ACF Morning Note Monday, 24 November 2014

ACF Morning Note
Monday, 24 November 2014
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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.
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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.
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Monday, 24 November 2014
ACF Morning Note
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Monday, 24 November 2014
ACF Morning Note
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