Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening European markets traded with some gains following the good performance of Wall Street. Today, the evolution of oil will remain the dominant theme on the eve of the role of the Fed meeting. The behavior of this raw material in the New York session is encouraging. After touching the minimum of the last 11 years (after losing more than 2%), oil has embarked on a strong recovery, ending the day with a gain of 2%. After having fallen 18% since the OPEC meeting (4th) to the minimum of yesterday, several technical indicators were at extreme oversold levels and the selling positions of crude oil in the oil markets reached the highest level in recent years. After yesterday’s behavior oil might initiate a short-term recovery.
US markets closed higher after an early pressed session. In fact, before the initial drop of oil and the general weakness of European equities, US indices traded lower, with losses close to 1%. Later, the US market held a volatile recovery founded primarily on technical factors. S & P plays an important support in 2000, which despite being momentarily broken, attracted many buyers including automatic trading models, which are based on mathematical and statistical algorithms. At this point adds a seasonal pattern. An interesting and curious feature of stock markets is that despite the factors influencing them to alternate, they tend to repeat patterns over the years. One of the recurring patterns over the last decades takes place in December. Generally, the pattern of this month is characterized by an initial rise during the first week, followed by a correction and a rally at the end of the month. So far, it can be assumed that this pattern is repeating itself, only missing its most interesting part: the year-end rally. In the business field, the merger between Dow Chemical and Dupont has generated some concern among the shareholders of these two companies, which resulted in the fall of their shares. Apple did not follow the general recovery of the market, by virtue of Morgan Stanley have reduced their estimates for iPhone sales in 2016. The economic agenda today provides for the publication of the consumer price index. This information should not influence the decision of the Fed tomorrow, but will provide important clues about the current situation. Despite the economic growth, progress in the labor market and the recent rise in wages, inflation remains slightly higher than 0%. Even excluding the most volatile goods, inflation stands at 1.30%, below the 2% desired by the Central Bank. Slowing the increase in goods prices has been the weakness of oil and the strength of the dollar. The big question is to know how long these two factors will weigh on inflation and consequently influence the US monetary policy.
Asian markets traded in different directions. Given the volatility of oil prices and the risk aversion in anticipation of the Fed meeting, the Nikkei index reached the minimum of the last seven and a half weeks. In China, the slight recovery in oil prices also allowed a recovery of the stock market. However, the depreciation of the Yuan after the release of the economic indicator on the country’s capital outflow did not allow higher valuations of Shanghai index.