World Stock Indexes Trading - page 30

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Despite all the financial media coverage of the Dow Jones’ 20,000 points, investors have been pausing in recent days, resulting in a period of consolidation. The year can be considered ended and can also be considered a good year. Faced with a series of unpredictable events, such as Brexit and Donald Trump’s victory, and how the year started (with a strong correction due to the devaluation of the Chinese currency) to achieve gains between 8% and 12%, 2016 was a particularly positive year. It is quite natural that investors choose to take a break, operating in the market just to position their portfolios for the new year.
 
The American markets closed with contained losses, and the volume continued to suffer a decrease. The session was marked by the publication of macroeconomic data, which did not influence the trend of major indexes but provided investors and economists with useful information about the US economy. GDP growth relative to the third quarter of the year continues to be revised upwards. According to the Commerce Department, the US economy grew 3.50% in that period, surpassing the 3.20% calculated in November and the forecasts of 3.30%. Starts today the period that corresponds to the so-called Santa Claus Rally. This period includes the last five sessions of the year and the first two of the new year. Over the past 30 years, the S & P performed 26 times, with an average gain of 1.74%. However, given the gains made by Trump Rally, the odds of a strong Santa Claus Rally will probably be lower than in previous years.
 
The banking sector will remain in the spotlight. In an interview published yesterday by the Bild newspaper, German Central Bank President Jens Weidmann warned that for “measures planned by the Italian Government” to succeed, the institution must be “financially healthy in its core business.” He also said that public funds could not be used to cover in advance potential future bank losses.
 
The South Korean market was penalized by the worsening political situation and the fall of about 20% from Toshiba which also affected the performance of all Asian exchanges. Toshiba warned yesterday it could incur losses of “several billion dollars” following the purchase of a US nuclear power company.
 
In the pre-opening session, European indexes traded lower after losses on Wall Street yesterday. In the London market, the FTSE index hit a new all-time high, with some analysts reporting strong expectation of the Trump presidency’s impact on rising consumption. Meanwhile, in addition to the banking sector, the oil sector has attracted attention, as the date of implementation of the agreement between members and non-OPEC members is approaching. This morning, the price of crude fell slightly, after the American Petroleum Institute had revealed inventories of this raw material higher than expected
 
Looking back, 2016 is marked by the valuation of the most risky assets, in a scenario of a certain optimism regarding the whole global environment. In fact, stock indices in the US recorded significant appreciations (S & P rose about 10%, Dow Jones 13.74% and Nasdaq100 7.08%), while in Europe DAX gained 6.59%.
 
With the US market closed today, attention will be divided between the currency market, due to the depreciation of the Pound against the Dollar and the Euro in Asian markets, and some business news. Pound depreciated, with investors worried and awaiting the speech of Theresa May, scheduled for tomorrow, regarding more details on the Brexit plan. Over the weekend, the UK Finance Minister said that if the country does not maintain access to the single market, it will have to pursue a “new economic model”. On the other hand, the Italian debt market and the performance of the banking sector in the country should attract attention, after the Canadian ratings agency DBRS on Friday cut Italy’s sovereign credit rating to BBB (high) from A (low) in a move which could raise borrowing costs for struggling Italian banks.
 
This year broke the tradition of being Alcoa the company that debuted the Earnings Season, due to the split in two companies, so that the disclosure of bank accounts was the starting point. For the fourth quarter, the estimates for results point to a 3% growth in the constituents of the S&P500 index.
 
In the last few sessions, Dax has been penalized by the weakness of the automobile sector and the appreciation of the Euro against the Dollar (due to the strong weight that exporting companies have in the German index). From the technical point of view, several indicators point to an increasing likelihood of a short-term correction.
 
In pre-opening, European markets were trading bullish. The main event of the day is the meeting of the European Central Bank, although no significant development is expected after the announcements in December. The speech should confirm the markedly accommodative nature, thus reiterating that the reduction in the monthly amount of asset purchases announced in December is only an adjustment of the program and not the beginning of a gradual reduction of the volume of acquisitions to zero.
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