Market View; World Stock Indexes & Trading Journal - page 12
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The first hours of trading the European Stock Markets were marked by the publication of a relevant economic indicator in China, the PMI index for the manufacturing industry, prepared by HSBC economists. According to HSBC economists the manufacturing activity in this country fell to 50.0, the lowest level in six months. This reading was below the 50.4 recorded in October and 50.3 estimated by economists.
The first hour of trading did reflect investors’ concerns and this was compounded by the publication of the PMI index for the manufacturing industry in Germany and in the Eurozone, as the values were below the estimate. After the opening of US market, the situation was reversed with the publication of US economic data with values above expectations.
The market will be impacted today by Loretta j. Mester’s speach from Fed, and tomorrow at the opening bell of the European markets by the speech of Mario Dragui.
In recent days, European markets had an overperformance comparing to the Americans. There are several reasons for this behavior, of which to highlight the words of Mario Draghi at the European Parliament and a recent study by JP Morgan which maintain their preference for the European Stocks, justified by the possibility of the ECB implement quantitative easing measures and the fact that European indices have better ratios (as the PER, share price divided by earnings per share of the company) more appealing than Americans. Another factor has to do with the expectation of some international investors that the difference in returns between the American and European markets may decrease by the end of the year. For example, since the beginning of the year, the SP500 appreciated by 10.84%, while the DAX fell 0.83%.
The European indexes have opened slightly higher than the previous close and begun to rise after Mario Draghi’s intervention at this morning conference. The conference started at 8:00 and was organized by the Bundesbank and with the participation of several German banks. Mr. Draghi said the ECB must drive inflation higher, and will expand its program of asset purchases, if necessary to achieve this. On Monday, before the European Parliament, Mario Draghi had already repeated that the ECB will continue to support the economy of the Eurozone and could implement a quantitative easing if the situation worsens. So far these promises have been enough to push up the markets as investors believe that his words will gain expression through concrete measures.
This week will be particularly intense and that intensity should focus primarily on the first three days of the week, as the US stock market will be closed on Thursday, Nov. 27, for the U.S. Thanksgiving holiday and on Friday will have a reduced session. This is an important moment for the assessment of the real state of the economy in the Euro Zone. The indicators to be published should condition the economic projections that the ECB will hold at its December meeting, as well as their propensity to implement a sovereign bond-buying program. In addition to the confidence index of German business, changes in the GDP of the German and Spanish economies will be published, inflation in the Eurozone, as well as some reliable indicators for this region. The more fragile are the numbers of the economic agenda largest is the probability assigned by investors to the implementation of a quantitative easing program by the ECB.In the US, are also disclosed relevant data such as GDP for the 3rd quarter, consumer confidence, the Chicago Purchasing Managers’ Index, among others. The Thanksgiving Day holiday also precedes the beginning of the Christmas season retail sales, which is one of the factors of great influence in Wall Street this time of year.
The European indices started trading with modest gains. The macroeconomic schedule dominated the session. The Gross Domestic Product (GDP) in Germany, in the third quarter, grew 12:10%, in line with forecasts. Among the various components of the GDP stand out private consumption, which registered an increase of 0.70%, and exports, which rose 1.90%. On the negative side, investment fell 0.90% due mainly to the Ukrainian crisis and the delicate economic situation in Russia. Technically, many indicators have reached the most extreme levels of overbought in recent months.The decline of oil on Asian and American markets broke the recent recovery of the European oil sector.
The European Indexes consolidated near highs and investors evaluated data on labor, production and housing to measure the strength of the US economy. The US markets will be closed tomorrow for the Thanksgiving day.Six of the top 10 industries in the SP500 rose today, with telephone and technology companies presenting the greatest gains. Energy shares were the most depreciated, falling 0.6% before the OPEC meeting tomorrow. Deutsche Telekom said that together with the French Orange is in preliminary talks with the British group BT to launch an offer on the Franco-German joint venture EE.In order to stabilize crude oil prices, Saudi Arabia led negotiations with Venezuela, Mexico and Russia, to reach an agreement to reduce production. Although the OPEC countries are favorable to a decrease in production, the share of each member is a source of contention.The US economy grew 3.90% in the 3rd quarter of this year, surpassing not only the estimates of economists (3.30%) as the initial forecast of the Commerce Department, the public agency responsible for the calculation of GDP. Contributing to this upward revision were private consumption (+ 2.20% vs 1.90% estimated) and investment (10.7% vs 5.50% predicted). On the negative side, exports have been revised downwards as well as public spending.Inflation linked to GDP increased by 1:40% in the 3rd quarter. The price of real estate in 20 major US metropolitan areas increased, year on year, 4.90% in September. Consumer confidence unexpectedly fell from 94.5 seen in October to the current 88.7.Due to the celebration of the Thanksgiving Day tomorrow and the reduced session on Friday, it is not excluded that at the end of the day some managers reduce their market exposure. While we celebrate the Day of Action Thanksgiving, OPEC will meet in Vienna and will decide if production decreases, a decision that will influence the price of oil and reflection of the equity markets. On the same day, various data will be reported in Europe. Therefore, it is not excluded that many American managers who will only return to their trading rooms on Monday take a prudent stance.
The European Indexes showed some gains today. From a macroeconomic point of view, this week will be important to to understand the current economic situation. The indicators on this week should condition the economic projections of the ECB at its December meeting, as well as their propensity to implement a sovereign bond buying program.Oil fell to a four-year low after OPEC kept its oil production unchanged at today’s meeting, dragging down the shares of energy companies, Gulf-region stocks, and the Norwegian krone. The oil market is facing a revolution with the production of oil shale in the US. This revolution allowed the US to increase by 50% its production of oil in just two years.Today was the Thanks Giving Holiday in the United States, and as expected, a day with less volume in the markets. Yesterday US markets closed with modest gains. The costs of American families grew 0.20% in October, offsetting the fall 0.20% observed in September. For the real estate market, sales of new homes during the month of October reached the 458,000, representing an increase of 0.70% compared to the estimation of 470,000. Compared to the previous year, the growth was 1.80%. This data reinforces the perception that the housing market has entered a new phase of expansion after the standoff in the summer of 2013. The Chicago manufacturing activity index PMI recorded a fall in November for 60.80, against the estimation of 63.00.
It has been a great Bullish Ride for the major World Indexes.
I'm grateful for the extraordinary trading week.
The forum is a great help.
Which you all a nice weekend. :-)
US shares rose, after the SP500 Index retreated the most in more than five weeks yesterday. This rise was influenced by the rise in the prices of biotechnology and energy companies and data on construction spending supported the confidence in the economy.
The SP 500 fell 0.7% yesterday, the biggest drop since 22 October, with weaker sales data from Black Friday.
Today’s data showed that construction spending rose more than estimated in October. The government labor report, later this week, may reveal that companies added 230,000 payrolls in November, while the unemployment rate is expected to remain at 5.8%, according to the consensus forecast by economists .
Yesterday the major stock indexes ended the session in positive territory, with the optimistic investors believing that new monetary stimulus measures will be announced on the ECB meeting, next Thursday. Leading the gains were the companies in the oil sector, recovering from six consecutive sessions of declines.Asian markets ended positive with the Chinese market leading the gains after the improvement in the indicator of services in the country.In macroeconomic terms the disclosure of Retail Sales in the euro area were in line with expectations and in the afternoon the attention will be turned to the ADP Employment Change, Nonfarm Productivity, Unit Labor Costs and ISM Non-Manf. Composite, Beige Book in the United States.Auto sales in the US showed the following numbers: BMW (-2.3%), Mercedes (00:58 +%), Volkswagen (+ 3.2%), Audi (+ 22%) and Porsche (+ 18%).Siemens Engineering signed a contract worth 1.3 billion zlotys for the construction of a power plant and heating for the largest refinery in Poland, PKN Orlen to.