Market View

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Today, a session with a reduced volume should be attended, and so, the lack of liquidity could generate some more pronounced movements. The Dow Jones test at 20,000 points will be the main theme of the day. Also to be added that the US oil reserves will be published at 3.30 pm.

 

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Despite all the financial media coverage of the Dow Jones’ 20,000 points, investors have been pausing in recent days, resulting in a period of consolidation. The year can be considered ended and can also be considered a good year. Faced with a series of unpredictable events, such as Brexit and Donald Trump’s victory, and how the year started (with a strong correction due to the devaluation of the Chinese currency) to achieve gains between 8% and 12%, 2016 was a particularly positive year. It is quite natural that investors choose to take a break, operating in the market just to position their portfolios for the new year.

 

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The American markets closed with contained losses, and the volume continued to suffer a decrease. The session was marked by the publication of macroeconomic data, which did not influence the trend of major indexes but provided investors and economists with useful information about the US economy. GDP growth relative to the third quarter of the year continues to be revised upwards. According to the Commerce Department, the US economy grew 3.50% in that period, surpassing the 3.20% calculated in November and the forecasts of 3.30%. Starts today the period that corresponds to the so-called Santa Claus Rally. This period includes the last five sessions of the year and the first two of the new year. Over the past 30 years, the S & P performed 26 times, with an average gain of 1.74%. However, given the gains made by Trump Rally, the odds of a strong Santa Claus Rally will probably be lower than in previous years.

 

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The Justice Department has fined 7200 M.USD (6300 M. €) for Deutsche Bank for its conduct in the sale of mortgage-indexed assets before the financial crisis, a preliminary agreement that needs to be made official. According to the bank’s accounts published in September, the bank had a provision for legal costs of about 5500 M. €, which does not only involve this case. Analysts estimated that Deutsche Bank would pay a fine between 2000 M.USD and 5000 M.USD.

 

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The banking sector will remain in the spotlight. In an interview published yesterday by the Bild newspaper, German Central Bank President Jens Weidmann warned that for “measures planned by the Italian Government” to succeed, the institution must be “financially healthy in its core business.” He also said that public funds could not be used to cover in advance potential future bank losses.

 

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The South Korean market was penalized by the worsening political situation and the fall of about 20% from Toshiba which also affected the performance of all Asian exchanges. Toshiba warned yesterday it could incur losses of “several billion dollars” following the purchase of a US nuclear power company.

 

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In the pre-opening session, European indexes traded lower after losses on Wall Street yesterday. In the London market, the FTSE index hit a new all-time high, with some analysts reporting strong expectation of the Trump presidency’s impact on rising consumption. Meanwhile, in addition to the banking sector, the oil sector has attracted attention, as the date of implementation of the agreement between members and non-OPEC members is approaching. This morning, the price of crude fell slightly, after the American Petroleum Institute had revealed inventories of this raw material higher than expected

 

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Looking back, 2016 is marked by the valuation of the most risky assets, in a scenario of a certain optimism regarding the whole global environment. In fact, stock indices in the US recorded significant appreciations (S & P rose about 10%, Dow Jones 13.74% and Nasdaq100 7.08%), while in Europe DAX gained 6.59%.