Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices rehearsed with contained losses. Yesterday’s session broke the positive momentum and the rally attempt of the European markets. In this context, the DAX broke the line of the 13200, zone considered as lower limit for any upward movement until the end of the year. Although the seasonal effects continue to favor European markets, after yesterday’s correction, the likelihood of a Santa Claus Rally in Europe decreases significantly. Another variable to follow is the bond market. In the US there has been a strong rise in yields, with 10-year interest rates at 2.50% (the highest level since March). Although in Europe the contagion of this movement to European yields has been modest for the moment, it is important to underline that during 2017 the correlation between US and European debt interest rates has been quite high.
US indices closed without major swings. The main event of the day had already been widely anticipated by the market. The House of Representatives approved, with 224 votes in favor and 201 opponents, the tax reform, the largest transformation at the tax level since President Reagan’s term. For this proposal to become law is only the signature of President Trump. After months of advances and retreats, with several jolts and some caricature contours, the approval of the tax reform is a victory of the Trump Administration that managed to approve it at times that can still be considered short, overcoming the objections of several members of the Republican Party itself . At the macroeconomic level, home sales increased 5.61% in November, reaching an annualized 5.81 million units. In addition to surpassing forecasts of 5.53 million, November’s sales represented the biggest increase since December 2006, when real estate market expansion reached its peak of expansion. The median price of real estate was beset by USD 248,000, an increase of 5.80% over the previous year. The booming economy, labor market dynamics, historically low interest rates, stock market appreciation and foreign investment in some metropolitan areas of the country have been the main catalysts of the real estate market. At the corporate level, to mention the good results of FedEx, whose shares rose 3.50%. The importance of the activity of the carrier exceeds the company itself because it is a good barometer of the dynamism of world trade.
Most of the Asian indexes ended at a low, and Kospi was the biggest looser (-1.72%), the South Korean index. The weakness of Korean stocks is due to the weakness of technological stocks (such as Samsung -2.24%) and the banning of Beijing authorities from a group of Chinese tourists and businessmen traveling to Seoul. Cyclically, China uses such bans to demonstrate its displeasure with some position in South Korea. The exception to the general downward trend were the Shanghai and Hong Kong stock exchanges that have lately moved to the rhythm of domestic factors , in particular the Bank of China’s monetary policy. After two days of meetings, the Bank of Japan (BoJ) has kept the broad outlines of its monetary policy unchanged. The benchmark interest rates were maintained at 0% and the BoJ reiterated its intention to purchase bonds and other assets for an annual amount of 750 000 M.USD. Japan’s monetary policy is the most expansionary of all, including the purchase of shares (mainly ETF). As a reflection of this share purchase and ETF, BoJ is among the 10 largest shareholders of several listed companies.