Market View; World Stock Indexes & Trading Journal - page 30

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Greek stocks have lost more than 85 percent of their value since 2007. The nation’s benchmark gauge closed at its lowest level since September 2012 on Monday.

 

Today, investors will follow the publication of the ADP report, which measures job creation in the private sector. Economists take advantage of the ADP report statements to improve their forecasts for the official employment report.

 

In the early hours of trading, mining and oil shares should negotiate under some selling pressure, resulting from strong reversal of the trend that was observed in the commodities market after the European close. In addition, investors will analyze the results that were published before the opening, but probably should have an impact strictly in the related stocks and should not influence the market as a whole.

 

Asian indexes closed higher, boosted by the good performance of the Shanghai Stock Exchange, which at 7:20 AM accumulated gains around 2%. Boosting the shares of this market was a report published by the state agency Shanghai Securities News that several investment funds have more than one million M. yuan (Chinese currency), about 150 000 M. €, to allocate the equity markets. While other Asian markets have closed up, the attitude of investors was characterized by some caution, justified by the publication of the US employment report.

 

Today’s session starts without relevant business news and with an economic agenda also quite meager. In this way, there can be expected more expressive movements by producers of raw materials, after being revealed economic indicators in China.

 

After the close of yesterday’s session, Google surprised the market by announcing that it will be replaced by a new parent company called “Alphabet”. The company explained in a statement that the universe of products and companies is already too big to exist under the name Google. The company chose to undertake a corporate reorganization with reflection in organizational structure. In the aftermarket, Google’s stock is up about 5%.

 

In the beginning of the session, European equities negotiated slightly higher, after the US stock market have reversed their downward trend and Asian stocks have also ended in positive range. The European markets consolidate after strong selling pressure after a devaluation of the Yuan of 1.90%. Today, the Chinese Central Bank have fixed a Yuan only marginally lower, thus giving a signal that wants a devaluation of its currency but in a thoughtful way. In business terms, Nestlé reported, relative to the 1st half, sales below expectations due to the collection of one of its products in India, while the second largest German utility company, RWE, also showed a lower semi-annual result than expected. Also German, ThyssenKrupp reported a significant increase in quarterly profit, aided by units of elevators and steel in Europe, beating analysts’ forecasts. On the other hand, the technological sector should capture the attention, after last night Cisco Systems have submitted their results, reporting a growth of 3.20% in net profit for the 4th quarter, while revenues increased 3.90%. In addition, the company expects an increase in their income between 2% and 4% and earnings per share between 0.55 USD and 0.57 USD. Cisco shares rose 3.87% in the aftermarket. Today’s publication of the minutes of the last meeting of the ECB should not raise great interest, since in this last event, July 16, there were no changes to the current monetary policy.

 

The Fed’s monetary policy is again the center of the debate on Wall Street after the economic data releases have suggested an increased strength of the economy, raising renewed expectations that the Fed start the interest rate hike cycle already in September.

 

Asian shares closed lower, with the Shanghai Stock Exchange accumulating losses of 2.50%, at 7:00 am. During the weekend, the Financial Times reported that the Chinese government would abandon its strategy to stabilize the stock market by buying shares held by state-owned financial institutions. The government in Beijing will focus its efforts on the punishment of persons and organizations that supposedly destabilized the Shanghai and Shenzhen exchanges. Initially, the Chinese authorities have tried to counter the sharp falls in stock markets, buying, through state funds, about 200,000 M.USD in two months. These interventions did not have had the desired success, displeasing international investors, as they are not familiarized the State to adopt such measures.

 

Asian shares closed with losses, which were quite pronounced in Tokyo. Dictating this trend were the economic data on China. In August, the PMI index on manufacturing activity, elaborated by the Chinese Government, fell from 50.0 to 49.7. This is the lowest level since August 2012, thus signaling that the Chinese industry is in a contraction phase. Caixin/Markit index, which also measures the manufacturing activity, fell in the same month from 47.8 to 47.3, the lowest since March 2009, confirming the contraction signs from the official PMI index. The difference between the two indexes lies in the PMI index that appeal to a larger sample and focus mainly on state enterprises and larger. The Caixin/Markit index is focused on a smaller sample, which consists mainly of small and medium-sized enterprises. In the past, investors associated negative data of the Chinese economy to possible monetary stimulus measures at this stage, investors fear that the Beijing government further devalue the yuan, which could induce other emerging countries to adopt a similar measure.

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