Market commentary: Welcome the rebound!

On Wednesday the markets experienced a positive rebound across the board along with gains in oil, supported by the release of the minutes of the latest FED’s policy meeting that showed how any potential interest rate hike will likely not be discussed at least until April. 

Although overall the minutes confirmed an accommodating approach by the FED, analyst have been pointing out that the higher dollar and the plunging oil prices will soon put some down pressure on US Inflation readings, which could push the FED to act on interest rates to balance such trend.

The European Markets closed all in the green with the Euro Stoxx 600 adding 0.48%, the FTSE 100 gaining 0.84% and the Dax Index rising 0.51%. However, European markets opened lower after the release of Germany Factory Orders that fell for the first time in three months in November, recording a slide of 2.4% after seasonal and inflation adjustments.

This is another signal that the European power house economy is going through a rough patch with the Bundesbank stating, last month, that while Germany avoided recession in the middle of 2014, its economy only managed a “modest start” of Q4.

This goes to add uncertainty in the minds of investors after the Financial Time yesterday published an article stating that the Eurozone has actually already slipped into deflation for the first time since the depth of the financial crisis in 2009.

US Markets rebound from a negative trend posting sizable gains, with the Dow Jones Industrial Average rising 1.23%, the Nasdaq rising 1.26% and the S&P 500 gaining 1.16%. Crude oil also posted some gains, closing 0.68% up and stopping 3 days of heavy losses that had pushed the WTI price below the psychological level of $50 a barrel.

J.C. Penny Co. was the day wild card surging over 20% at the opening after reporting better than expected same-store sales, which increased by 3.7% during the holiday season. The shares reached a high of $7.95 during the trading section before closing at $7.89. This jump comes as a welcomed news for shareholders and investors after the company dropped over 45% from its peak in August 2014.

These results seem to support the Company’s decision to reinstated Myron Ullman as CEO, who have been reorganizing the retailer, bring back some successful initiatives that have fuelled the substantial increase in sale registered over the Christmas season.

Overnight in Asia, markets extended the rebound with all the major indexes closing in positive territory. The Nikkei 225 was among the best performers adding 1.67%, the Korean’s KOSPI Index rose 1.11% and Hong Kong market gained 0.63%, while the mainland Shanghai market was the only big loser of the session, shedding 2.55%.

Samsung Electronics Co, the largest manufacturer of smartphones reported its Q4 outlook confirming expectation for its first annual profit decline in over 3 years. However, shares in the Company opened 1.76% higher on Thursday following remarks that showed improvements in earnings and operating profit for the last quarter of the year.

Samsung indicated a Q4 operating profit of 5.2 trillion won, compared to Q3’s 4.1 trillion, displaying a 26.8% increase Quarter-on-Quarter, and suggesting that the electronic giant managed to stop its negative trend.

The outlook reported means a probable full year profit for the Company in the region of 25 trillion won the lowest in 3 years, but the rebound in the fourth quarter is suggesting that the Samsung could be on a slow recovering path and analysts believe there will be continuous improvements in earning going forward, especially from the second quarter of 2015.

This article was issued by Mr. Paolo Zonno, Trader/Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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