Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded with modest gains. During the first hours of trading, European markets should be supported by the oil and mining sectors. In the Asian session, the industrial commodities traded up. The catalyst of this rise is essentially technical in nature. In recent weeks, many investors decided to sell positions in these assets and now, before the Bank of Japan (BoJ) and the Fed meetings they began to reduce this exposure. In fact, if the Fed does not act together with the BoJ and make a conciliatory statement to investors, then risk assets (including oil) will appreciate in value. Another sector that will be monitored by investors will be the banking sector, after the weakness of Friday.
US markets closed lower, penalized by the uncertainty regarding the meeting of the Fed this week, and also due to some specific factors. Investors continued to position their portfolios to the possibility of the Central Bank to increase interest rates at its meeting on Wednesday. Despite the money markets assign a low probability to this event (12%) and economists point to a modest probability (average 50%), the fund managers have adjusted the profile of their portfolios by selling shares and state bonds and increasing liquidity. Friday was made public that China, the largest holder of US debt, has declined significantly its position. In July, US government bonds held by China amounted to 1.2 trillion dollars, the lowest exposure since 2013. At the macroeconomic level, noted that the Labor Department reported that prices rose more than expected in August, before the rising incomes and health costs that nullified the drop in gasoline prices. The consumer price index rose 0.20% (vs 0.10% expected), after remaining unchanged in the previous month. Compared to the same period last year, this index increased 1.10%, after 0.80% in August. Excluding the more volatile assets, this indicator rose 0.30%, compared to 0.20% expected. On the other hand, the Reuters/Michigan Consumer Sentiment Index, reached 89.8 in September, below the 91.0 expected by economists. The session was also conditioned by other factors such as the fall in oil prices and the weakness of the banking sector. The latter was affected by the news that Deutsche Bank may enter into litigation with US authorities, after refusing a pre-court agreement that provided for the payment of a fine of 14,000 M.USD. The technology sector has over-performed, this time not due to the stocks of Apple. Intel improved its projections for this year’s results, given the improvements seen in the PC market.
Major Asian indexes ended up, after losses last week. This move was due in part to the fact that investors are positioning themselves before the meetings of the Fed and the Bank of Japan (Wednesday) and partly due to the appreciation of oil prices. The Japanese stock market was closed, a day dedicated to respect for the Elderly. In turn, the negotiation of the Sydney stock exchange was suspended for a good part of the session due to technical problems, and ended prematurely.