Article Hero

Markets go silent

1640867437.png
Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
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.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments 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.The research analyst in not employed by KW Investments 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 Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

Share this article

How did you find this article?

Awful
Ok
Great
Awesome

Read More

Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.