Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening European markets traded lower. Despite the reaction contained in the European markets to the attacks of Paris, investors should remain sensitive to this issue in that continue to occur developments that could create some volatility. This morning, a French police intervention led to a shootout in the Saint Denis area where have been killed three terrorists. Additionally, Air France had to cancel two flights due to terrorist threats. Despite the uncertainty and tension that exists in Europe and the Middle East, the situation of the equity markets appears to be positive and after the publication of the October employment report there has been a greater propensity to risk, however this idea results from a survey prepared before the tragic events of Paris. Interestingly, this greater propensity to risk coexists with an increased likelihood of the Fed raising interest rates.
US markets ended the session without major fluctuations. After a positive start, favored by the good performance of European markets, the rise of European indices was losing momentum as the oil began to lose ground. The session also provided relevant macroeconomic signals. Inflation measured by the consumer price index rose 0.20% in September (in line with forecasts), thus reversing the decline 0.20% observed in September. While the consumer price index is not a measure of inflation preferred by the Fed, this indicator lies very close to the 2% target set by the Central Bank. The Fed prefers to resort to inflation associated with private consumption, which apart from the more volatile assets, is found in 1.80%. After the data published yesterday seem to get to meet the conditions for an increase in interest rates in December. Either Janet Yellen and Stanley Fisher stated that it is not necessary that inflation comes close to that level but showing an upward trend. Industrial production decreased 0.20% in October, compared to an estimated increase 0.10%. Relative to the housing market, the National Association of Home Builders’ housing-market index fell three points to 62 in November, the industry group said Tuesday. October’s reading, revised to 65 from an initially reported 64, marked the highest level since October 2005, during the last housing boom. At the micro level, to mention the good results and the positive outlook from Home Depot and Wal-Mart that eased recent fears in relation to consumption. Today at 19:00 will be published the minutes of the last meeting of the Fed. This document will describe the degree of consensus within the Executive Committee in relation to a rise in interest rates in December and what are the conditions required to do so.
Asian markets closed lower before Wall Street’s failure to extend the rally from yesterday, and the new events in France. The only exception was Japan, where the Nikkei managed to remain unchanged due to the strength of exporting stocks.