Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices did not show a definite trend. At an early stage, European markets will react to macroeconomic data on China. Although investors are currently focused on the Italian political situation and on the economic prospects that the future Trump administration has created, China remains a relevant variable for the activity of several European companies. In the third quarter of this year, European companies saw a 6.10% drop in profits. However, most analysts estimate earnings growth in 2017 (between 6% and 14%). To this end, emerging markets are an important variable, accounting for 31% of their revenues (compared to 17% of their US counterparts). Following this initial reaction, European investors should focus on the Italian banking sector. This morning it was announced that Unicredit will carry out a capital increase of 13 000 M. €. This operation was already predicted by the market although its amount and timing were yet unknown. The strong rise of the European markets after the Italian referendum was led by Italian banks, whose good performance has spread to their European counterparts.
US markets closed with contained losses, with the exception of the Dow Jones that prolonged the recent rise. Despite the sharp rise in oil prices (2.58%, although the European session reached close to 5%), the session was marked by some investors’ caution regarding the meeting of the Fed, whose decision will be known tomorrow. This event prompted a number of investors for some profit taking after the strong valuations that Trump Rally generated. The rise of oil was one of the main themes of the session. The agreement between OPEC and 11 non-cartel oil producers will reduce world production by 558,000 barrels a day in addition to the 1.2 million agreed in OPEC. US shale oil companies are starting to resume production from holdings that have been suspended, which become profitable again as oil prices recover. Today, the volume is expected to be below average with investors waiting for tomorrow’s Fed meeting, and some profit taking should not be excluded.
Asian indices closed without major swings, with the exception of the Nikkei that closed with some gains. The main point of interest of the session was the publication of the economic indicators in China, which provided a more optimistic panorama on this country. In November, industrial production grew by 6.20% (compared to the forecast 6.10%), while retail sales increased by 10.80% compared to the forecast 10.10%. From the beginning of the year until November, investment in fixed capital increased by 8.80%, but a large part of this investment was carried out by public companies (20.10%), which are not always governed by economic criteria. Private investment during the same period grew only 3.10%. Even so, these indicators point out that the Chinese Government should achieve the proposed goal of achieving a GDP growth between 6.50% and 7% this year.