Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
European markets were rehearsing at a slight rise. Yesterday, the DAX, tested the support zone of the 12900-13000. From this level some attempts to recover can not be ruled out, although it is not yet clear whether this short-term correction has ended. Despite yesterday’s rebound, there is a very reasonable probability of seeing, in the short term, a generalized rise in European sovereign yields. In this context, Mario Draghi will be present today at an important forum organized by the ECB, which will also include the Governor of the Bank of England, the Governor of the Bank of Japan and the Governor of the FED Charles Evans. Mario Draghi’s intervention is scheduled for 10:00 a.m. Mario Draghi’s words could be a catalyst for debt markets and could dictate the yield trend today. The German technology company Infineon announced that it reached a quarterly result of 328 M. €, roughly in line with the estimated 330 M. €. The revenues also fell within the analysts’ estimates (1820 M. € vs. 1840 M. €). Vodafone reported that its revenues fell 4.10% in the quarter, due to some adverse exchange effects and the deconsolidation of its unit in the Netherlands. However, the company is confident for the future, increasing its projection for EBITDA growth in 2017 from 8% to 10%.
The American markets ended the session with contained variations. The session was characterized by some expectation regarding the tax reform process. Although the American legislative process has numerous legal “shortcuts” that speed up passage of laws, the differences between the Senate and House of Representatives proposals are so sharp that this process can be somewhat time-consuming and troubled. A curious point regarding the tax proposal is that its developments continue to affect the market, but most fund investors argue that this process either does not have a significant impact on corporate profits (which in the background moves, in the long run, share prices) or that it will not even come to fruition. Another topic of the session was General Electric’s behavior. GE has made public its restructuring plan which foresees a concentration of the conglomerate’s activity in three key areas: aeronautics, power generation and medical / wellness equipment. The conglomerate reduced for the third time in its 125-year history the dividend (the first two were in 1938 and 2009) from $ 0.24 to $ 0.12. GE shares lost 7.17%, the biggest daily devaluation since the financial crisis of 2008-2009.
Asian stocks traded under selling pressure that was largely due to economic data in China. In October, investment in fixed capital increased by 7.30%, slightly below the expected 7.40%. Retail sales increased 10% compared to the anticipated 10.40%. Industrial production increased by 6.20%, slightly below the estimated 6.30%. The sale of houses fell by 3.40% over the previous year. This last fact reflects the intentions of the Government of Beijing to stop the real estate speculation that prevails in several zones of the country. All in all, this data does not compromise GDP growth this year, despite the moderately negative market reaction.