Market Outlook – June 25, 2018

Global Markets Rattled Anew by Trade Disputes

 

Over the weekend, the Wall Street Journal reported the plan by U.S. President Donald Trump to bar many Chinese companies from investing in U.S. technology firms and block additional technology exports to China.

World shares reacted negatively to the said report and fell on Monday. It’s not only the trade dispute with China that is causing investor worries. The automotive sector in Europe dropped 1.4% and extended its losses for seven straight days. Trump also said last on Friday that tariffs on EU car imports would be increased by 20%. percent.

Oil Prices Fall to Begin the Week

 

On Monday, oil prices fell as traders took into the account the expected 1 million barrels per day (bpd) increase in oil production output. The Organization of the Petroleum Exporting Countries (OPEC) agreed to raise the volume of production at the conclusion of their meeting in Vienna last week.

The oil benchmark, Brent crude futures LCOc1 were trading at $74.25 per barrel or a 1.7% lower from their last close. Meanwhile, the U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $68.42 a barrel or 0.2% lower.

Prices initially jumped on Friday after the OPEC decision was announced although the boost in supply would not be as much as some had expected. Analysts see the global oil markets to remain relatively tight this year.

ECB Not Raising Interest Rates

 

Vitas Vasiliauskas, a member of the European Central Bank’s (ECB) rate-setting committee, indicated in an interview on Monday that the ECB will not take rate action at its September 2019 meeting. According to The Wall Street Journal report, it is now certain that the discussions on raising short-term interest rates could only happen by the end of 2019.

Investors Await Comcast’s Counter Offer for Fox Assets

 

Investors are expecting Comcast Corp. (CMSCA) to respond to its rival’s sweetened bid offer to acquire Twenty-First Century Fox Inc.’s (FOXA) TV and movie assets. Walt Disney Co. (DIS) raised the stakes and made a cash and stock offer of $71 billion.

Comcast’s CEO Brian Roberts made it known how badly he wants to have the Fox sees. It’s the way to expand and better compete with online video streaming giant Netflix Inc. (NFLX). Observers believe Disney has the inside track so far.

Summer Box Office Showing Impressive Numbers

 

Universal Pictures’ “Jurassic World: Fallen Kingdom” lifted the global box office this weekend. With summer heating up, movie gross receipts may notch peak numbers during this particular season. Based on year-to-date data, the numbers are up nearly 9%. That would be the highest level since early in the year.

The weekend overall total of $280 million is very impressive. It’s exactly double the same late June prime weekend in 2017. The movies being shown in the last two consecutive weekends are raking it in big in both foreign and domestic markets.

The Jurassic World sequel debuted to a $150 million weekend in the U.S. to beat initial projections. The movie is now the 20th all-time in domestic opening weekends. But the sequel is $58 million less than the 2015 Jurassic World. Disney’s “Incredibles 2” earned $182.6 million when it opened in the prior weekend. However, the film dived to $80.9 million this weekend because of “Jurassic World: Fallen Kingdom.”

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