Market View; World Stock Indexes; Trading Journal

Yesterday, the British stock market led the gains on a day the British Pound has considerably devaluated, reaching the minimum of the last 31 years.

To frame the session today (and perhaps also the near ones) is necessary to go back yesterday, when Bloomberg published an article on the ECB’s monetary policy. According to this article, the Central Bank was considering reducing its financial asset acquisition plan, and this reduction is called tampering. According to the report, the ECB would be to draft a plan to gradually decrease (possibly in steps of 10 000 M. €) its asset purchase program currently at 80 000 M. € / month. This program is scheduled to end in March 2017 and in the market there was the expectation that this period could be extended and possibly increased the amount. However, the intervention of Mario Draghi at the September meeting and some later interventions of a few members of the institution have shaken investors’ expectations.

The main even yesterday was the abrupt fall of the pound against the dollar (6%). A drop of 6% in the forex market is, in general terms, a drop of about 20% in a stock index. The reasons for this move are unclear but apparently are not of a fundamental nature and can be an error, of an automatic trading program that triggered a series of stops in a low liquidity environment.

The figures indicate that the expansion of the labor market remains intact although at a slower pace. Data confirm the improvements in the labor market indicated by the Fed at the last meeting and shall not constitute an obstacle to a rise in interest rates in December. Until this meeting will be published two employment reports. The Fed has scheduled a meeting in early November but should not take any decision before the presidential elections.

Today officially begins the Earnings Season with the presentation of Alcoa's quarterly accounts. The earnings season starts today, but only in the next week is to gain greater intensity. In addition to Alcoa's results will be published on Friday Citigroup accounts, JP Morgan and Wells Fargo.

The volatility of European and American markets remain close to the minimum of the year. However, it is unlikely that this exception will endure especially considering that October is statistically one of the volatile months.

The fact that the Shanghai Stock Exchange have valued can be explained by the fact that these signs of weakness can influence the Beijing authorities to adopt new measures to stimulate the economy.

The increase in inflation may be signaling some recovery in economic activity, particularly consumption. This fact mitigates the fears aroused by last fall in imports and exports.

The results of the banking sector, published on Friday, were entirely good and managed to alienate some fears caused by Alcoa and Ericsson. The President of the Fed argued that the central bank can tolerate a higher than desired inflation to ensure that the economic expansion continues to solidify. Today, the Vice President Stanley Fisher will be present at a conference organized by the Economic Club of New-York.

The appreciation of oil in the Asian session were due to the decline in the dollar and a study by Bernstein which indicated that the accumulation of world oil reserves decreased in the 3rd quarter of this year, reaching the lowest value since the last quarter of 2014.

Oil (quoted in New-York) continues to trade in a very volatile way but not descending significantly below 50 USD / barrel has been enough to give some support to its sector and more indirectly to the market as a whole. These good results overshadowed economic data, which seem to strengthen the arguments of those defending an increase in interest rates in December.

Today, Asian markets had a relatively quiet session, achieving modest gains. In Japan, valuations were more significant due to various business news and the interruption of the last two days recovery of the Yen against the Dollar.

Asian markets closed in a slight downward. The appreciation of the dollar pressed the price of oil and its sector. However, the Japanese market was favored by the downward trend of the yen against the dollar, a behavior that favors the major exporting companies.

The behavior of Italian banks can influence the behavior of the Spanish and German pairs in a week in which many European banks will publish their quarterly accounts.

Today DAX reached 10825, overcoming the level of 10800. The medium-term consolidation phase may be over and a new upward movement is now technically possible.

The protagonist of the earnings season in the banking sector will be the Deutsche Bank which reports its accounts tomorrow.

Oil continues to be an influential variable in the current panorama of the equity markets. Yesterday, crude oil closed at 49.20 (-1.60%), a particularly volatile session, on the day the Energy Department showed a drop of oil reserves (-553 thousand barrels), against the predictions and calculations published on Tuesday by the American Petroleum Institute. Gasoline reserves suffered a higher decline than estimated.

Yesterday, the earnings season reached its mid-point, as 50% of the constituents of the S & P already submitted its quarterly accounts. Until yesterday, about 73% of companies surpassed analysts’ forecasts and about 61% did the same concerning revenues.

The beginning of this week should be particularly intense because beyond corporate news, European investors are faced up with the electoral campaign in the United States and the difficulty of OPEC in achieving a consensus on the reduction of production.

In an environment marked by uncertainty regarding the outcome of the presidential elections, the US market traded slightly higher, with economic indicators released to reveal a consistency with previous published figures suggesting that the Fed will raise interest rates in December.