Stock Market Trading: 07 November 2014
Expectations for a good Non-Farm Payrolls
number are seeing European equities creep higher ahead of the open.
Wednesday's drop in ADP jobless claims boosted confidence in the US and supported yet another strong rally in stocks on Thursday.
At the same time, the European Central Bank reiterated its pledge to increase stimulus efforts and the optimism helped reinforce the mood on the other side of the Atlantic.
Recent US data has firmed up the belief that the world's biggest economy is gaining traction and traders think that today's employment figures are set to reflect that.
With this positive back-stop, the bulls are holding onto their long positions whilst a lot of the bears have decided to fold their cards and close their short positions to stave of ruination.
Stock Market Trading: 06 November 2014
With traders nestling in ahead of today's central bank meetings, stock markets in Europe are set to ease on Thursday.
will also have 10 points shaved off this morning by companies going ex-dividend.
Although US markets have completely shaken off the recent spasm lower by voyaging into uncharted territory, European indices still have some way to go to challenge their ceilings.
It's been a commendable effort from the European bulls given the disappointing economic data of late, but it's clear that to replicate the kind of optimism seen in the US, the ECB is going to have to lend a hand.
Bulls have got their fingers crossed that the ECB, like the BoJ, will start popping the corks on the Bollinger to keep the QE party going, but the consensus view of this happening today is pretty miniscule.
Whilst expectations are for Draghi to stand pat, the Eurozone economy continues its slow slide into the mire of deflation and his plan to increase the ECB's balance sheet hasn't had any effect on confidence.
However, as long as he doesn't explicitly rule out sovereign bond purchases, markets will be happy to assume that the economic environment will eventually force him to give us an F1 podium-style Champagne finish.
The Dow Jones rose by more than 100 points to a fresh all-time high of 17,484 yesterday on the feel good factor after Republicans won a majority in the US Senate for the first time in 8 years.
At the same time, the ADP Research Institute reported that companies added 230,000 workers last month, surpassing estimates and hinting that the jobs market is in rather good shape.
Stock Market Trading: 05 November 2014
After shrugging off some early wobbles, European equities are set to start on solid ground this morning.
We saw a bit of a kneejerk reaction lower to yesterday's weaker forecasts from the European Commission, but this shouldn't have been a surprise to anyone that's even remotely involved with the markets.
All they've done is adjust their previous forecast after the long string of weak economic data that's been coming out of Europe for the last 6 months.
The traders that sold on the news perhaps give the European Commission too much credit; as yet I have not met anyone, nor any institution, that has any consistent predictive ability above random chance.
Given that yesterday's sell off was based on nothing new, those traders who were on the other side of the trade are set to profit handsomely as prices make their way back up to Tuesday's open and everyone hunkers down ahead of today's ADP figure.
In the US, an ongoing slump in oil prices pushed energy stocks lower.
However, giants like Wal-Mart
and Procter & Gamble
had the muscle to lead a rebound in late trading.
This saw the Dow Jones reverse course towards the close, posting a gain of 22 points to 17,378.
On top of that, the Dow has been on the offensive in overnight trading, crossing above the 17,400 mark to a fresh all-time high.
Stock Market Trading: 04 November 2014
Following a muted session in the US and Asia, European stock markets
are set to open flat.
Given the surge we saw on Friday, it was only natural that equities would give back some of those windfall gains.
However, with a brightening outlook for the US and the expectation that Japanese quantitative easing will work its way around Asia, the declines in those markets were much more modest than the almost 1% drops we saw across Europe.
It looks as though Europe can't piggy-back off the efforts of other regions for very long before we're reminded of the mire it's in, and we should get another reminder today with the release of EU Economic Forecasts.
It will be a particular point of interest to see how the EU views the trajectory of growth and inflation this time around as they appeared to be reasonably bullish in the spring forecasts.
Since then, GDP growth in the big economies has stagnated and inflation has dropped to unexpected levels but, to their credit, they did get stubbornly high unemployment right.
After reaching a new all-time high on Friday, the Dow Jones retraced 17 points to 17,358 yesterday amid a sell off in energy stocks.
Nonetheless, the US Institute for Supply Management showed a rise in manufacturing PMI, which strengthened the case that the world's largest economy can now sustain itself.
Stock Market Trading: 03 November 2014
European equities are set to open little changed following the huge run away gains on Friday.
Traders are likely to pause today as they take a breather and try to reassure themselves that equity really valuations should be around these levels.
In addition, investors will be kept off their trigger fingers by the fact that this week is packed full of big data releases and central bank meetings.
This will be all the more important as the brewing storm cloud of slowing global growth continues to hang over us.
A weaker than expected reading for Chinese Manufacturing PMI on Saturday was a timely reminder that all is still not well.
We also had another poor showing for Germany on Friday, with Retail Sales slumping.
This should have sent alarm bells ringing, but maybe investors are thinking that if the European economy is starts to resemble the Japanese economy, perhaps they'll start acting like them as well?
In an unexpected move, the Bank of Japan boosted its annual target for expanding the monetary base to ¥80 trillion from ¥60-70 trillion.
The announcement showed that even if the ECB is having second thoughts about picking up the baton from the Fed, someone else is ready to do it, implying that QE remains on the table at a global level.
Market reaction was swift and decisive, with the Dow Jones
immediately spiking to an all-time high and ending the day 175 points up at 17,363.