Dax 30; Ftse 100; SP 500 - Market View

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Yesterday, with the exception of the Nasdaq 100, the US market was bullish. The Dow Jones index hit a new high again, making it 10 consecutive sessions of record closing, something that had not happened since 1987. The S & P500 also hit a record high of 2368 points, boosted by the appreciation of the energy sector.

 

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On the macroeconomic front, the number of weekly applications for unemployment benefits remained close to the 40-year lows. This indicator rose slightly from 6,000 to 244,000, compared to the estimated 240,000.

 

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The US market interrupted the positive trend of the last few days which left stock indexes steadily higher.

 

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President Trump is expected to disclose more details of his fiscal policy, which has been somewhat vague. With US equity markets trading at record highs, investors seem to anticipate that not only will the measures be approved but will have an impact on the economy. It is curious how a politician so little consensual and who arouses conflicting emotions in public opinion has achieved such a broad consensus among investors. Thus, there is a risk that these investors may be disappointed or that the market behaves according to the old aphorism of Buy on rumors sell on facts.

 

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One of the main news of the day was related to the merger between the two European stock exchanges London Stock Exchange Group and Deutsche Boërse, which could be fought by the European Commission. Consequently, the shares of the two exchanges fell significantly.

 

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Although Donald Trump did not give much detail about the fiscal reform announced during his election campaign, the market was trading higher, with Dow Jones having already surpassed the psychological barrier of 21,000 points. The probability of the Fed raising interest rates returned to the stock market scenario on a day marked by the publication of various economic indicators.

 

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As in the US, the reaction of stock markets in Europe to Donald Trump’s speech last night in Congress was positive, especially in the construction and commodity-producing sectors.

 

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The US market was trading at a slight low. In terms of economic indicators, the number of weekly claims for unemployment benefits has fallen to the low of the last 44 years last week, continuing to point to a strong labor market. This indicator fell by 19 000 to 223 000 in the week ending 25 February (vs. 243 000 expected), thus reaching the lowest since March 1973. This was already the 104th consecutive week in which the number of applications for unemployment benefits Remained below 300,000, the highest since 1970.

 

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The fall of the market on Wall Street ended up impacting Asian markets that ended today’s session in negative territory. Investors’ attentions focused primarily on the US Federal Reserve’s monetary policy. In South Korea, the market was under pressure from the country’s tensions with China.

 

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Components of the Europe Stoxx 600 index showed an average increase of 11% in profits compared to the previous year, the highest growth of the last two years, compared to 4.90% observed in the constituents of the S & P500 index . Among the various factors that may underlie the expected overperformance for 2017 are the weakness of the Euro, the rise in commodity prices and the recovery of the banking sector.