World Stock Indexes Trading - page 6

 

On 31[SUP]st[/SUP] December 2015, S&P 500 was trading at 2035 levels down by almost 0.73% and Dow Jones was trading at 17420 levels down by 2.08% from the close of 2014, with energy sector being the worst performing sector because of sharp drop seen recently in oil prices and other sectoral indices remaining at multi-year lows. In 2015, S&P 500 the imperative US index went into negative territory after showing positive bias for three straight years with two-digit gains. The last S&P 500 went into losses was 2008, when it went down more than 30%. The negative sentiment of 2015 might linger for short term in 2016 but traders have already positioned themselves to see volatility in 2016.

Fortunately, i firmly expect that this flattish nature of US indices and undervaluation will gradually bring a new up trend on the back of strengthening US economy, surge in inflation and positive investor sentiments ahead of US elections.

 

If European markets close higher today, many investors who have opened selling positions in the market will resort to derivatives to protect their capital and might close their positions. In addition, recent declines have made some stocks interesting from a fundamental point of view, which could attract the interest of the so-called value Investors. When a financial asset goes through a very prolonged and steep downturn, where many investors have opened selling positions (short), recoveries are usually quite quick and sharp. However, if today’s behavior of European equities is weak investors who bought yesterday, as well as potential buyers will be discouraged.

 

Today US oil reserves will be released. In recent weeks, there has been a fairly volatile and distant readings forecast of economists. Despite this volatility is possible to trace a pattern, characterized by a much smaller increase in oil reserves and a sharp increase in gas reserves. Economists estimate that crude oil reserves have increased 2.6 M.USD and gasoline 1.9 M.USD.

 

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For a more enduring reversal of investor sentiment, the statements of Mario Draghi do not seem to be enough. To attend a recovery of stock markets, it should be confirmed any of the following conditions:

– The decline in fears about a devaluation of the Yuan (which has already been happening)

– The stabilization of the Chinese markets

– The oil recovery

 

he value of crude oil was undoubtedly the main catalyst of Wall Street’s rise on Friday. Oil posted the largest daily increase since August of last year valuing up 9%.

 

From a technical point of view, while the S & P stays above 1800 points, there remains a reasonable probability that the stock markets entering into a recovery.

 

The meeting of the Fed today will not bring major changes in relation to what was broadcast to the market at its December meeting. Last month, the oil retreated over 25%, with a negative impact on inflation and hindering the task of driving the Fed to levels close to 2%. Given this trend, investors will monitor the reference of the Fed for inflation, it is not excluded the minutes to reveal the apprehension of the members of the Central Bank, which would lead investors to believe not only that the Fed will not raise rates at the March meeting as the number of increases may be smaller than anticipated by the Fed members (4 increases of 0.25%).

 

In the European session will be the scene of two opposite forces: a negative reaction from Wall Street to the Fed decision and the appreciation of oil in the New York session.

Reason: