Dax 30; Ftse 100; SP 500 - Market View

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Oil declined after the International Energy Agency cut its oil demand projections to 2017 and 2018. These projections slightly cool the positive sentiment that was being built around it but also serves as a justification for several investors to realize capital gains after the strong gains accumulated in recent weeks. In fact, from 9 October to 7 November, Brent appreciated 16%. The weakness of oil is also negatively affecting other industrial commodities, so the mining sector may also be under pressure.

 

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The Fed announced they are ready to move in December with one rate hike and they did announce it beforehand so that it wouldn't be a surprise to the market environment.

 

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At the sectoral level, the oil stocks could be one of the highlights of the session. Yesterday, DJStoxx Oil & Gas suffered sharp losses after the Norwegian sovereign fund informed it would withdraw its oil stocks from its benchmark. Norge Bank is the largest sovereign fund in the world, managing around 1 000 000 M.USD. The fund is fueled by oil revenues and aims to generate returns (through investment in financial assets) for future generations, when oil exploration is gradually losing ground.

 

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The week of Thanksgiving is usually favorable to stock markets. In fact, since 1945, the S&P ended that week up in 75% of that period, with an average valuation of 0.64%. Interestingly, in the years that the S&P has accumulated gains over 10% (as in the current year), the average Thanksgiving week gain rises to 0.84%.

 

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Oil prices rose on the back of rising expectations that the OPEC meeting scheduled for next week will allow the cartel to prolong cuts to oil production currently in place.

 

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In the commodities sector, the price of oil rose in international markets (in the US it already surpassed the 58 USD a barrel barrier for the first time since July 2015), driven by the growing expectation of a decision to cut output during the OPEC meeting scheduled for next week. In addition, the news about the interruption of production in a pipeline in Canada, which implies an 85% cut in the supply of this raw material to the US, also contributed to its upward trend.

 

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Today was marked by a weak activity in the European markets, explained by the closing of the American stock exchange, due to the celebration of the “Thanksgiving” in the country. Thus, the variations in the main stock indexes were quite contained, and the utilities sector was negatively highlighted, due to the announcement of some business results.

 

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In the pre-opening, the European markets traded in slight rise. The weak activity and low trading volume, explained by the holiday season in the US (associated with Thanksgiving), should continue to mark today's session on European markets. The agenda of corporate results and the agenda of macroeconomic indicators haven't relevant events for today, so the focus should be on the continuing political uncertainty in Germany and on business news that may arise throughout the day.

 

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On Monday, Britain’s Micro Focus suffered a heavy loss after Deutsche Bank cut its recommendation to buy to keep.

 

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Oil companies have been among the best performers in the hope that OPEC members will be able to extend the cut-off on crude oil production.