Market Commentary: European stocks advance marginally, await Draghi speech

US

US stock market indices rebounded after three days of negative price movements as new-home sales data surprised upwards. The data showed that in August new-home sales in the US increased to the highest level in six years, interpreted by many as a clear sign that the housing recovery is making progress. Housing indicators are often cited as the best indicators of the health of the economy as consumers typically only invest in new houses if they are confident of their income streams.

The benchmark S&P 500 index advanced 0.78% while the technology biased NASDAQ increased by 1.03%. Technology stocks had retreated in the previous three days as investors decreased risk from their portfolios.

 Asia

China has uncovered $10 billion in fraudulent trade. Companies used illegal documents in order to export or import goods and providing an illegal channel for criminals to move funds. As a result investment and commodity import may slow as banks will likely increase checks on documentation.

The Hong Kong’s Hang Seng Index declined 0.3 percent, the Nikkei 225 Stock Average increased 1.3 percent and Australia’s S&P/ASX 200 Index climbed 0.1 percent.

Europe

European stocks advanced marginally on the open as investors awaited a speech by the European Central Bank President Mario Draghi. Draghi speaks at a conference of European central bankers in Lithuania. Draghi’s Speech starts at 10:00 CET.

Deutsche Post AG, owner of DHL beat Amazon and Google, to be the first mail provider to use drones. Europe’s largest postal service, is about to begin deliveries of medication and urgent goods to the some islands using unmanned helicopters.

Air France rose 2.2 percent at it withdrew plans to create a Transavia Europe and instead focus on Transavia France, avoiding relocation of jobs from France.

Investors are betting on a rebound in Russian stocks as tensions in Ukraine appear to be easing. NATO, one of the most outspoken critics in Russia, admits that the Russia is pulling back increasing the probability of a resolution to the conflict.

Currency

The US dollar climbed to a four-year high as home sales data signaled that US economic growth is on track. US data on durable goods and initial jobless claims today should cement yesterday’s home sales data.

The Euro slid below $1.28 for the first time in 14 months as markets are becoming more convinced that the European Central Bank will add further monetary stimulus. BNP Paribas are forecasting the Euro at $1.18 next year.

This article was issued by Calamatta Cuschieri, visit www.cc.com.mt for more information.

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