Financial market research and analysis

Nestlé didn’t wait long time before reacting to Daniel Loeb’s activist call. The world’s food giant said it plans to buy back 21 billon dollar worth of shares to foster its stock price.

The financial environment in Switzerland is particularly attractive for borrowing debt to boost the share buybacks, as the Swiss National Bank keeps its Libor rate target at -0.75%.

The changes will not stop here. Nestlé is also seeking interesting acquisition opportunities in the domain of its well-known businesses such as coffee, pet care and bottled water.

We remind that Nestle is also growing in the field of wellness, healthy alimentation, and medical-nutrition, as part of its strategic bet for the future of the alimentation business.

According to the most recent Bloomberg survey. 43.8% of investors are in favour of long Nestlé stocks, 43.8% remain on hold with twelve-month target of 85.13 franc.

Nestlé’s share price resumed its rise in Zurich to new record high levels, 85.70 franc at the time of writing.


All FTSE sectors opened in the red, pound hit 1.2860

The Bank of England (BoE) Governor Mark Carney convinced buyers to return to the pound as he announced macro-prudential measures aiming to bring the UK's inflation down to the 2% policy target. In this regard, the BoE will increase capital requirements for the UK banks and maintain the consumer credit growth under control. The macro-prudential measures should help the BoE taking control over the UK’s inflation and keeping the interest rates low through an eventually rough Brexit period.

Cable cleared the 1.2824 resistance and advanced to 1.2860.

Stronger pound weighed on the FTSE stocks. The FTSE 100 eased below the 7400p in London. The appreciation in the pound and softer energy prices could encourage a further pullback to 7370p (100-day moving average) before 7345p (minor 23.6 retracement on Trump-reflation rally).


Oil under pressure as API data shows rising stockpiles

The WTI crude is offered pre-$44.41 (minor 23.6% retrace on May – June decline) amid the API report showed that the US crude oil inventories rose by 851000 barrels last week. The more official EIA report is due today; analysts expect 2.1 million barrel contraction in the US inventories last week. A slower contraction, or an unexpected rise in stockpiles could enhance short positions and encourage a pullback to $42.00/ barrel.


Traders sell USD and yen, buy EUR and antipodeans

The US dollar is offered across the board as the FOMC Chair Janet Yellen hinted at a ‘very gradual and predictable shrinkage’ in the Fed’s balance sheet. She also stated that there are ‘number of reasons to believe that the interest rates will remain low’ as the Fed normalizes its policy. The US 10-year yields advance to 2.20%, the yield curved steepened slightly. The US stock indices traded lower. The Dow Jones and the S&P500 closed 0.46% and 0.81% lower respectively, NASDAQ slid by 1.61% on decent sell-off in the US tech stocks.

The EURUSD cleared 1.13-offers and extended gains to 1.1379 in Frankfurt. The European Central Bank (ECB) President Mario Draghi’s speech in Portugal prepared a good basis for the positive breakout, yet the actual trigger has been the broad sell-off in the US dollar following the Federal Reserve (Fed) Chair Janet Yellen’s speech. Traders’ shift their mid-term target to 1.15 mark. The positive trend should see support at 1.1165 (minor 23.6% retrace on April – June rise) and 1.1051 (major 38.2% retrace).

The EURJPY advanced to 127.86, its highest level since April 2016. The euro’s aggressive rise against the yen, combined to slightly higher US yields underpinned buyers in USDJPY. The pair is presently testing 112.23/112.38 area (major 61.8% retrace on May – June decline & and 200-day moving average). The daily MACD (Moving Average Convergence Divergence) turned positive; technical indicators are favourable for a further advance to 113.05 (minor 76.4% retrace) and 114.35 (May peak).

The Aussie and the Kiwi extended gains against the US dollar ant the yen. The NZDUSD hit a fresh June high (0.7343) and continues gathering momentum for a further attempt to 0.7375 (February high) and 0.7400 mark. The AUDUSD advanced to 0.7624. The next positive target stands at 0.7635 (June high), before a further push toward the 0.7750/0.7800 mid-term resistance.


Sentiment turns neutral on gold

Gold pared losses amid Monday’s fat-finger plunge. Despite improved US yields, the yellow metal paved its way back to the 100, 200-hour moving average levels ($1’250). The bias turns neutral.