Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices traded with contained losses. Today’s highlight should be for Italian equities and more specifically for bank bonds. On Friday, the rating agency Standard & Poor’s upgraded its Italian debt rating from “BBB-” to “BBB”, continuing to give it a stable rating. This was the first improvement in the last 12 years, with the agency pointing to continuous economic developments, the expansionary monetary policy of the ECB, the reduction of banking sector risks and the prospects of a more energetic decrease in public debt. Another sector to follow is the oil sector, considering that the Brent quotation has reached the maximum of the last 2 years. However, there is a risk that oil stocks will not fully capitalize on crude oil prices.
US markets closed with sharp gains, highlighting the Nasdaq which recorded one of the best daily performances this year. The major catalyst for the rise in technology stocks was the set of results reported by Google, Amazon, Microsoft and to a lesser extent by Intel. All these companies comfortably beat the estimates and were quite confident for the future. In fact, various ratios like the PER (Quotation / Earnings per share) have reached extreme levels, not observed since the technology bubble of 2000. In a first analysis, the good results that were released by Amazon, Google and Microsoft, diminished these fears but only in the next sessions will we be able to verify if the activity and the perspectives of these companies have changed the paradigm of the current stock market situation. Prior to the publication of US technology companies’ accounts, the ECB and the Bank of Japan reiterated the continuation of its ultra-expansionary monetary policy, which will continue to support and sustain the activity of two major economic regions, which are also two of the main markets of these companies. With respect to the domestic market, the Commerce Department reported that the US economy grew 3% in the third quarter, surpassing economists’ forecasts of 2.50%. If we exclude the “inventories” effect, GDP grew by 2.30%. The main component of GDP, private consumption, increased 2.40%, above the forecast 2.10% but below the 3.30% calculated in the previous quarter. The main strength of the economy during the third quarter is that the economy was able to cushion the first negative effects of Hurricanes Harvey and Irma from the states of Texas and Florida. Although the Department of Commerce has explained that it is impossible to calculate the full effect (direct and indirect) of these two cataclysms, it has reported that material damage amounted to 131,400 M.USD. It is important to emphasize that this was the first calculation of GDP and that it will be revised twice more, so the reading published on Friday may change.
Asian markets closed without major fluctuations. The good performance of Wall Street was overshadowed by the initial decline (more than 2%) of the Chinese stock exchanges. Apparently, the weakness of Chinese equities had its epicenter in the bond market which was due to a spiral of sales orders, which was exacerbated by the lack of liquidity that still characterizes this market.