Dax 30; Ftse 100; SP 500 - Market View

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Asian markets ended with some gains, with the potential positive effects of a hypothetical US tax reform approval overlapping with yet another North Korean ballistic test. Although the US tax reform has as its main objective to boost the domestic economy, the potential increase in household income should also benefit products imported from Asia. Yesterday some Japanese newspapers had anticipated a ballistic test by North Korea which, according to regime propaganda, could hit the United States.

 

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Asian markets ended lower, penalized by weakness in the technology sector, which was plunged by the steep fall in Nasdaq. In Tokyo, the weakness of technological Stocks was more than offset by the appreciation of the banking sector. It also notes the rise in interest rates in South Korea (the first in 6 years) and the release of the PMI index in China. The PMI index for manufacturing industry in November reached 51.8 against the estimated 51.4. At the services level, PMI stood at 54.8 compared to 54.3 in October.

 

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On the daily chart of gold we can see that the precious metal has been boxed between the 200 day EMA at the 1270 level and the 1300 level. If we see a rise of volatility close to a support or resistance zone, the commodity may be getting ready to take off.

 

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The US Senate passed a string of fiscal measures aimed at increasing American incomes by a very small majority (51-49). Postponing the description of the main measures of this document to another time, the issues that its approval places are described. The first is the time it will take to reconcile with the proposal passed in the House of Representatives. The second is to try to anticipate (as much as possible) what the real effects will be on the real economy. The third concerns the impact it will have on the public deficit. If it is very significant, it may imply a generalized rise in yields, which will cause a profound change in the global stock market situation. The fourth, which depends a little on the others, is to know how much of the positive effects of this reform have been anticipated by the extraordinary rise of American markets in recent months.

 

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Most European markets ended on a downward trajectory, with investors reacting to the global downturn in technology stocks. The London exchange was one of the exceptions to this negative behavior, since it recovered from the initial losses. In addition to the technological sector, whose trend was influenced by the performance of the North American peers, the banking and automobile sectors were also under pressure.

 

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The ADP employment report showed that 190 000 jobs were created during November, a level above expectations but lower than in October. For oil, the price of West Texas Intermediate traded in New York fell, after the unexpected increase of oil reserves in the country.

 

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Last week the NZDUSD went back and forward without any clear direction but closed in the green, in the middle of the weekly range, in addition managed to close within the previous week range, which suggests being clearly neutral, neither side is showing control.

 

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After years of crossing a long and winding desert the EU economy is finally displaying strenght beyond QE. The EU stock markets are not yet reflecting this new reality but they will.

 

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European markets closed today’s session with losses, albeit contained. Today’s sentiment was fundamentally marked by the expectation of the FED meeting that ends today (but the outcome will only be known after the closing of European exchanges), as well as the ECB meeting scheduled for tomorrow.

 

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In sectoral terms, trends were observed in different directions, with the positive result being the producers of raw materials and the negative effects of utilities. Among German utilities, Innogy fell about 13% after adjusting its forecasts for 2017. This behavior influenced the performance of RWE (-12.69%) and E.ON (-4.57% ).