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US macroeconomic data continues to exceed expectations, in which the employment numbers strengthen a recovery scenario for the American economy. However, after today’s opening, U.S. stocks fell, with the Standard & Poor’s 500 Index retreating after touching its average price for the past 50 days, as small-cap shares resumed a selloff following a fifth weekly decline.
This morning, Asian shares closed positive, reacting to the smaller number of protesters on the streets of Hong Kong.
The positive opening of major European indices, led to a marginal climb throughout the day. DAX30 was in decline throughout the day. It is important to notice that the German market was closed last Friday.
Alcoa Inc. unofficially starts the U.S. earnings season the same day as it reports third-quarter earnings. Eight other S&P 500 companies will post results this week.
SP 500 Daily chart:
The stock market kept falling in the day. EBay earnings failed to offset the decline in consumer confidence.
The uncertainty is large and many investors are waiting for the next catalyst to make their entry in the markets.
Protests in Hong Kong remain as a political concern and also remain the rumors that the Fed may raise the interest rates sooner than anticipated.
Investors are making their analyzes to assess whether growth is strong enough to withstand the rise in interest rates.
The SP500 fell about 1.75% in September, with the Fed on course to end its monthly bond buying program, in October.
Later this week, data from the manufacturing and services industries will be released, in addition to the government’s monthly labor report.
The reporting of quarterly results from Alcoa Inc., on October 8, will kicks off the earnings season.
Pro-democracy protests in Hong Kong induced to the fall of stocks in Asian markets, and subsequently the same effect in the European market. The economic data release of the German Economy, the U.S Consumer Spending and personal income data, did not change the market sentiment, as it is not presented too far from expectations. In the euro zone consumer confidence declined in September and the value of stocks remained low.
The European economy continues to weaken and the demonstrations in Hong Kong add to uncertainty.
Investors should remain cautious until the next earnings season starts, so in the short term is not expected to emerge signs of strength in the stock market.
Daily chart of the Index DAX30:
Investors await the disclosure of relevant macroeconomic data on Wednesday (17th September). The perspective to interest rates, to be announced by 19:00h will be crucial to further developments.
The markets are still suffering the effects from the decline in industrial production, and are aligned with the information disclosed through the financial media from last week.
It is speculated that the economy has made the necessary recovery to justify the increase in interest rates.
I am not convinced that the stock market has ended it’s correction, believing that it will keep falling until the the disclosure of relevant key data that may justify the rise to new highs.