Thungen Financial Labor Day Market Update
With the majority of global markets closed for Labor Day we can expect a quiet day with very few surprises.
Despite a lower than forecast Manufacturing PMI for April, China is still seeing expansion even if it is under expectations. Figures showing a 50.4 rating for April against a forecasted 50.5 are in keeping with China's current performance of late and as we closed out the first quarter of 2014 general sentiment is that the economy will continue to grow, even if it is a a reduced pace. In contrast, the IMF have just reported that China could very well over take the US as the World's largest economy by 2020, if not sooner. With a population roughly 3 times that of the US but with 10 times less spending power the government has said it feels this is an unrealistic view given that they see the country as a middle income economy which is expanding its middle class. The Nikkei managed a strong day posting good gains for the trading session probably helped by the lack of markets being open in the region.
Asian Markets as of 1st May 2014:
Nikkei 14,465.66 +1.23% SSE Comp. 2,026.36 +0.30%
Hang Seng 22,133.97 -1.42% ASX 5,423.60 -0.86%
With nearly all of Europe observing the May 1 holiday there is little to report with regards to the markets. What is driving the local markets though, is the ongoing situation in the Ukraine. With all parties involved looking to avoid further violence we now are seeing the financial and economic side of the crisis come into full effect, or at least that is what we are being told. As United States and Europe ramp up the sanctions being placed against Putin's aids and several companies close to the Moscow leader there are reports that the endeavor into the Ukraine could cost Russia up to $100bn in 2014 alone. The IMF has joined a growing list of Ukrainian supporters by signing off on a bailout of $17bn. Tied to a string of reforms the bailout is available over the next 2 years with over $3bn available immediately after the local government agreed to increase gas prices by 50% last month. This, along with $1bn from the US and a promises of up to $15bn from the EU, Canada, Japan and the World Bank should see the Ukraine able to separate from Russia financially however it is placing the country in a position that is hardly enviable and no doubt will be felt by the people for many years to come.
European Markets as of 1st May 2014
FTSE 6,780.03 +0.15% Dax 9,603.23 +0.20%
CAC40 4,487.39 -0.23% BEL20 3,089.80 -0.52%
Zurich SMI 8,476.66 +0.50% MICEX 1,305.93 +1.96%
US markets were spurred to keep their gains after the FED statement from Ms. Yellen confirmed the yet again that plans to reduce QE will still moving forward. Reducing their bond buying program buy another $10bn per month the FED Chairman said that the economy was growing again and that the data was supporting the sentiment of the markets. There was a handful of economic factors recently and although the figures could be construed either way the reality is that this has been the best period of growth since 2005 for the US. This helped the Dow break an all time high and even though tech companies were again the brunt of some profit taking even the NASDAQ managed to hold its gains. With the economy at home improving and Obama back from a Asian relationship building trip all eyes will be back to the US to see what and how they will push to resolve the situation in Eastern Europe. With Washington's sanctions starting to take effect, apparently, and Putin hinting that any excessive moves could adversely affect foreign investment in Russian firms the fact that the global economy is improving may well take a back seat to the potentially destabilizing situation in the region.
US Markets as of 1st May 2014
S&P500 1,883.95 +0.30% Dow Jones 16,580.84 +0.28%
NASDAQ 4,114.56 +0.99%
Thungen Financial would just like to take this opportunity to wish everyone a Happy Labor Day!
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Thungen Financial Advisors. All market data within this release is for your general information and enjoys indicative status only. Thungen Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.