World Stock Indexes Trading - page 7

Asian markets closed with sharp gains, due to the somewhat surprising decision by the Bank of Japan. Challenging economists’ forecasts, which point to an extension of the asset purchase program, the Bank of Japan decided to reduce the interest rate on deposits which the Nipponese banks have with this institution to -0.10%. This measure is not innovative but takes the surprise character in that Governor Haruhiko Kuroda recently to have shown skeptical to the adoption of negative interest rates.

Regarding the potential of the ongoing recovery, this will depend on the behavior of oil and Chinese financial markets. From a technical point of view, and considering the DAX as a sample of European markets, the first obstacle relevant to the rise of the German index is located in the zone of 10170-10270. The recovery is expected to be much more volatile than in the last years. It is not excluded that this upward movement is interrupted by negative sessions, in which may occur sharp devaluations.

It seems that the GBP/USD move to the downside is over for now.

Perhaps the overperformance of the Chinese market was due to the approach of the New Year festivities and the possibility (purely hypothetical) that the Bank of China to surprise the financial markets during this period with some monetary measure

The Governor of New-York Fed, said that conditions in financial markets and the global economy serve as compelling evidence to the US economy, with the same effects of a rise in interest rates. Investors interpreted the words of William Dudley as a lower propensity of the Central Bank to raise interest rates at its next meeting in March.

Despite the recent acceleration, wages are not fully mirroring, the improvements in the labor market.

With closed Asian markets, oil prices should capture the attention, and the trading volume should be more restrained. In terms of consolidation movements, the French retailer Casino has agreed to sell a majority stake in the Thai operator of supermarket Big C Supercenter by 3,100 M €, excluding debt to the Thai TCC Group. On the other hand, the Air France KLM said passenger traffic grew 3.20% in January, while the traffic loads decreased 6.40%.

It looks like European stocks are heading for 2013 low.

In recent sessions, European equities have been under strong selling pressure and since the beginning of the year have recorded a underperformance compared to their US counterparts. The reasons for this pattern are several. The first is that the European economy is far more exposed to China than the US. Another reason has to do with the resurgence of fears about the banking sector in different European countries. Another cause of selling pressure on European equities is that in December these equities are the first choice of global investors who had overexposure to European equity indices, justified by good economic prospects and the expectation that the ECB will implement further monetary stimulus measures. When earlier this year as risk aversion increased significantly, global investors rushed to reduce their exposure to equity markets and consequently those in which they held a greater exposure.

The banking sector will continue to be the protagonist of the European session. Until last week Italian banks had been chosen as a representative sample of the sector, but at this stage that role was taken over by Deutsche Bank. The bank’s activity has been penalized by restructuring costs and the legal costs associated with the various processes in which the bank is or was involved, the costs associated with greater regulation and also by the low levels of interest rates. In addition, investors will monitor developments in the oil and also the testimony of Janet Yellen in the Senate (15:00).