World Stock Indexes Trading - page 22

The month of September is full of events that can offer some challenges to investors. The first is the employment report on Friday, followed by the meeting of the ECB (8th), meetings of the Fed and the Bank of Japan (21), the first debate between Hillary Clinton and Donald Trump (26 ) and the OPEC meeting (26-28).

The month of September is full of events that can offer some challenges to investors. The first is the employment report on Friday, followed by the meeting of the ECB (8th), meetings of the Fed and the Bank of Japan (21), the first debate between Hillary Clinton and Donald Trump (26 ) and the OPEC meeting (26-28).

The ISM index, which measures manufacturing activity in the country and is one of the most used tools in the analysis of economists, unexpectedly fell in August. In fact, the ISM fell from 52.6 to 49.4, against forecasts of 52.0. At this level, the manufacturing activity goes back a contraction phase, something not seen since February. The fall was cross the various components of the indicator, including the employment component, which fell to a phase of contraction. 

The major Asian indices did not show a common trend. The Japanese stock market in recent weeks has been one of the best performers but today was penalized by the appreciation of the yen, which pressured shares of exporters in the country.

People feel most comfortable in a congestion or a consolidation area, but this may be the most dangerous place to be. So it would be logical to conclude that trading outside the comfort zone shall be the safest and correct one.

The first stage of the morning should be marked by the expectation of the ECB meeting, which will likely translate into reduced volumes and a contained volatility.

Today, the session will be dominated by two themes. The first is the evolution of oil. The second theme of the day will be the intervention of several members of the Fed. Although the vast majority of investors have the conviction that the Central Bank will not raise interest rates in September, financial markets continue to look for evidence to support this assumption. For today, are scheduled the interventions of the Governor of the of the Boston Fed, the Dallas Fed Governor and member of the executive committee of the Fed Daniel Tarullo.

In recent months, several members of the Fed have been advocating being the conditions for an increase in interest rates, and September is a possible date. On Friday, the Governor of the Boston Fed, Eric Rosengren said that the risks of delaying an increase in interest rates are growing. This statement was complemented by the conviction that the US economy is in a phase of strong expansion and has shown resilience to external shocks, the most recent being the Brexit. Recent interventions by various members of the Fed, forced investors to question themselves about the possibility of a rise in interest rates already at the meeting of 20 and 21 this month. Generally, when a market conviction is shaken and called into question, the result is an increase in volatility and a significant increase in risk aversion of investors. It was this pattern that was observed on Friday. Sales reached all sectors, with particular focus on the more cyclical and more sensitive to interest rates, commodities, corporate bonds, among others. US government bonds also suffered losses, because of its sensitivity to interest rates. This last point raises a threat to the equity markets. If increases the prospects of a rise in interest rates by the Fed is not ruled out that yields exceed the level of 1.63%. This level is important from a technical point of view because if surpassed may signal an upward movement in yields. In this scenario, the impact on the stock market would be negative. Technically, in recent weeks, the S & P had oscillated (with the exception of some specific moments) between 2168 and 2194, with very low volatility. Usually these market phases precede very significant movements and high volatilities. The fall on Friday was particularly and surprisingly expressive, and may mark the beginning of a new market phase.

Today begins a conference organized by CNBC, where they will participate in several personalities of the economic and financial world, as fund managers, hedge fund managers, economists, etc. This event may represent a good opportunity to know the views of stakeholders in the current environment, and which is their position in terms of portfolios and to what extent are anticipating a rise in interest rates.