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Market Outlook: German factories take a hit

Biggest fall in orders since 2009
July 5, 2019

May factory orders data published this morning in Germany were far worse than expected and showed the biggest fall since 2009. Month-on-month they fell 2.2 per cent versus the 0.2 per cent decline analysts had pencilled in. Over the last 12 months they have fallen by 8.6 per cent which compares to a 15.9 per cent drop in 1993 and the record low 28.2 per cent decline in 2009. Later today the United States publishes June employment data where an increase of 160 thousand jobs is the consensus expectation.

Southern California was hit at 17:30 GMT yesterday with an earthquake measuring 6.4 on the Richter scale, the most powerful one in 25 years. The epicentre was on the edge of Death Valley National Park and the city of Ridgecrest suffered the most damage; the mayor declared a state of emergency. They were dealing with many, but minor, injuries and the hospital was evacuated because the building was damaged. Multiple fires were triggered and gas leaks appeared.

DAX 30

Still overbought and no follow-through to Wednesday’s rally.

 

SHORT TERM TRADER: Square.

 

POSITION TAKER:  Square.

FTSE 100

Still overbought as it stops suddenly. Following Tuesday’s very disappointing construction survey data (43.1 and the lowest on record in this survey’s short history) it’s not surprising but sad to hear that Britain’s oldest building company has gone into liquidation. City AM reports that Kent-based R Durtnell and Sons, established in 1591 and run by 13 generations of the family, specialised in heritage restoration work.

 

SHORT TERM TRADER:   Square.

 

POSITION TAKER:  Square.

S&P 500

No trading yesterday as it was a US public holiday.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Nothing happening here, as is the case with most currencies against the US dollar.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Drifting lower as it gives up half of June’s gains. Worth noting that Danish sovereign bills, notes and bonds all yield less than zero, according to Reuters.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

GOLD

Holding quite comfortably above the psychological 1400 despite bullish momentum slumping. Keep an eye on the fact that Bloomberg is reporting that ‘gold heads for the longest stretch of gains in 8 years’.

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Short at 1404; stop above 1440. Target 1320.

Nicole Elliott is a long-standing member and Fellow of the Society of Technical Analysts and has taken over the IC’s trading coverage.  She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.