Market View; World Stock Indexes & Trading Journal - page 13
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Shares recovered after an initial decline after the European Central Bank, mention about considering a proposal for an assets buying program, which may include sovereign debt purchase as early as next month.
U.S. stocks rose, with equities heading for a seventh weekly gain, as better-than-estimated payrolls data bolstered the case that the economy is strong enough to withstand an increase in borrowing costs next year.Employers in the U.S. added 321,000 jobs in November, the most since January 2012, driving wage gains and highlighting increased corporate confidence the economy will endure a weakening in global markets.
Stock market rises at the end of last week were driven by speculation on the possibility the European Central Bank (ECB) decides to adopt a comprehensive program of economic stimulus after the meeting of this institution in January.Asian markets ended positive. Data released in China showed that exports rose 4.7% in November, well below expectations of 8.0%. Imports fell 6.7%, while economists had expected growth of 3.9%. However, revised data showed that Japan’s economy contracted for the second consecutive quarter.The major indexes fell today mainly due to falling energy producers with Crude at 5 years lowest value.
The signs of strength given by the employment report in the US relaunched the question of the timing of the first rise in interest rates in this country, which will be the central theme of this week.In recent months, the labor market has gained greater momentum, culminating in the creation of 321,000 jobs in November and a rise 0.40% of wages. The increase in wages, which until last month had been contained, was the latest sign of strength in the labor market.
Stocks fell, extending the week’s decline for the Standard & Poor’s 500 Index, as energy shares renewed a selloff after OPEC cut its forecast on 2015 demand for crude. Yesterday, the specter of Greece returned to haunt European investors. The Athens stock exchange fell 12% after Prime Minister Antonis Samaras have anticipated the presidential elections in February to December.Considering the fall of yesterday and the fact that several indicators have accused a loss of upward momentum, a correction for the major indexes begins to gain expression. This scenario will be reinforced if the Dax closes below 9835 (Last week Low).
The main event today was the second auction of liquidity provision by the ECB, the so-called TLTRO (Targeted longer-term refinancing operations). These ECB’s operations are intended to stimulate the provision of credit by European banks, through the injection of liquidity in the interbank market to near 0% interest rates. The first operation took place in September, but banks only required 82 600 M. €, which was well below the 400 000 M. € which were the maximum ceiling that the ECB was willing to give. The European institutions asked the Central Bank for 129 840 M. €, aligned with the estimated value which was expected between 100 000 M. € and 170 000 M. €. A portion of the amount requested today will be applied to replace the loans requested from the ECB 3 years ago and which mature in the coming months and may not represent additional liquidity in the banking system. The outcome of today’s auction may influence the ECB’s decision on the adoption of a sovereign debt purchase program. That the request is deemed low, then the ECB will have more arguments to implement new measures of monetary stimulus, so that the balance of this institution reaches 3 000 000 M. € as intended.
Trading was marked by the reaction of European investors to economic data in China whose industrial production was below expectation. Investors are giving attention to the evolution of oil prices and the political situation in Greece.
Oil price remains under pressure hitting new lows.
The main point of Thursday's session was the loss of much of the recovery achieved during the first hours of trading. Apparently, the mentality of buying the dips would prevail and investors were taking advantage of the fall of the previous day to buy shares in the expectation of a final rally of the year, however, the last hours of trading showed a lack of conviction from buyers. The news that Democrats and Republicans could not reach an agreement in respect of public expenditure plan led many investors to sell. The deadline for agreement was ending at midnight but was finally reached. Still, the future of US indices traded low before the European opening.
The Minister of the United Arab Emirates for Petroleum, said OPEC will not change its output even if the price of crude decline to 40 USD / barrel.The FED’s meeting on Wednesday shall only gain some relevance shortly before its completion.After the resilience demonstrated earlier in the week, last Friday the US markets have accused some nervousness before the intensification of threats to equity markets. Many investors reduced their exposure to the market or bought puts (put options) to protect their portfolios. In face of this nervousness, Wall Street recorded the worst weekly performance in the last two and a half years.
Once Charles Darwin wrote something like this:
“It is not the strongest or the most intelligent who will survive, but those who can best manage change”
The same is true for traders: Traders that can adapt faster to the market changes are the ones that get consistent and positive results.
The meeting of the FED constitute a further step in the preparation of the financial markets to the normalization of monetary policy in the US process. Key elements of this meeting are the economic projections of the Central Bank for 2015 and the semantics of the statements that result from the meeting. From the statement, investors will try to assess what will be the timing of the first rise in interest rates as well as what will be the pace of their increases.