Spreadex Market Analysis: S&P 500 Reaches Record Levels

AM Analysis – “George Osborne to launch Islamic bonds” – Alex Conroy
George Osborne will announce his intention to launch Islamic bonds in Britain today, in a move following the recent plan to make London the go to place for Chinese trading outside of China. Chancellor Osborne intends to issue the first Islamic bond outside of the Muslim world. The recent effort to diversify business and product offerings could be seen as a way to keep competitive in the financial world despite the capping of banking bonuses and attempts to cap shadow banking bonuses, the worry being that this could drive the finance world away. By welcoming all foreign investment this should ensure London remains a leader in global finance.

Expect a volatile day in US markets today to mark the beginning of the two day Federal Reserve policy meeting, with speculators attempting to position themselves ready for any decisions. The main decision being whether to start tapering the $85 billion a month bond purchasing. Tapering is seen as unlikely given the recent government shutdown and unfavourable jobs data for September, with a delay until March the likely outcome. Speculators are however likely to follow the meeting feverishly and overreact to any surprises or announcements made causing huge swings. With results for the US being disappointing overall for the last month investor’s won’t be surprised if today’s PPI and Core Retail Sales miss forecasts, expected at 0.2% and 0.4% respectively.

PM Analysis – “S&P 500 reaches record levels” – Max Cohen
Despite disappointing data from the U.S, a continuous stream of impressive earnings has helped spur the S&P 500 to record levels, trading as high as 1761.6 this morning. Meanwhile, European indices have edged higher during today’s session as investors speculate that the Federal Reserve will maintain their current $85 billion of monthly bond purchases.

U.S policymakers meet today and tomorrow and the majority of economists surveyed so far believe that the Fed will resist tapering until at least March 2014. With global indices gaining so much value over the past 3 months and sentiment at such a high level, encouraging earnings alone won’t push these markets on much further. Of the 256 S&P 500 companies that have reported so far this period, 76 have beaten profit estimates while 54 percent have topped revenue forecasts.

It is possible however that the Fed’s (expected) accommodative stance will be the catalyst that bulls are craving. Whilst the Dax 30 & S&P 500 are trading at record highs, the FTSE 100 is still some 185 points away from the 30th Dec 1999 high of 6950.6. However, traders will no doubt see today’s disappointing Producer Price Index & Retail Sales data from the U.S as a setback, especially after last week’s less than inspiring non-farm employment numbers.

[The original articles by Spreadex can be found here.]

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