Stock Market Trading: 31 May 2013
European equity markets are set to open flat as clarity continues to elude stock market traders.
The first part of the year, which saw almost assured daily rises regardless of the fundamentals, seems to be a distant memory now. Instead, the focus has been shifted to the short-term vacillations over whether or not the Fed will taper their QE.
Yesterday's US economic data was below expectations, with preliminary GDP numbers and jobless claims both disappointing the markets.
Ironically, that did not attract a sell off in equities but saw the Dow Jones
gain 28 points to 15,331.5 on investor speculation that the Fed will maintain its stimulus.
Although the weak data has momentarily buoyed the bull's stimulus expectations, the next few days will see a barrage of US data set to slap sentiment around.
Of course, this will culminate in the big payrolls and unemployment numbers next Friday.
Between now and then, volatility is expected to spike as traders try to read the effect on future monetary policy from every little data point.
Stock Market Trading: 30 May 2013
European equities are set to open marginally higher but traders still appear to be bewildered over a mixed economic outlook.
A downbeat forecast from the OECD on global growth confirmed what most had suspected in the back of their minds.
However, the divergence amongst the regions has caused serious concern.
Whilst the reduction in the Eurozone's prospects came as no surprise, the optimism surrounding the US rattled a few more traders who fear Fed tapering.
As the US finally looks to be hauling itself out of the slump and the prospect of Fed tapering becomes more real, European economies are concerned about being judged on their own fundamentals.
The Dow Jones index lost 80 points to 15,301 as a lack of significant economic data triggered some profit taking.
Ever since Chairman Ben Bernanke said that the Fed may pull the plug on monetary stimulus should the outlook improve, market participants have felt obliged to pace their enthusiasm and consider matters one by one.
Stock Market Trading: 29 May 2013
European shares are set to ease slightly on the open, with bulls cautious of being overly optimistic.
Despite the solid gains seen yesterday, bulls are guarding against getting ahead of themselves, still scarred by last week's sudden reversal.
Yesterday's buoyant session in Europe was fuelled following some better-than-expected US housing and consumer confidence data.
The housing sector showed strong momentum as home values in the US rose the most in more than five years, with some areas even returning to pre-crisis levels.
In addition, the financial spread betting
markets were also spurred by a jump in consumer confidence to the highest level since 2008.
As a result, it came as little surprise to see the Dow Jones rallying towards all-time highs once again, hitting an intraday high of 15,522.
However, even as the data pushed US markets higher, traders got a taste of the new 'good news is bad' phenomenon.
Subsequently, US indices did a double take and spent the rest of the session retreating on fears that a pick up in the fundamentals will accelerate the Fed's effort to taper their bond purchases.
The pullback saw the Dow close well off its highs, settling just 59 points higher for the day at 15,394.5.
Stock Market Trading: 28 May 2013
Amid reduced trading activity due to the Memorial Day holiday in the US, the Dow Jones closed 13.5 points higher at 15,340 yesterday.
It appears that investors were still weighing the Federal Reserve's next move regarding monetary stimulus.
In his speech before Congress, Chairman Ben Bernanke pointed to a 'highly accommodative' policy but also acknowledged the possibility of an early withdrawal.
Nevertheless, European equities are set to open higher as the bulls step out from behind cover.
Despite last week's sudden evaporation of confidence, bearish momentum appears to have peaked for now and the buyers will be on the look out for bargains.
Europe managed to pare a decent portion of last week's losses as European Central Bank Executive Board member Joerg Asmussen came out with some reassuring and much needed dovish comments.
That reassurance looks to have aided the stimulus dependent rally and spurred on the bargain hunters.
This carried over into Asia, with indices
showing broad gains, and overnight stock market futures are indicating that UK and US investors will eagerly play catch up on the open.
Stock Market Trading: 24 May 2013
European equities are set to open flat as the Nikkei takes another lurch lower.
The last time the Nikkei dropped 7% in a single day was when the Tsunami struck the Japanese coastline two years ago, and things aren't getting any better today.
At the time of writing, we are another 3% to the downside.
The debate surrounding QE has certainly affected market sentiment and, alongside a surprise contraction in Chinese manufacturing data, has caused a vast swarm of profit-takers to call time and run.
Regardless of where they got out, they have done just fine this year as we are still 40% to the good.
Having taken its cue from the Nikkei
, the US market opened sharply down only to recoup losses as the day wore on and end up just 27 points lower at 15,355.
Better-than-expected Initial Jobless Claims and housing data fuelled the return.
In addition, a surprisingly strong earnings report from Hewlett-Packard
added 17% to the firms share price which helped lift the blue-chip index.
Stock Market Trading: 23 May 2013
investors have had a fantastic run this year; it has been hugely profitable and markets seem to have risen almost regardless of the news.
Despite the world economy being far from rosy, company valuations have soared to unseen levels.
They have benefited from huge injections of cash into the financial bloodstream and low rates of borrowing.
And let's not forget that investors have nowhere else to put the money; commodities, bonds, who wants to invest in those at the moment?
However, the see-saw trading session seen yesterday, which was fuelled exclusively by Federal Reserve comments/minutes, just goes to show the importance of central bank stimulus.
It also serves as a stark reminder that this positive environment for corporations is only a temporary measure; it won't last forever.
The big question now is whether this is the moment to 'sell in May and go away' or whether yesterday's almost 300 point range in the Dow Jones was merely a temporary bout of nervousness.
During his testimony to Congress, Ben Bernanke initially issued a warning that a premature withdrawal of QE could derail the recovery.
That statement sparked a rally in the Dow
which saw the index hit a new record of 15,540.5.
However, shortly afterwards, he then remarked that the Fed might scale back their monetary stimulus should the job market keep improving.
Investors decided to focus on the latter and so the Dow fell back to end the day 26 points lower at 15,354.
Stock Market Trading: 22 May 2013
European equity markets look set to open marginally lower after what was another strong day for equities on Tuesday.
Despite there being no major economic data of note from the US, comments from Fed Presidents proved to be the market drivers once again.
This time QE was in favour, with St Louis Fed President James Bullard saying that the 'bond buying program should be maintained to boost growth', and so the Dow Jones
rose by 42 points to 15,379.
Today, we should get a clearer idea of forward looking monetary policy when Fed Chairman Ben Bernanke testifies before Congress and the latest FOMC minutes are released shortly afterwards.
This may help us end the current speculation and let stock markets focus on the more traditional drivers.
Stock Market Trading: 21 May 2013
European equitiy spread betting
markets look set to open a few points lower as fear of a QE slow-down ensues.
Across the pond yesterday, various Fed Presidents gave their views on quantative easing and hints that the Fed may ease back on its bond-buying program eradicated any gains for US equities.
Speculation surrounding QE should be given some clarity later this week as Fed Chairman Bernanke speaks and the latest FOMC minutes are released.
For the Dow Jones today, the remarkable trend of 18 straight Tuesday gains on the trot will be tested in what should be a fairly 'fearful' day of trading.
Having closed at its highest level in 13 years yesterday, all of a sudden, the FTSE
looks set to follow its American counterparts and break its all-time high.
That high of 6,930 was set back in the last millennium, just, on 30 December 1999.
Although we're unlikely to set a new record this week, with sharp moves to the upside doubtful given such highly inflated prices, we shouldn't have too long to wait if we can avoid any bad news.
Stock Market Trading: 20 May 2013
European stocks are set to open marginally lower this morning, despite strong gains being seen across Asia.
Life is getting harder for market commentators as there are only a finite number of ways of writing the same piece of news.
In case you weren't aware of the continuing theme in 2013, the US saw some improving data, more companies released better-than-expected earnings, and we are at yet more all-time highs.
The problem is that as long as economic data
continues to improve and stimulus measures are kept in tact, nothing is likely to change unless investors get nervous.
This time around it was US consumer confidence and future economic activity sentiment that gave markets the boost, both of which are at five year highs.
Until something changes, it seems that most of the signs are pointing in one direction.