Home » Market Daily Watch » Markets Update – TradexSys DailyWatch – 12/10/2023

Markets Update – TradexSys DailyWatch – 12/10/2023

Good morning, Thursday, October 12th. The fourth consecutive day of gains in the American markets yesterday, Wednesday afternoon. The S&P closed at 1040.19, while the Dow Jones and the Nasdaq gained 0.72% and even the Asian markets followed the same trend overnight on Wednesday, with Hong Kong even registering a 2% increase. The Nikkei was primarily driven by positive inflation data in India and a rally in Chinese banks, as the Chinese State Sovereign Fund increased its position in the four major Chinese banks. This favorable trend extended to Europe, with all European indices in positive territory this morning, and the DAX was up by 0.60%. American futures continue to show a positive trend, with gains of around 0.38% for the three major futures, namely the Dow Jones (+0.39%), the Nasdaq (+0.40%), and the S&P 500. The euro and oil are gaining slightly after recently falling below $460. The yield on the 10-year bond is continuing to provide relief to the stock markets, with a significant decline in yields contributing to a positive atmosphere.

From an economic perspective, yesterday’s focus was on the American production index, which increased by 0.5% in September, surpassing expectations. Despite expectations of a negative market reaction, the markets responded positively, interpreting the fact that the production of goods is still declining, with a 0.67% decrease compared to the previous course. Another positive aspect was the release of the Fed minutes regarding the last meeting in September, reflecting a division among Fed members regarding possible future interest rate hikes. Some members consider 1-2 rate hikes possible, while others believe that the restrictive policy should stop, avoiding further rate hikes. However, there was unanimity in the need to proceed with caution in the next steps in monetary policy, as well as the importance of keeping interest rates high until there is substantial evidence that inflation is decreasing and approaching the target set by the Fed, which is 2% annually, as with the ECB.

Today, we eagerly await the consumer price index data, scheduled for 02:30 Italian time. Forecasts indicate a 1.4% increase compared to the previous consumer price index, excluding food and oil, which is the indicator closely followed by the Fed to make decisions regarding monetary policy. Another significant piece of news is the acquisition of Pioneer Natural Resources by Exxon, one of the largest acquisitions in the oil sector in recent years, valued at $59.5 billion. Such acquisitions are generally viewed positively, but it will be interesting to see how the stock prices of the companies involved will react. We will anxiously await the data for today and tomorrow to assess how the market will respond, especially with regard to the important inflation data.


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