Wall St. looks to end good week with a flourish; Lira weakens on US sanctions fears

Summary:

• US stocks remain near record highs

• Goldman Sachs attempts to breakout 

• Daimler issued another profit warning 

• Turkish Lira weakens on possible US sanctions

• Trump takes aim at Crypto

US stock markets have started higher at the beginning of the final cash session of the week with the 3 large cap indices and the small caps all trading in the green. It’s been a good week on the whole for US equities with new highs seen across the major large cap benchmarks largely thanks to Fed chair Powell reaffirming the central bank’s intention to cut rates at month end. Looking at data from outside the US there has been some concerning figures from Asia with Singaporean GDP dropping to its lowest level in a decade and the most recent Chinese trade figures clearly reflecting the negative impact that tariffs are having.

Due to the nature of their reporting, big banks are typically amongst the first to report on Wall Street and as such they often gather a fair chunk of attention. Citi will set the ball rolling on Monday before 3 more banks report on Tuesday with Goldman Sachs of particular interest. Goldman made an attempted breakout during yesterday’s session with the stock rising up to its highest level of the year. With expectations for earnings still fairly pessimistic on the street, there’s a sense that there could well be several beats and it appears that investors are potentially looking to front run these releases and buy in advance. Goldman Sachs shares have breached the 61.8% fib at 209 and with the EMAs in a positive orientation there’s at least a couple of factors support a breakout higher. The 78.6% can be found around 225. 

 In terms of equities it’s been a pretty underwhelming week on the continent overall, with the main stock markets not joining in the rally enjoyed by their peers across the Atlantic where Wall Street has reached new all-time highs. Daimler (DAI.DE) is sinking today after the German carmaker issued a fourth profit warning in slightly over a year. The company said that full-year earnings may come in lower than 2018’s results. Daimler blamed a recall for faulty airbags and building reserves for diesel-related cases for weaker performance. In the previous profit warning in June, Daimler hinted that this year’s earnings may match those from 2018. While outlook for other carmakers is deteriorating as well, Daimler is the only one to issue profit warnings so often.

Turkish lira is down by 0.50% against the US dollar today, during a rather quiet session on the currency market. Currency plunge is associated with information that first parts of Russian S-400 missile system to be delivered to Ankara today. The US repeatedly threatened to impose sanctions in case of purchase of the Russian system. Economic sanctions may be very powerful, because trade ties are quite significant, looking from the perspective of Turkey.

Coming not long after Fed chair Powell and BoE Governor Carney issued notes of caution on cryptocurrencies and Facebook’s plans to launch its own called Libra the US president has launched a stinging attack on the asset class. Trump tweeted that he was “not a fan” of cryptocurrencies, calling them “not money” and also stating that if Facebook wants to become a bank by issuing its own currency, then it must seek the appropriate certification. Given his propensity to recklessly take to social media and fire off his views on such a wide range of topics, it’s surprising that given its popular nature it has taken Trump this long to opine on cryptos. There was notable wave of selling seen in the markets after Powell’s comments on Wednesday, but the reaction to Trump’s remarks has been far more sanguine with cryptocurrencies on the whole actually trading higher since the series of tweets. Despite Trump’s broadside, cryptocurrencies are actually rising on the day with Stellar the biggest gainer and higher by over 10%.