World Stock Indexes Trading - page 2

Traders boosted bets that the Fed will raise rates next month after the labor report.

It is difficult to find any weaknesses in Friday’s employment report. Thus, the odds of an increase in interest rates rose to 70% compared to 58% the day before and 39% from the end of October.

It's quite likely that there will be a relatively “traumatic event” in global markets once the current period of low interest rates comes to an end.

Investors will now focus their attention to the intervention of Mario Draghi at an event organized by the Central Bank of England at 13:15.

A factor that marked the session was the weakness of oil. Yesterday it was reported that off the US and China are dozens of supertankers with about 100 million barrels on board. The cargo of these ships belong often to commodities trading companies awaiting the rise of crude price to sell the barrels they hold.

Oil continues to suffer the pressure generated by solid evidence of an oversupply and strength of the dollar. Yesterday, the US Department of Energy revealed that last week the oil reserves of the country increased by 4.2 million barrels instead of the 790 000 estimated.

Because of these tragic events can not be excluded that investors will take on a greater geopolitical risk in their investment decisions in the oil market.

The central theme of the current situation is the monetary policy of the Fed. Since the publication of the employment report for October, the currency markets gave a high probability of a rise in interest rates at the December meeting (currently 70%). This week will be published two key indicators that will allow us to have a clearer vision of what will be the decision of the Central Bank in December (The minutes of the last meeting of the Fed and inflation).

Despite the uncertainty and tension that exists in Europe and the Middle East, the situation of the equity markets appears to be positive and after the publication of the October employment report there has been a greater propensity to risk, however this idea results from a survey prepared before the tragic events of Paris. Interestingly, this greater propensity to risk coexists with an increased likelihood of the Fed raising interest rates.

The rise in interest rates should not have a significant impact on the American economy. Considering a timeline of one year if the rates are situated somewhere between 0.50% and 1% (according to the forecasts of economists), remain at historically low levels and as such should not significantly affect investment nor recourse to credit by households. The impact of rising interest rates should feel via appreciation of the dollar. However, this movement is already embedded part in the current quotation of the American currency. The appreciation of the dollar should feel more in terms of the results of American multinationals (by decreasing the profits generated outside the US) and emerging economies.