Of records and rates | Calamatta Cuschieri

Most US stock markets are hitting consecutive record highs, and a December rate hike by the Fed is now fully priced in

The latest existing home sales hit an all-time high on Tuesday
The latest existing home sales hit an all-time high on Tuesday

Dow Breaks 19,000

The Dow Jones Industrial Average surpassed the 19,000 level for the first time, and most other US bourses also reached fresh highs over the course of yesterday’s session. Small caps trading on the Russell 2000 index extended their recent rally and took their winning streak to levels not seen in 20 years. Stocks were also helped by an improving economic outlook – the latest existing home sales hit an all-time high on Tuesday.

The dollar has also been strengthening on the back of seemingly rosier prospects for the economy on expectations of substantial fiscal stimulus and, consequentially, a tighter monetary policy stance. Indeed a 25 basis point rate hike by the Federal Reserve in its next meeting in December is now fully priced in.

If the Fed does come through as is widely expected, the focus will turn on the future rate hike path. Multiple Fed officials, including Chairwoman Janet Yellen repeatedly said that any future hikes would be gradual. The markets will be looking for clues to changes in this stance, and whether the recent electoral happenings have had a marked impact on the Fed’s outlook for interest rates.

OPEC Negotiations

You probably won’t be surprised to hear that there’s been another predictable twist in the latest episode of the shall-we-or-shall-we-not-cut-output-or-maybe-we-should-freeze brought to you by OPEC. Members of the oil-producing-exporting cartel are debating a 4%-4.5% output cut but Iraq and Iran are wrestling for better terms.

Oil prices keep bouncing around depending on the latest headlines – expect more volatility until the deal, if any, is official.

Check Your Sources

French construction company Vinci saw its shares tank almost 20% on Tuesday after a hoax press release said that it was reviewing its results for the past year and a half after uncovering accounting irregularities. The hoax press release also said the company fired its Chief Financial Officer Christian Labeyrie as a result.

The press release came late in the day, 4:06pm Paris time and also claimed that the company had informed the French regulator, the Autorité des Marchés Financiers. Less than half an hour later an official statement from the company said it had become the victim of a hoax. The statement read:

“Vinci officially denies the dismissal of Christian Labeyrie. We express our indignation towards such practices and inform that the group and Christian Labeyrie will file a complaint against the persons responsible for these acts.”

Vinci shares recovered from their intraday low, but still closed 3% down on the day. The French company joins a host of other companies which have been similarly targeted, including Fitbit, Avon Products and even Google.

This article was issued by Andrew Martinelli, Trader 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 Investments Services 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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