As the year is ending, markets are staying silent and getting ready for new sessions.
Yesterday's session was characterized by a substantial drop in the trading volume due to the festive days, which will be accentuated tomorrow, leading to a large part of the market closing.
The slowdown in the index movement continued yesterday with rotation from technology stocks to more defensive stocks.
The data for pending home sales that fell 2.2% in November contributed to the more negative sentiment of investors.
The Dow Jones index was the one that had the best performance as a consequence of the flows towards defensive stocks. The technological Nasdaq was the one that experienced the biggest falls, but even so, the movements were not very important given the lack of market activity.
In contrast, the European indices suffered steeper falls, pushed down by the worst pandemic situation and by the restrictive measures taken by European authorities, as is the case of the German DAX index, which fell around 0.50%.
The USD weakened against most of its counterparts in the foreign exchange market, which occurred despite the rebound in market interest. The yield on the 10-year American bond rose to 1.54%.
Normally, there is a positive correlation between interest rates and the dollar, so yesterday's behavior can only be attributed to specific flows that deviate from the usual market correlations at the end of the year.
Oil also lost the correlation it had experienced with stock indices in the last week with rises to appropriate technical levels. The reason was the publication of inventory data from the American Petroleum Institute, which fell to -3,576M, below the forecast figure.
Technically, oil has already corrected to the resistance zone around 76.50, and that is also the 0.618% Fibonacci retracement level of the bearish leg of the entire month of November. A daily close above these levels would terminate the current bearish momentum.
Sources: Bloomberg, Reuters.
The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.
As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).
The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest.
The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.
JME Financial Services (Pty) Ltd trading as ZA.CAPEX.COM acts as intermediary between the investor and Magnasale Trading Ltd, the counterparty to the contract for difference purchased by the Investor via ZA.CAPEX.COM, authorised & regulated by the Cyprus Securities and Exchange Commission with license number 264/15. Magnasale Trading Ltd is the principal to the CFD purchased by investors