.46% 2,238.83 +9.77%
DJIA INDU 21,892.43 +0.12% 19,762.60 +10.77%
NASDAQ IXIC 6,368.31 +1.05% 5,383.12 +18.3%

The portfolio today

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

:-) Our USD-denominated index closed at a record high of 2.873, up 0.53% on yesterday’s record of 2.858.

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.872 +0.52% 2.105 +36.47%
Valuation Rate USD/AUD 0.79509 -0.57% 0.72663 +9.42%
AUD-denominated Index AUD 3.616 +1.09% 2.895 +24.89%

Portfolio stock prices

:-) Apple closed at a record high of $163.35, up 0.27% on yesterday’s record of $162.91.
:-) PayPal closed at a record high of $61.77, up 1.25% on yesterday’s record of $61.01.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $943.63 +0.84% $792.45 +19.07%
Alphabet C GOOG $929.57 +0.90% $771.82 +20.43%
Apple AAPL $163.35 +0.27% $115.82 +41.03%
Amazon AMZN $967.59 +1.42% $749.87 +29.03%
Ebay EBAY $35.69 +1.39% $29.69 +20.20%
Facebook FB $169.92 +1.11% $115.05 +47.69%
PayPal PYPL $61.77 +1.25% $39.47 +56.49%
Twitter TWTR $16.93 +0.00% $16.30 +3.86%
Visa V $103.73 -0.04% $78.02 +32.95%
VMware VMW $106.96 +1.93% $78.73 +35.85%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index rose 0.4%, recovering from the lowest in more than 2 years.
The EUR dropped 0.7% to USD 1.1886, after touching the strongest in almost 3 years on Tuesday.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

Prices are as at 15:47 EDT

  • NYMEX West Texas Intermediate (WTI): $45.99/barrel -0.97% Chart
  • ICE (London) Brent North Sea Crude: $50.81/barrel -2.29% Chart
  • NYMEX Natural gas futures: $2.94/MMBTU -1.31% Chart

flag_australia AU: Building Approvals, Australia, July 2017

Press Release Extract [ser_abs1]

au_buildingapprovals_20170830

Total Dwelling Units

  • The trend estimate for total dwellings approved rose 0.7% in July and has risen for three months.
  • The seasonally adjusted estimate for total dwellings approved fell 1.7% in July following a rise of 11.7% in the previous month.

Private Sector Houses

  • The trend estimate for private sector houses approved rose 1.0% in July and has risen for five months.
  • The seasonally adjusted estimate for private sector houses was flat in July after rising for three months.

Private Sector Dwellings Excluding Houses

  • The trend estimate for private sector dwellings excluding houses rose 0.1% in July after falling for four months.
  • The seasonally adjusted estimate for private sector dwellings excluding houses fell 6.7% in July following a rise of 21.3% in the previous month.

Value of Building Approved

  • The trend estimate of the value of total building approved rose 1.3% in July and has risen for six months. The value of residential building was flat. The value of non-residential building rose 3.1% and has risen for six months.
  • The seasonally adjusted estimate of the value of total building approved fell 0.4% in July after rising for three months. The value of residential building fell 2.2% following a rise of 5.1% in the previous month. The value of non-residential building rose 2.4% and has risen for four months.

Australian Bureau of Statistics, “8731.0 Building Approvals, Australia, July 2017“, 30 Aug 2017 More

flag_australia Construction Work Done, Preliminary, Jun 2017

Press Release Extract [ser_abs2]

au_construction_20170830

VALUE OF WORK DONE, CHAIN VOLUME MEASURES

Total Construction

  • The trend estimate for total construction work done rose 0.6% in the June quarter 2017.
  • The seasonally adjusted estimate for total construction work done rose 9.3% to $51,669.7m in the June quarter.

Building Work Done

  • The trend estimate for total building work done rose 0.5% in the June quarter.
  • The trend estimate for non-residential building work rose 3.0% and residential building work fell 0.9%.
  • The seasonally adjusted estimate of total building work done rose 0.1% to $26,996.9m in the June quarter.

Engineering Work Done

  • The trend estimate for engineering work done rose 0.7% in the June quarter.
  • The seasonally adjusted estimate for engineering work done rose 21.5% to $24,672.8m in the June quarter.

Australian Bureau of Statistics, “8755.0 Construction Work Done, Australia, Preliminary, Jun 2017.“, 30 Aug 2017 More

flag_europe EU: Consumer Confidence Indicator. Aug 2017

Press Release Extract [ser_3]

In August 2017, the DG ECFIN flash estimate of the consumer confidence indicator remained broadly flat in the euro area (+0.2 points to -1.5) and unchanged in the EU (at -2.3) compared to July.

eu_cci_20170830

European Commission DG ECFIN, “Economic Sentiment Indicator & Business Climate Indicator. Aug 2017“, 30 Aug 2017 More

flag_europe EU: Economic Sentiment Indicator. Aug 2017

Press Release Extract [ser_2]

The Economic Sentiment Indicator (ESI) for the euro area rose again in August, increasing slightly by 0.6 points to 111.9, its highest level in more than 10 years. The indicator for the EU remained broadly stable (-0.3 points to 111.9)1, just below its 10-year high of July.

eu_esi_20170830

Euro area developments

The increase of the ESI in the euro area resulted from improved confidence in industry and services, partly offset by marked decreases registered in the retail trade and construction sectors, while confidence among consumers remained broadly unchanged. The ESI increased in three of the five largest euro-area economies, namely in Italy (+3.6), France (+1.7) and Spain (+1.4), while it eased in Germany (-0.6) and the Netherlands (-0.9).

The increase in industry confidence (+0.6) was triggered by a marked increase in managers’ production expectations and a slight improvement in their assessment of the stocks of finished products. By contrast, managers’ appraisal of the current level of overall order books worsened slightly. Of the questions not included in the indicator, managers’ assessments of past production improved, while their appraisal of export order books worsened. Higher services confidence (+0.7) resulted from managers’ more positive assessment of the past business situation and higher demand expectations, while their assessment of past demand remained virtually unchanged. Consumer confidence remained broadly stable (+0.2), reflecting households’ more optimistic views on their future financial situation and savings expectations, which were largely offset by more pessimistic assessments of the future general economic situation and future unemployment. Retail trade confidence plunged (-2.3) due to managers’ more negative views on all three components of the indicator (i.e. the assessments of the present and expected business situation and of the adequacy of the volume of stocks). Also the construction confidence indicator decreased distinctly (-1.5), due to markedly lower employment expectations and worsened assessments of the level of order books. Finally, the sharp rise (+8.5) in financial services confidence (not included in the ESI) owes to strongly improved appraisals of all three components (i.e. past business situation and past and expected demand).

Employment plans saw upward revisions in industry, while they shrank in services and construction and remained broadly unchanged in retail trade. Selling price expectations increased in industry, while they remained broadly stable in services and decreased slightly in retail trade and strongly in construction. Consumers’ price expectations remained virtually unchanged.

EU developments

The slight downward correction of the ESI in the EU (-0.3) was mainly due to worsening sentiment in the largest non-euro area EU economy, the UK (-3.6); sentiment in Poland remained broadly unchanged (-0.2). EU developments at sectoral levels were broadly in line with those for the euro area, the main difference being that industry confidence remained broadly stable rather than improving as in the euro area.

Managers’ employment expectations were broadly in line with euro area developments in industry (up) and construction (markedly down), while, contrary to the euro area, employment was expected to remain stable in services and shrink strongly in retail trade. Price expectations were up both in industry and services.

European Commission DG ECFIN, “Economic Sentiment Indicator. Aug 2017“, 30 Aug 2017 More

flag_europe EU: Business Climate Indicator. Aug 2017

Press Release Extract [ser_4]

eu_bci_20170830

In August 2017, the Business Climate Indicator (BCI) for the euro area increased slightly (+0.05 points to +1.09). Managers’ production expectations increased markedly. To a lesser extent, also their appraisals of the stocks of finished products and past production improved. By contrast, managers’ views on overall order books and, in particular, export order books deteriorated.

European Commission DG ECFIN, “Business Climate Indicator. Aug 2017“, 30 Aug 2017 More

flag_usa US: ADP National Employment Report. Aug 2017

Press Release Extract: ADP

Private sector employment increased by 237,000 jobs from July to August according to the August ADP National Employment Report®.

us_adp_20170830

“In August, the goods-producing sector saw the best performance in months with solid increases in both construction and manufacturing,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Additionally, the trade industry pulled ahead to lead job gains across all industries, adding the most jobs it has seen since the end of 2016. This could be an industry to watch as consumer spending and wage growth improves.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market continues to power forward. Job creation is strong across nearly all industries, company sizes. Mounting labor shortages are set to get much worse. The initial BLS employment estimate is often very weak in August due to measurement problems, and is subsequently revised higher. The ADP number is not impacted by those problems.”

ADP Research Institute, “ADP National Employment Report: Private Sector Employment Increased by 237,000 Jobs in August“, 30 Aug 2017 (08:15) More

flag_usa US: GDP and Corporate Profits, Q2/2017

Press Release Extract [ser_bea]

Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2017, according to the “second” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the second quarter, the general picture of economic growth remains the same; increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated. These increases were partly offset by a larger decrease in state and local government spending.

us_gdp_20170830

Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent (revised) in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the second quarter, compared with an increase of 2.0 percent in the first quarter.

The increase in real GDP in the second quarter reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory investment and federal government spending and an acceleration in PCE that were partly offset by downturns in residential fixed investment and state and local government spending and a deceleration in exports.

Current-dollar GDP increased 4.0 percent, or $189.0 billion, in the second quarter to a level of $19,246.7 billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion.

The price index for gross domestic purchases increased 0.8 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter. The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent.

Corporate Profits

Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $26.8 billion in the second quarter, in contrast to a decrease of $46.2 billion in the first quarter.

Profits of domestic financial corporations decreased $29.4 billion in the second quarter, compared with a decrease of $40.7 billion in the first quarter. Profits of domestic nonfinancial corporations increased $64.8 billion, compared with an increase of $3.8 billion. The rest-of-the-world component of profits decreased $8.6 billion, compared with a decrease of $9.3 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the second quarter, receipts increased $8.5 billion, and payments increased $17.1 billion.

Bureau of Economic Analysis, “National Income and Product Accounts – Gross Domestic Product: Second Quarter 2017 (Second Estimate) – Corporate Profits: Second Quarter 2017 (Preliminary Estimate)“, 30 Aug 2017 (08:30) More

flag_japan Japan update

Currency: USD/JPY

JPY movements
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: Nikkei 225

N225 movements
^ Nikkei N225 movements over the past week Chart: Google Finance

flag_china China update

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: CSI300

CSI300 movements
^ Shanghai CSI300 movements over the past week Chart: Google Finance