Dax 30; Ftse 100; SP 500 - Market View

At the moment, the Volkswagen scandal has not affected economic activity in Germany and it is too early that watch possible impacts originated by the attacks of Paris. The effects of terrorist attacks can only be evaluated in the coming months. However, for some sectors, such as tourism and transport, the consequences are already visible. According to the union of hotels and restaurants, last week in Paris revenues in bars and restaurants fell 44% and the occupancy rate of hotels was only 57%.
 
In Shanghai prudence prevailed since the new IPO’s will may lead many investors to sell shares in order to participate in such operations.
 
In recent weeks, the DAX has overperformed compared to its European peers. The main reason for this behavior is related to the weak expression that mining and oil companies have in the German index. The overperformance has been based on the good performance of more cyclical stocks such as chemical, automotive and industrial companies. Favoring these sectors is the fact that the Chinese slowdown have already been incorporated in the outlook of investors and the weakness of the Euro. However, in the short term, falling European currency begins to reach extreme levels, so it is not to exclude the possibility of a more technical recovery. If such a scenario materializes, the overperformance of the DAX may be interrupted.
 
US markets ended without major fluctuations, with the Dow Jones recording the lowest intraday variation of this year. During the first phase of the session, investors reacted to various economic data. After the reaction to economic indicators, many fund managers prepared for the Action Day of Thanksgiving that will usher in a prolonged weekend, to the extent that on Friday the session on Wall Street will be shorter, so many investors are away from their trading rooms. Today is Thanksgiving Day, which is celebrated every year on the fourth Thursday of November.
 
Yesterday, US markets were closed, to celebrate the Thanksgiving Day. Today, the session will be shorter, ending at 18h00 (GMT). The day is called Black Friday, which marks the official start of the Christmas Season sales, which coincides with the most profitable period of the retail chains. In recent years, with the expansion of online sales the importance of Black Friday has been losing some importance for Cyber Monday. At the economic level, the Christmas sales is usually a good barometer of the mood of American consumers and as such are one of the factors that influence the equity market during the month of December. Purchases during this period are accompanied almost daily by analysts and are fairly disclosed in the financial media, by conditioning the performance of stock markets. The Association of American retailers estimates growth of 3.50% of sales compared to the same period last year. At the Statistical level since 1928, the S & P appreciated by 68% of the time during Black Fridays, with an average rise slightly less than 0.27%.
 
This week will be particularly intense, with the completion of the ECB meeting on Thursday and the publication of the employment report in the US the next day. These two events are preceded by the release of other economic indicators, in an environment marked by high geopolitical risk. This environment of uncertainty should result in greater volatility. However, given what happened in recent weeks, economic issues should overlap to the terrorist threat in Europe and geopolitical tension lived in Turkey and Syria. One big question is whether the majority of European investors has positioned itself in relation to the expected announcement of measures by the ECB. Since the attacks of Paris, the DAX has appreciated 6% and 4% the Eurostoxx 50. In the currency market, the Euro lost since that date 1.50% as investors anticipate a greater supply of Euros as a result of an even more expansionary policy of the ECB.
 
At sector level, mining shares may be highlighted by positive due to the appreciation in the price of various metals in the Asian session, which should ensure the FTSE100 one overperformance due to the weight that these companies have in the English index.
 
American indices closed higher, boosted by some consumption data and seasonal factors. Yesterday were published Cyber Monday sales that surprised by the positive. Given the same Monday last year, online sales grew 16%, a growth rate higher than the 12% estimated. This variation reassure many investors who had been concerned about the disappointing sales in stores and shopping centers. Another variable that inspired buyers is that December is traditionally a positive month for equities. Generally, the pattern of this month is characterized by an initial rise during the first week, followed by a correction and a rally at the end of the month.
 
The ADP report showed that the private sector created 217,000 jobs in November, beating expectations for 190,000. The creation of jobs relative to October was revised upwards from 182,000 to 196,000. In these two months, the main driver of employment were small and medium enterprises focused on services. Although the correlation between this indicator and the official employment report (to be published on Friday) is not high, it is likely that the latter shows that the labor market remains dynamic. If this scenario is confirmed, the last obstacle to a rise in benchmark rates at this December meeting may have been removed.
 
Before the joint committee of Congress (Senate and House of Representatives), Janet Yellen reiterated its confidence that the US economy is recovering, based on the improvement of the labor market and the factors that are limiting inflation should diminish in next year.
 
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