Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices declined slightly. The media sector should be highlighted. Last week, France’s Vivendi announced the acquisition of 20% of Mediaset, an Italian media company controlled by the holding company of the Berlusconi family (39.80% of the capital). The Italian regulator has shown some apprehension about this transaction because Vivendi already controls Telecom Italia, through 24% of its capital. As has happened in recent weeks, the Italian banking sector will be closely monitored by investors. At the present stage, the process of recapitalization of Monte dei Paschi di Siena is the main point. The bank has to be recapitalised until the end of this year. The bank’s management has tried to avoid a state solution to the problem, which could penalize small bondholders. Today, the daily La Repubblica says that the Italian Post Office can enter the capital of the bank. This news was not officially confirmed.
US markets closed without major fluctuations, with volume boosted by the maturity of futures and options. However, the news of the seizure of an American drone by China has led to a more defensive stance on the part of investors. This more prudent position translated into a purchase of state bonds, which simultaneously caused the yields to fall. The decline in state yields, which hit the highs this year, boosted interest-sensitive sectors such as real estate and utilities, which prevented major indexes from suffering further losses. From the macroeconomic point of view, it should be noted that homes under construction fell more than expected (18.70%) in November to 1.09 million units (against 1.24 million in anticipation). Construction permits decreased 4.70% to 1.20 million (vs. 1.23 million envisaged.). Today, the focus will be on the future Trump administration. The future president has always been a staunch critic not only of China’s economic policy but also of its maritime policy in Southeast Asia. Also today, FED President Janet Yellen will attend a conference at the University of Baltimore. Investors will be aware of any mention of the Fed’s stance in relation to the hypothetical effects of the monetary policy of the incoming Presidency.
Asian markets closed without major fluctuations, with the exception of the Hong Kong stock exchange. The underperformance of this stock exchange can be explained by the fact that it is the main market for international investors to expose themselves to Chinese equities. Thus, the Hang Seng index may have been penalized by the diplomatic incident between China and the US. On Friday, the Chinese Navy detained an American submarine drone (allegedly belonging to the US Navy) in the South China Sea, prompting a formal protest from the United States. The possession of the Southeast Asian Seas is disputed by several countries, there being no common interpretation of their membership or of which portion is considered as international waters. Furthermore, the Japanese trade balance improved in November, with exports declining by 0.40% (compared to forecasts of -2%) and imports by 8.80% (compared with an estimated 12.20% decline).