In the United States, homes under construction during the month of November increased by 3.30% to 1,297 million, compared to the expected 1,250 million. On the other hand, the number of building permits decreased by 1.40% to 1,298 million. Economists estimated 1,270 million licenses.
Yeserday the session was marked by the realization of some profit takinhg. This move had its epicenter in Apple shares. Reducing Nomura's recommendation to Apple served as a motivation for a number of investors to realize some profit takinhg, not only in this stock but also in the technology sector as a whole.
The approval of the tax reform is a victory of the Trump Administration that managed to approve it at times that can still be considered short, overcoming the objections of several members of the Republican Party itself .
Friday session was poor in news, which, along with the current court, contributed to a decrease in volume. Roche announced that it will acquire the American Ignyta (specialized in cancer treatment) for 1700 M.USD. Roche shares fell 0.41%. At the sector level, the banking sector was penalized by the weakness of the Spanish banks. On the positive side, the media sector stood out.
The retail sector stood out positively after Mastercard reported that US consumers spent more than 800,000 M.USD on holiday purchases, a number considered a record. This behavior was driven mainly by the increase in consumer confidence, the growth in employment and the fact that rebates in stores started earlier.
Today’s session is part of 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. The Dow Jones and S&P500 indices completed at the end of last week five consecutive weeks of gains as a result of the tax reform announced by Donald Trump that reduces corporate taxation from 35% to 21%.
Copper hit highest yesterday for the last three and a half years. Sustaining the rise in this raw material are, on a more structural level, positive prospects for the world economy. In fact, the current macroeconomic environment has some unique characteristics. The current phase is marked by a unison of the major economic regions, something that was not observed more than two decades ago. Thus, this whole cycle is guided by a high correlation between the main economies, with the growth of one to stimulate and reinforce the expansion of the others.
European markets ended the last session of 2017 in different directions, with investors looking at the outlook for the coming year. 2017 was marked by an appreciation of the European stock markets, albeit smaller than the US, mainly due to the appreciation of the Euro which is a disadvantage for the region's exports. The technology sector has appreciated by around 20%, making it one of the best performers in Europe on an annual basis. The producers of raw materials were also highlighted by the positive, driven mainly by the rise in metal prices at the end of the year. In London and Frankfurt, markets closed earlier. The FTSE index appreciated 0.85%, reaching a new high, led by companies in the mining sector. Infrastructure firm Balfour Beatty rose 1.43% after reporting that it had sold an additional stake in Connect Plus. On the other hand, the German market closed with a slight loss, reason why in annual terms the valuation of the DAX index was of 12.60%. In Paris, Airbus shares have been under pressure, despite reports of an order for 430 A320neo planes by private equity firm Indigo Partners.
Oil companies were among the worst performers on Friday, in line with the behavior shown by the price of crude oil in response to OPEC statements about the expectation of a greater supply of this raw material in the market in 2018 by the non-member countries of this organization.
The results of UBS officially inaugurate the earnings season of the European banking sector. Today, the IMF announce its economic forecasts for 2018. This event is taking place in Davos, Switzerland, where the World Economic Forum will begin tomorrow. This event, attended by politicians, economists, CEOs, central bank presidents, among others, is generally a precious source of insight and opinions from people with a potential to influence the global political-economic environment.
Since December 2012, the US debt limit has been reached and since then the State has operated through a series of legal and accounting subterfuges, without having a budget as such. As time goes by the efficiency and duration of these subterfuges is becoming smaller and it will be important that this problem find a more structural solution.
The recent hyperbolic rise of the indices is uncommon and often leads to excesses, which ultimately leads investors to regret. Thus, a short-term correction may be the best scenario for the continuation of the current Bull Market.
In the uncertain context of recent days, the Hong Kong stock exchange has been a notable exception. This market continues to be used by many global investors as a good way to expose themselves to the Chinese stock markets. In addition to several companies from this country being listed in this market, in the last decade China has become the main economic and commercial partner of this autonomous region, making its companies more interconnected with those of the continent.
Following the close of European stock markets, the US market was trading lower, with investors cautious about rising sovereign bond yields. In the absence of relevant business results, attention was focused on the disclosure of economic indicators.
The Euro rally begins to show some signs of fatigue. A short-term correction may be in progress. A fall below 1.2365 may not imply an immediate appreciation of the European indices if in the US the main indexes begin to show signs of fragility. Often, the devaluation of the Euro translates into a mere overperformance of the markets of the Old Continent vis-à-vis its American counterparts.
It should be noted that of the companies belonging to the S&P 500 index, 80% reported numbers above expectations and 81% beat estimates in terms of revenues. In terms of economic indicators, the ADP employment report showed that 234 000 jobs were created during January, well above the expected 185 000 but below the previous 250 000 observed in December.
Wall Street traded lower on the day the job report was known. The environment was characterized by a rise in yields on sovereign debt and the reaction to business results released yesterday after the closing of three major companies: Alphabet (Google), Amazon and Apple. The employment report showed that 200 000 jobs were created during January, more than the expected 180 000. Salaries rose 0.30%, in line with expectations. These data boosted yields on Treasury Bonds, with 10-Year Treasury Bonds reaching the highest of the last 4 years. Regarding the reaction of technology companies that reported their results yesterday, Apple and Alphabet were downgraded, while Amazon was gaining ground, having already reached a new record high. Of the companies belonging to the S&P500 that have so far submitted their quarterly accounts, 78% exceeded forecasts and 80% exceeded estimates in terms of sales.
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