Market View; World Stock Indexes & Trading Journal - page 18
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Today the SP 500 Index broke 2,100, reaching a record for a second day on speculation that the Greek debt impasse is easing while oil prices erased earlier declines.
The Eurogroup assigned a period (ending on Friday) for Greece to accept the extension of the assistance program for 6 months. Thus, the market will continue sensitive to any news or rumor on this topic, which may result in the occurrence of sudden and abrupt movements.
Despite the latent threats, the oil fall, the fall of the euro, the ECB’s decision to apply the quantitative easing program in the Eurozone and the allocation of global investors are critical factors that have contributed to the good performance of European markets. European economies are the main beneficiaries of the oil price fall (reduces production costs and increases the disposable income of consumers) and euro devaluation (improves competitiveness in foreign markets for European companies). To help is also the good results (in relative terms) of European companies.
Early in the morning, the stock markets traded without major fluctuations. After Greece submitted a proposal to extend the loan received, the Eurogroup will meet to discuss the proposal. Initially the meet was to be done by video conference, but will now be held a meeting in Brussels, which may favor an understanding. The news that the various statements made clear yesterday, the Greek proposal merited the opening of some countries and the European Commission itself but also skepticism in Germany and other countries like Finland and Austria. Although the deadline given by the Euro-group formally end today, it can not be excluded, in case of not reaching an agreement, extended talks along the weekend. In this context, the publication of the preliminary reading of the PMI indexes (purchasing managers index) has less importance than usual. It was anticipated a slight improvement on previous months due to already be reflected in the European economy the effects of the devaluation of the Euro, the fuel price fall and monetary environment even more beneficial, however the PMI values came out lower than expected.
The Wall Street behavior will depend on developments in Europe, knowing that when the stock market indexes hit new highs usually attract retail investors interest.
The Nasdaq was able to record the ninth consecutive session in positive territory. The technological index continues to benefit from investors’ preference for more cyclical companies and the optimal performance of Apple. The macroeconomic issues will take center stage over the coming days.
In addition to the macroeconomic and political focus, the earnings season continues to attract attention, but today we have an event that could bring some volatility because at 16h30, Mario Draghi will be present in the European Parliament, where he will present the ECB’s Annual Report .
Asian markets closed higher, highlighting the sharp rise in the Nikkei, which continues to reach new highs of the last 8 years. Boosting Japanese stocks were essentially the depreciation of the yen and expectations that the Central Bank of China may announce new monetary stimulus.
Oil shares shall be under pressure after yesterday’s decline of 3.89%.
European markets react positively to the recent macroeconomic events in China, reflecting the measures announced by the Central Bank of China. On Saturday, this institution reduced the benchmark interest rate from 5.60% to 5.35%.