Aluminum: A ‘Fundamentally Solid’ Metal Bashed In By Sanctions
Aluminum’s weak prices are down to one single driver: US sanctions against Russian aluminum giant Rusal (MCX:RUAL) and its CEO Oleg Deripaska. The company is part of a broader group of Russian firms, businessmen and government officials sanctioned by the US Treasury Department in April for alleged meddling in the 2016 US presidential elections.
The deadline would also occur after the US midterm elections on November 6, buying time for the Trump Administration to avoid such hot-button issues before the polls.
In Tuesday’s trade, three-month aluminum futures on the LME settled a touch lower, at $2,032.75 a tonne, after a short-burst rally in three previous sessions following the deadline extension on Rusal’s US licenses.
The sudden squeeze on the global market caused a 12 percent rally on the LME in April—the biggest for aluminum in eight years. “Fundamentals remain solid,” Bank of America-Merrill Lynch said in a note this week on its outlook for the metal, noting that Rusal accounted for 6 percent of global production, aside from its commanding presence in the US market.
Yet the Wall Street bank acknowledged that aluminum prices remain “heavily influenced by a reluctance of market participants to take positions, as long as uncertainty persists over the fate of the company.”
Investing.com has a “Strong Sell” recommendation on the metal’s daily technical outlook, with a bear call on almost all of its daily-moving averages from the 10-day average of $2,060.47 to the 200-day average of $2,155.12.
However, CRU International, a global metals consultancy, has projected a base case scenario where aluminum could stabilize at $2,235 a tonne in the fourth quarter.
Pound Australian Dollar Exchange Rate Forecast: Will GBP/AUD Recover on UK Sales Growth?
By Oliver Meredew
Chance for Pound Sterling Australian Dollar Exchange Rate Rise on Strong UK Sales Data
The Pound (GBP) has fallen by -0.4% against the Australian Dollar (AUD) yesterday, following the news that UK inflation has slowed by more than expected.
This deceleration in the rate of UK price growth has unsettled GBP traders, who are worried about reduced odds of a Bank of England (BoE) interest rate hike.
While this data has weakened the Pound, the UK currency could recover and rise when retail sales stats come out on Thursday.
The year-on-year readings for September are tipped to show growth, even if month-on-month slowdowns are expected.
Increased sales activity is good news for the UK economy as a whole, as it can lead to faster GDP growth and prevent job losses among struggling retailers.
Will BoE Governor’s Comments Trigger GBP/AUD Exchange Rate Rise?
This week’s last major UK economic event will come on Friday, when Bank of England (BoE) Governor Mark Carney makes a speech.
Mr Carney will be giving remarks in New York and might raise demand for Pound Sterling (GBP) if he discusses monetary policy.
Given growing uncertainty about a 2019 BoE interest rate hike, Mr Carney could reassure traders and boost the Pound by backing an interest rate increase next year.
An explicit statement of when such a rate hike could occur is unlikely, although even hints could be enough to cause GBP/AUD exchange rate gains.
Citigroup: Bank Stock Ripe For A Powerful Rally
Over the past year, investors have been wary of banking stocks, and for good reason.
Banks are beginning to look attractive again, some offer a better risk-reward equation than others. If you’re looking to reenter this sector, we think Citigroup (NYSE:C) is one of the best banking stocks to own right now.
In the third quarter, the New York-based lender posted a 12% surge in profits, to $4.62 billion. Earnings per share were $1.73, beating analyst expectations of $1.69 a share.
Operating expenses fell 1%, surprising expectations and indicating that the company is on its way to meeting financial targets for this year. Citi also showed an improvement in the yield from its North America Citi branded credit card business. Analysts were watching this metric closely and the improvement adds another positive point for Citi’s profit outlook.
But the brightest factor that makes Citigroup a great banking stock to bet on is CEO Michael Corbat’s success at sustainably cutting costs for the past six years.
Another factor making Citigroup stock a better pick than its peers is the lender’s aggressive capital return plan. This year Citigroup hiked its quarterly dividend by $0.13 to $0.45, for a current yield of 2.60%, and announced its intention to return $17.6 billion to investors via stock buybacks.
Currently trading at $69.71, Citigroup is one of the cheapest picks among the big financial names. In an environment where interest rates are rising and the US economy is showing strength, Citigroup’s stock can only get better from here. Its place at the bottom of the pack is what makes Citi ripe for a powerful rally.
eBay Seen Dropping 8% as Analysts Lower Estimates
By Michael J. Kramer
eBay Inc.’s (EBAY) stock has had a horrible 2018 with the shares down by more than 30% from their January highs. Technical analysis suggests it may be about to get much worse for the stock, as it faces a decline of as much as 8% from its current price of $32.50.
One reason for the negative sentiment is because analysts have lowered their growth estimates for 2019 since the company reported second-quarter results. The company is due to report third-quarter results on October 30.
One reason for the bearish sentiment is that analysts have been trimming their earnings and revenue forecast. Since July, when the company reported second-quarter results, analyst have cut their sales estimates by 2% while boosting their earnings estimates by 1%. But the outlook for 2019 grows more dire. Now, analysts see earnings growing by 12% from prior estimates of 16%, while revenue estimates are forecast to rise by 8% from earlier estimates of 9%.
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