Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European stocks had reasonable gains, driven by Japan’s central bank’s decision. This decision caused an appreciation of the Dollar against the Yen and to a lesser extent against the Euro, which, together with the oil recovery in Asian session, is expected to favor more European cyclical sectors. The banking sector will continue under the guidance after yesterday’s profit warning (warning that profits will be lower than anticipated) from R. Bank of Scotland, high impairments reported by Banco Santander, the bad debt situation in Italy and the political uncertainty in Spain, which together with the weakness of the South African economy could constrain banks in this country.
US markets closed up, boosted by the continued recovery of oil and some enthusiasm around some technology companies. The oil market was particularly volatile, with the session to be marked by many rumors and denials. Also during the European session, rumors of a meeting between Russia and some OPEC countries in order to agree on a reduction of production. Rumors pointed to a 5% reduction that would allow oil to achieve some balance. Later, the Russian energy minister said it was premature to talk of a production cut although he had shown an openness to such an initiative. For the first time in 2016, the price of crude could appreciate for three consecutive days, ending yesterday’s session gaining 2.85%. Caterpillar reported an EPS of 0.74 USD, exceeding the estimated USD 0.69, but revenue fell short estimates. On Nasdaq, stood out Facebook, with a valuation of 15.50%. Amazon climbed 8.90%. From an economic point of view, orders for durable goods fell 5.10% last month, significantly bellow the forecast (0.70%). On the labor market, the number of weekly claims for unemployment benefits decreased by 16,000 to 278,000, up from 271,000 anticipated. At a time when the global economy is involved in an aura of uncertainty, the publication of GDP for the 4th quarter 2015 takes on greater importance. The change in domestic consumption (which accounts for almost 70% of GDP) could draw a more accurate description of the state of the US economy.
Asian markets closed with sharp gains, due to the somewhat surprising decision by the Bank of Japan. Challenging economists’ forecasts, which point to an extension of the asset purchase program, the Bank of Japan decided to reduce the interest rate on deposits which the Nipponese banks have with this institution to -0.10%. This measure is not innovative but takes the surprise character in that Governor Haruhiko Kuroda recently to have shown skeptical to the adoption of negative interest rates.