Uber and Dropbox Lower, Mixed Data from UK
The US dollar traded almost unchanged on Friday with the US Dollar Index (USDX), which indicates the strength of the US currency against six other major currencies edging only slightly lower. The pound sterling (GBP) was however again trading lower after stabilizing at the start of the previous week, reaching now below the level of 1.21 against the dollar. While the trade balance deficit at GBP 7 billion was much less than expected, the pace of the industrial production, declining by -0.6% compared to the previous year vs. -0.3% expected and the gross domestic product falling by 0.2% in the second quarter against expectations of a flat growth could have further scared investors already anxious about the implications of a possible “no-deal” Brexit.
Despite concerns about the ongoing trade conflict between the US and China but also other parties, where the US still does not rule out tariffs against the European car sector, stocks pushed higher across the markets at the start of the European trading session.
Bitcoin continued trading within a rather restrained range below $12,000, while some alt-coins, especially Bitcoin Cash saw a sizable upside on Sunday afternoon.
For Monday afternoon the release of the US Treasury budget level is scheduled. Later in the Asian-Pacific trading session Japanese data such as the capital goods price index and the tertiary index are expected.
The EUR/USD pair remained relatively stable in the vicinity of the 1.12 mark despite disappointing fundament data from Europe, where the German trade balance surplus was reported at €18.1 billion around €0.6 billion lower than in the previous month and the French industrial production further declined by 2.3% in June vs. expectations of a decline by 1.6%. Italian consumer price index (CPI) data showed also very sluggish inflation at now only 0.4% per year vs. 0.5% expected.
While almost no relevant fundamental data releases are scheduled for Monday, trades can look forward to plenty of important CPI data coming in on Tuesday from Germany and then the United States. From Germany also the monthly ZEW survey results will be released on that day.
While gold prices consolidated around the $1,500 per troy ounce, which is a six-year high, bullish bets on gold futures in the US noticeably increased. In the weekly statistic from the Commodity Futures Trading Commission (CFTC) - the Commitments of Traders (COT) report, 292.5 thousand net long contracts speculative positions in gold futures were reported, which is the highest number in almost three years.
Gold prices could be especially driven by developments in the currency markets and the impact of central bank policies, as China allowed the yuan to devaluate beyond the psychologically important level of 7 yuan per US dollar, while central banks around the world, such as in New Zealand, India or Thailand announced rate cuts which might have been more surprising than usual for such central bank.
While oil prices pushed lower in the first half of the previous week, given the further escalation in the trade conflict between the US and China and overall fear of a global economic slowdown, which could also impact the demand for crude oil, prices rebounded on Friday as reports indicated that Saudi Arabia would not take a passive stance should oil prices crash. Also on Friday the US Baker Hughes Oil Rig Count indicated a further decline in drilling activity in the US as the number of operating oil rigs fell to the lowest level since February 2018 to 764, which is a decline of 6 oil rigs compared to the previous week.
On Tuesday the American Petroleum Institute (API) publishes its weekly statistics on crude oil stockpiles, followed by data from the Energy Information Administration (EIA) on Wednesday, which will report also the weekly change in crude oil but also gasoline and distillate inventories.
After three days of recovering valuations, major stock indices closed again lower on Friday, with especially stocks in the chip sector (US Semiconductors ETF -1.70%) closing significantly lower. Other sectors like the energy (US Energy ETF -1.16%) was also affected by the broader sentiment despite a sizable recovery in oil prices.
While Uber (-7.08%) shares were lower following the quarterly results showing net losses above $5 billion, when taking into perspective this retracement was merely a fall to the level where the stock was at the start of the week. However the sizable loss and the high rate the company is burning through its cash reserves, could have been the reason for a report that the company stopped hiring new technical and engineering staff.
One of the biggest losers of the day was however Dropbox (-12.51%) with shares plunging to an all-time low. Investors might have been disappointed with low average revenue per user numbers reported by the cloud storage company.
More quarterly earnings disclosures can be expected this week, when companies like Tilray (Tuesday), Alibaba (Thursday) and Walmart (Thursday) will publish their numbers.
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