Stock Market Trading: 15 November 2013
Most European markets will open fairly flat today, but the FTSE
looks set to open higher after making a nice move to the upside overnight.
After a week with little economic data of real emphasis to gauge the situation, the markets have had some time to settle and assess the recovery process.
On the one hand, the Bank of England seems to be in strong spirits.
The UK housing market is riding high and unemployment is falling quicker than the autumn leaves, but rest assured Mark Carney is in no rush to raise interest rates.
Or so he says.
As for the ECB, there is more cause for concern.
Yes, Eurozone GDP figures showed expansion, but only by a mere 0.1%.
In addition, Germany and France are at a crossroads, with different views on how to handle the costs of managing failed lenders.
As a result, there will have to be some deliberation within the European banking sector.
With pressure mounting, could we see even more quantitative easing from the ECB?
Comments made by Janet Yellen that she favours more of the same loose approach to monetary stimulus pushed equities to fresh record highs yesterday.
The Dow Jones surged 37 points to 15,872 after a slight pullback in the early afternoon and is still looking strong during overnight trading
Stock Market Trading: 14 November 2013
European stocks look set to open higher after both the BoE and the Fed comforted investors by saying that any change in monetary policy or quantative easing will not take place until their respective economies are ready.
Data from the Bank of England confirmed that the unemployment rate is on the decline and that the recovery has taken hold, however, Mark Carney will not discuss policy change until the 'staging post' 7% unemployment rate is reached.
The Dow Jones saw an initial sell off yesterday, but that was quickly overturned during the afternoon session as investors speculated that Janet Yellen will continue QE.
The Fed's Vice Chairman claimed that they have made significant progress towards their goals but still have more work to do before cutting back.
The reaction was swift, with the Dow ending 76 points higher after reaching a record level of 15,849.
If tomorrow's jobless rate is still too high then the Fed could well continue to support the economy, with tapering a mere future proposition.
Traders will expect that and so any weak data could see stocks rally.
Nevertheless, looking at the spread betting charts
, with stock markets reaching such dizzy heights and all-time highs, we may see some doubt as to whether the rampage can continue.
Stock Market Trading: 13 November 2013
European equities look set to succumb to a modest pull back this morning as traders book profits.
European indices have been edging down from last week's five-year highs as a run of fairly weak corporate earnings and low volumes have encouraged investors to take some money off the table.
With little fire on the economic calendar
this week, traders aren't seeing much of an upside.
However, it still seems that the path of least resistance in the US is higher as Friday's employment rate satisfies investors' sentiment for a strong economy.
Although we saw a slight fall back yesterday, with the Dow Jones dropping 13.5 points to 15,760, a rest was probably warranted after the strong rally following the government shutdown.
Tapering news will continue to dominate stock market activity, and investors will wait with baited breath for more details.
Any signs of an improved economic outlook might convince the Fed to start reducing their stimulus.
Stock Market Trading: 12 November 2013
Modest gains are expected at the start of the European session as the bulls look to gain some momentum after a day of flat trading activity.
Britain's recovery, although not out of the woods, has certainly exceeded expectations.
The main indicator on when a change in monetary policy is likely to take place is the unemployment rate.
If we see a reduction to 7%, the BoE may well consider raising interest rates from their all-time lows.
However, with unemployment falling at a faster than expected rate, the Bank may have to act quicker than desired.
The problem for Mark Carney is this; how does he portray this great progress without spooking the markets into believing that interest rates will definitely rise?
It seems that a strong US corporate earnings season still offers enough support to keep the upward trend in equities intact.
Yesterday, amid a rather tight range, the Dow Jones gained 15 points to 15,773 as the timing of cuts to monetary stimulus remains unclear.
Hopefully, some economic data scheduled for later this week will offer some insight into the consumers' spending power.
Stock Market Trading: 11 November 2013
are set to open fairly flat as traders dust themselves off after what most would say was a surprising announcement from Mario Draghi last Thursday to reduce interest rates to 0.25%.
The decision certainly spooked the financial spread betting
markets and caused some volatility that we have not seen for a while.
With European growth data expected to show signs that the economy really is grinding to a halt, it will support Draghi's decision to cut interest rates and should give the economy the fighting chance it needs to recover.
Strong economic data following the Non-Farm Payrolls release meant the bulls were riding high on Friday, with US markets rallying through to the close of play and the Dow Jones settling 150 points higher at 15,748.
Friday's NFP indicated a rise of 204,000 jobs in October, compared with estimates of a 120,000 increase, amid upward revisions for the previous two months by 60,000 jobs.
However, it seems that a more consistent run of positive economic data is expected before the Fed contemplates the scaling back of quantitative easing.
The consensus seems to point to a delay until March next year with a reduction from the current $85 billion to $70 billion.