ACF Morning Note Monday, 24 November 2014 Sponsored by ACF Partners and Produced by ACF Follow us on Twitter @ACFER2 for smaller companies and more macro Monday, 24 November 2014 ACF Morning Note The Headlines this Morning ● The Peoples Bank of China (China’s CB) cut base interest rates for the first time since 2012 late Friday afternoon providing some optimism for the region. ● European Central Bank (ECB) president Mario Draghi said “excessively low” inflation had to be raised quickly and by whatever means necessary placing a much more Dovish tone to his previous comments and suggesting that 1tn QE would happen sooner rather than later. US equities: US stock advanced on Friday after China’s CB cut base rates and the EUR zone CB’s comments of asset purchases (EUR 1tn QE) gave equity markets some impetus and led th to a 5 straight week of gains. The S&P 500 closed up 0.5% reaching 2,063 with two thirds of stocks advancing. The DJIA posted similar gains, advancing 91 points to close at 17,810. Data – Chicago Fed National Activity Index, Flash services PMI, Dallas Fed manufacturing survey. Large and small cap equity futures are suggesting a positive open (just) later today. The Vix is trading 14.83-14.93. Asian equities: Asian stocks this morning are following Friday’s lead from the US. The MSCI Asia Pacific index (excluding Japan) is 1.2% higher. The Japanese markets have managed gains of around 0.2%. However the HSI and SCI are the clear winners placing gains closer to 2%. The SK Kospi, Taiex and ASX 200 are all in positive territory whilst only the NZ X 50 has failed to trade in the black – it is down 0.44%. European equities: The Stoxx 600 added 2.1% on Friday snapping a 2 day losing streak. In Europe the motivation and sentiment was much the same as for the US but the movements and optimism were much more pronounced driving 17 out of 18 national benchmark indices for Western Europe to close up. The FTSE 100 added over 1%, the CAC put on an exciting 2.67% and the DAX equally stimulated investors rising 2.62%. The Mediterranean country gains were over 3%. Data – Germany’s November Ifo business sentiment survey and Swiss unemployment. European equity futures are suggesting a positive open across the board this morning and one that is broadly stronger than equivalent futures are suggesting for the US open. The EU Vix closed at 17.5 but the Vix-Jan future is suggesting volatility will increase in the new year. ACF Equity Research Ltd is regulated by the Financial Conduct Authority. FRN 607274. Page 2 of 5 Monday, 24 November 2014 ACF Morning Note Commodities prices: Brent crude remained in excess of USD 80 bbl after China’s CB, the PBOC, weighed in with a surprise rate cut. Brent is trading steadily in this morning’s Asian session. We have OPEC’s meeting later this week to look forward to, on which investors will be keeping a keen eye after crude prices climbed in the latter stage of last week coming off its lows of around USD 78 and is currently trading at USD 80.43 bbl. The Bloomberg commodity index of 22 raw materials advanced 1.1% on Friday after Au advanced on the back of bullish Au positions from hedge funds. Bullish Au positions grew at their fastest pace since the middle of this year. The precious metal has bounced off recent lows of USD 1,143 t/oz. Au is currently trading at USD 1,200 t/oz. Forex: The EUR approached a 2-year low vs. USD on the expectation of significant ECB QU action. The Aussie and Kiwi dollars both strengthened vs. crosses on China’s PBOC decision. ACF Equity Research Ltd is regulated by the Financial Conduct Authority. FRN 607274. Page 3 of 5 Monday, 24 November 2014 ACF Morning Note Click here for the ACF Morning Note Glossary THIS PAGE INTENTIONALLY BLANK ACF Equity Research Ltd is regulated by the Financial Conduct Authority. FRN 607274. Page 4 of 5 Monday, 24 November 2014 ACF Morning Note Disclaimer The information in this report has been prepared by ACF Equity Research Ltd (ACF). The research is published for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any securities or any financial instruments. ACF has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of ACF Equity Research Limited. 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