Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
Today’s session was guided by investors’ reactions to the meetings of the Central Banks. As anticipated by the market, the ECB maintained the benchmark interest rate at 0% and reiterated the continuation of the asset purchase until at least September 2018 at a rate of 30 000 M. € per month from January 2018. In addition, at the press conference, Mario Draghi, reported that the ECB estimates that the economy will grow 2.40% in 2017, 2.30% in 2018, 1.90% in 2019 and slow down to 1.70% in 2020. In the words of Mario Draghi a significant upward revision “compared to the September projections of 2.20% in 2017, 1.80% in 2018 and 1.70% in 2019. Regarding inflation, Draghi said that inflation in the region will increase sustainably for a target of 2%, although there is still no convincing evidence of this acceleration in prices, and inflation is expected to be only 1.70% by 2020. This year, inflation is expected to remain at 1.50%. The Bank of England also opted to keep its lead rate at 0.50% after the rise announced on 2 November, the first in ten years. In addition, following the meeting, the Monetary Policy Committee decided to leave unchanged the economic stimulus program, in which it invested 445,000 M.GBP since 2009 for the purchase of public and private debt securities. For the Bank of England, the main risk to the UK remains the effect of the Brexit deal which has caused, among other impacts, the devaluation of the Pound and the rise in inflation. The Swiss National Bank has kept its monetary policy unchanged and said it expects inflation in the country to exceed its three-year target of 2.10% in the third quarter of 2020.
The US market declined, one day after the Fed’s decision to raise benchmark interest rates. The meeting of the Central Bank generally corresponded to the expectations of the previous day. The benchmark rates increased 0.25% for the 1.25% 1.50% range. This decision had two opposing votes, from the Fed Governors of Chicago and Minneapolis, who preferred a maintenance of reference rates. The content of the communiqué resembled the one from the end-October meeting, although it took an even more positive view of the economy and the labor market. In this positive view of the economy, the FED has improved its estimates for GDP growth to 2018, which is expected to be 2.50% from the 2.10% previously anticipated. Projections for the years 2019 and 2020 also improved to 2.10% and 2% respectively. Curiously, neither the press release nor the press conference made any reference to the impact of a possible tax reform. To remember that also yesterday, elements of the Republican Party reported having reached an agreement in principle on the fiscal package, with the Republicans of both chambers of the US Congress satisfied with the consensus of the versions proposed and approved in the House of Representatives and the Senate. In the business field, news for the confirmation of the agreement for the purchase of Twenty-First Century Fox by Walt Disney for 52400 M.USD. The financial sector was trading higher, favored by the Fed decision. In the macroeconomic field, retail sales increased 0.80% in November, comfortably surpassing the estimated 0.30%. If car sales are excluded (a very volatile item because it depends on factors such as promotional campaigns or tax incentives), retail sales increased 1% from the 0.60% anticipated. It should also be noted that growth for October was also revised upwards.