Dax 30; Ftse 100; SP 500 - Market View

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Before the financial committee of this institution, the Chairman of the Fed has taken a balanced and prudent approach. Janet Yellen said that there is no timetable for increases in interest rates despite several members of the Fed believe are necessary interest rate increases. So, in absence of any new risks and if economic conditions will remain it will be appropriate an increase interest rates.

 

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Yesterday, although oil has managed to keep up the levels it had after the cartel’s decision announcement, American equities were shaken by the weakness of the financial sector.

 

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The improved perception of global investors in relation to Deutsche Bank boosted Asian markets. In Japan, the Tankan report showed that the feeling of Nipponese industrial large remained unchanged in the 3rd quarter of this year.

 

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Today, attention will be focused on the behavior of the shares of Deutsche Bank and the intervention of two members of the Fed, the Governors of the Federal Reserve of Richmond and Chicago.

 

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Yesterday, the British stock market led the gains on a day the British Pound has considerably devaluated, reaching the minimum of the last 31 years.

 

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To frame the session today (and perhaps also the near ones) is necessary to go back yesterday, when Bloomberg published an article on the ECB’s monetary policy. According to this article, the Central Bank was considering reducing its financial asset acquisition plan, and this reduction is called tampering. According to the report, the ECB would be to draft a plan to gradually decrease (possibly in steps of 10 000 M. €) its asset purchase program currently at 80 000 M. € / month. This program is scheduled to end in March 2017 and in the market there was the expectation that this period could be extended and possibly increased the amount. However, the intervention of Mario Draghi at the September meeting and some later interventions of a few members of the institution have shaken investors’ expectations.

 

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The main even yesterday was the abrupt fall of the pound against the dollar (6%). A drop of 6% in the forex market is, in general terms, a drop of about 20% in a stock index. The reasons for this move are unclear but apparently are not of a fundamental nature and can be an error, of an automatic trading program that triggered a series of stops in a low liquidity environment.

 

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The figures indicate that the expansion of the labor market remains intact although at a slower pace. Data confirm the improvements in the labor market indicated by the Fed at the last meeting and shall not constitute an obstacle to a rise in interest rates in December. Until this meeting will be published two employment reports. The Fed has scheduled a meeting in early November but should not take any decision before the presidential elections.

 

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Today officially begins the Earnings Season with the presentation of Alcoa's quarterly accounts. The earnings season starts today, but only in the next week is to gain greater intensity. In addition to Alcoa's results will be published on Friday Citigroup accounts, JP Morgan and Wells Fargo.

 

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The volatility of European and American markets remain close to the minimum of the year. However, it is unlikely that this exception will endure especially considering that October is statistically one of the volatile months.