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Draghi stifles the euro market
The severely downbeat speech from the ECB President Draghi stifled the euro market this morning. Euro shortly slipped below 1.07 mark as Draghi said that the bond purchases program could extend past September 2016 if needed. The possibility of deeper negative rates from December remains well alive. The market is already positioned deeply short on anticipation of a further unorthodox move from the ECB. Draghi’s speech today has been a reminder, not a surprise.

The Eurozone sovereign bond yields move south today, the core-periphery yields remain tight. The rally in Eurozone bonds could not continue interminably however, as the combination of low/negative yields and depreciation in euro will jeopardise gains in capital and curb marginal appetite in purchasing disproportionately expansive sovereign debt from the Euro area. The risk of volatility rises as distortion in the Eurozone bond market amplifies.

Released this morning, the German consumer inflation was flat in October while consumer prices in France improved in line with expectations. As Christmas approaches, further improvement in European retail sales and inflation could give a bump to the economic activity and a lukewarm smile to the ECB. The positive seasonal bias will certainly not move the ECB away from its dovish policy path.

There is no taboo, no uncertainty; the European Central Bank is full-heartedly fighting to revive inflation and growth in the zone. The combat involves a cheaper euro and export-driven companies.

The sharp drop in euro-dollar basis swaps hints at sturdier selling pressures in EURUSD. Traders continue chasing top selling opportunities to strengthen their euro short positions moving toward December, where a potential rate hike by the Fed could even bring the parity on the radar. Political issues in Portugal is also a rising downside risk.

European equities in red

European equities opened in the red. In Germany, utilities lead losses: RWE 9-7%) and E.ON (-3.2%).

RWE profits fell by 29% as electricity prices fell by circa 10% in the past nine months. On top, Germany moves to renewable energy sources, suggesting a long-term downside shift in company’s future revenues and profits. In this context, the stock price is expected to remain under pressure regardless of the energy prices. A rapid glance to analyst coverage shows that the majority remain on hold with a twelve month average price target set at €14.42. This is well below the historical average of €40.84.

Siemens (+2.23%) missed earnings estimates in Q4, while industrial profits beat expectations as sales surged by 13.8%. The company raised dividend and announced the second share buyback as no growth in profit margins is expected in 2016.

14-12-2020

GBP jumps on Brexit talks extension
The British pound has jumped in early trading this week after the UK Prime Minister and EU Commission President agreed to extend Brexit talks beyond Sunday. MARKETSThe S&P 500 fell on Friday, wrapping up a losing week, as the outlook for additional fiscal… Read more

10-12-2020

AirBnB IPO today
At its IPO price of $6 per share, Airbnb ABNB, is expected to raise at least $3.5 billion with an initial market capitalization topping $40 billion. MARKETSStocks fell on Wednesday, retreating from the record highs set earlier in the day, as tech shares strug… Read more

9-12-2020

S&P 500 closes over 3,700
MARKETSThe S&P 500 closed above 3,700 for the first time ever on Tuesday as Pfizer started to roll out its coronavirus vaccine in the U.K., lifting hope of the economy recovering in the near future. The Dow Jones gained 0.4% while the Nasdaq Composite clim… Read more

8-12-2020

Global stock market cap reaches $100 trillion for 1st time
The value of all the stocks in the world put together has reached a giant $100 trillion for the first time. MARKETSThe Dow fell 0.69% Monday, led by Intel and broad-based weakness in value stocks as rising Covid-19 restrictions offset optimism over an imminen… Read more

4-12-2020

Pfizer vaccine supply chain problems
MARKETS The S&P 500 fell slightly from record high. Major U.S stocks indices cut gains quickly in the final hour of trading after Dow Jones reported Pfizer now expects to ship half of the doses it had previously planned this year after finding raw materia… Read more

2-12-2020

Dollar Purge Continues
The US dollar dropped to fresh two-and-a-half year lows on Tuesday, with EUR/USD rising above the widely-watched 1.20 handle. MARKETSNews• Stocks in Asia-Pacific were mixed in Wednesday morning trade after major indexes on Wall Street surged to record highs o… Read more

1-12-2020

Bitcoin hits record high
The price of Bitcoin climbed 8.7% on Monday to reach a fresh record high of $19,857.03 - overtaking its previous peak made in 2017. MARKETSNews• Asia stocks rise as the Caixin/Markit manufacturing Purchasing Managers’ Index for November came in at 54.9 — its… Read more

30-11-2020

OPEC meeting starts
Today OPEC+ begin a 2-day meeting to decide whether to begin producing an extra 2 million barrels per day of oil, or delay for another 3-6 months. MARKETSNews• Asia-Pacific markets are mixed this morning while S&P 500 futures are down half a per cent. Ind… Read more