Dax 30; Ftse 100; SP 500 - Market View

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Asian markets closed without a common trend, though prudence over today’s Fed meeting has dominated investor sentiment. The Nikkei closed with gains near 0.50%, favored by the devaluation of the Yen against the Dollar.

 

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After giving some signs of correction yesterday, the Fed's statement, which fits sharply in investors' expectations, boosted the common currency. Generally, when a given event fits investors' expectations, there is a tendency for financial markets to continue, at least in the short term, the underlying trend. This pattern is different from that in which the market expects a favorable factor or event and reacts in advance, so-called buy on rumors sell on facts.

 

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Without any news, the Fed meeting turned out to be a painless event, allowing investors to focus on the other issue of the moment: the earnings season. In this chapter, the news has been favorable, with the vast majority of companies reporting numbers that beat forecasts.

 

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According to the latest news, Secretary of State for Defense Jim Mattis and US Secretary of State Rex Tillerson will have reported that the Trump Administration continues to seek diplomatic resolutions with Pyongyang. Still, investors should continue to monitor developments in relation to the situation on the Korean Peninsula.

 

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The lowering of the risk of a US-North Korean military conflict has restored some confidence to European markets that have started the week with significant gains, recovering from last week's losses.

 

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The minutes of the last meeting of the FED, held on 25 and 26 July, will be published today. In this event, the Federal Reserve kept the fed-funds interest rate range unchanged at 1.00% -1.25% and signaled that the balance-sheet normalization process will soon begin. The first step will most likely be the reduction of asset purchases with the money coming from repayment of maturing bonds. To justify this decision is the positive view the FED has of the economy. With the economy operating at full employment, with the creation of jobs being labeled “solid” even with the 4.40% unemployment rate, with consumption and investment growing, the Central Bank believes that are gathered the conditions to reduce its balance sheet (amounting to 4 500 000 M.USD). According to CNBC, with these economic data published yesterday, expectations for a rise in interest rates in December increased to 54% from 37% the previous day.

 

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During today's session, investors should react to the publication of the minutes of the last Fed meeting. On the other hand, while fears about tensions between North Korea and the US have softened, worries about the situation Politics in the US worsened after US President Donald Trump had closed two consultative bodies on economic matters yesterday in the face of the resignation of prominent businessmen on board.

 

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Fears about the terrorist attack in Barcelona, as well as political uncertainty in the US and still some geopolitical tension shall led investors to opt for safe haven assets.

 

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European markets were downtrending, reflecting the behavior of the US market, as well as renewed fears about tensions between the US and Korea, with the news that the US and South Korea Start their annual military exercises today, which are expected to last for 10 days between 21 and 31 August and will be a test of North Korea’s behavior. Although planned for some time now, these exercises come at a delicate time, after several weeks of an exchange of war rhetoric between Washington and Pyongyang that drew the worst fears, although last week tensions have subsided with statements by Kim Jong that said Which for now would contain his plans. Expectations are mostly concentrated at the Jackson Hole Conference at the end of the week.

 

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These days, the environment in the global stock markets is marked by an expectation of the Annual Central Bank Conference to be held in Jackson Hole later this week, although most analysts are not expecting Janet Yellen and Mario Draghi , Presidents of the FED and the ECB, to bring to the market great news about the conduct of their monetary policies.