Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European stocks were trading slightly higher. Today, a preliminary OPEC meeting will be held, which will serve as an antechamber to the official meeting on November 30. This meeting will be more technical but it would be enlightening if signs of understanding appeared, in order to diminish the volatility of the oil market, thus increasing its transparency. Meanwhile, investors are starting to give more credit to the cut of production levels, with last week trading the biggest number of call options on crude oil this year. Today, Mario Draghi will present the ECB’s annual report to the European Parliament. It can not be excluded that this report includes some references to the December meeting. Since the October meeting, Mario Draghi’s interventions have been few, so this event can serve as an antechamber to the meeting on December 8.
US markets closed with contained losses. The volatility and volume of the market has declined in the last two sessions, indicating that perhaps investors are assimilating the new trends and the new reality that have emerged since the election of Donald Trump. While many economists and fund managers have wondered why financial markets focused only on the positive side of economic policy that the new administration intends to implement, objectively analyzing market indications, it is concluded that there is no will for profit taking. At the present stage, the best approach to analyzing the markets is to increased attention at the sectoral level. While several sectors such as banking have reached extreme levels of overbought, making them vulnerable to short-term corrections, it seems apparent that most post-election trends will be of a more lasting nature. So if many investors see these trends in this way it is only natural that a number of them are not tempted to reduce exposure to these sectors. One of the consequences of Trump’s victory was the rise in yields as a result of the perception that its economic policy based on tax cuts and an ambitious infrastructure plan will accelerate inflation. This rise in yields and expectations of economic agents in relation to inflation has generated greater consensus within the Fed on what to decide at the meeting in mid-December. On Thursday, Janet Yellen made a more inclined speech for an interest rate hike on that date, and on Friday, Kansas Fed, Dallas and St. Louis Governors made statements to that end. During this week, the trading of the American stock market has its highest intensity in the first two days. Thanksgiving is celebrated on Thursday, and on Friday the market closes at 6:00 p.m. GMT. On Wednesday, if there are no unpredictable events, the volume is generally weaker with investors preparing for the festivities, often leaving the trading rooms before the close of that session.
Asian markets closed higher. The Dollar dip benefited some Southeast Asian markets. Although the strength of the American currency of recent weeks favor exports, it is important to remember that several banks and companies in the region subscribed bonds in dollars. When appreciated the Dollar, increases the the debt amount of these institutions, many of them with a high financial leverage. In Japan, exports declined for the 13th consecutive month, signaling the loss of competitiveness of their companies (due to the appreciation of the Yen during 2016). Imports also declined, partly because of the strength of the yen (which decreases its value) but also because of weak domestic demand.