Dax 30; Ftse 100; SP 500 - Market View

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Copper hit highest yesterday for the last three and a half years. Sustaining the rise in this raw material are, on a more structural level, positive prospects for the world economy. In fact, the current macroeconomic environment has some unique characteristics. The current phase is marked by a unison of the major economic regions, something that was not observed more than two decades ago. Thus, this whole cycle is guided by a high correlation between the main economies, with the growth of one to stimulate and reinforce the expansion of the others.

 

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European markets ended the last session of 2017 in different directions, with investors looking at the outlook for the coming year. 2017 was marked by an appreciation of the European stock markets, albeit smaller than the US, mainly due to the appreciation of the Euro which is a disadvantage for the region's exports. The technology sector has appreciated by around 20%, making it one of the best performers in Europe on an annual basis. The producers of raw materials were also highlighted by the positive, driven mainly by the rise in metal prices at the end of the year. In London and Frankfurt, markets closed earlier. The FTSE index appreciated 0.85%, reaching a new high, led by companies in the mining sector. Infrastructure firm Balfour Beatty rose 1.43% after reporting that it had sold an additional stake in Connect Plus. On the other hand, the German market closed with a slight loss, reason why in annual terms the valuation of the DAX index was of 12.60%. In Paris, Airbus shares have been under pressure, despite reports of an order for 430 A320neo planes by private equity firm Indigo Partners.

 

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Today begins the earnings season, which will be one of the central themes of this week.

 

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Oil companies were among the worst performers on Friday, in line with the behavior shown by the price of crude oil in response to OPEC statements about the expectation of a greater supply of this raw material in the market in 2018 by the non-member countries of this organization.

 

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It's impressive how U.S. stocks ignore the government shutdown drama in Washington and rose to all-time highs.

 

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The results of UBS officially inaugurate the earnings season of the European banking sector. Today, the IMF announce its economic forecasts for 2018. This event is taking place in Davos, Switzerland, where the World Economic Forum will begin tomorrow. This event, attended by politicians, economists, CEOs, central bank presidents, among others, is generally a precious source of insight and opinions from people with a potential to influence the global political-economic environment.

 

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Since December 2012, the US debt limit has been reached and since then the State has operated through a series of legal and accounting subterfuges, without having a budget as such. As time goes by the efficiency and duration of these subterfuges is becoming smaller and it will be important that this problem find a more structural solution.

 

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Yesterday, the main catalyst of the rally were the good results of Netflix. Not only did profits exceed estimates, but the number of subscribers to the company's media services was much higher than forecast (8.33 million versus 6.39 million). Netflix shares appreciated 10% and boosted the other technology titles that in turn served as the engine for the rest of the market. Not taking any notice of Netflix's bottom line, the market appears to be going through a phase where investors do not need economic or financial drivers to buy stocks. Positive feeling finds stimuli in itself.

 

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The recent hyperbolic rise of the indices is uncommon and often leads to excesses, which ultimately leads investors to regret. Thus, a short-term correction may be the best scenario for the continuation of the current Bull Market.

 

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In the uncertain context of recent days, the Hong Kong stock exchange has been a notable exception. This market continues to be used by many global investors as a good way to expose themselves to the Chinese stock markets. In addition to several companies from this country being listed in this market, in the last decade China has become the main economic and commercial partner of this autonomous region, making its companies more interconnected with those of the continent.