Trade overview: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations
Trading in Europe opened this morning with a negative trend, although without significant changes. The British FTSE index falls by 0.3%, the DAX and the KAC opened unchanged.
In Asia, the stock exchanges of China, Hong Kong and South Korea are closed this morning for the Chinese New Year. The stock market in Japan is closed for the “National Day”.
Wall Street futures trade this morning in a mixed trend but with minimal changes.
Trading on Wall Street closed last Friday in a mixed trend, the S&P 500 index rose by about 0.6% and closed above 5,000 points for the first time, the Dow Jones index fell by about 0.1%, the Nasdaq recorded increases of about 1.2%.
Cloud Flair Jumped 20% on Friday after posting better-than-expected reports. PepsiCo fell more than 3% after reporting mixed results, Pinterest fell about 11% after reporting lower-than-expected revenue but higher earnings.
American online travel agency Expedia Group decreased by about 18% after reporting revenues of 21.7 billion dollars, slightly lower than expected, also, the company announced the replacement of the CEO.
Several more intriguing reports are expected to emerge this week, tomorrow Coca-Cola and IRB, on the fourth Paramount Global , Cisco Corp , Occidental Petroleum (Warren Buffett has a significant stake in it), on Thursday Coinbase Global , Applied Materials and Rocco .
In the American debt market, government bonds traded in a mixed trend at the end of the week. The yield on 10-year bonds decreased slightly and traded around 4.17%.
In the commodity and currency markets, American oil traded this morning at $76.5 per barrel and Brent oil at $81.7. Cryptocurrencies started to soar last weekend, Bitcoin traded this morning at $48,100 per coin and Ethereum at $2,500.
Macro: In the world we are heading for a week full of new data, among other things, on Tuesday morning the unemployment data in Great Britain, the consumer price index in Switzerland, in the afternoon the consumer price index in the USA, on Wednesday the consumer price index in Great Britain, the GDP in the Eurozone, on Thursday the GDP in Japan , the unemployment data in Australia, the GDP in the UK, the retail sales in the US and on Friday the producer price index and the business sentiment index of the University of Michigan.
Research analyst David Benjaminov from Global X commented in his review of Wall Street and in particular regarding the peak that the S&P 500 index broke last weekend, “There are also question marks regarding the current valuations and how far such an upward trend can be maintained, especially if the economic data does not support it. There is a risk increased for correction”, warns Binaminov, “certainly if we see negative economic data. The continued increases in the stock markets may also lead to a tightening of monetary policy, with the aim of cooling prices a little.”
In contrast, BJP’s forecast. Morgan is more blunt. At the end of the week, the company (according to the website Investing.com) published a forecast in which the company’s analysts note that not only are the increases in the markets limited, “we believe that the upside from here is limited and that the shares will fall by 20%-30% from a record that will be set during the year.”
The analysts of J.P. Morgan is still optimistic about the small companies (small caps) and states that they are a more attractive investment opportunity than the large companies, “They may trade with a short return of 200-300 basis points, but in the end they will achieve an alpha (excess return on the market, SHG) of 34-59% in the next year or two.”
The analysts presented the signs, or red flags, that signal volatility and risk, the first is the inverted yield curve that usually predicts an economic recession, the gap between the performance of the shares of the small companies that shows a shift away from risks and that of the large companies that climb to record highs. In addition, the analysts point to the absence of a risk premium on the American stocks, as evidenced by the profit returns that are even lower than the Fed’s interest rate.
“In our 25-year career, we’ve seen stock markets behaving irrationally in the past and those were warning lights to watch out for like 2+2 is always 4,” the analysts said.
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