Markets are holding their gains as May draws to a close. High stock prices and low bond yields are the talk of the week as the impending ECB meeting next week motivates investors to act now.
Asian markets are trading positive with the Hang Seng in particular seeing good volume and gains. Having hit yearly highs on the last five of six sessions the index is holding its own at a time when it is expected to be volatile. With the Chinese government looking to address economic growth concerns, the local markets are subject to widespread corrections and its good to see that this is not the case at this time. Japanese Retail Sales data didn't surprise many analysts. After increasing their Sales Tax rate from 5% to 8% at the beginning of April which saw the largest spending spree in Japan since 1997. With a March sales figure up 11% it wasn't a shock to see that spending after the tax hike had dropped 4.4%. The BoJ has been struggling for decades to reverse deflation and low consumer spending, the idea behind increasing the sales tax is to force consumers to spend now on the assumption that products will be more expensive in the future. The Japanese Govt. has long been troubled by the increasing aging population and cost of social security that it brings with it and this is seen as a way of generating additional capital to address this phenomenon.
Nikkei 225 at 14,681.72 (-0.14%) Hang Seng at 23,087.89 (+0.03%)
SSE Comp at 2,050.23 (+0.07%)
European markets continue their rally ahead of what could be one of the most important ECB meetings of 2014. Next week the European Central Bank meets in Frankfurt and is expected to lay out a program of stimulus for the EU with its main objectives being low inflation and low capital growth. What has been hinted at for the past few months may finally be given a time frame and it is fair to say that the markets are waiting expectantly for news that will keep the bulls going forward. Mario Draghi is expected to announce some form of Deposit Rate cut, into negative territory which would effectively see banks being charged to hold cash with the ECB overnight. Another possible scheme would be bank loans specifically aimed at increasing lending to smaller companies. All eyes are on Frankfurt next week and considering Europe is looking to be on the cusp of a transitional period, many believe the possibility of some form of QE will be well received and help drive the Eurozone forward.
FTSE 100 at 6,851.22 (+0.09%) Dax at 9,939.17 (-0.02%)
CAC 40 at 4,531.63 (+0.04%) BEL 20 at 3,161.85 (+0.14%)
IBEX at 10,757.20 (+0.40%) Zurich SMI at 8,706.50 (-0.04%)
Markets in the US continued their run as the S&P again hit intraday highs yesterday. Breaking and holding 1,900.00 was a major step for the index and although it closed just under its previous high, confidence is rife in the US and stocks keep adding value. As with other economies the US are obviously waiting to see what comes from the ECB next week and the continued line from the Federal Reserve over the past few months committing to reducing their bond buying program and the implication that interest rates would increase later next year has helped keep the indexes in the States very positive despite a poorer than expected start to the year which was mainly put down to the terrible weather seen in Northern America. There is a range of economic indicators out of the US today and tomorrow. Most notably today is the 2nd GDP estimate which is forecast to be marginally down at 0.2% quarter on quarter. Housing and Jobless data will round out today and tomorrow see's a range of data including Personal Consumption Expenditure (PCE Index) and both Personal Income and Spending year on year.
Dow Jones Closed at 16633.18 (-0.25%)
NASDAQ Closed at 4,225.08 (-0.28%)
S&P 500 Closed at 1,909.78 (-0.11%)
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